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Upfront Prices: 5% Rise Expected

Jun 5, 2006  •  Post A Comment

Media buyers expect to pay about 4 percent to 5 percent over last year’s prices during the upfront for commercials, according to research company SQAD.

The latest figures from SQAD, which tracks ad prices, are remarkably uniform between broadcast and cable and among dayparts.

The trick to this data is that it is an average, so it does not reflect differences from network to network, said Lawrence Fried, VP of SQAD. Some networks-like ABC, which was up in the sought-after 18 to 49 demographic for the past two seasons-could be up much more than that 4 percent to 5 percent. Others, such as NBC, which has been down in the ratings for a few seasons, may not be up at all.

SQAD’s Media Market Guide National Report is research based on the quarterly surveys of a couple dozen top media buyers, who provide information about prices in the scatter market. The May report also looks at upfront pricing for next season.

“We think this is about the strangest pre-upfront dance we’ve ever encountered,” the report said, with clients focused on issues other than price.

One issue-whether ad sales would be based on Nielsen Media Research’s ratings including DVR viewership-was keeping buyers and sellers from actively negotiating prices.

When SQAD asked buyers to look at price, the buyers pegged the cost per thousand viewers in the 18 to 49 demo during prime time at $28.29, up about 5 percent from last season. For viewers 25 to 54, the CPM is $29.03, a price somewhat higher than for the 18 to 49, the demo buys are most often based upon. A thousand viewers in the 18 to 34 demographic cost a whopping $46.26.

Prices in other dayparts showed similar increases. In late-night, for example, the CPM for adults 18 to 49 was $21.57, up 4 percent.

In cable, youth-oriented networks were expected to cost 6 percent more, with CPMs for adults 18 to 34 reaching $39.48. Prime time on the general audience cable networks was expected to produce a 5 percent increase, with CPMs in the 18 to 49 demo reaching $21.36.

The report also looks at scatter, where prices are mostly just 3 percent to 6 percent above upfront levels. With advertising available on the scatter market at prices close to upfront levels, advertisers are encouraged to hold money out of the upfront to have more flexibility in setting spending plans later.

The data in the report is separate from SQAD’s Net Costs database, which uses actual invoices from advertisers representing billions in ad spending.

But Mr. Fried said the Media Market Guide has proven to be accurate. “If you ask buyers and they give you numbers, they’re likely to give you numbers a little higher than they expect,” he said.

But Mr. Fried said buyers are given opportunities to adjust those numbers later and “most of these numbers don’t change that much. Our experience here is these percentage increases are what people expect to pay.”