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Scatter's Spigot Opens

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NEW YORK As buyers and sellers alike report an early surge in fourth-quarter ad spending, it's become clear that a confluence of unusual events are reshaping this year's scatter market -- a market that has been lackluster, if not moribund, for over a year.

The Q4 influx comes on the heels of the softest upfront market since 2001, and no one is yet suggesting anything near a full-scale recovery. Some buyers say they will wait a month or longer before jumping in to see if the uptick is an artificial creation, in hopes that prices will come down.

The vigorous scatter market comes on the heels of a delayed upfront, where buyers and sellers haggled fiercely over pricing in the recessionary climate. The result was a mid-September mash-up of the conclusion of upfront negotiations, the go-to-order process and the registering of Q4 scatter budgets, according to sources participating in the process.

The compressed sequence of events has yielded some surprising results. One positive effect: more money became available for upfront spending during the go-to-order process than expected, as advertisers added to their commitments when they went to order.

"The result was a kind of hybrid upfront-scatter market" that kicked in after Labor Day, said Harry Keeshan, evp, national broadcast at PHD. "Normally there are pretty clear lines when the upfront ends, when we go to order and then get into the scatter market. This year it kind of got all mushed into one."

In fact, some shops are still presenting their formal upfront buy recommendations to clients, said Christine Merrifield, svp, director of video investment and activations operations at MediaVest. As to scatter, she said, "We're encouraged that the market is getting healthier as far as demand."

Despite the surge, some buyers are holding back. "Will it continue? I'm betting not," said the top buyer at a big agency, of the early Q4 momentum. "I think the add-on money kind of ignited the market a little and I think it will slow down as we go forward."

It's not precisely clear how much additional money flowed from the client coffers to upfront add-ons, but several buyers indicated that many clients added double-digit percentages to their commitments. Those buyers estimated that overall the add-ons may account for two or three percentage points of total network inventory.

According to a report written last month by Credit Suisse senior analyst Spencer Wang, the networks only sold 69 percent of their available inventory in the upfront this year, about 10 percentage points less than they usually sell because the nets either couldn't get their price or the demand simply wasn't there. The last-minute add-on activity probably boosted the broadcast network sell-out rate to 71 or 72 percent, buyers said. That's still below the typical rate of between 75 to 80 percent.

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