Ad buyers are contemplating a new era in television, in which NBC is no longer dominant.
After years of being in a class by itself in the key 18 to 49 demographic, and with its strong hold on Thursdays, an important night for retailers and big-spending movie studios, NBC has been able to command premium pricing for its spots.
But in the November sweeps, NBC’s ratings declined while the surging CBS turned the competition into a real horserace. Ad buyers now foresee a different landscape in both the scatter market and next year’s upfront.
“You’ve come from a place where five to six years ago NBC had a huge, huge audience advantage and they were a dominant network on that night in programming that the entire ad community wanted to purchase. Obviously, over time, shows run a cycle,” said Steve Grubbs, CEO of ad buyer PHD USA, which forecasts CBS will be No. 1 in 18 to 49 this season.
“NBC for upscale demographics is still dominant, and there are a lot of advertisers out there and a lot of categories where that upscale target is very important,” Mr. Grubbs said. But it’s inevitable “as you lose your ratings dominance, it’s difficult to maintain your cost-per-thousand premium.”
In last year’s $9.3 billion upfront, NBC raked in $3 billion in commitments. CBS was second with $2.2 billion.
Mel Berning, president of network broadcast at MediaVest Worldwide, said market pricing has already begun to adjust itself, and NBC’s pricing will come under more pressure with the end of “Friends.”
“It’s fair to expect that if the ratings trends continue they may fall relative to the other guys,” Mr. Berning said. “The question is what’s in development for next year.”
Thursdays, where NBC has had a string of hits from “The Cosby Show” to “Cheers,” “Seinfeld” and the still potent “ER,” is now challenged by CBS. Losing the beachhead when “Friends” ends could be costly.
“`Friends’ is not only an enormous driver on a revenue basis, but it provides an enormous lead-in audience for the entire night. And thus the entire night becomes this enormous revenue generator,” said Marc Goldstein, president-CEO of MindShare U.S.
Mr. Grubbs said that NBC’s other Thursday night shows are also getting long in the tooth, compared with CBS’s programming that night. “Look at `CSI’ and `Survivor’ and `Without a Trace.’ Those shows theoretically could still be growing,” he said.
With NBC no longer dominant, agencies may be required to take more risks and put chips on more spots on network scheduling boards.
“There are still going to be a certain number of shows that everybody wants. It may not be as predominantly NBC, but there will still be some NBC properties on there as well as the other guys,” Mr. Berning said.
In the ad market, the next year’s prices are a function of supply and demand, as well as what a client paid the previous year. That means it will take time before another network can command higher costs per thousand than NBC, which in the past few years has set the tone for the market by selling first to ad buyers.
“I don’t think those things are really going to change that quick overnight,” Andy Donchin, senior VP and director of national broadcast at Carat, said. “But in the past couple of years CBS has gotten the bigger increases.”
In last May’s upfront NBC got on average a 15 percent CPM increase, while CBS rang up an 18 percent increase.
“There’s lots of things other than the 18 to 49 numbers that people are looking at. They’re looking at upscale [viewers], and it depends on the product,” Mr. Goldstein said. “It’s not like the proverbial light switch and all of a sudden it’s going to happen. But it clearly will over time, but it may happen in scatter. It may not.”
The sweeps also revealed problems for all of TV, with the broadcast networks as a group showing audience slippage.
“I’m not only concerned on one night on NBC, I’m concerned with all of the networks all seven nights of the week,” Mr. Donchin said. “We need these vehicles for mass reach and appointment television, and I want networks to do well.”