Current CPMs 'Outrageous,' But TV Marketers Keep Buying

by Wayne Friedman, Dec 12, 2007, 1:30 PM

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The upside-down formula of prime-time programming and prime-time advertising pricing continues to accelerate and revolve.

Media agency executives are increasingly making sky-high scatter network deals for 2008 for programming which they are not too sure will be around come March, April or May. How expensive?  "CPMs are outrageous," says one media buyer.

Oh, and by the way, don't expect any rating guarantees.

With expected low-rated network reruns, or lukewarm performing reality or game shows due to the writers' strike, one would expect cheap deals for advertisers. Far from it.  With less good inventory around for TV advertisers, prices are skyrocketing.

But this is a lose-lose scenario -- not just for the short term for marketers, but network ad chiefs as well. Networks don't have that much inventory to sell, so they aren't seeing large amounts of cash flow into their accounts.

What's any TV advertiser to do when the writers (and TV producers) are seemingly intent on sitting out for the long run? Some marketers are turning to sports TV, such as Fox's Bowl Championship Series. That event typically doesn't sell out completely because there is lots of inventory in those games and early January doesn't lend itself to any strong scatter sales.

But not this year.  Reports are that it is doing extremely well. CBS' NCAA Tournament is also getting major sales -- unusual for this time of year.

Cable networks are gaining ground, and even "unwired" networks -- those weirdly named networks where local advertising time from stations around the country is pooled together and sold to national advertisers with a Nielsen national rating.

The uncertainty has steadily increased, to where some are wondering whether the upfront advertising marketplace will really occur in 2008. Perhaps media buyers and TV network sellers will just continue the game of making one, two or three quarter scatter buys well into the 2008-2009 season.

There's more instability: TV numbers are now turning liquid, too slippery to get a hold of, too unsteady for comparative analysis.  Are you going to measure the 12% drop in live program ratings this year against the live program ratings of next year or C3 ratings?  Like some want to do with Barry Bonds' records, this TV season may warrant an asterisk.

If there is little to no program development this season, that means another asterisk of sorts for the 2008-2009 season. That means the true read on C3 ratings won't be possible for another two years -- the 2010-2011 season.
With all of this, marketers still want to buy network TV -- and pay "outrageous" price increases. Amazing. Nothing can kill this highest profile, most maligned, most adored, advertising vehicle -- not commercial ratings, not an over-spilling of make-goods into this season from last season, not a writers' strike, not the Internet.

What will it take for marketers to turn away? Snow? Color bars?  A camera pointed at a fish bowl?

Maybe.  But if there's a hint that someone is watching, or even expecting something to happen, TV marketers will be there - perhaps even doing product placement signage on a slow-moving crab.

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