Network pacts ad agency Group M
Now that the major broadcasters have wrapped the bulk of their upfront business for the 2007-08 season, it’s cable’s turn.
Lifetime Television said Tuesday it has sealed a $70 million ad deal with ad agency Group M, the second major deal struck by the agency and a cable network with deals based on the new standard of commercial ratings rather than program ratings.
Two weeks ago, Group M kicked off the upfronts with an estimated $800 million deal with NBC U that included buys on cable nets Bravo, Sci Fi and USA, but sources said the talks are heating up after the conclusion of the network upfront last week.
With the Group M deal, Lifetime execs reported the net had sold 50% of the inventory it expects to sell in the upfront, securing ad rate increases of 7% to 9%.
The majority of the deals were cut on the “live-plus-three” commercial ratings, which includes viewers that watch the ads live and within the first three days on DVR playback.
The conversion from traditional program to commercial ratings — in which the nets’ advertising guarantees are based on the ratings for the commercial spots specifically rather than the average ratings for a program — is a sea change for Madison Avenue and has been a dicey one for some cablers with young viewers who don’t necessarily stick around for the ads.
“There is a supply issue with ratings erosion and the switch from program to commercial ratings,” said Chris Boothe, chief activation officer for Starcom, which last week inked a commercial ratings deal with Discovery Networks and Nickelodeon.
Cable loses about 10% of its auds during the commercials, compared to broadcast, which loses about 5%. It’s one of few instances in the ad business where having an older aud actually helps, because they are more likely to watch the ads.
Particularly afflicted are young-skewing nets like MTV, VH1 and E! Network.
“Fortunately for us, we don’t lose too much in the translation,” said SVP of ad sales John Matluck. “Once we started to negotiate, it seemed like everyone wanted commercial ratings.”
Sales were helped, Matluck said, by the successful debut of “Army Wives,” which debuted four weeks ago as the highest-rated series in the net’s 23-year history. The new series is getting close to 3 million viewers an episode, according to Nielsen Media Research.