Digital making its move? TV having sluggish upfront

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In what could signal the beginnings of a shift of television ad dollars to the digital side, broadcast networks are seeing only moderate price increases on their commercials. They’re also selling less overall volume of their ads.

On Thursday, the smallest of the major U.S. English-language broadcast networks, the CW, wrapped up its portion of the upfront market, a yearly selling ritual in which major media agencies buy the bulk of TV ad time for the coming season.

According to reports in Adage and Adweek, the CW garnered percentage increases of around 7 percent for the price it charges advertisers to reach 1,000 viewers, a metric labeled “CPM.” The other major networks, ABC, CBS Fox and NBC, are also looking at single-digit increases. CBS is leading the Big Four pack — which still has inventory left to sell — at around 9 percent.

Also read: Report – Broadcast networks will get 8% higher CPMs at upfront this year

That level of price increase is in line with expectations of around 8 percent overall. But it’s down significantly from the 12 percent the networks averaged last year.

Also read: How Netflix really did save the CW

More troubling for broadcasters, according to the ad trades, CW sold only 75 percent of its commercial inventory for the coming season, as opposed to nearly 80 percent last year. This puts total dollar volume for the network — jointly owned by CBS Corp. and Time Warner Inc. — at around $400 million to $420 million, flat with last year.

So if the other networks also report flat dollar volumes, as is expected, what will it mean? According to analysts, the willingness of advertisers to concede to price increases suggests they still see broadcast TV as a unique tool to reach a mass audience.

“Network TV remains a fixed starting point for TV plans, and will continue to serve this purpose for as long as it satisfies goals better than any alternative that may be tried,” wrote Pivotal research analyst Brian Wieser to investors. “Neither cable TV nor online video, nor other media yet provides sufficient credibility to accomplish this goal for the largest brands, even as incremental shares of marketers’ budgets shift to new platforms.”

Of course, that last part of Wieser’s statement is key. The fact that advertisers are unwilling to increase their total commitment to the sector suggests they’re holding back dollars for new digital video alternatives, which were aggressively showcased for advertisers earlier this spring by companies including Google and Yahoo at a series presentations called the NewFront.

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