NBC Slashes Ad Rates To Spur Sales
Sources say the network has already written over half of its business for the 2001/02 season at this week's "upfront" advertising market.
After a slow start, deals finally got under way in earnest Tuesday, with business heating up once word spread that NBC was discounting prices. ABC, CBS, WB, Fox and UPN all sealed some initial deals late last week.
The networks generally sell between 75% and 80% of their advertising inventory during the upfront buying spree.
Industry analysts predict that NBC, which saw its ratings in the coveted adults 18-49 demographic flag 4% in primetime last season, could see its upfront sales drop by as much 13% to $1.9 billion for next season. Still, NBC is expected to be the market leader.
An NBC spokeswoman confirmed that discounting prices was a strategy. "We realized that in order to increase our share of the pie, we needed to break the price a bit. The strategy seems to have worked."
NBC declined to comment on exact figures, but media buyers said that NBC has lowered its CPMs (cost per thousand unit) "substantially."
"NBC is being subjected to the market realities. They have a very high CPM base with advertisers," said one media analyst.
ABC is also said to be caving into buyers with substantial decreases in CPMs. Media buyers largely agree that ABC is the most vulnerable network since its primetime adults 18-49 ratings slumped 20% last season. Last year, boosted by "Who Wants to Be a Millionaire," ABC was the marketplace leader, reaping an all-time upfront record of $2.3 billion (vs. NBC's $2.2 billion).
Fox is cutting rates selectively and modestly, while the WB and UPN are looking for moderate increases. Meanwhile, CBS continues to hold the line.
Last year, by Memorial Day, advertisers had committed to spend more than $8 billion on the six broadcast networks. This year, up against one of the worst ad markets in a decade, competition for upfront money is especially fierce. After years of paying increases, buyers feel they are owed some deals.