Dick Wechsler's last guest post was so well received, I've decided to ask him to weigh in more often on media matters. As we kick off third quarter, I thought it would be an appropriate time to ask Dick about the media outlook. Here's what he replied:
As we enter into the third quarter, the word on the street is that the Upfront Broadcast Market is down three to five percent over last year. That means that the cost per point advertisers are willing to pay for primetime network programming and the like is lower, year over year. While this is an unconfirmed figure, it is not good news for either the media or DRTV advertisers.
Here’s how the media market works: Each network, station, etc. projects its year based on an average cost per point. The greater the premium (to that average cost) the upfront market is able to secure, the more negotiating room there is at the bottom for the DRTV market. In simple terms, a lower top means a higher bottom. In the current market, the media seems more willing to sell inventory at a 20-30 percent discount to general advertisers than it is to sell that same inventory to the DRTV market at a 50-70 percent discount, as was previously the case. Ouch.
Furthermore, a weak upfront market usually means a strong scatter market. Scatter is the DRTV advertiser’s playground. Rather than committing their budgets in the upfronts, more general advertisers will be purchasing inventory on short notice in scatter. The result is likely to be uncertain inventory availability and volatile pricing.
The good news is that we should start seeing firm news about the upfronts in the next few weeks. Until we have clearer direction, don’t deviate from the pricing structure that makes sense for your campaign and buckle your seatbelts until the media market settles.
