Add-ons at the upfronts
Prices up, inventory goes quickly; Fox sets recordThis year's broadcast upfront was moving swiftly toward a conclusion Tuesday, with strong price increases on inventory amid a move in the industry toward average commercial minute ratings and Fox Broadcasting reporting its best-ever upfront.
Meanwhile, Discovery Communications and Starcom USA struck a big deal using minute-by-minute data that gets the industry even further toward the goal of granular, accurate ratings of individual commercials.
Last week's pact between NBC Universal and Group M started a flood of dealmaking that made it likely that the majority of the broadcast upfront negotiations would be concluded by week's end, if not sooner. And mirroring this year's strong market for scatter inventory, many of the networks seemed to be getting high single-digit increases in CPMs. ABC, sources said, was capturing CPM increases of 10% or more above last year's upfront prices. That's despite — and in many cases because of — a 10% overall decline in viewership.
Fox had nearly completed its upfront negotiations to the tune of what sources said was a record of nearly $1.9 billion. ABC also was cruising toward one of the largest hauls in its history, on track to better last year's $2.3 billion.
Fox's upfront commitments ranged from $1.8 billion-$1.9 billion, with average CPM increases between 7%-9%, sources said. Movie advertising was particularly strong and garnered CPM increases of 9% or more, sources said. The network offered a little less inventory for sale in the upfront this year compared with a year ago, saving more for a scatter marketplace that has been up in the double digits.
Sources said that CBS was about 75% through with its upfront sales, with a handful of advertisers left to complete. CPM increases were in the high single digits. NBC also was 75% through with negotiations, with 5%-6% CPM increases. The CW was just getting started.
If it holds up, it's likely that the broadcast network upfront will end up with higher CPM increases and more volume than had been expected. One executive said Tuesday that the decline in broadcast ratings as well as an attractive scatter market has combined to give the broadcast networks a hotter hand. A buyer said that cable would be up too, though fortunes would depend on the niche and the network.
Most if not all of the broadcast deals were being done using average commercial minute ratings. NBC's deal with Group M used the live plus three-day average commercial minute ratings, which takes into account DVR viewership but isn't as accurate on a commercial-by-commercial basis. Tuesday's Discovery-Starcom pact skips over that and guarantees based on the actual minutes that advertisers run during the hour. The deal includes some DVR usage, though neither Discovery nor Starcom would comment specifically. Discovery was said to get CPM increases as well.
The Discovery-Starcom deal includes not only Discovery Channel but also TLC, Animal Planet and other Discovery cable channels. It was made possible by Discovery's strict adherence to the same commercial breaks every hour, as well as Starcom's confidence in Discovery above other cable channels to be able to determine exactly when a given commercial runs. Starcom has been analyzing minute-by-minute ratings for 18 months, said Chris Boothe, Starcom USA president and chief activation officer. Starcom recently made a second-by-second data deal for Discovery HD Theatre using TNS Media Intelligence data.
Discovery Communications Advertising Sales president Joe Abruzzese said it's his belief that the industry will be going to minute-by-minute ratings within a year or two, so it made sense that the network get ahead of the curve. Starcom agreed.
"It's clear to us that this is where everyone will go, and if we have processes and a system and a faith in the data, we might as well take that step this year instead of waiting," said Natalie Conway, senior vp cable activation at Starcom USA.
That doesn't mean that all of Discovery or Starcom's upfront deals will be done on minute-by-minute ratings. Discovery expects to do more based on average commercial minutes and hardly any based on program ratings, which had been the currency for some time. Starcom said it's looking to do more minute-by-minute upfront deals but that it depends on the confidence in the data streams of other networks because it requires a lot of back-office sophistication. Starcom did three minute-by-minute deals last year, with the Weather Channel, AMC and WE: Women's Entertainment.
"It's our intention to do more, it's just finding the right partner," Conway said.