The TV upfront advertising market is busy, with big broadcast networks asking for double-digit percentage increases.
Media-buying executives say TV networks are proposing big 15% to 20%+ increases in prime-time cost-per-thousand viewer prices (CPMs). According to media executives, marketers are estimated to be looking to settle for around 12% to 13% hikes.
One veteran media agency executive called the conditions “brutal.” NBC and CBS are particularly active, nearing deals. Representatives from those networks declined to comment.
A number of factors are contributing to rising prices, including competition from more direct-to-consumer brands -- around 150 marketers -- looking to participate in the market. They are shifting some spending to national TV from digital media.
Growing D2C brands -- pet foods, mattresses, fitness equipment, etc. -- are willing to pay near full CPM prices for TV network inventory. They could squeeze out some traditional major TV upfront brands.
In addition, for new D2C brands, traditional TV CPMs can be lower than buying digital media for premium video. For example, CPMs for premium OTT video can be priced at $25 for viewers 2+ -- versus around $5 on cable TV networks and $12 on broadcast prime time.
At the same time, D2C companies -- in buying higher-priced TV inventory -- are pushing TV networks to prove more brand lift metrics and other key performance indicators.
Added to this is a move by traditional upfront TV marketers to shift more TV money from digital media platforms back to traditional TV, given ongoing brand-safety concerns. That move began during the last couple of years.
“Clients want to rotate back to TV; the trust issue is really back,” according to a media-selling executive. “They can’t afford to sit out, and scatter is not going to be easy.”
Also factor into this: Traditional TV has seen around a 12% reduction in total gross ratings points -- putting further pressure on competition to secure inventory on all advertisers.
High-priced prime-time inventory might push traditional TV upfront players into other dayparts -- such as late-night and daytime -- according to a media executive.
A year ago, the upfront advertising sales period for the 2018-2019 TV season saw a 5.2% increase in revenue to just over $20.7 billion, according to Media Dynamics, a media consulting/publishing company.
Five English-language broadcast networks -- ABC, CBS, NBC, Fox, and CW -- gained 5.8% to $9.6 billion, while cable networks were 4.7% higher to $11.1 billion. The CPMs adult viewers pricing rose 10.2% for the broadcast networks to $31.97, and 9.7% for cable networks to $17.49.