Rino Scanzoni, chief investment officer of WPP’s GroupM, says broadcast TV networks could face steeper viewership declines next year -- especially because networks will not be able to replicate viewership gains made last year.
Broadcast network declines could hit 6% or 7% -- levels more common in recent years -- which would be greater than the 4% to 5% viewership erosion levels that networks witnessed this past season.
“Broadcast had a relatively good year in prime time,” says Scanzoni, with Winter Olympics and World Cup programming lifting viewership. “Erosion will probably go back to mid-single digit levels.”
Other dayparts helped broadcast last season. Specific improvements came from early morning daypart (from higher NBC and ABC programs) and late-night TV programming (soaring ratings from NBC’s “The Tonight Show with Jimmy Fallon.)
“You had more ratings in broadcast than was anticipated,” he says. “The year before, we were down 10%. It created a softer scatter market and that affected cable. Cable benefits when broadcast gets very pricey.”
Subsequently, cable networks followed this up with lower upfront overall dollars -- a drop of 4% from the year before. “I thought cable would have been done a bit better -- but I think they’ll pick up the slack in scatter,” says Scanzoni. “Clients want flexibility.”
GroupM, which controls a sizable chunk of U.S TV advertising dollars -- around 25% -- predicts that overall TV advertising will see a 3.5% gain for 2014 (with overall U.S. ad dollars climbing 3.4% to a estimated $161.1 billion).
Broadcast networks will be flat and cable networks will climb 4%. But for cable, Scanzoni says, this will be down from the 7% to 8% regular annual advertising revenue gains.
Last year’s weak TV scatter market should see a slight uptick next season. “You’ll see a better scatter market -- [last year was] flat to up a bit,” says Scanzoni. “Not that it will go crazy. But there are better options for it to be a bit healthier.”
That said, national TV clients will be ever more cautious -- looking for greater flexibility. He adds: “It has been my experience that when clients hold onto money, it generally doesn’t come back into the market.”
Scanzoni says that one major factor in broadcast TV’s overall performance for next season will be where CBS lands.
Many are predicting that CBS will return to the top broadcast TV network among key 18-49 viewers -- boosted by the inclusion of potential high-rated NFL football games on Thursday night for a handful nights. Marketing executives estimate that CBS could pull in as much as $200 million in advertising dollars collectively for those games.
Group M made big news during the upfront period in transitioning to C7 metric-attached deals (C7, the average commercial rating plus seven days of time-shifted viewing) across its roster of clients rather from C3 agreements. Scanzoni says these C7 include all Group M’s movie marketing clients.
Explaining the decision to move from C7 from C3 -- the primary metric for national TV networks since 2007 -- he says: “The reality is that the ad on a show, being played back [on DVRs], is being viewed -- you can’t take that ad back on the DVR. The exposure is there. Then it comes down to economics. Why wouldn’t you do it?”
Looking at the bigger picture for C7, he says: “Converting to any metric has no impact on advertising dollars -- in the long run it could decrease ad dollars. My budgets didn’t change. I’m not spending any more or less. If you can make an adjustment on what you are getting, why wouldn’t you do it?
For networks, Scanzoni sees their C7 benefit coming long-term to stabilize their audience and CPMs. All that could influence a greater share of dollars for broadcast TV -- perhaps getting more back from cable or other media.