Upfront week, upfront weak

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It's upfront week in New York, time for the nets to work over advertisers. We're encouraged by early indications from buyers that the network prime-time upfront will grow by a meager 3% vs. last year's over-the-top gains. But upfront dollar changes are a poor gauge of TV advertising. Actual network revenue offers a more accurate measure, and it shows network-TV growth is more muted than recent upfront tallies might suggest. Advertisers would do well to consider that network TV is a mature medium that shouldn't expect more than single-digit growth.

As Ad Age reported last week, buyers estimate this spring's network prime-time upfront will grow 3% to $9.74 billion. That's down from big double-digit gains in spring 2003 and spring 2002.

Actual revenue figures show slower growth for networks since the advertising market began its sustained turnaround two years ago this month. The network prime-time upfront for the 2002-2003 season leapt 22%, according to Ad Age's survey of the market, yet actual prime-time revenue for the top three networks that season grew only half that rate (11.6%), according to data from the Broadcast Cable Financial Management Association. Likewise, the 2003-2004 upfront jumped 15%, yet season-to-date prime-time revenue for the three biggest networks is up only 5.8%. The association collects actual data from three networks-ABC, CBS, NBC-but they account for about 75% of measured network TV spending, providing a proxy for the network market.

Networks from year to year tweak the amount of inventory they offer upfront, so upfront dollar changes must be viewed with caution. Changes in cost-per-thousand viewers offer a more useful measure. But actual revenue figures give the best picture of how advertisers really value network TV. And over the last four seasons-boom, bust, recovery-prime-time revenue for the Big 3 averaged just 5% growth a year (vs. an 8.5% average upfront gain). That's small change for a mature medium past its prime time.

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