Upfront Television Ad Commitments
Early Network TV Advertising Sales Looking Good for 2008-9 Season
Jun 10, 2008
Despite all the continuing negative reports, network television advertising is still very much alive and well. According to the early unofficial figures, the five networks sold about $9.2 billion worth of commercials in their advance or "upfront" sales campaigns for the 2008-09 season.
John Consoli of Mediaweek Magazine said the upfront sales prove that "broadcast TV -- for the foreseeable future, and against all odds -- really remains the king of all media."
Those "odds" against broadcast TV include Internet competition, the increasing use of digital video recorders which allow viewers to fast forward past commercials and smaller program audiences.
ABC, CBS and Fox Reportedly Increased Ad Prices 8 to 10 Percent
Mediaweek reported that ABC, CBS and Fox increased their upfront prices 8 to 10 percent this year. NBC was able to raise its prices five percent although it finished fourth in ratings for the 18-to-49 year old demographics.
The $9.2 billion figure reported by Mediaweek and Ad Age is about one percent higher than the previous upfront ad sales and ABC, CBS and Fox may add a bit more to those totals before ending their pre-season negotiations.
However, observers said there may be trouble hidden in the numbers because the networks this year appeared to be committing more of their time slots to the upfront negotiations than they usually do and they probably threw in some extra benefits to go along with the 30-second spots. Mediaweek said the networks broadened the upfront negotiations "to harness the momentum" of the sales campaigns and to "reach their lofty totals."
Advertisers May Fear Increase in Scatter Spot Prices
The upfront sales traditionally account for about 80 percent of network time slots. The remainder are later sold as "scatter" spots closer to the actual times that the programs run.
Analysts said advertisers may have committed more money to the upfront sales this year because they are afraid that scatter spot prices may rise dramatically, as they did last year. The inventory of scatter slots may be less because some advertisers are buying more upfront spots to make up for the smaller program audiences. That means revenue from scatter spots may drop unless the networks can make up for fewer spots with higher prices.
Analysts said the higher upfront totals may also be misleading because they do not represent firm sales. Advertisers can adjust and even cancel some buys as the networks release their quarterly program ratings and advertisers take closer looks at the ongoing economy and their own sales.
Here’s how Mediaweek and Ad Age saw the numbers that began emerging from the upfront negotiations in early June.
- Fox: $1.9 billion, about $100 million more than last year.
- ABC: About $2.4 billion, with another $100 million or so expected.
- CBS: Approximately $2.4 billion, with at least another $100 million anticipated.
- NBC: About $1.9 billion. That’s an estimated $100 million more than last year. Mediaweek quoted one media buyer as saying "NBC still has a lot of value to many of our clients, even if it is the fourth-place network."
- CW: About $385 million. That’s generally even with last year after taking into consideration that the network sold its weekend programing to a third party. Despite its fifth place ranking in overall audience ratings, CW remains an attractive niche market for wireless, health, beauty, movie and retail commercials.
References:
- John Consoli, Mediaweek, June 9, 2008
- Brian Steinberg, Ad Age.com, June 9, 2008
- Ad Week, June 9, 2008
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