If a historical upfront marketplace adage is true -- that a tight scatter market presages strong upfront demand -- then the 2016-17 upfront marketplace could well be a robust one, according to never-before-seen data analyzing the share of spending growth of upfront vs. scatter markets.
The data, provided by Standard Media Index, shows that while upfront spending has risen 3% through the first seven months of the 2015-16 broadcast year (October-through-April), the scatter marketplace has expanded nearly four times that rate: +19%.
The SMI data represents actual media buys processed by five of the six major agency holding companies (excluding WPP), and is considered directionally representative of the overall advertising marketplace in the U.S.
Scatter markets are the near-term quarterly markets that occur after long-term upfront ad commitments are made, and generally are considered an indication of demand going into the next season, because they reflect how much of the networks’ unsold inventory is being gobbled up -- either from brands that held back on the amount of inventory they needed during the preceding upfront, or because new scatter market-only players are entering the marketplace.
The markets are not directly comparable for a lot of reasons, including the fact that upfront deals have better terms and conditions (including ratings guarantees, cancellation options and the ability to selected preferred inventory before it is sold in scatter), but the total of the two marketplaces represents aggregate network ad revenues and the absolute demand of the network TV ad marketplace.
“SMI’s numbers show the new broadcast year took off like a speeding train. Scatter spending in 2015’s fourth quarter zoomed ahead 27%, while upfront dollars rose a mere 3%. Then the spending eased off a bit in this year’s first quarter, to a 10% rise for scatter and flat for upfront spending,” writes SMI chief James Fennessy in a post on SMI’s blog analyzing the data today.“The seven-month results for the current broadcast year are a dramatic improvement for TV sellers over the trend they were experiencing a year ago,” he continues, adding, “Scatter revenue was down 2% for national networks during the full broadcast year 2014-15 in comparison with 2013-14. Upfront dollars were off by 6%, for an overall decrease of 5% in national TV revenue.”