The slow start to the US television market’s upfront sales, coupled with a very low rate of conversion to confirmed orders (see US TV Networks Suffer Low Pre-Season Ad Bookings), has seen the costs per thousand fall at all but two of the major networks, according to data from yesterday’s Myers Report.
Costs per thousand are what the advertisers will pay in order to reach a certain size audience; in the US these are referred to as CPMs. In soft market conditions and an advertising downturn (as at present), networks often decrease their CPMs in order to retain their share of the ‘advertising pie’ (see
NBC Cuts Airtime Costs To Maintain Share). Alternatively, the TV operators can choose to accept a lower revenue base in return for raising their airtime costs.
Myers says that only The WB and CBS-TV appear to have increased their CPMs in the upfront sales of 2001. This is against a backdrop of a year on year decline of almost $2 billion in total upfront commitments. For media sellers the decline in costs and overall advertising sales volume is bad news.
CBS has chosen to retain a substantial portion of its inventory for the ‘scatter market’ – buying which takes place in the latter stages, after the upfronts of June and July. Myers says that no other network to which it spoke thinks that this is a good strategy. With the continued retracting economy – and no improvement is expected before Q2 2002 – CPMs could decline even further during the scatter market.
If the TV networks insist on holding their costs, advertisers may turn to other media, such as print, when planning campaigns. A rise in the airtimes costs at ITV in the UK have pushed a degree of adspend toward other, cheaper media in the last year or so.
What is significant about the fall in CPMs in the US for the 2001 season is that it will continue to impact what the networks can charge for several years, as all the gains of 2000 have effectively been given back. Myers says that unless advertiser budgets grow beyond expectations, media buyers will now expect to maintain the new levels into 2002 and beyond. If the markets continue to soften, CPMs could be lowered even further.
The following table shows an average from multiple sources of the major networks change in CPMs this year, as compiled by Myers Reports. The numbers are averages of estimates and are therefore intended only for use as benchmarks.
| Major Network Upfront CPMs 2001 Year On Year Change |
| |
|
| Broadcast networks |
% Change |
| Prime-time |
-5.0 |
| CBS-TV |
1.0 |
| Fox-TV |
-2.0 |
| NBC-TV |
-6.0 |
| ABC-TV |
-8.0 |
| WB |
4.0 |
| UPN |
-4.0 |
| Daytime |
-12.5 |
| Late night |
-1.5 |
| Evening news |
-8.0 |
| Morning news |
-2.0 |
| |
|
| Cable networks |
|
| Broad-based networks |
-20.0 |
| Major niche networks |
-12.5 |
| MTV |
-7.0 |
| Third tier networks |
-17.0 |
| News |
-16.0 |
| |
|
| Syndication |
|
| High tier |
-7.0 |
| Mid tier |
-11.0 |
| Low tier |
-18.0 |
| |
|
| Source: Myers Reports (multiple sources) |
|
