Marketers Paying Moderate Price Increases to Networks

Upfront Market Tight, but Outlets Claw Out Some Gains

By Published on .

NEW YORK ( -- The upfront marketplace may be a tight one, but that isn't stopping networks from eking out moderate price increases for ad time on their air, according to media buyers.

Walt Disney's ABC has been able to secure increases of around 9% in the cost of reaching 1,000 viewers, according to people familiar with the situation. That measure, also known as a CPM, is commonly used in these types of negotiations. If ABC can secure high-single-digit percentage price increases, that would suggest that Fox, which has more momentum than any of its broadcast rivals this year, ought to be able to get even more. Fox declined to comment.

Demand still exists
What does all this show? Even in a market crimped by marketers' fears about the economy, media outlets can still claw out some meager gains. Prices "are more than we had hoped or expected, but not double-digit," said one media-buying executive, whose agency had completed a deal with one of the networks.

ABC on Friday completed some business with both Starcom USA and Zenith Media, according to people familiar with the situation. Those dollars are widely believed to come from movie studios -- Starcom works for Disney and Zenith for 20th Century Fox -- which are perceived by media buyers this year as being nervous about getting enough TV time to hawk their latest releases.

To be certain, two agencies' deals with one network won't define the market in general. But getting two of them to sign on to high-single-digit increases when most buyers swear they won't agree to more than a mid-single-digit hike suggests that the networks have leverage where some buyers felt they had less. After all, with ratings down overall, the big broadcast networks are not as big as they once were; it takes more showings of a 30-second commercial to reach the same number of eyeballs as more consumers migrate to the web and other media venues for information and entertainment.

If ABC secured a 9% increase, the consensus among buyers is that NBC and CBS would tuck in alongside that number or somewhere underneath it.

Gauging interest
Networks typically sell 75% to 80% of their inventory in the upfront market, with the rest sold in "scatter," or ad time sold on an as-needed basis. Upfront money really means very little overall; it represents commitments to purchase advertising, but can easily be repurposed or withdrawn depending on the ultimate lineup on a network's schedule. Most analysts use the upfront as a means of tracking advertisers' interest in TV advertising, not as a sign of revenue flowing to the networks' parent companies.
In this article:
Most Popular