Upfront way up

Mad Ave. spends $9.2 bil on TV buys

Network execs can throw a few extra steaks on the barbecue this Memorial Day, as the industry reported its richest upfront sales tally ever.

Madison Avenue pledged at least $9.2 billion to the six webs next season, snapping up ad time quicker than anyone expected.

“It’s the fastest I’ve ever seen it move,” NBC Television Network group prexy Randy Falco said. “Agencies and clients were ready for this market. Budgets were in order, and they knew where they wanted to make their bets. There’s not much uncertainty in the marketplace.”

ABC TV network prexy Alex Wallau marveled that media buyers were putting down hundreds of millions of ad dollars before even screening the nets’ pilots.

“Advertisers believe they need first and foremost network TV to market their brands to their consumers,” Wallau said.

Lesson learned

The frenzy could be a sign that advertisers are optimistic about the economy, particularly now that fighting has stopped in Iraq and the effects of 9/11 are receding.

Still, “It would be unfair to say this reveals an overall strength in the economy,” Falco warned. “But it’s at least an indicator and leads you to believe that advertisers believe there will be a lot of consumer activity in the six to nine months.”

It’s just as likely that advertisers are simply continuing to recover after learning a valuable lesson in 2001.

That was the year advertisers held back on upfront, sending a chill throughout the industry as the nets saw cost-per-thousand-impressions (CPM) declines and their overall tallies drop. But the move ultimately hurt advertisers, some of whom saw their fortunes decline even further after they removed their messages from the marketplace.

“I think what everybody talks about is they want to maintain their share of the marketplace,” one network sales chief said of the boom. “If the competition is out there advertising their services or introducing a new product, they want to maintain their voice.”

Hence the recovery. After 2001’s $6.8 billion intake, the market surprised many last year by posting a then-record $8.1 billion. And now it’s jumped 13.5% to $9.2 billion.

Entertainment strong

This time around, retail, pharmaceuticals, packaged goods, fast food and entertainment (particularly the surging DVD release campaigns) led the spending, while the slumping automotive business held back more than usual.

Surprised by the amount of cash flooding the upfront, net execs also say it’s likely advertisers moved some of their dollars traditionally reserved for the scatter marketplace into upfront.

NBC, the season leader among adults 18-49, took full advantage of the market: The Peacock made history by becoming the first net to cross the $3 billion mark in terms of upfront guarantees (up from 2002’s $2.7 billion). Net also posted its third highest CPM increase ever.

“It’s an extraordinary year,” Falco said. “NBC took nearly a third of the entire marketplace.”

NBC and Fox expect to post substantial CPM increases of between 15%-16%. Excluding special events and sports programming, ABC is expected to post a CPM increase of between 12%-14%.

The Eye, hoping to outpace NBC with CPM bumps in the 16%-18% range, waited the longest to start writing deals.

CBS will likely post around $2.2 billion in ad revenues (up from $1.9 billion last year). Fox, which only programs 15 hours, is expected to hit a solid $1.6 billion (up from $1.3 billion).

ABC execs said upfront ad revenues for its regular schedule will total about $1.7 billion (vs. $1.5 billion last year). But the Alphabet also hoped to spread the word that its “Monday Night Football” franchise and special events like the Oscars pumped that number up to $2.3 billion.

‘MNF’ tops for ABC

“Our No. 1 series is ‘Monday Night Football,’ ” Wallau said. “To not have that somehow play into our number is to really mislead in terms of what we’re getting accomplished. It’s very important to understand where our performance is.”

Rival nets would likely point out that their tallies don’t include primetime sporting events or specials –which would make it unfair to compare their totals to ABC’s $2.3 billion figure. Wallau said he’d be fine with other nets recalculating their totals to include those sports and specials numbers.

Meanwhile, among the newer nets, the WB will rake in $710 million thanks to CPM increases of 18%- 22%, while UPN is expected to land $210 million-$240 million.

As always, the record intake comes with a dose of irony. As the networks continue to lose viewers, advertisers need to spend more to reach the same number of eyeballs. As one network chief pointed out, the nets’ CPM gains have more than made up for ratings declines.

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