Networks, Buyers Seeking Light at End of Upfront Tunnel
Upfront ‘09 will be remembered as one of the more protracted negotiating periods in advertising history. Why wouldn’t it be? We’re in the midst of the worst recession in decades, and that means big TV spenders want to see price cuts of the kind they see at their local Macy’s and at the auto dealership on the strip mall.
Even while ratings were down at the broadcast networks, advertisers were forced into paying higher prices during upfront ‘08. Now it’s payback time; they’re saying show us the rollbacks.
The broadcast networks might well respond that they’ve got much better product this year, the economy is only going to get better and if you don’t like the prices, see you in scatter. If the ratings go down again next season, scarcity itself would mandate decent CPM rates. Cable programmers argue they are already offering value for money given their pricing discount to broadcast. Plus they’re over-delivering the viewers that are moving off broadcast, so why should they take a pay cut? One cable seller told me the arithmetic just isn’t there for rollbacks.
Few negotiators are willing to even define the terms of the game. One major cable sales executive said last week he wanted the buy side to explain exactly what “steep declines” meant. The Los Angeles Times’ Meg James and Advertising Age’s Brian Steinberg both reported this week on the upfront stall. But as July 4 nears, there is also a sense that it is time to break the deadlock and start the upfront talks as I reported yesterday.
Here is my prediction for what will ultimately shake out: It will be a negative marketplace for everyone, but CPMs will be down a couple of points. Worst-case scenario is a negative 5 in broadcast. Just for comparison purposes, TNS reported that ad spending in network TV declined by 4.2% in the first quarter of 2009, with cable TV down 2.7%.
And if anyone is going to come out this marketplace flat, it is CBS, which has the Super Bowl acting as a carrot and stick. OK, the perennially solid CBS means the Eye Network has more to sell than its broadcast brethren and that could push prices downward, but it would be a tough argument to suggest they should be punished for holding up their end. Fears that the network’s procedural-heavy schedule might be getting stale must surely have dissipated with The Mentalist’s performance and upcoming bankers like The Good Wife and Undercover Boss. Can we all convene at CMO Camp David now?