TV’s upfront ad-sales market is getting into gear.
NBC, ABC and Fox have all started to sell advance advertising commitments for their coming programming schedules, according to six executives familiar with the pace of this annual haggle session between U.S. TV networks and Madison Avenue. They join CBS, whose sales activity became more noticeable late last week.
When it comes to primetime ad slots, these executives suggest, NBCUniversal has been seeking some of the industry’s highest increases in the cost of reaching 1,000 viewers, a measure known as a CPM that is central to this yearly sales market. NBC is pressing for CPM hikes of between 12% to 13%, and maybe even more, these executives said. One media buyer said advertisers in some cases have tried to resist the rates. “Why would someone pay that” at a time when linear viewership is eroding and digital video offers a solid alternate route to reach consumers, this executive asked. In 2017, NBCUniversal sought CPM hikes in the high-single-digit percentage range – meaning that it is asking its sponsors in 2018 to consider paying higher rates than last year’s benchmarks.
ABC, meanwhile, has been seeking CPM increases of between 10% and 11%, these executives said. In 2017, ABC sought CPM increases of between 8.5% and 10%. Fox for its part has put its main focus on selling advertising in its sports properties. The 21st Century Fox-owned network recently signed a five-year deal to broadcast the entire annual slate of “Thursday Night Football” games. The CW has been engaged with buyers since last week.
NBCUniversal, ABC and Fox declined to make executives available to comment on the state of upfront progress.
Billions of dollars in ad support are at stake. The nation’s five English-language broadcast networks last year attracted between $8.69 billion and $9.55 billion in advance commitments for their primetime schedules, compared with between $8.41 billion and $9.25 billion in 2016. That means they eked out an approximate 3% to 4% gain in volume of advance advertising commitments, according to Variety estimates. Those results were robust, possibly marking the most they’ve gleaned since 2004, when six broadcast networks (the WB and UPN were still around, in place of CW) secured around $9.5 billion.
There are several factors at play that could slow the upfront down. Advertisers have begun to rely more heavily on rival forms of media, including social, mobile and digital. What’s more, a number of big marketers have placed media accounts into review, which is likely to place pressure on their current agencies to secure the lowest CPM increases possible.
More fog could lie ahead. The future of many of the big TV companies is unknown: AT&T is hoping to gain approval of its bid to buy Time Warner, owner of Turner. 21st Century’s Fox effort to sell the bulk of its assets to Disney faces a rival bid from Comcast. And CBS management is battling with its controlling shareholder, National Amusements Inc., raising speculation over who will lead the company down the road. Ad sales teams may not know whether they are trying to meet current management’s goals or working to impress whoever may be running the company in the not-too-distant future.
Both NBCU and Fox are trying to sell new formats that they believe will give sponsors more traction. The companies intend to cut back ad time in specific programs, a technique that is said to lend a boost to the commercials that do run, since viewers will see far fewer ad messages during a show. Buyers say the prices being sought for these new ideas are high, though people familiar with the networks say interest in the concepts is robust.