The annual ritual of the US broadcast television ‘upfront’ starts this week with over $8 billion (€6.92bn; £4.96bn) in advertising revenues up for grabs.
These days the smoke-filled back rooms may have transmogrified into Perrier-sipping salons but the razor-edge of the big poker game is sharper than ever.
The Big Four broadcast networks are already flaunting their top stars, huckstering new shows and justifying the higher ad rates they seek. In the opposite corner, advertisers and agencies have already started the psychological warfare, warning that their dollars are ready to migrate to cable and satellite if networks’ pricing gets altitudinous.
And there is no doubt that the rival delivery systems are coming up fast on the rails. Cable networks are grabbing more eyeballs than ever before – and notching higher aggregated prime-time ratings than their broadcast competitors. But few think the days of the big networks are numbered. Yet.
Explains OMD USA managing director Ray Warren: “If you’re an advertiser that wants to make sure twenty million people saw your spot last night, you still have to go to the big networks.”
Furthermore, companies with national distribution and wide customer bases, Procter & Gamble and General Motors for example, cannot risk exclusions form the top time slots and popular shows that only the national networks can provide.
“The real leverage . . . is the inventory situation,” says Warren . “There are fewer high-rated hits than there used to be and there are only so many 30-second spots on one episode of [current sitcom hit] Everybody Loves Raymond.” And although the fifty-five nationally rated cable operators offer targeted audiences, “it’s a lot of inventory and a lot of little ratings points”.
But Warren warns the sands of time could be running out for the four broadcast titans – ABC, CBS, Fox and NBC. “Every year, cable becomes a little bit more acceptable for [different] reasons: better programming and broadcast ratings going down. At some point the networks asking for too much money will send advertisers to cable... if [the networks] go looking for double digit increases, they're making a mistake.”
Data sourced from: Financial Times; additional content by WARC staff