Commentary
Media Buyers Outraged By Higher Upfront Prices
- by Wayne Friedman , Staff Writer, May 2, 2019
Last Thursday, on the MediaPost Outfront panel, some senior media agency executives noted some unfavorable numbers:
John Muszynski, chief investment officer, Publicis Media Exchange, said over the past five years, prime-time ad pricing rose 38%, while delivery of adult 18-49 viewers declined 39%. That’s not a good formula.
Mike Law, head of U.S. media investment at Dentsu Aegis Network, said “the number is actually worse.” Since 2001, prime-time ratings declined 78%, while ad rates grew 180%.
Muszynski also noted that while broadcast networks claim to cut down the number of commercials -- in an effort to address TV marketers complaints -- it didn’t result in much. Except for some higher overall pricing.
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For example, he says TV networks may be just shifting commercials -- trimming back the number of messages, in the first commercial pod of a TV show, for example. But they load up more commercials later in a show. The first scaled-down commercial pod of two commercials would be charged a premium price.
In addition, networks did not offer up any discount on the rest of the TV inventory in a program.
Who was doing this? He did not disclose.
In a following MediaPost Outfront panel, Catherine Warburton, chief investment officer, Assembly, offered this caveat for those looking at the depressing TV network pricing trend: There are great deals on cable TV networks.
For many marketers, cable TV networks offer better reach and scale than many premium digital platforms. But cable TV still has much lower reach than broadcast networks.
Big-time TV brand marketers are left in another spot. The ratings supply continues to weaken. And while digital video platforms are growing, they are still woefully inadequate for major-spending, scale-needing TV upfront advertisers.
Other ideas are still fuzzy. For example, addressable advertising in its current form does not address TV marketers' complete needs, either.
In dealing with this year’s TV network market, frenzied media-buying executives’ upfront work time will yield them little downtime.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
Wayne, this is just another example of buyers trying to pressure the networks with bombastic announcements of this nature prior to the upfront. Soon we will be hearing from the sellers---telling quite a different and an equally puffed up story---how they have developed better targeting concepts,high impact low clutter breaks,etc.Ho Hum.
Frankly, the CPMs that advertisers pay for TV are a fantastic bargain---like 3-4 cents per viewer who actually watches all or part of a commercial---and I'm not referring to Nielsen's "average commercial minute" ratings, which greatly inflate the commercial audience.
As I've pointed out before,when a business---including most TV advertisers, must cope with steadily rising costs, the normal solution is to raise prices while giving the same or less in return. That's called inflation and it's absurd to think that inflation doesn't apply to the TV networks. It does. So if the TV time buyers are really as outraged as they claim, why not recommend that their clients shift most of their ad dollars into radio or magazines or digital venues---providing the lattter will ensure that the ads have a fair chance to be seen and offer valid "audience" measurements?
Will they do that? Don't bet on it.
I agree with Ed, but I also think there's another side of it: the upfront is a market and as such reflects supply and demand. Without strong demand, there'd be no way for the almost 40% loss of audience, almost 40% rise in pricies mentioned in the piece. When I was working in Sales Proposals at ABC in the mid-70's, it was said that if we sold out while there was still money in the market to be spent, heads would roll. I had a companion to that: if we ran out of inventory (having sold it all to the biggest advertisers) and had nothing left to sell (even at outrageous prices), we'd be hearing from the government. Although I'm sure they'd never admit it, I'm sure the big advertisers and their agents assume they'd get the benefit of lower pricing while it would just be "the little guys" who would be shut out--wishful thinking in extremis!
What are the trends in local TV and national spot? Are the price hikes there doing about 2.5?
Since many people know that TV CPM's are still cheap compared to digital and other forms, and TV generates greater profit than any other medium, yeah, the prices go up