Buyers Remorse: Want Make Goods, Not Scatter

NEW YORK Media buyers' simmering resentment toward the broadcast networks for continuing to sell scatter inventory instead of offering those slots as make goods for the much lower than anticipated prime-time ratings yielded by the new C3 metric has come to a boil.Several buyers said the networks have sold so much fourth-quarter ad inventory that many retailers who need make goods now, as the holiday season approaches, can't be accommodated. The buying execs also said that although many retailers need pod exclusivity, most pods are already filled with retail ads through the end of the fourth quarter."If an advertiser can't get the gross rating points for their commercials when they need them, what is the point of running the ads at all?" said one media buyer who did not want to speak for attribution.Despite the rosy picture the broadcast networks have painted of viewership and heavy advertiser demand for inventory in the nearly sold-out fourth-quarter ad marketplace in prime time, buyers contend there are significant ratings shortfalls under the new C3 metric, which the networks are trying to play down as a minor research glitch.Through the first five weeks of the prime-time season, the live program ratings for the five broadcast networks are down nearly 10 percent overall, total viewers have slipped 8 percent, and 18-49 demo ratings are down 12 percent. And though those numbers are program ratings, not commercial ratings, they can be correlated to five-week averages for C3 ratings, even though only two weeks of C3 ratings have been issued. That's because if you take the commercial ratings and add three days of DVR viewing (C3), then deduct the number of viewers who do not watch the commercials in the three-day-delayed mode, the C3 ratings almost mirror live program ratings.Adding to buyers' anger is their position that the networks artificially tightened the marketplace and inflated pricing by carrying over make goods from last season into this year. The networks traditionally have been allowed to delay giving make goods from quarter to quarter, but are supposed to complete their make-good payouts by the end of each season. Carrying them over into this season gobbled up avails and sent prices soaring to as much as 50 percent higher than those set in the upfronts. "The networks did not even start offering make goods until about two weeks ago, even though we requested them before that for some of our clients. And now they're trying to hold out giving them until first quarter," said one media buyer, who did not want to speak for attribution. The reason could be that the networks just don't have enough inventory left to cover the ratings shortfalls.One executive said his network currently owes about 3 percent more make goods than they anticipated when they made their upfront guarantees. But agency executives said that figure seems low. "It's really important that the broadcast networks show some restraint and stop selling all their remaining fourth-quarter inventory and start offering more make goods right now," said a buyer, adding that only the CW has stopped selling fourth-quarter advertising and started doling out make goods. "The future of the upfront process is at stake here. If the networks can't deliver on their guarantees and delay make goods again like they did last season, the whole upfront process is going to be tainted going forward. Right now the networks see an opportunity to pad their bottom line before the end of the year by selling all this high-priced scatter in a market they artificially tightened. And they don't want to worry about make goods until later in the season," said another buyer speaking on the condition of anonymity. "But as make goods build up, they may incur too many to make up."However, the networks don't believe the situation is as bad as it is being portrayed by the agencies. Viewership, they say, is down only 2 percent compared to last season if seven-day DVR viewing is factored in. And because Nielsen Media Research added 11 percent more DVR homes to its viewing sample this season, apples-to-apples comparisons to last year's live-viewing numbers are impossible. "Viewing patterns have not changed dramatically since last season," one network sales executive said. "But Nielsen's sample has changed and that is what is creating some confusion. Eventually, as more DVR homes are added to the sample, it will sort itself out."But buyers say until it does, the networks can't keep stalling on handing out make goods."The only network that is going to be able to get out from under a pile of make goods in the first and second quarters is Fox, which can simply add several hours of American Idol tryouts to its schedule and make advertisers whole if they need to," one buyer said.Another agency executive warned that if the networks' scatter prices continue to stay at the current inflated levels, and ratings continue to decline, there will be a point where advertisers begin to rethink their plans and possibly start looking at cable or other media platforms. "There will be a breaking point," the exec said.

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Buyers Remorse: Want Make Goods, Not Scatter

John Consoli

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John Consoli