Madison Avenue Is Mad As Hell, March Mad: Takes More, Not Less Network TV

Demand for network TV advertising, which had been lagging so far this year, surged in April thanks largely to March Madness. While much of the coveted NCAA basketball tournament coverage occurred in March, the big money and high rates of the Final Four and championship games occurred in April and were enough to boost ad spending dramatically for the broadcast and cable TV networks that covered it.
Broadcast network TV ad spending by Madison Avenue’s big agencies, which was down 1% for the first four months of 2013, rose 13% in April versus the same periods in 2012, according to the most recent data from the major agency holding companies compiled released by Standard Media Index. Cable network ad spending, which is up 3% through the first four months, expanded 9% in April.
“Most of those numbers were driven by March Madness,” explains SMI’s James Fennessy, noting that ad spending on NCAA broadcast network CBS rose 37% and Turner Sports’ networks’ rose 60% in the month of April.
The SMI data, which comes directly from the actual media buys processed by a majority of Madison Avenue’s biggest agencies, also reveals a continuing share shift taking place from broadcast to cable network TV during the 2013 scatter marketplace. The main reason, says Fennessy, has been the sagging performance of network TV prime-time ratings, and the fact that the major broadcast nets have had to use much of their scatter advertising inventory as “ADUs,” or audience deficiency units -- makegoods given to cover advertisers’ upfront audience guarantees -- which has driven the balance of scatter advertising dollars to cable networks.
While SMI only reports the volume of agency ad spending, and not prices, Fennessy says feedback from buyers and sellers indicates that the share shift has also driven cable network ad prices up during the first- and second-quarter scatter markets, due to the depletion of saleable broadcast network ad units.
The tightening of scatter ad inventory, however, indirectly could be a good thing for both broadcast and cable networks heading into 2013-14 upfront ad negotiations by creating a perception of scarcity just as they begin negotiating deals for next year.
Most other major media continued to pace at year-to-date trends, but the online display and social media markets did experience a pronounced uptick in ad demand in April. Display, which is up 17% through the first four months, soared 31% in April. Social media buys, which are up 13% through the first four months, rose 22% in April.
As a result, total digital advertising investments by the major agencies -- including mobile, video, ad networks, exchanges, etc. -- expanded from a growth rate of 20% during the first four months to 26% in April.
Fennessy said it’s not exactly clear why the online options have been expanding, and where those budgets are coming from, but he said the next release of SMI data in May will include more granular information that may shed light on that.
Among other things, he says agencies contributing data to SMI’s composite are providing more detailed breakouts of their digital ad spending including precise breakdowns of their “display” budgets.
“SMI users will have visibility into true digital ad spend for the first time,” he says, noting, “by breaking out placement reporting type and the exact ad destination, e.g. how and where the ad was booked.”
As a result of those changes, Fennessy says SMI will be able to delineate digital ad spending for specific suppliers, identifying “the digital ad spend for a major network like ESPN into mobile, search, video and display. Currently these dollars are classified mainly in display and the new categories will help show the shift from traditional TV into the emerging digital platforms.”
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