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Upfront strategies remain the same

Media buyers stay course in down economy

Broadcast ratings continue to decline and cable program viewing continues to rise, but don’t look for massive advertising revenue shifts during TV’s upfront advertising-selling period.

Even in this value-conscious, weakened economy, media buyers say steady media planning rules still apply.

“We don’t just buy cable because broadcast ratings are eroding,” says Shelley Watson, senior VP and director of entertainment advertising at Santa Monica, Calif.-based media agency RPA. “Smart, savvy buyers follow the programming. It’s not simply broadcast vs. cable.”

Currently many cable series are big success stories, growing their overall pool of ratings points. While cable has gained about 4% or so in viewership this year, broadcast ratings are averaging around a 10% decline.

For cable, this is good and bad news.

The good is that growth from big, original cable shows — TNT’s “The Closer,” USA Network’s “Burn Notice,” Lifetime’s “Army Wives” and FX’s “Damages,” for example — gives advertisers access to quality TV dramas.

“With a lot of investment in programming, cable becomes more of a value option,” says Mel Berning, exec VP of advertising sales for A&E Television Networks.

The downside of cable is that it adheres to supply-and-demand formulas — just like everything else. Says Brad Adgate, senior VP and corporate media director for Horizon Media: “Cable has a lot more inventory to sell. That can work against them.” As a result, buyers say pricing should drop.

Also, cable networks compete with each other.

“If I don’t want to buy ‘The Closer,’ I can buy ‘Army Wives,’ ” says Gary Carr, senior VP of national broadcast for New York media buyer TargetCast. “They are all cannibalizing each other. There are almost no must-buys in cable.”

Berning says this is a common complaint of media-buying executives: “They say they are always frustrated by more supply. ‘You should be cheaper,’ they say.”

Overall, cable ad revenue continues to grow. Cable advertising upfront dollars are now about $7 billion-$7.2 billion, with broadcast at $8.5 billion-$9 billion, according to estimates.

Specifically, media sellers examine cost-per-thousand viewer prices for a particular program to gauge more closely its ad performance. Generally, cable CPM pricing is 50% to 65% cheaper than broadcast.

Every year, cable tries to narrow this gap. TV marketers have been giving cable somewhat better-than-average increases — 3%-10% — during the last several years. TV advertisers will never accept 50% increases to be near parity with the broadcast networks.

“Maybe cable networks are priced right, but broadcast networks are priced too high,” one media agency executive says.

David Levy, president of Turner Broadcasting Sales and Turner Sports, believes TV marketers should readjust their media budgets — especially this upfront period, as many businesses are undergoing big transformations due to the weak economy.

“These (broadcast) CPMs come from a time where there was complete dominance by broadcast over cable,” he says. “In today’s world, that’s not the case. CPMs need to come more (in alignment to their) relationship with ratings. We need to balance the budget.”

Levy notes there is no difference in pricing for cable and broadcast when it comes to sports, news or kids programming. Why should there be for entertainment programming?

“If it’s great television, consumers don’t care about whether it is on broadcast (or) cable,” he says.

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