Upfront Posturing Has Early Start

Leslie Moonves isn’t the lone network executive forecasting a strong upfront market this year — the CEO of CBS is just the only one predicting it publicly. Sources at other networks also expect a strong market based on current demand for scatter time and the fact few advertisers are opting out of earlier purchase commitments.

Last week, however, agency executives rebuffed such talk, countering that the relative strength or weakness of the scatter market is no longer a sure sign of things to come in the upfront, given the growing number of media channels open to advertisers.

So begins the annual pre-upfront dance.

Moonves told attendees at a Credit Suisse investors conference last week that the Tiffany network will demand “strong double-digit” price hikes during this year’s upfront talks, based on its popular programming schedule — including Tuesday night stalwart NCIS and CSI: Crime Scene Investigation-and the current robust scatter market where advertisers are paying between 20 and 30 percent or more for ads than they paid for 2009 upfront inventory.

Buyers noted that last year Moonves also took a public stand proclaiming that CBS would achieve price hikes during the recession. Instead, CBS accepted price decreases in the 3 or 4 percent range, while other networks accepted even bigger decreases. In a bid to partially offset the price cuts, CBS sold less time in the upfront last year, a tactic Moonves said CBS would implement this year if advertisers don’t pay double-digit rate hikes.

Networks, countered buyers, are no longer must-buys given other outlets on which to place dollars. They also point to continuing network erosion of the audiences most coveted by advertisers. A season-to-date analysis through mid-February by Havas’ MPG of Nielsen ratings shows that the 18-to-49-year-old audience across CBS, ABC, NBC and Fox dropped 2 percent. (CBS, however, is up in the demo by 3 percent.)

According Steve Farella, CEO of New York-based TargetCast tcm, nothing in the performance of the major networks this season justifies price increases “anywhere near double digits.” He added, “If we see that from the networks, we’re just moving the money.”

Antony Young, CEO of Publicis Groupe’s Optimedia, agreed. “It’s going to be very hard to convince clients to pay more for less” this year, he said, suggesting that prices are likely to remain flat versus last year.  “There are lots of options to buy rating points.”

Even third-party observers say strong demand in scatter doesn’t ensure higher upfront pricing. Mike Kelley, partner with PricewaterhouseCoopers’  entertainment, media and communications practice in New York, says the networks will have to demonstrate strong return on investment for advertisers if they expect to get any price hikes, let alone double-digit increases. And after years of talking about integration across multiple platforms and 360 offerings, the nets have to start walking the walk, he said.

“There would have to be a strong direct line from impression to consumer activation to transaction and even management of that [customer] relationship” to justify rate increases, he said. “If they’re not showing that, forget it.”