Before last year's upfront, CBS pretty much laid its plan on the line: it would get double-digit percent increases on the cost per thousand viewers. To many observers, CBS didn't quite get there for all advertisers, maybe not even for an average of all advertisers. (But it got close enough!)
This year, Les Moonves, CBS Corp. chief executive, has been talking up this magic price line once again -- but this time with firmer projections at hand. If such an increase happens, it would be significant as -- few, if any, broadcast networks have seen really big price increases since perhaps the late 1990s, when the competition from cable wasn't as great, and the big broadcast networks were, well, still big.
But this year, with talk of 40-50% price increases in the current scatter market over upfront pricing, the ongoing sentiment has taken strong roots. Still, for networks other than CBS, those big scatter increases are a little misleading. That's because, with fewer ratings points on ABC, NBC and Fox, there hasn't been much TV inventory to sell and overall revenues to amass.
Many are predicting that CBS -- in a good position with more ratings points to sell this year versus last year -- could really get 12-15% price increases, especially in light of 20- 50% scatter market increases. Scatter markets -- especially in the second quarter -- have been a strong predictor of upfront performances.
What kind of sentiment? Consumers understand this concept. Has the price for your gasoline gone up 12-15%? Hmmm.... Has the price of your medical premiums gone up 12-15%? Hmmm....
Some would say the upfront, as a "futures" market, has nothing to do with this. Not only that, but the upfront doesn't indicate much - since advertisers receive options from networks to get out of their commitments within a given broadcast year.
Some national TV advertisers may indeed be looking at big double-digit price gains -- those who perhaps have a low price base with little leverage and are looking for key program positions. Or maybe other "have-to-have-it-at any-cost" marketers. (Hello, movie studios!)
A number of media agency executives are more down-to-earth - feeling that perhaps this upfront will repeat last year's modest high single-digit price gains.
CBS' take on the advertising business is obviously a key indicator. As perhaps the last almost pure-play national broadcaster around, it will continue to be on the forefront of how the bigger broadcast advertising pool of revenue is responding.
Emotional sentiment around "double-digit increases" will be hard to shake. A closer look might reveal that overall actual revenue gains for the networks might be a lot less -- especially in future years. Long-term "lower-single-digit" gains in revenue -- due to those volume constraints -- may be the rule.
TV advertisers may still be pissed by the talk of high pricing. But not all broadcasters will be cheering either.