The rush is on to buy prime time TV ad spots
Some in advertising are calling the television networks' ``up front'' selling season this year an old-fashioned sellers' auction. Other observers are saying it looks more like a stampede. In any case, it looks like a turnaround from what many on Madison Avenue termed a disaster for the networks last year. National advertisers and their agencies are jockeying to buy and hold the commercial spots they want for the upcoming prime time season on the three major networks: ABC, CBS, and NBC. The networks have been demanding and in most cases getting price increases ranging from 10 percent to 25 percent and more.
NBC, the top-rated network in prime time, reports a virtual sellout for the last quarter of 1987 and the first quarter of 1988. With price increases at the network averaging about 25 percent, popular programs such as the Cosby Show (rated No. 1), Family Ties (No. 2) and Cheers (No. 3) have commanded as much as a 35 percent increase, according to Robert Blackmore, senior vice-president for sales at NBC.
``With the economy strong and company earnings up, it was a very strong marketplace,'' Mr. Blackmore said. In some cases, he reports, advertisers are dusting off old brands and putting new money behind them to make them more competitive with the many new products being introduced with large advertising budgets.
Traditionally the up-front market begins in July and lasts about six weeks. This is when networks firm up schedules and announce asking prices for commercial time during the coming television season. Advertisers and their agencies then bid for preferred time slots.
Alan Gottesman, the analyst at L.F. Rothschild & Co. who follows advertising and communications, points out that advertising has outperformed the gross national product every year since 1975. ``But don't read too much into that,'' he cautions. ``Advertising has done well in recessions as well as strong economies.''
The up-front selling season was slow getting started this year, reports Jerry Dominus, vice-president for sales at CBS. But once it took off, he adds, ``it was wild - we had clients stashed in different rooms waiting to close deals.'' He spoke of working several times until the computers shut down at 4 a.m. to record sales and estimate unsold inventory. He claims price increases averaging 10 percent.
Mr. Dominus attributes some of the price pressure to what he calls the ``quadrennial factor.'' Every four years, including 1988, there is a presidential election. Next year is also the year of the Olympics, and both these events attract additional advertising dollars while removing as many as 35 evenings of traditional prime time programming and viewing from the schedules.
This is also the year in which the A.C. Nielsen Company is replacing its traditional diaries with ``people meters'' to measure audience ratings. ``We were all wrestling with the ratings situation,'' says Jake Keefer, ABC's executive vice-president for sales. But with hardly any program inventory left in the first two quarters of the coming season, he adds, ``It proved to be a strong market, and we are pleased with the way it turned out.''
It is estimated that $3.1 billion was spent on prime time spots in the up-front market this year.
Frank P. McDonald, senior vice-president for media at the N.W. Ayer advertising agency describes the up-front market as a ``pure supply/demand economy. We haven't seen price increases as large as those quoted,'' he says. ``Those clients who jumped in early got the best deals, of course.''
But according to Steve Grubs, senior vice-president and national television buyer for the BBDO agency, the price hikes were substantial. ``The [networks] were in a better position this year than they were last year and in general were getting 15 to 20 percent price increases for prime time.''
Industry forecaster Bob Coen at the McCann-Erickson advertising agency believes the up-front market has turned out to be stronger than first expected. ``You could say it proved to be something of a buying stampede,'' he says. It reinforces his earlier forecasts of a 7 percent increase in advertising expenditures for 1987 followed by a 9 percent increase in 1988.