The broadcast TV networks are poised to dramatically reverse three years of declining upfront volume with rising revenue and higher pricing -- a strong signal coming from an active scatter market with big spending increases in key advertising categories.
“It’s a strong marketplace; there looks to be more money in the overall TV economy,” says Geri Wang, president of advertising sales and marketing at the ABC Television Network. “Advertisers still seek high quality. People still care about premium TV and premium video.”
One key measure of TV advertising health — cost per thousand viewer prices — is expected to rise 7% to 9%, according to media estimates. All this comes in contrast to small CPM gains of a year ago when national TV advertisers had to pony up 3% to 5% price additions from the year before.
Additionally, for the first time in three years, projections are broadcast upfront markets will see a rise in total dollar volume — up 3% to 4% overall to $8.7 billion.
“National TV could see low single-digit volume growth, and high-single digit pricing," says Brian Wieser, senior research analyst of Pivotal Research Group.
This is down 11% overall in volume since the 2012-13 season. Also, a year ago broadcast TV networks gained just 4% on average in primetime CPMs to $24.40 for viewers 18 and older.
Much of the positive talk around this year's upfront is based on the current scatter market, where advertisers buy commercials on a near-term quarter-by-quarter basis — this versus the summer’s upfront market when marketers purchase around 70% of commercials for the entire TV season, which starts in September.
Paul Rittenberg, EVP of advertising sales for Fox News Channel, says: “Scatter prices have been up for three consecutive quarters over upfront — probably due to scarcity and money that has been over-committed to digital.”
How much higher? Like a eye-popping 15% to 20%, according to media buying and selling executives.
Sharply higher scatter revenue has come from a number of marketers including pharmaceutical, food and the biggest TV ad category, automotive, which represents around 25% of all TV advertising.
According to iSpot.tv, since the beginning of the TV season, automotive spending is up 28% to $3.37 billion — upfront and scatter deals from mid-September through March 20 — this versus $2.63 billion for the same period a year before.
Pharmaceutical advertising — over-the-counter and prescription products — are 40% higher to $2.15 billion from $1.54 billion. Fast food restaurant spending has improved 30% to $1.4 billion versus $1.08 billion for the same period a year ago.
Still, Catherine Warburton, chief investment officer of media agency Assembly, wonders whether all this is new national TV money: “Is the money we are seeing in scatter money that would have been in the upfront? Possibly. But [overall] I don’t see the scatter situation as being a good barometer for the TV marketplace.”
Even if media buying executives believe the current scatter market signals big upfront gains, Fox News’ Rittenberg says don’t expect a return to the old days.
“In the past, you’d have scatter rising by double-digit percentage price increases, followed by the upfront rising by double-digit percent price increases. I don’t think that is the reality anymore.”
Not only that but there isn’t sharp growth across all major TV categories. For instance, banks and credit cards — also big national TV spenders — have seen mostly flat spending since the start of the season; $698.2 million has been spent versus $707.3 million in the same period a year ago, according to iSpot.tv.
Helping the broadcast networks — as well cable networks, which are also positioned to benefit from a rising upfront — are questions concerning digital media.
Media executives have complained about consumers’ ad-blocking, poor viewability of digital video ads and outright fraud by some digital video advertising sellers.
Beyond all of this, one senior broadcast TV network advertising executive takes solace in what media agency executives haven’t said so far this pre-upfront period: "The most important marker is that we are not seeing the normal dance from media agency executives, saying that the market is going to be down.”
A strong upfront can have an umbrella effect for other TV platforms — like local TV.
“A strong upfront market bodes well for everybody — linear, local TV and digital,” says Steve Lanzano, president-CEO of TVB. “But can you quantify it? No. But intuitively, it makes sense. There’s a residual emphasis in terms of more demand for inventory.”
No comments:
Post a Comment