Fewer people are watching traditional primetime TV. Madison Avenue is rushing to spend money on the ones that still do.
NBC, CBS, ABC, Fox and the CW have all started to sell advance advertising commitments as part of TV’s annual upfront market, according to six people familiar with the tone of negotiations. And while the ongoing exodus of TV viewers to streaming services might make one think the medium’s relevance is waning, advertisers apparently feel differently.
People on both sides of the bargaining table report that the networks are pressing for deals that call for ad rates that are in many cases greater than what they paid last year. Deals call for a 12% to 17% increase in the cost of reaching 1,000 viewers, a measure known as a CPM that is central to these yearly talks between TV networks and advertisers over the cost of ad time -though it’s not clear whether advertisers will agree to those terms. One person suggested clients are still insisting on no more than 12%.
Each network declined to make executives available to comment on the pace of their current sales process.
The TV networks are pressing a surprising advantage: They have fewer viewers to “sell” to advertisers but are at the same time seeing a surge in demand for TV commercials. Streaming services run few ads – sometimes none. And marketers continue to have concerns about committing dollars to new venues like Facebook and YouTube, according to these executives, citing issues with the quality of content or measurement.
“The networks are taking a really hard line, really pushing hard,” said one executive familiar with the tone of the talks. “The buyers know they don’t have anywhere else to go” to get the same broad reach that TV offers.
Marketers are focused on TV’s best-watched inventory – broadcast primetime – these executives said, fearing that if they don’t lock up ad inventory quickly, they may not be able to get money down. Some sales executives at TV networks are warning clients that demand is so robust this year that there may be fewer chances to put ad dollars down in TV’s so-called “scatter” market, when ad inventory is bought much closer to air time, typically at a premium.
TV’s sales efforts have been buoyed by an influx of demand from an array of upstarts that have typically put the bulk of their ad dollars into digital venues. Now, companies such as Peloton, Warby Parker and Wayfair are eager to harness TV advertising, which often reaches broader consumer audiences and is used to generate “brand awareness” and not just a quick response to a pitch. Awareness of a product or service typically helps foster a longer-term relationship with a customer, and even some degree of loyalty to particular kind of soap, sneaker or electronics device.
Interest from the new phalanx of so-called “direct to consumer” advertisers – who typically sell goods via e-commerce instead of at stores – has also given the networks the ability to push back on clients who have historically paid lower CPM rates. The newer clients don’t have the decades-old relationships that guarantee some longstanding sponsors better-than-market rates, and networks have begun telling buyers they will in some cases give priority to advertisers who pay higher CPMs.