Upfront Intel: It’s the Shows!

Jun 1, 2008  •  Post A Comment

The logjam broke in the upfront advertising market late last week, as ABC did deals with two major agencies that extracted price increases of about 9% on a cost-per-thousand-viewers (CPM) basis.
That increase is likely to establish a ceiling in the marketplace, according to ad sales executives.
Fox, which finished No. 1 in the ratings last year among adults 18 to 49, is likely to get a similar boost in its ad rates, they said.
Buyers who declined to be identified said they wanted to get their money down on ABC because the network has several big hits on its schedule, such as “Grey’s Anatomy,” that sponsors want to tie into, and the network reaches key demographics.
One source indicated that while total sales in the broadcast upfront market are expected to fall because of the shaky economy, in these early deals, the money going to ABC was up. ABC finished second in the 18-49 demo last season.
If ABC builds on its early take, it could make life difficult for the other networks, which need big CPM increases to offset double-digit rating declines. Early in the week, a combination of lower ratings and demand for higher pricing at the broadcast networks had some buyers looking to increase their spending on cable.
“They’re calling me,” said one cable sales executive. “Something must be happening.”
But there, too, some sales executives were seeking bigger price increases than buyers were willing to pay.
Buyers said Turner Broadcasting, home to networks including TNT and TBS, was seeking double-digit increases in CPM, which in some cases halted the conversations.
One buyer said Turner could have gotten deals done by now and taken some broadcast money if it had been more realistic in its pricing. A Turner spokesman declined to comment.
Still, some agencies last week registered their clients’ spending plans with Turner Broadcasting, the first step in completing a deal, sources said.
But with the supply of cable ratings points exploding as audiences grow, buyers are looking for less aggressive pricing from networks. That abundance of ratings points, the primary commodity traded in TV-ad deals, keeps prices in line as long as demand doesn’t skyrocket.
Before Friday, the only prime-time deal reported was in cable, with media buyer Starcom and Hallmark Channel shaking hands.
Dealmaking has gotten more complicated this year because agencies are ready to include digital video in their upfront buys. The agencies and their clients have become more comfortable dealing with video on different platforms, and the digital programming being offered by the networks is higher-quality and attracting bigger audiences, buyers said.
In addition to digital, NBC Universal is trying to include the Olympics and the Super Bowl, two big-ticket items, in its upfront deals. Buyers and rival networks say there probably is not enough money in the post-upfront scatter market to get NBC to its goal of $1 billion in ad sales for the Beijing Games.
NBC declined to comment.
Dealmaking also has been slowed because some clients have not finalized their spending plans.
Meanwhile, market sources said there appeared to be movement in the kids TV ad market, following a report last month that GroupM and Nickelodeon were close to making a deal.
Sources said the big players in the kids market have either made deals or received budgets from most of their major clients.

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