CBS is among the networks talking big scatter percentage increases in CPMs -- positive spikes of 20% to 30% over the upfront. But there's still a bigger question: Where's the "visibility"? (That's what some call actual and significant ad revenues gains.)
For years, when the upfront moved from $7 billion to $8 billion and then to $9 million -- with scatter dollars rising as well -- the financial formula worked fine. This was especially true when broadcasters were also witnessing annual ratings erosion of 4% to 6%.
As long as CPMs increases were high enough to overcome ratings declines, things were good. But last year changed all that. Faced with recessionary times, TV marketers weren't going to pay any increases in CPMs.
Instead they got rollback, which in turn forced the networks to sell less in hopes that pricing would go up later on, in the scatter markets. CBS, for example, sold 64% of its inventory in the upfront -- well below the higher range of 70% to low 80% it has done in the past.
The networks' strategy worked. Marketers came back in the and paid more than in the upfront. But the problem was still with visibility: The networks didn't have enough inventory to sell -- in large part because of typical declining ratings.
(For its part, cable network group, Discovery Communications, says ad revenues are pacing 5% higher than a year ago in the first quarter).
Les Moonves, president and CEO of CBS, reiterated similar statements other TV executives have made regarding advertising inventory: "Our sales guys are begging us to give back promo time for ad sales."
Will the networks walk into a similar upfront this year? The economy seems to be slowly turning better. But all is not entirely well.
TV marketers are still skittish. Digital revenues aren't coming fast enough to make ends meet for TV content providers. Some broadcasters have resorted to hoping for big retransmission dollars to make up the difference.
Even the word "discounting" might be in the networks' vocabulary. CBS also tossed a bit of a bombshell on the Apple iTunes front, noting that it was considering cutting the price of some of its advertising-free episodes on iTunes in half -- to 99 cents from $1.99.
What does that say? That we are still in a cut-rate entertainment world.
Apple -- who had been pushing TV providers on this front -- probably understands better than most that the number of diverse platforms for video is still growing and the market is getting more competitive, no matter what your digital financial formula is.
Broadcasters all suggest, with their always-optimistic point of view, that the upfront will be up this year. We couldn't agree more -- but the upward trend won't hold for all the metrics.
Scatter pricing increases make for good headlines, but we're guessing the big volume advertising gains of the past decade and a half will go in another direction -- perhaps making for some tougher-to-look-at headlines.
We don't quite see what's visible.