With the U.S. network Upfronts starting next Monday, speculation is rife among industry members as to whether we’ll see increases, decreases or status quo advertising revenues.
Last year’s Upfronts saw a strong in increase advertising prices over 2010-2011 (25-40 percent in some cases), but most analysts are predicting smaller upfront revenue gains this year, with Wall Street analysts estimating one to four percent for the broadcast networks.
Jack Myers, media economist and publisher of the Jack Myers Media Business Report, admitted that his predictions for 2012-2013 are a bit more modest – “I’m projecting between minus two and plus two percent increases in volume, and that’s based on speaking with buyers.”
While Myers suspects that some of the broadcast nets’ Upfronts money will go to online video instead, that’s a good thing for the broadcast nets, too. “A lot of the money that’s shifting to the online marketplace is shifting to the network’s own video assets – like ABC.com, CBS’s TV.com and Hulu. About 50 percent of the money spent on online video will go to the broadcast and cable networks, and the lion’s share of that goes to broadcast,” he said.
“Any way, plus or minus two percent isn’t doom or gloom. You also have to keep in mind that Upfronts volume doesn’t tell the whole year’s story – it’s only part of the story. There’s also the scatter market, and what tends to happen is if the Upfronts market is up, the scatter market is down a bit and vice versa.”
Media analysts expect that strongest Upfronts numbers (and gains) are likely to come from CBS. Myers concurred. “On a cost-per-thousand [CPM] basis, Wall Street analysts are projecting CBS at eight to 11 percent [and] that’s very possible. CPM growths overall will be in mid-single digits for the broadcast networks, with CBS on the higher side. ABC is having a pretty good run, too. Fox is the only one that could see problems, with American Idol down 30-40 percent.”
Though the CW has also seen its ratings dip recently, Myers predicts that the CW’s relatively new president, Mark Pedowitz, could breathe new life into the net. “Advertisers are not going to punish the CW for its ratings problems this year,” he said.
As for the age-old question of whether the Upfronts model is still current, Myers says the proof is in the “newfronts.”
“In the last few weeks, we’ve seen the online video ‘newfronts,’ and every cable network has held their Upfronts. There have been nearly a hundred between February and May. Ten years ago everyone was calling for the elimination of the Upfronts, but we see signs of them getting stronger, not weaker.
“When you see companies like YouTube, Vevo and AOL making seven-figure investments in newfront presentations, it really ups the game for broadcast networks to be active.
“In the past couple of years, some of the network’s downgraded their investments in the Upfronts – notably NBC and ABC, which continues to have a simple Upfronts without the dog-and-pony, the celebrities and the hospitality. But now, there’s increased pressure to compete with the online sector — and the cable networks too — so things may turn around,” he concluded Myers.