• by Wayne Friedman , May 11, 2012

What will the new upfront look like? Two time-tested business indicators -- scatter market pricing and real economic gross domestic product -- are signaling there will be only slight gains in TV spending.

“The growth in spending in the upfront is going to be minimal at best,” says Rino Scanzoni, chief investment officer at GroupM, which controls a third of all TV media spending in the U.S.

National TV spending -- for an entire TV season -- follows real U.S. GDP growth 99% of the time, says Scanzoni. (Real GDP numbers do not factor in inflation). For 2011, that growth number was around 2%. So far, for the first quarter of 2012, real growth continues at around that pace. Including inflation, GDP was closer to 4.0% in 2011.

For the upcoming full TV year, Scanzoni says cable networks might show stronger improvement than the TV market as a whole -- around a 3% gain. But for broadcast, flat or lower numbers will be in order. “It will be a struggle,” says Scanzoni.

For the upfront itself, estimates vary that broadcast will pull in anywhere from $9.2 billion to $9.5 billion; cable will be somewhat higher, at $9.4 billion to $9.7 billion.

The second-quarter scatter market also continues to be a good measure in predicting where the national TV upfront will land, according to media-buying executives. Right now, the market is at 1% to 7% price hikes over upfront pricing set a year ago.

“I always look at the scatter market for indication,” says Noah Everist, associate director of media investments for Campbell Mithun media unit Compass Point Media. And right now that seems to suggest “it’s going to be a orderly market.”

More frantic marketplaces almost always signal wild price gains. A year ago, national TV networks took in very strong 9% to 16% price percentage gains. All of that led to a much weaker 2011-2012 quarter-by-quarter TV scatter market that followed. Media executives now theorize marketers shifted money into last year’s upfront and out of the scatter markets that followed.

Media buyers agree slight price gains in the current scatter market will translate to upfront market. “I’m guessing mid-single-percentage-digit increases,” says Gary Carr, senior vp and executive director of national broadcast for TargetCast TCM.

Further evidence of only slight TV gains is that for many advertising categories TV spending levels are near their all-time highs -- even factoring in corrections after the difficult recessionary periods after 2009 

Says Scanzoni: “Many categories in 2011 have exceeded levels in 2007 -- except CPG [consumer products companies] and QSRs [quick-service restaurants], which are flat. He cites other estimates showing that national TV spending was overall flat in the fourth quarter 2011.

He adds: “We are in a post-correction period. We are already at all time highs.”