Dame Fortune is a flaky old broad and deaf as an adder, and anyone who thrives on her favor will eventually come to understand the dual meaning of the term “standard deviation.” Kenny Rogers said as much in his 1978 hit, “The Gambler.”
If the 2009-10 TV upfront market was all about knowin’ when to hold ’em and knowin’ when to fold ’em, it appears we won’t be able to assess exactly how well the networks played their collective hand until next year. About $2 billion got left on the table, leaving ad sales bosses to go all in on what they hope will be a rock-solid scatter market. So far, the bet seems to be paying off.
Like hopes for an economic recovery, the national TV ad marketplace is a fragile thing, and yet buyers and sellers alike are reporting an early surge in fourth-quarter spending. Scatter pricing in broadcast, so far, is said to be between 5 percent and 8 percent higher than upfront rates, said buyers, as clients who sat out the summer poker tourney are anteing up again. Lured by a promising slate of new series (and a subsequent run of solid deliveries), marketers who suddenly found a few extra dollars moved quickly to pick up time on the fall schedule.
Of course, the chips are stacking up in the wake of the softest upfront market since 2001, when broadcasters swallowed CPM rollbacks between 2 percent and 8 percent off the prior-year rates. And while the increased activity is a welcome sign, no one is exactly belting out “Happy Days Are Here Again” just yet, either.
For example, some media buyers said they will wait a month or longer before jumping into the fray, stepping back a bit in order to gauge the durability of the newly bullish market. Those who are holding back suggest the uptick may be an artificial construct, a rogue storm cell formed by the confluence of unusual events that shaped this year’s market.
The lollygagging upfront threw off client presentations and more than a few internal clocks, causing the holds-to-orders cycle to bleed into the registering of Q4 scatter budgets, according to sources actively participating in the process. In some cases, clients who had cut costs in Q2 and Q3 began looking to add to their commitments when they went to order. “The timing made it possible for some advertisers to try and scarf up some extra time, but at upfront pricing,” said one national TV buyer who declined to speak for attribution. “That sort of thing has been met with mixed results. Some [networks] may be in a position where they’ll take whatever money gets thrown their way, even at the expense of getting the modest increases of scatter.”
For want of a better word, the compression gave rise to a mash-up marketplace. “The result was a kind of hybrid upfront-scatter market” that kicked in after Labor Day, explained Harry Keeshan, executive vp, national broadcast, 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, senior vp, director of video investment and activations and operations, MediaVest. And still, the dollars keep rolling in. “There’s money in the marketplace. We’re encouraged that the market is getting healthier as far as demand,” she said.
Despite the recent surge in activity, some buyers don’t see this as a return to form. “Will it continue? I’m betting not,” said the top buyer at a media agency. “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 clear how much additional money flowed from 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 2-3 percentage points of total network inventory.
According to a recent report by Credit Suisse senior analyst Spencer Wang, the networks sold 69 percent of their available inventory in the upfront this year, or about 10 percentage points off plumb. The last-minute add-on activity probably boosted broadcast network sell-out rate to 71-72 percent, buyers said. That’s still well below the typical sell-out rate (between 75-80 percent).
If broadcast is getting solid scatter in- creases, top-tier cable net sales chiefs said they’re getting even higher rates. “We’re seeing healthy CPM gains,” said Turner ad sales chief David Levy. “We’re looking at high-single to double-digit increases over what we booked in the upfront.”
Short of consulting a Magic 8 Ball, there’s no way to project how the rest of the year will play out. Agencies are still putting together their seasonal buys, and, as has been the case for the past several quarters, clients continue to make decisions close to airdate. As such, it’s anyone’s guess how a network will perform from one week to the next.
Broadcast and cable are both enjoying a flurry of auto and retail activity. “We are spending more this quarter than we did in last year’s fourth quarter, but we also have less brands to focus on,” a General Motors rep said. “How that translates to next year is to be seen, but we feel our allocations…adequately support our four core brands.”
Among the other big fish jacking up their media spend through the end of the year are General Mills, Toyota and Target. In addition, a lot of credit card money is in play, courtesy of new cards/campaigns from American Express, Chase and Discover.
As the clients continue to gather at the gaming tables, the general mood is one of restrained optimism. “I’m encouraged, but not overly so,” said PHD’s Keeshan. “It will continue to be a trying year.”