TV Upfront Ad Market Stirs: Networks Making Deals At Modest Price Gains

TV’s upfront advertising market has started to move, with virtually all broadcast networks in the deal-making process -- with advertising viewer prices more or less in line with modest growth estimates.

CBS, Fox, ABC, and NBC are said to have written some deals with movie studios and automotive moving first -- which is customary with most upfront TV advertising markets, according to media executives.

Projections are that the price per thousand viewers (CPMs) will grow modestly -- anywhere from 4% to 8%, with NBC said to be getting the highest levels due to its strong ratings performance this season. Overall, these increases are slightly less than the upfront pulled in a year ago.

One media executive said NBC was at different stages in the deal-making process with around 50% of the overall TV advertising market, which includes completed upfront TV agreements: “It’s moving swiftly.”

CBS, ABC, NBC and Fox spokespeople had no comment about upfront negotiations.

In addition to achieving the best 18-49 prime-time results of any network this season, NBC has the benefit of being underpriced compared to the rest of the marketplace, seeking to raise its average prime-time CPMs -- especially for 18-49 viewers and 25-54 viewers.

NBC's prime-time CPMs have been generally lower than other networks, especially in recent years, due to weak program rating performances. Increasingly, NBC has been looking to package more of its cable networks into marketers' overall upfront media buys.

According to Tarrytown, NY-based SQAD, for 2013, TV broadcast CPMs averaged $44.11 for adults 18-49, and $15.63 for 18-49 viewers for cable TV. Another estimate, from Media Dynamics, says overall broadcast network prime-time CPMs average around $19.00 in 2013.

Analysts believe the upfront market to be weaker overall, especially for the broadcast networks, because of expected lower upfront dollar volume -- around 2% or so -- from a year ago, around $9.2 billion. Cable networks, on the other hand, should rise a couple of percentage points from just under $10 billion.

Says one veteran media buying executive: “No one has seen enough registration to gauge this market.  People are looking at this market as similar to last year -- which is why those numbers are floating around. Volume seems down in broadcast [and there’s a] shift to cable -- again probably similar to last year.”

At least one media agency group, GroupM, is making upfront deals based on the average commercial ratings plus seven days of time shifted data (C7). That is a shift from the virtual industry standard of the last seven years, in which media agencies have made deals based on the average commercial ratings plus three days of time-shifted data (C3).

Still, other media agencies are not looking to change their audience guarantee currency with the TV networks to a C7 metric at this time.

"Watching TV" photo from Shutterstock.



8 comments about "TV Upfront Ad Market Stirs: Networks Making Deals At Modest Price Gains".
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  1. Darrin Stephens from McMann & Tate, June 5, 2014 at 9:47 a.m.

    The CPMS you quote for SQAD are demo cpms and are 30 second equivalent. Media Dynamics CPMs are non equivalent and based on total people. They are not remotely comparable.

  2. Ed Papazian from Media Dynamics Inc, June 5, 2014 at 12:59 p.m.

    Correction Darrin. The Media Dynamics CPM as quoted, above, was for 30-second units but included all viewers aged 2 plus. We provide a full range of adult CPM and CPP projections by age/sex groups, by network type, dayparts and time frames ( quarterly and monthly ) as part of our TV ACES service.

  3. Chris Westerkamp from Active Youth Network, June 5, 2014 at 2:44 p.m.

    Without quibbling about the technicalities of CPM measurement, let's be honest - network audiences are shrinking and viewers are going elsewhere. The fact they see any increase is a miracle.

  4. Ed Papazian from Media Dynamics Inc, June 5, 2014 at 3:42 p.m.

    Regarding broadcast network audiences, the change is partly a function of reach----about 75-80% of all adults watch one or more broadcast network primetime shows per week, compared to 95% 30 years ago---and frequency----average minute primetime ratings are down by almost 300% over the same period. So, the number of telecasts we watch is what's mainly down---and falling. As for the reasons why advertisers keep spending on primetime TV, despite its very high CPMs, the answer is even simpler. It's the prestige factor, the glitz and buzz that draws them in, not the reach. They want to be associated with "big time" TV, consequently they merchandise the heck out of their buys, showing "the trade" that they are really supporting their brands by airing their spots in high profile entries. That's why the upfront is so important. Along with all of the garbage time that they are forced to take in their multiple show network "packages", a few goodies are included. The upfront allows each advertiser to guarantee themselves representation in well known and talked about programs; scatter buys do not provide this benefit with any degree of certainty. Whether advertisers will continue to regard primetime as offering a prestigious environment when the average broadcast rating falls below 2% remains to be seen, as, at that point, the networks will no longer be able to afford "quality" dramas and sitcoms and will probably be airing mostly reality fare, game shows, varieties and even less expensive stuff.

  5. ME ME from ME, June 5, 2014 at 4:10 p.m.


  6. Nicholas Schiavone from Nicholas P. Schiavone, LLC, June 5, 2014 at 5:28 p.m.

    Dear Mr. Papazian,
    I have held your quantitative skills in high regard for decades.
    However, I find your latest analysis of Broadcast Television Audiences and TV Buyer Motivations has merely scratched the surface deeply.
    You are reiterating the pathetic pablum of the digital crusaders who, in their statistical ignorance and media naivete, will say anything to advance their new age (rhymes with sewage) causes.
    Admittedly, 2014 is not 1984. Then again, 1984 was not "1984" and your Orwellian dismissal of the unchanging aspects of human nature and media behaviors is both surprising and disappointing.
    There is no "Brave New World" -- literary or otherwise.
    Let the 2014 Upfront continue passionately for broadcast and cable television. And may CPM's rise as they ought.
    Advertisers are well-served by media planners, buyers and sellers who are up for the game!
    We need not encourage mediocrity by mistaking a few limp correlations with causation.
    In fact, I think I've heard you say as much just a few years ago.
    Onwards and upwards.

  7. Ed Papazian from Media Dynamics Inc, June 5, 2014 at 9:14 p.m.

    Nick, if you think that I'm simply spouting digital media propaganda, you should read my newsletter as well as my other comments on Media Post. Regarding the merits of broadcast network primetime, facts are facts. Ratings have fragmented to the point where getting a 2.8 18-49 rating is a big deal, The normative rating for the same demo was roughly three times higher 30 years ago. Moreover, anyone who checks the reach and cost relationships will see that broadcast network primetime can only be justified as an economical reach builder at very low GRP levels. Beyond a certain level you get far better results using a mix of broadcast and cable, with the latter supplying a major portion of your added reach at lower cost. This does not mean that an advertiser should not use primetime broadcast. Enhancing a brand's image with "the trade" is a perfectly valid justification for paying very high CPMs. The same goes for wanting to capitalize on the buzz generated by a "hot" primetime entry or wanting to see your brand in with the big spenders. But please don't tell us that primetime broadcast is the only way to garner mass reach or that commercial recall is much higher in such programs because viewers appreciate their relatively low ad/promotional clutter. By the way, if I'm correct in my assumption that as ratings continue to fragment, the networks will have to abandon their costly dramas and sitcoms, this is a potentially big problem for lots of cable channels which rely on reruns of "off-network" fare to draw viewers. Hopefully, cable will fill the ensuing void by getting even more heavily into original primetime productions, using its very successful business model: hold production costs in check and use lots of reruns.

  8. Nicholas Schiavone from Nicholas P. Schiavone, LLC, June 6, 2014 at 10:39 a.m.

    Dear Mr. Papazian,
    I appreciate your thoughtful response.
    All you write shall be carefully considered
    before I formulate a reply.
    Enjoy the day.

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