TV Upfront

Hope Springs Eternal as TV's Scatter Market Shows New Signs of Life

March Thaw Could Usher in a Stronger Upfront Market

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Credit: Chris Ratcliffe/Bloomberg

In a development that could prove to be a sign that a healthier upfront bazaar is in the cards, the scatter market is showing signs of a resurgence, as marketers in recent weeks have started freeing up their TV budgets.

According to data crunched by Standard Media Index, scatter spend on national broadcast in March increased 43% versus the year-ago period, which has many ad sales executives feeling cautiously optimistic about their prospects in the upfront. (For the uninitiated, "scatter" refers to the unguaranteed buys made outside of the upfront, which account for roughly 20% of the networks' overall dollar volume. Historically, a strong spring scatter market nearly always proves to be a bellwether for a robust upfront sell-off.)

Last month's scatter activity marks the first time that in-season demand has helped make up for last summer's weak 2014-15 upfront. (As much as media CEOs in February crowed about "high single-digit" pricing increases, those marginal gains did nothing to offset the overall weakness of the TV market.)

Scatter volume was down 3% in February.

"A nice uptick in scatter dollars fueled national TV growth in March, which is certainly a good sign for the health of the ad marketplace," said Scott Grunther, exec VP-media at SMI.

SMI said it measures 80% of all national U.S. agency ad spend via the booking systems of five of the six global agency holding companies (Aegis, Havas, IPG, Omnicom and Publicis) as well as leading independents.

Looking at the first quarter of 2015, marketers increased their scatter spend by 11% versus the year-ago period, with broadcast volume up 13% and cable improving 9%. Overall TV spend in the first quarter (including upfront buys booked last summer) fell 6%. When tough comparisons against the year-ago period are mitigated by pulling out the revenue associated with the 2014 Sochi Winter Olympics, total broadcast TV spend was up 7%, while cable improved 4%.

"The solid growth figures, when you remove the impact of the winter games, provides reason for networks to be more optimistic heading into upfront season," Mr. Grunther said.

Per SMI, the strongest broadcast categories in the quarter were telecommunications, which was up 14%, and consumer electronics (up 8%). The weakest were food/produce/dairy (down 22%) and auto/dealerships (down 21%). Which isn't to say that auto drove away from TV entirely; the category grew the most of any category on ad-supported cable, as first-quarter spend increased 21%.

Season-to-date, broadcast ad revenues are down 4% versus the first 27 weeks of the 2013-14 campaign.

After buyers in last year's upfront held firm on pricing, the networks held back more inventory than usual for scatter, in the hopes that the market would rebound. That strategy pays off 9 times out of 10; unfortunately for the suppliers of ratings points to the nation's advertisers, last summer was an outlier.

While it's far too early to assess how the 2015-16 upfront will play out -- for one thing, none of the client budgets have been registered, making it impossible for either side to "count the house" -- ad sales execs have said that they expect this year's bazaar to play out in a similar fashion to last year's upfront.

"March really picked up and Q2 looks very promising, but my gut tells me we may be in for another crummy upfront," said one ad sales chief. "We'll see what [our clients] want to spend and we'll take it from there."

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