Scatter Market Cools
Soaring TV scatter-market pricing has had a major slowdown in the first quarter, according to media agency executives -- but it is generally still higher than the upfront pricing set in the summer a year ago.
Media agency executives say the big 30% to 35% increases for the cost per thousand viewers in the fourth quarter have abated in the early months of 2011. In some cases, there are only 10% to 15% hikes --- or even less.
"The first quarter has cooled off considerably," says one media agency executive. "People panicked in the fourth quarter."
This is not to say that networks aren't still happy with the current situation. "The business is robust; the pricing is firm -- depending on daypart and the kind of packaging," says Aaron Cohen, chief media negotiating officer for media agency Horizon Media.
Media executives say this year's first-quarter option period, in which marketers can cancel part of their upfront buys, was more "normal" -- around 8% versus that of a year ago, when it was unusually low, with its low-single-digit percentages. TV marketers can cut back 25% of their upfront deals during the first quarter, 50% in the second and third quarters.
This more normal quarterly option period helped the networks. "They had more inventory to sell," said Cohen -- and at higher prices than the upfront.
In the fourth quarter, executives says there was a mad rush to place media dollars on TV programmers -- broadcast, cable and syndication --partly due to the reaction to the strong upfront TV ad market that preceded it, and also as a result of more marketers returning to television with budgets after the lows of the big recession period.
Compounding some of the price issues in the last few months of 2010, networks such as ABC, NBC and Fox had significant audience deficiencies where they needed to make good to TV advertisers with additional commercial inventory. All factors contributed to a tightened supply. Not just broadcast was hit -- some large cable networks witnessed ratings declines in the period.
Fox was in the worst shape of all the networks, losing some 15% or more in adult 18-49 ratings points. However, now in the first quarter, with the return of "American Idol" -- and its high number of ratings points -- Fox has come back somewhat.
Only CBS has been able to consistently make real advertising volume gains since the start of the season. CBS said scatter pricing in its fourth-quarter 2010 reporting period was up 35% to 40%. Overall, CBS says network advertising volume -- upfront and scatter -- improved 8% from the fourth quarter of 2009.
But early periods of 2011 may not be so robust for CBS or other TV networks. "Networks are ready to deal," says one media executive. "If networks were performing at the levels they promised, pricing would be higher."
Still, media executives are expecting overall TV program price gains for the coming spring/summer upfront advertising sales period for the 2011-2012 broadcast season.