TV’s upfront advertising sales market is starting to move.
CBS, Turner, Viacom and Discovery have begun to sell advance advertising commitments for their programming schedules, according to media buying executives and other people familiar with the tone and pace of negotiations. These people suggest CBS has been seeking mid-to-high single-digit percentage increases in the cost of reaching 1,000 viewers – a measure also known as a CPM that is central to these annual talks between TV networks and Madison Avenue. Cable networks, meanwhile, have been trying to press for CPM hikes that tuck under what they perceive broadcasters may be getting, these people said.
The early-stage haggle – people caution the market has yet to get into full gear – suggests advertisers may have more leverage this year than in 2016, when big consumer-products companies like Procter & Gamble moved ad dollars that had previously been earmarked for digital media back into TV. In 2016, the broadcast networks pressed for CPM increases that ranged in the high-single digit to low double-digit percentages. In 2017, however, buyers have indicated new wariness over the migration of viewers from TV to streaming video and mobile devices. While the networks are pressing for CPM hikes of 8% to 9%, buyers say they are holding firm against the request.
The nation’s five big English-language broadcast networks last year secured between $8.41 billion and $9.25 billion in advance ad commitments for primetime as part of the annual “upfront” market, according to Variety estimates – the first time in three years they’ve managed to break the $9 billion mark. The figures, of course, represent indications of spend, not cold, hard cash. Those numbers typically show up in some form in year-end earnings reports.
To be sure, many advertisers and networks remain in heated conversations. Walt Disney’s ABC is said to be engaged with buyers, while Fox Networks Group is leaning hard on sports programming, working to renew multi-year pacts with major sponsors of its National Football League and Major League Baseball broadcasts. Omnicom Group’s OMD and Publicis Groupe’s Publicis Media are said to be holding active discussions with various networks, while WPP’s GroupM is believed to be taking a methodical approach to the talks, holding firm against CPM hikes above a certain level.
CBS, Viacom, Discovery and Turner declined to make executives available for comment. ABC and Fox did not respond to queries seeking comment.
One buying executive suggested the market is not likely to move more significantly until NBCUniversal’s position is known more fully. The Comcast-owned company is selling three major sporting events – the 2018 Super Bowl, the Winter Olympics and the World Cup – and has a broad portfolio of inventory to manage. NBCUniversal is said to be seeking CPM increases in the high-single-digit percentage range.
The networks face some headwinds. One executive familiar with the proceedings suggested spending by automotive manufacturers and movie studios – two categories that are significant sponsors of TV programs – is down, while ad spending from retailers is seen as “a mixed bag.” This executive said consumer-product manufacturers and alcohol marketers appeared to be spending more money in the 2017 negotiations.