TV on the Spot: Broadcasters claim victory ahead of time, but tough economy could threaten – diversity | Region & Cash

TV stations are claiming victory in this year’s upfront ad sales market, but their executives understand they may be snatching it from the jaws of defeat.

CBS, NBC, Fox, Univision and some of their brethren are cheering the foresight as US television networks attempt to sell most of their advertising inventory ahead of the next program cycle. You have a reason to. According to many reports, the volume of advertising commitments won has increased compared to the previous year. Disney, for example, predicted on Monday that it would earn around $9 billion in advertising for the coming year (upfront figures are never guaranteed, of course, as advertisers may cancel portions of their orders depending on circumstances). At the same time, the networks banked that advertising money by agreeing to smaller rate hikes — usually a conspicuous sign that they lack some leverage in the market. In addition, the uncertainty in the macroeconomic environment weighed heavily on the discussions.

“The psychology of the market this year was, ‘Hey, I don’t know what the future holds and I don’t like that,'” says a media buyer familiar with this year’s preliminary talks.

What clouds are floating over the horizon? A sizzling stock market, big spikes in inflation, and the threat of a recession, to name a few. Madison Avenue paid attention. So-called scatter ads — spots bought in real-time as needed, as opposed to the predictions placed through pre-purchases — are already looking down. The scatter market is “definitely weaker than it was last week, last month, last year,” NBCUniversal CEO Jeff Shell told investors in June.

Additionally, Microsoft skipped the pre-meeting, according to five executives familiar with the matter, and there’s some talk among executives that both Pepsi and Burger King could have curbed some up-front spending. Pepsi and Burger King declined to respond to questions about their upfront activities. Microsoft previously declined to respond to a similar request.

Given the bleak business outlook, advertisers gravitated toward networks that opted to reduce a measure called CPM, or the cost of reaching 1,000 viewers. As demand surged last year after the first wave of coronavirus, networks took advantage and targeted CPM increases of 16% to as high as 25%. In 2022, however, most media companies were content with increases of 8% to 12%, according to executives familiar with this year’s market.

Those who got too aggressive may have missed out on some money. Newly formed Warner Bros. Discovery has made headway ahead of time, but the company’s pugnacious demands for high CPM and volume commitments led to resistance from buyers. Amazon’s quest for top prices for its new “Thursday Night Football” — on par, some shoppers say, with Fox’s hefty fees for 30-second ads on its Sunday afternoon NFL shows — has also drawn some rebuke. Warner Bros. Discovery and Amazon declined to comment

And while media companies are making higher levels of advertising commitments than last year, not all of their properties are getting the same level of support. One buyer estimates that TV companies’ overall video ad volume is up 6%, but notes that the growth is being fueled by double-digit percentage increases in the amount committed for digital ads, such as Paramount+ or Peacock, coupled with modest increases or flat results Designed for linear transmission and approximately 10% pullback over traditional cable.

The TV crew has other reasons to celebrate. YouTube, Amazon, Roku, and other digital players have taken a habit of luring in some of the TV dollars that used to flow directly into the networks. But TV competes more directly with broadband competitors, says one buyer, and offers better tariffs. “Our digital growth went to broadcasters’ digital products,” says this buyer. “All of a sudden the digital landscape is very wide, very crowded,” and advertisers have more players trying to advertise for their money.

Sports offered a different story. Advertisers rushed to get money for big matches and games, eager to woo the large live audiences that tune in and are much harder to find with prime-time drama and comedy. TV execs say their top sports shows are luring in advertisers who have typically relied on traditional television, even marketers who typically try to target female consumers. “Big sporting events are what big marketers focus on,” said Mark Evans, Executive Vice President of Ad Sales at Fox Sports. “It’s the best way to get your products in front of millions of people at the same time.” Another bright spot: streaming. When Disney launched a new ad-supported version of Disney+ and other commercials placed next to their broadband connections, advertisers were definitely intrigued as they consider a similar option from Netflix.

Now that most of the upfront deals are in place, all eyes are on the economy. If the country’s financial situation continues to deteriorate, look for advertisers trying to increase their ad plans by three months or more. “If a recession is looming, it will be interesting to see if the money stays or falls,” says one of the buyers.

VIP+ Analysis: A looming recession weighs heavily on advertising

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