Commentary
With A Weak Hand, Networks Could Always Play Promo Card
- by David Goetzl @dgoetzl, April 8, 2013
Predictions are starting to accelerate from Wall Street on how the upfront market will play out. The emerging consensus is a softer selling season for the Big Four networks, with volume up slightly at best and pricing increasing in the mid single-digit range.
The broadcasters can’t be thrilled with the tepid forecasts, but there are all kinds of triggers to pull to impact either figure -- ranging from holding back inventory to offering pricing discounts in exchange for higher spending. There’s one, though, networks seem particularly reluctant to pull: selling some of the most valuable inventory, rather than keeping it for themselves.
Frequently, networks seem to reserve those last positions in a pod before a show returns for their own promos -- sometimes running more than one house ad in a row. If the spots were always coveted – hmm, I’ve got to make a kitchen run, I probably have two minutes to get back – they’re worth more now while waging an anti-DVR war.
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During time-shifted viewing, placing an ad in that last position would seem to improve the likelihood that at least part of it will be viewed at regular speed. When fast-forwarding stops, a DVR backs up automactially. So, when people blazing through a pod at top speed see a show returning, there can be enough time after they hit stop for an ad to convey a tagline, a movie opening date or a special offer (50% off at Macy’s all weekend!).
Networks may have already charged a premium for the last-spot inventory. But the opportunity to do so with even more handsome returns seems ripe. Of course, the calculations of what’s the better move -- trying to build future viewership or taking guaranteed money -- could occupy the smartest media researchers for who knows how long.
But for networks, it’s nice to have the potential stimulus in their back pockets. So, will this upfront bring a rainy day worth making a big move selling that prime real estate?
On Friday, Barclays’ Anthony DiClemente weighed in forecasting a 0.5% bump in volume for the Big Four collectively to $9.2 billion, with CPMs ranging from up 5% to 6.5%.
CBS would lead with a 6.5% increase, followed by ABC at 6%, Fox at 5.5% and NBC at 5%. Barclays predicts cable should land a 2% volume increase to $9.99 billion.
Discussions Pivotal Research’s Brian Wieser had with buyers and sellers yielded different perspectives (hardly a shocker). Buyers suggested volume could be down as much as 2%. Sellers suggested total dollars would be up slightly.
Pivotal’s conclusion? Volume down 1%. Also, CBS would land CPM increases in the 7% range, which would top the market. The other networks would slide in below with increases between 4% and 6%. Cable networks are likely to have similar increases in pricing.
RBC Capital Markets’ David Bank had previously predicted a broadcast market with about a 2% volume drop, though cable would be up in the 4% to 5% range. Pricing could increase around 6%.
Even with a slower market, there seems to be enough to justify remaining selfish with promo placement.
Keep paying more for less everyone!!!!
I am sure Movie accounts or retail clients like Macy's are not stupid enough to buy the last position in the POD just because there is a chance (slim) that the person fast forwarding their DVR playback will slow down and catch a portion of their sales event spot, movie opening etc....my how tv advertising has fallen apart!
Are we talking about changing the promo strategy that created this weak hand? About time.
Average cable net runs upward of 2000 promo annct's per week. The value of that inventory for promo, or for ad sales is obviously huge. The average net only promotes one handful of shows per week, meaning that average frequency by any loyal viewer is enormous. Could some be given up for rev purposes ? It would seem so. On question of premiums for individual positions, two impediments in enacting on any scale : first is that TV net backrooms ( still a manual process ) are crushed with commercial scheduling restrictions and are not looking for or able to handle another. Second one is a bigger consideration - shining a light on your high-value positions also shines a light on your lower-value positions, which there are far more of. In a zero-sum game, pricing individual pod positions on a scaled basis is a losing proposition for the net.
The "sell as commercial time" vs. "use for own promos is an important (& intriguing) phenomenon--particularly in light of the research on the effectiveness of promos. What us known about how networks' decisions re allocating time to commercials vs. promos vary across different types of programming--especially "regular" vs. special programs, particularly the Super Bowl telecast?
This accentuates the value of sports programming, in that it is mostly immune to fast-forwarding and has yet to achieve critical mass on the mobile (non-traditional) media platforms. It also has a built-in expiration date that increases the value to time-sensitive marketing campaigns.
If you have a holiday sale, it won't help to have viewers seeing it the day after that holiday. And if you're a network with a show (or a studio with a movie) premiering, you know that the debut episode (or opening weekend) are critical to the long-term success of said property.
I'd keep those promos, too, if I were them.
Two things wrong with the current promo model: 1) The value of the sellable inventory consigned to the promotion, of say, a 3-rated TV program, invariably dwarfs by comparison any associated revenue from the commercial inventory in the actual show. And 2) Once the promos reach ad nauseam levels (hello TNT), they only serve to reinforce exactly why 97% of the audience has decided not to watch.
And who (consumer) do you (consumer) think (consumer) will pay (consumer) for all of these (consumer) increases ? The consumer ?