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Late-night was a bright spot in this summer's otherwise lackluster broadcast upfront market, where ad buyers struck deals for commercial time in the upcoming TV season.
For many years an afterthought during the prime-time-centric upfronts, the new regime in late-night hosts has lately heated demand from advertisers.
"Usually in negotiations the conversation is around prime and then all the other dayparts lumped together, but late-night was a bigger part of the conversations," one media buyer said.
NBC is likely the biggest beneficiary, with a 45% surge in late-night budgets and higher-percentage price hikes than for prime-time, said Linda Yaccarino, president, advertising sales, NBC Universal. Media buyers confirmed that one broadcaster saw at least a 40% surge in its late-night schedule.
The new faces on screen are also attracting advertisers that may not have bought late-night in the past, according to media buyers.
The trend started last year, fueled by Jimmy Kimmel's move to 11:35 p.m. from midnight in January 2013, but has accelerated since Jimmy Fallon took the "Tonight Show" reins from Jay Leno in February.
"In recent years, late-night has been late-night. There hadn't been a large-scale change," Ms. Yaccarino said.
Since Mr. Fallon took over, "The Tonight Show" has seen a resurgence in viewership, particularly among the younger viewers that advertisers often target. "The Tonight Show" is currently averaging 4.2 million viewers on any given night, up about 24% from last year, and viewership among 18-to-49-year-olds has surged 70%.
Seth Meyers also came on board as host of the "Late Night" this year, succeeding Mr. Fallon in that slot. Mr. Meyers has been successful in attracting more viewers, with viewership in the 18-to-49-year-old demographic up 24%.
And with overall broadcast ratings down, late-night looks that much more attractive.
"Late-night is the next logical stop for advertisers to pick up displaced GRPs [gross ratings points]," Ms. Yaccarino said.
Three tiers of pricing
"Late-night was the most aggressive of all dayparts," a second buyer said. "Networks were turning away dollars and trying to create tiers of pricing."
$137.8B U.S. ad spend for top 200 advertisers
Typically advertisers negotiate new ad buys based on what they paid in the prior season. Last year, ABC looked for a price correction on "Jimmy Kimmel Live" by seeking a higher price for any additional time advertisers wanted, creating two tiers of pricing for some buyers, the buyer said. And in this year's upfront ABC pushed for more yet again.
"Tier two happens often especially on legacy bases that networks don't like, but tier three is very uncommon and speaks to just how much demand there was in late night," the buyer added.
An ABC spokeswoman did not respond to requests for comment.
Ad rates for late-night commercial time saw price increases in high single-digit to low double-digit percentages, and those advertisers who looked to make buys at the tail end of deal-making were subjected to even higher increases, the buyer said.
More change is coming next year, when Comedy Central's Stephen Colbert will replace David Letterman as the host of CBS's "Late Show."
While buyers may not be placing bets on Mr. Colbert just yet, there's already been interest around the transition. CBS has already benefited from an uptick in demand, according to media buyers.
Dollar volume and ad rates for late-night increased significantly in the upfront, a CBS spokesman said. "It was an attractive daypart for us in the upfront," he said. "Letterman's pending retirement is generating interest."
The surge in advertiser attention has caught the eye of cable networks, with at least one cable channel taking a closer look at opportunities in the late-night space as a result.
Overall, the upfront marketplace was underwhelming, with NBC the only broadcaster to secure an increase in overall dollar volume.
Fox saw as much as a 15% decrease in volume, while CBS, ABC and The CW are all believed to be on par or down from their volume totals last year.