Ad Buyers Predict Small Upfront Increases, Scatter Overpriced In 2011

Kris-Magel-A-

As buyers and sellers engaged in some early upfront posturing Tuesday, a pair of top agency executives suggested they overpaid in last summer’s heated market as the current scatter market has been less than searing.

“Last year was a pretty healthy upfront market,” said Initiative executive vice president Kris Magel at the MediaPost Outfront conference. “In hindsight, it might have been a little bit overpriced, but that happens once in a while. At the time, I think we expected the television market to be a little more healthy in the full year than it’s actually turned out this year.”

The scatter market hasn’t “backed up those higher upfront prices,” he said. Prices are above upfront levels, but not soaring above them.

advertisement

advertisement

“With the benefit of hindsight, we paid a little bit too much –- a couple of points too much last year,” said Mike Rosen, President, Activation, Starcom USA.

Rosen said buyers would prefer scatter prices to be 10% to 15% above the upfront, validating a decision to spend heavily in the market. But the lesser premiums now have raised the prospect that last year’s upfront was “a little” high.

Suggesting upfront spending could be “much more moderate” this year, Magel said researchers he works with projected total spending for the 2011-12 season would be up 6% to 7%. Leading into the 2012 upfront, the Initiative research team is calling for a 3% to 4% increase, suggesting some upfront dollars could be held back with expectations the scatter market will be somewhat muted into 2013.

On the flip side, Donna Speciale, who paid the high prices as a top buyer at MediaVest last year, is now the new president of Turner entertainment and animation sales. She said the scatter market dynamics have been in line with projections.

Last year, a lot of scatter money moved into the upfront, so a “moderate” scatter market that’s happening now was expected. “It’s not extremely high, but it’s not low,” she said.

If so many buyers thought they overpaid, options taken in the first and second quarters have been significant, she said. Instead, they have been “minimal.”

Looking ahead to selling Turner inventory this summer, she said: “I think [the market is] going to be strong moving forward.”

In a similar vein, Procter & Gamble, traditionally a heavy upfront buyer, has suggested it may trim TV spending. But Dave Cassaro, formerly of NBCUniversal and an industry consultant, suggested that wouldn’t have much effect on networks. “It’s like turning an oil tanker a quarter of a degree and everybody gets all upset,” he said.

Overall, he said: “In an economy that is sort of this new normal, people are looking to either regain, maintain or grow share. That means you’re going to spend more money in television,” he added.

Next story loading loading..