TV's Upfront Ad Rollercoaster: It'll Be Up -- And Down As Well

A media critique by Wayne Friedman, West Coast Editor of Media Post
Thursday, January 21, 2010

Don't be fooled by the new surge in some TV ad spending --- there's more going on than meets the eye.
Take Olympic spending this year. Interpublic Cos. Magna research group says that this year's Olympic games will generate $488 million in "incremental revenue," much of it going to TV platforms. But this is way down from the $650 million in incremental revenue during the 2006 Winter Olympics in Torino, Italy.
That's not all. Many broadcast network executives says while rates are up, they wish they had more inventory to sell. Reading the tea leaves, there seems to be no appreciably big volume gains for networks in this scatter market.
One veteran media buyer puts it better: "Things are up. But it's not a runaway scatter. There's not that much more money. It appears real strong, but that's because scatter has been real soft."
Top-rated networks in the fourth quarter, such as Fox, may have more inventory than many other networks to sell. But, according to most experts, those overall scatter dollars gains may be perhaps $100 million or so.
These numbers would be significantly lower than in years past, where it was customary for networks to grab $200 million to $250 million or more in one particular fourth quarter scatter period.
These trends are a part of overall broadcast erosion. When a network has less ratings points to sell -- even with somewhat higher CPMs -- it can't generate overall dollar volume.
And while cable networks have also been touting big double-digit CPM increases over the upfront with some volume gains, still it seems no single cable network can have a big impact in the marketplace.
Estimates are the second quarter should see some improvement in demand from advertisers. This has always been a strong indicator of how the upfront will go.
That said, the upfront should see stronger pricing than last year's big retrenchment. But total volume gains might be disappointing -- certainly with some broadcast networks and syndicators, less so with cable networks.