Network Upfront Ends; Prices Down

For the first time since 2001, advertising rates on network television are down. ABC, CBS, and Fox negotiated rates that were 4-percent off from last year, while last-placed NBC accepted deeper discounts. Now television executives have to make their margins in the competitive scatter market.

Over the past few years, network television has witnessed a soft market in their upfront season, the time of year where advertising agencies make commitments to spend during next prime-time season. While volume has remained flat, this year, it fell a whopping 15%.

The spin is an expectation of rebounding budgets in 2010. From the Associated Press…

An executive at another network said: “We sold this upfront with the view that we were moving into a rising economy rather than a softening economy.”

What’s more, some key advertising categories, like auto, retail and financial services, are expected to have bigger advertising budgets in 2010, after buying about 20 percent less commercial time this around in the upfront market.

Advertising, always the first budget item cut during recessions, is one of the last marketing functions to receive full-funding when the economy rebounds. Considering the fact that the economy is not showing much inclination to recover, I believe those expectations are rosy, at best.

Network television is suffering from two economic forces.

1. A more competitive landscape vs. cable television
2. A decline in program quality

Blaming the general economy is but a cover, in my opinion, when executives are not investing in quality programming, opting for cheap sitcoms, game shows, or reality fair. NBC’s recent announcement that it indents to invest in quality scripted programming is a smart move and should bear fruit in the future.

Here are other articles I have written on this topic:

• What Propels Intent to Purchase?
• New Campaign for Will County Health Department
• Choosing the Proper Lure for Your Audience
• U.S. Olympic Committee to Launch TV Network in 2010
• Advertising Picks Up, Recession Nears End?
• Newspaper Revenue Trend Line Reconsidered
• Will Online Ad Revenue Beat Newspapers in 2011?
• AdAge: Banks That Spend, Win
• Is Radio Advertising Effective?
• New Television Spot for Appellate Court Judge Mary Schostok