CBS managed to extract a price increase from advertisers for its airtime despite declining demand, Ad Age reports.
It’s a perfect illustration of how distorted the TV network ad market is: Name one other type of business where suppliers can extract price increases—8-9 per cent per thousand pairs of eyeballs, reportedly—even though fewer people want to buy their wares?
CBS is able to do this because it intends to shrink the supply of its airtime in lockstep with retreating demand. By removing airtime from the “upfront” (the spring/summer season during which networks ask advertisers to make the bulk of their annual TV deals) and saving it for the “scatter” market (spare airtime that’s sold close to the broadcast date), CBS is hoping that advertisers can be rushed into making high-priced, last-minute deals for fear of not being on air with their campaigns.
CBS has booked $2.5 billion to $2.75 billion in commitments, Ad Age said. That money came despite the fact that there are fewer big movie releases planned (studios spend a LOT on ads) and word that Procter & Gamble intends to pull back on traditional media spending.
Normally, CBS could justify higher prices by pointing to greater ratings. But the LA Times says its audience growth is marginal:CBS is coming off a season in which it averaged 11.75 million viewers in prime time, a gain of 1%. Among the coveted adults 18-49 demographic, CBS grew 3% and is now just two-tenths of a ratings point behind the leader, Fox.
Lastly, consider the institution of the upfront itself. Why, exactly, is the sale of an entire year’s TV network airtime rushed into a period of a few weeks in May and June?
And isn’t it an amazing coincidence that all the networks have adopted the same schedule for this rushed, temporary fire sale?
And isn’t it a further amazing coincidence that the handful of giant media buyers that control the majority of ads bought on network TV—and who take a slice of the budgets for putting them there—don’t protest this arcane, inefficient system (a system in which until recently deals were still done via phone calls and faxes!)?
It’s almost as if the networks were a cartel with a captive audience being corralled by rent-seeking middlemen.
Perish the thought.
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