EXAMPLE 2: Matt Lauer Allegations & Termination
The high volume of media sold in the upfront buying season can have a revenue insulating effect for a network in times of controversy, so long as that controversy is short-lived and the network can quickly pivot from the news cycle.
QUESTION: Did the Matt Lauer controversy affect unit costs for The Today Show?
Analyzing the combination ad cost data prior to the Matt Lauer revelations in November 2017, we see that the show was already trending 12% under the previous year, with unit costs averaging between $44,502 and $52,993 during Q4 2017. The weeks following his termination saw a decline in unit costs. However, when we take a deeper dive into our SQAD data, these declines appear to be consistent with standard holiday season adjustments.
The following analysis was done for The Today Show during the 7AM-9AM time block.
||Q4 Average Before Holidays
||% Drop During Holidays
||Q1 Average After Holidays (Rebound)
||% Difference Before vs. After Holidays
||$44,502 – $52,993
||$35,634 – $42,434
||$50,368 – $60,113
||$38,834 – $46,347
||$50,237 – $58,997
||$40,248 – $47,266
We first look at the combination numbers for the show over the course of the past three years.
The Seasonal Holiday Dip
- Q4 2017 unit costs during the holidays (Week of 12/18 to the Week of 12/25) dropped more than 50% from $43,728 – $52,072 to $21,132 – $25,164.
- In Q4 2016, we see a 46.8% drop in unit costs during the holidays.
- Looking back yet another year to Q4 2015, unit costs fell a similar 51% during the holidays.
Based on historical year-over-year data, the drop in unit costs around the time of the Matt Lauer controversy is most likely related to seasonal adjustments. With that said, there is something interesting to see in the recovery data after the holiday declines.
- In Q1 2018, unit costs averaged between $35,741 and $42,561, 19.9% lower than the pre-holiday rates.
- In Q1 2017, the post-holiday rebound was 22.9% lower than pre-season numbers.
- The rebound in Q1 2016 was 19.9% lower than pre-holiday rates.
Year-Over-Year Recovery Performance
What’s interesting to note is that the post-holiday recovery for 2017-2018 season was better than the 2016-2017 season, narrowing the unit cost difference between the two years (see trends for the orange and blue lines in Graph 2).
- Prior to the holiday season decline, Q4 2017 average unit costs were trending 12% less than the Q4 2016 average unit costs.
- After the holidays, Q1 2018 unit costs came in only 8.4% under the Q1 2017 average unit costs.
- In 2018, The Today Show improved their Q4/Q1 rebound trend by about 4% year-over-year.
We cannot specifically attribute the improved post-holiday recovery trend for Q1 2018 specifically to the speedy resolution of the Matt Lauer controversy. There are many factors in play for the Q1 2018 numbers beyond how NBC managed the revelations, one of which includes the Winter Olympic broadcast on NBC.
Year-over-Year Recovery Performance
To support the data showing a better-than-average post-holiday recovery, the scatter data from the same time period last year shows some key details about the existing market conditions before and after the Lauer controversy:
- Before the holiday season and during the controversy, Q4 2017 scatter unit costs were trending 1.4% better than the Q4 2016 average unit costs.
- After the holidays, the year-over-year costs improved further with Q1 2018 scatter costs soaring 16% higher than Q1 2017 costs.
- The Today Show improved its Q4/Q1 scatter rebound trend by 15% year-over-year despite controversies surrounding Matt Lauer and the program.
The scatter year-over-year trend confirms the combination trend showing that the 2018 post-holiday season experienced a better recovery rate than the year prior. In the overall numbers, we see a better than expected post-holiday market correction in scatter ad costs directly after the Lauer issue.
ANSWER: It is unlikely the Matt Lauer controversy had a negative effect on the average unit costs for The Today Show.
Due to the overall consistency in trends analyzed across the years (in both combination and scatter), it appears that NBC was shielded from the negative effects of the controversy because of the protective power of upfront buying. It is possible that the data indicates the speed with which NBC handled the Matt Lauer revelations, combined with the added marketer interest in the network’s ad inventory during the Olympic Games, contributed to a better-than-expected Q1 performance in 2018.