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Pharmaceutical Spending Drives Moderate CBS Gains in TV’s Upfront Market

An influx of spending by pharmaceutical advertisers helped fuel moderate gains in volume at CBS in TV’s “upfront” advertising market, according to a media-buying executive and another person familiar with the annual negotiation for commercial time between TV networks and Madison Avenue.

The buying executive suggested CBS may have seen a small gain in the volume of ad commitments made for its primetime schedule. Using a figure of 1%, CBS may have secured between $2.28 billion and $2.63 billion for its primetime programming, compared with $2.26 billion and $2.6 billion in 2016. If so, it would mark the first time in two years that CBS has been able to gain more volume for primetime. Last year’s volume of commitments was flat with what CBS secured in 2016.

For CBS, the home of “Big Bang Theory” and “The Late Show with Stephen Colbert,” advertising demand from drug marketers proved key. These advertisers often need to run longer commercials to explain side effects of their various medications and they realize they can run those commercials more cheaply in daytime and late night, where commercial prices are cheaper. CBS was able to use that demand to sell packages of advertising across its schedule, the person familiar with the matter said. CBS also saw demand from financial-services and insurance companies; retailers and manufacturers of consumer packaged goods, said the person familiar with the matter,

The results illustrate some quirks of recent markets. Advertisers’ budgets for TV have increased slightly in recent years, according to media buying and TV ad-sales executives, but marketers remain wary of TV’s eroding viewership. Dropping ratings combined with increased demand is creating inflation that Madison Avenue may not be able to tamp down. While advertisers have a broad array of alternate venues to consider, including streaming video and social media, TV remains more reliable in some ways than other stuff. “Buyers had no place to go with these dollars,” said one ad buying executive.

The dynamics can be seen in the rates CBS sought, The network pressed for 9% to 10% increases in the cost of reaching 1,000 viewers, a measure known as a CPM that is integral to these annual  discussions between U.S. TV outlets and advertisers. In last year’s haggling, CBS pressed for similar price hikes.

CBS is home to some of TV’s most popular primetime shows, but its success with advertisers in the past two upfront sessions have been driven by gains in other parts of the day. In the morning, “CBS This Morning,” with its emphasis on a more serious presentation of news, has made the network more competitive with NBC’s “Today” and ABC’s “Good Morning America,” and its lower ratings can mean more efficient ad pricing. In late-night, Colbert’s program has become the most-watched among wee-hours entries, while James Corden’s “Late Late Show” has also proven popular.

 

 

 

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