Brian Steinberg
Advertising Age

Let the upfront posturing begin! Yes—already!

With about three months to go before the ad industry’s biggest marketplace—upfront ad sales for the coming broadcast TV season—CBS Corp.’s chief executive is predicting the company can reel in solid price increases from advertisers.

"We’re not just looking at low single-digit increases at the upfront, because our numbers are going to expect more," said Leslie Moonves, CBS’s CEO, speaking to investors on a conference call. "We believe in our product, and we believe in the strength of our network and our programming."

Moonves has a reputation for promotion; rare is the moment when he concedes industry conditions are troubled or the fortunes of his company are anything but on the upswing. Even in January 2009, when many people felt like the economy was heading toward freefall, he predicted rate increases at that year’s eventual upfront market.

Instead, however, wave after wave of advertisers held back from putting down money until the very last minute. The networks wound up offering rollbacks on the price of reaching 1,000 viewers, or CPMs, in the range of 1% to 3%. NBC, owing to greater ratings shortfalls, had to go so far as to offer CPM rollbacks in the negative mid-to-high-single-digit range, buyers said.

But broadcast TV now seems to be enjoying a reversal of fortunes. The networks held back more inventory at the 2009 upfront in hopes of getting better prices in the later "scatter" market, when advertisers purchase inventory on an as-needed basis.

Moonves said during the conference call Thursday, Feb. 19, that the scatter market is going well. "I don’t think I’ve ever seen scatter that’s going at these numbers, and frankly, it is a terrific marketplace, where our sales guys are begging us to give back promo time for ad sales," he said.

A robust scatter market typically augurs a healthy upfront. When scatter prices are cheap and demand is lackluster, marketers feel less of a sense of urgency to get money down at the new upfront. But when prices shoot up, there’s more pressure to secure advertising at the new upfront in case of further price increases later.

All of the advertisers now paying CBS "plus-30," meaning ad rates 30% higher than they could have paid at last year’s upfront, will focus more on locking in prices [during the upfront] this time around, Moonves said.#