Point: Upfront Will See Increase in CPMs

When the smoke clears from this year's upfront, television is going to come out slightly ahead of where it was in last year's record results.

What it probably won't be will be the phenomenal increase in CPM that had been predicted enthusiastically by the networks and rather grudgingly by buyers. That burst of optimism - with predictions of double-digit CPM growth - was the casualty of the war in Iraq and concerns about the economy. But the TV marketplace has proven to be more resilient than the overall economy.

That fact seems to mystify some people. But it's explained by David Verklin, CEO of Carat North America, who said that in the current climate that advertisers are relying on the tried-and-true medium to carry their message. They're retreating into TV, Verklin said.

Discussions with buyers and network and cable executives say there will probably be a 5% increase in CPM in this year's upfront. That prediction has held up pretty well, reported widely and ratified by many after the war in Iraq reached a successful conclusion. But last week, Viacom CEO Mel Karmazin was asked during the company's Q1 earning teleconference what he thought would happen in the upfront. He answered the question tongue in cheek.



"For all of you advertising agency people that are on this call, you can assume we're going to see CPM growth of 15 to 20%, and the market is very hot and we'll try to accommodate you to the best as we can but you better buy often, buy fast and get your order in now," Karmazin said. He said that there has been some posturing on the part of media-buying agencies and talk of syndication going first in the upfront as a way of gaining leverage on the networks.

Karmazin acknowledged the 5% prediction floating around and said, "I think the marketplace will dictate the pricing and I feel good about where the marketplace will be." He said that Viacom will deal with advertising agencies wherever they want to buy, either in the upfront or in the scatter market.

"We're indifferent as to when we sell our advertising. We know Wall Street would like us to sell 80% in the upfront at good pricing and that's probably what we'll do. ... [But] waiting for scatter over the last few years has not turned out to be a bad decision," Karmazin said.

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