Pumped-Up Prices, Aggressive Buying Forecast for Upfront

Scatter pricing is at a 25-30 percent premium over last year’s upfront levels, fueling media-spending expectations in advance of the spring TV upfront market, according to attendees at Merrill Lynch’s annual advertising, publishing and education conference in New York last week.

The automotive, pharmaceutical and motion- picture sectors are all strong media buyers this year, while the financial category continues to be weak. Panelists said the movie industry is willing to spend aggressively for upfront time in the second and fourth quarters, and so if Hollywood studios come into the upfront early, they will drive up prices for other marketers. Agency media buyers are expected to try to limit CPM increases this year by purchasing more time on cable.

The conference, hosted by ML analyst Lauren Rich Fine, drew senior executives from Aegis, Publicis, Omnicom and WPP. Noticeably absent were IPG’s CEO and CFO; Bill Cella, chairman of media buying firm Magna Global, represented the company instead.

In advance of the meeting, Fine lowered her industry growth forecast for this year, saying she expects a growth of 3.7 percent in the U.S.—excluding direct mail—rather than the 4 percent she previously predicted. According to Fine, global growth will be 2.7 percent, less than the 3 percent formerly predicted. In making the change, Fine cited the higher base created by a stronger-than-expected fourth quarter, the European economy’s deterioration and the industry’s tentative start in 2003. She expects growth in 2004 to be 6 percent in the U.S. and 5 percent globally.

Her forecasts suggest U.S. growth will be in line with the gross domestic product in 2003 and slightly ahead of the GDP in 2004.