Upfront, Scatter Sales Mostly Flat Heading Into 2019-20 Marketplace

While TV networks continue to negotiate upfront deals -- looking for mid-double-digit percentage price increases -- TV ad revenues show a flat and/or downward trend over the last two years.

Standard Media Index says upfront-placed advertising revenue for the better part of last TV season -- October 2018 through April 2019 -- came in at $19.3 billion, down 3% on a two-year compound annual growth-rate (CAGR) basis.

During the same period, scatter-placed advertising revenue is at $7.1 billion -- flat on a two-year CAGR basis.

Growth categories for upfront-based deals during that period include financial services -- 6% higher to $2.4 billion on a two-year CAGR basis -- and scatter revenue, 15% more at $663 million.

So-called scatter TV deals are when marketers buy TV networks on a month-to-month or quarter-by-quarter basis. Upfront deals are TV buys made for an entire TV season.

The picture is a bit more mixed for pharmaceutical companies, up 2%. Those marketers placed $2 billion in upfront deals, with scatter revenue down 14% to $658 million.

SMI says the wellness category -- mostly coming from direct-to-consumer brands -- is up 16% over a two-year period, to $513 million. Scatter revenues has risen 21% to $304 million.

Categories that declined include broad-based consumer product marketers -- down 5%, looking at a two-year period through April, to $3.7 billion -- while scatter is down 6% to $1.1 billion.

SMI data comes from raw invoices from five of the seven media agency holding groups, as well as independent media agencies, making up 70% of the national TV market.

Current upfront deal-making has  broadcast TV networks looking for high 15% to 20% in pricing increases -- the cost per thousand viewers (CPMs), according to media executives. Media buying executives anticipate negotiating final 12% to 13% gains.

Large networks price hikes are largely to compensate for continued lower TV viewership overall, say media executives. In the past year, linear TV viewership has been down around 12% to 15% on average, depending on the network.

Recently, The CW closed its upfront deal-making with 14% to 15% CPM rises and overall single-digit percentage gains in upfront dollar volume. Media executives estimate CW’s upfront dollar volume rose from $580 million to $650 million.

Last year, for the 2018-2019 TV season, Media Dynamics says the five English-language broadcast networks -- ABC, CBS, NBC, Fox, and CW -- gained 5.8% to $9.6 billion in the upfront market, and cable networks were 4.7% higher to $11.1 billion.

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