NEW YORK — Network prime-time ad sales activity kicked into high gear Thursday, with most major webs seeking steep rate increases from movie studios and auto makers in a precursor to broader sales activity.
Total size of the so-called upfront market — which represents the bulk of ad sales for the 1997-98 season beginning in September — remains unclear, but buyers and sellers have been forecasting at least a 5% gain that would put the take at $6 billion for primetime.
A robust ad market, coupled with declining network audiences, is fueling demand for available rating points and driving prices upward. As a result, the classic supply-and-demand scenario again has advertisers paying more for fewer eyeballs.
And movie studios typically pay the highest rates, in exchange for scheduling flexibility and the need for key pre-weekend spots like NBC’s Thursday night lineup. Despite high initial requests for 18% to 20% price hikes for movie ads by NBC, Fox and the WB, buyers expect the studios to come in at pricing 14% to 15% above last year’s levels in primetime. Similarly, auto makers expect to pay 12%, vs. asking prices of 15% or more above last year.
Daytime ad sales have largely been completed over the past two or three days, with dollar volume flat at $1.2 billion and cost-per-thousand (or CPM) hikes in the 9% to 11% range. NBC’s unit rates are slightly higher because of its lower base pricing.
With the majority of news sales completed, volume is up slightly to about $300 million with 5% to 8% CPM gains. The kids market moved last February with Saturday morning sked announcements.
But it’s prime that shapes the market, and ABC’s decision to move early, buyers said, reflected the perception that most weren’t enthusiastic about the web’s prospects with its fall schedule. While ABC sources are claiming half its inventory already has been sold at $750 million, which paces the network even vs. last year, buying sources believe the network has sold no more than $600 million.
In posturing typical of this time of year, the network camp claims buyers actively sought early deals, while buyers said ABC aggressively shopped for early business to protect its market share before NBC kicks into sales overdrive.
ABC, given its ratings woes, is under pressure from corporate management to at least equal last year’s $1.6 billion take, and the Alphabet web is asking for steep increases but so far settling in the 8% to 9% range, still a reasonable performance.
ABC sales prexy Marvin Goldsmith declined comment, except to say, “We are doing business with some people at rates we find mutually acceptable.”
But one knowledgeable buyer said Goldsmith “made a fundamental decision to build himself a position early on that will allow him to play the balance of the market very selectively” without panic selling.
Fox continues to be bullish in seeking price hikes based on strengthened 18-to-49 demos, while CBS is being “rational” with more modest increases for its older-skewing audience.
Although new fall lineups do affect proportionate shares of ad dollars earned by each network, most network pricing is based on prior-year performance and the base pricing already in effect. Therefore, networks like ABC, which historically have had high base prices relative to competitors, will get lower CPM gains on a percentage basis.
The market should wrap up early next week.