Reality Rates With Advertisers

Advertisers have a simple mantra: Show me the ratings, I'll show you the money. In prime time, that means buying unscripted, reality programming or new scripted shows.

Yes, the latter command higher ad rates, but with a caveat: Scripted shows are harder to launch.

So advertisers are becoming more comfortable with reality programming, especially top-tier performers. Survivor averages $425,000 per 30-second spot, according to network estimates at the beginning of the season. Idol grabs as much as $500,000 per spot, sources say, since its range is broad.

Such high-rated reality shows increase a network's cost-per-thousand (CPM) measure because ad buyers usually purchase in bulk. For example, American Idol can get advertisers into riskier fare, such as My Big Fat Obnoxious Fiancé. How? They get a discount on Idol if they agree to buy time in Fiancé.

"We don't negotiate individual unit costs or individual CPMs," says Andy Donchin, director of national broadcast for Carat USA. "We just negotiate the overall mix and the overall cost per thousand on a network schedule."

But there's a big difference between franchise shows, such as Survivor and Idol, and concept shows with a finite run, such as Joe Millionaire: A franchise's ratings and content are predictable. Advertisers know what they're getting.

Things get trickier when a network replaces a time-period regular with a short-term, untested reality series, a frequent practice. In that case, a network's ad sales department, ad buyers, and clients negotiate over whether the new show contains acceptable content and can deliver equal or better ratings than the slot's previous occupant.

So far, the networks have fared better with unscripted replacement shows, such as Fox's The Simple Life and My Big Fat Obnoxious Fiancé and NBC's Average Joe, than with the initial scripted shows. When the replacement show outperforms the previous effort, everyone wins.

It also explains why the networks have avoided introducing reality to advertisers during their upfront presentations: They want advertisers to bet on scripted shows, then switch to reality formats if ratings are poor. That way, networks end with higher CPMs during the upfronts, and reality shows help the nets avoid make-goods later if the scripted series fail.

Still, advertisers and buyers think they should pay less for most reality shows.

"If I were buying a schedule that was 100% Average Joe and Fear Factor and other programs that weren't scripted, but not American Idol and Survivor, I would expect the CPM to be significantly lower than what I pay for scripted shows," says Kris Magel, senior VP and group director, national broadcast, Optimedia. "These shows have buzz. It's a fun way to keep prime time fresh."

Magel wouldn't pay as much for newly minted hit The Apprentice, though, as for The West Wing. "The Apprentice is much less expensive for the network to produce. While The Apprentice has that kind of buzz, it's still not as much of a cultural phenomenon as American Idol."

Advertisers are growing used to Fear Factor, which ranks No. 18 in adults 18-49 and performs well with hard-to-reach young men. Some steer clear, though. "There are many clients who are queasy about that show," says one buyer. "It's highly limited in its ability to garner packaged-goods or food clients, so that reduces some of the demand."