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TV Upfront Ad Market Stirs: Networks Making Deals At Modest Price Gains

By Wayne Friedman, June 4, 2014

TV’s upfront advertising market has started to move, with virtually all broadcast networks in the deal-making process — with advertising viewer prices more or less in line with modest growth estimates.

CBS, Fox, ABC, and NBC are said to have written some deals with movie studios and automotive moving first — which is customary with most upfront TV advertising markets, according to media executives.

Projections are that the price per thousand viewers (CPMs) will grow modestly — anywhere from 4% to 8%, with NBC said to be getting the highest levels due to its strong ratings performance this season. Overall, these increases are slightly less than the upfront pulled in a year ago.

One media executive said NBC was at different stages in the deal-making process with around 50% of the overall TV advertising market, which includes completed upfront TV agreements: “It’s moving swiftly.”

CBS, ABC, NBC and Fox spokespeople had no comment about upfront negotiations.

In addition to achieving the best 18-49 prime-time results of any network this season, NBC has the benefit of being underpriced compared to the rest of the marketplace, seeking to raise its average prime-time CPMs — especially for 18-49 viewers and 25-54 viewers.

NBC’s prime-time CPMs have been generally lower than other networks, especially in recent years, due to weak program rating performances. Increasingly, NBC has been looking to package more of its cable networks into marketers’ overall upfront media buys.

According to Tarrytown, NY-based SQAD, for 2013, TV broadcast CPMs averaged $44.11 for adults 18-49, and $15.63 for 18-49 viewers for cable TV. Another estimate, from Media Dynamics, says overall broadcast network prime-time CPMs average around $19.00 in 2013.

Analysts believe the upfront market to be weaker overall, especially for the broadcast networks, because of expected lower upfront dollar volume — around 2% or so — from a year ago, around $9.2 billion. Cable networks, on the other hand, should rise a couple of percentage points from just under $10 billion.

Says one veteran media buying executive: “No one has seen enough registration to gauge this market.  People are looking at this market as similar to last year — which is why those numbers are floating around. Volume seems down in broadcast [and there’s a] shift to cable — again probably similar to last year.”

At least one media agency group, GroupM, is making upfront deals based on the average commercial ratings plus seven days of time shifted data (C7). That is a shift from the virtual industry standard of the last seven years, in which media agencies have made deals based on the average commercial ratings plus three days of time-shifted data (C3).

Still, other media agencies are not looking to change their audience guarantee currency with the TV networks to a C7 metric at this time.