Annually, agencies and advertisers alike, have pivotal conversations with broadcast (and cable) networks pricing for the upcoming year.
This timeframe is simply called “the upfront” in the advertising business. The upfront is the season of purchasing inventory for the forthcoming year. It has been the practice over the years that advanced buying provides more cost savings. Networks typically sell up to 75 percent of their available inventory during this period. In New York, Chicago, Los Angeles, in particular, networks showcase to ad agencies their upcoming programming to gauge buyer interest at a viewing party. The more interested the buyers are of the programming, the better change for higher pricing for the program.
This upfront historically yields many long hours of discussion that take place between buyers (agencies and advertisers) and the sellers (networks). This is when price, daypart, and programming are discussed at length.
Buyers are typically vocal about whether the programming viewed will make it past a few episodes aired. After all, there is a direct relationship between viewers watching these programs and what price a buyer should pay for said programming. Just think, “Empire.” This show aired the back half of the season for FOX and yet its ratings (% of viewers) continued to grow with each episode. This means, if you want in on a show like this in 2016, expect to pay premium pricing.
Below provides a snapshot of the emerging results as some of these deals have concluded. Guess what? It’s pretty close to what many in the advertising business predicted; single to low digit increased CPMs (cost-per-thousand) viewers:
- ABC, CBS and NBC: expect CPM increases range 3% - 6%
- FOX, on the other hand, is flat to -2% reduction
- Many cable networks discussions are still in progress and will conclude later than the broadcast networks; such as: FOX and NBC.
One can glean from the above CPMs that the marketplace is soft. Agencies and advertisers are being very cautious about large upfront commitments for 2016.
For small business owners, before you start counting savings, please investigate whether this is really good news. It may only be good news if one is actively participating in the upfront. Since some of the major Advertisers are inking lower upfront purchases (lower commercial inventory), it is expected that this move may drive up cost when engaging in quarter-to-quarter purchasing post upfront (a.k.a. scatter market).
One may ask why this doesn’t seem much of a shock? Mainly, the market has been fairly soft given the networks’ recent performance. They continue to experience viewership erosion in key dayparts. It is assumed that the networks will seek to package digital/social media/programmatic opportunities to stave off overall investment declines.
Many small business owners may have experienced the actuality of being ignored in the past by sales representatives working for networks and/or their local market affiliates. But get ready to receive cold callers seeking a moment of your time. If that happens, seize the moment to secure better rates!
Adele Lassere is a marketing/advertising consultant with 20+ years experience, freelance writer and author of “Elements of Buying” (self-help advertising guide); available at Amazon.com. Adele was listed as Black Enterprise’s 2011 Top Execs in Marketing & Advertising and Black Enterprise’s 2013 Top Women Executives in Advertising & Marketing. Contact: [email protected]
