Scatter Market Bodes Well for Sellers, Nets Believe

TV sales executives have begun to believe that they will have the upper hand when it comes to negotiating during this year’s upfront marketplace.

Strong scatter market sales in the first and second quarter have prompted one broadcast executive, who wished to remain unnamed, to say, “We’re not going to pushed around like we were last year,” Mediaweek writes. Scatter prices are up double digits at most networks over upfront pricing, and Fox hit record levels with its scatter deals.

Scatter prices are up by about 10 percent over last May’s upfront, so advertisers such as Johnson & Johnson, who skipped buying during the upfronts betting that prices would be down during scatter, may have lost in the process.

Scatter sales have been driven by several product launches and relaunches and strong demand in competitive categories such as wireless, retail, pharmaceuticals, financial and packaged goods.

But while network executives may be rubbing their hands with anticipation, media buyers are optimistic, as well. Rino Scanzoni, chief investment officer for GroupM, points out that his agency does not look at upfront and scatter dollars being separate issues. “If you combine the two this season, the overall dollar growth for broadcast television is only about 2 percent, and that is something that shouldn’t give them great negotiating advantage in the next upfront,” he is quoted as saying.

He goes so far as to say that the networks are beginning their posturing, trying to “panic” the buyers.

Scatter pricing has been significantly higher than during the upfront also because inventory is restricted, since there have been a high number of makegoods the networks have had to give advertisers for under-delivering, which restricts available inventory.
Whatever the reason for tightened inventory, many advertisers have not been able to get into the shows they had hoped to be in, which should indicate that they will pony up during the upfront to avoid risking being frozen out again next season.
Scatter has also been strong on the cable side, with cable nets achieving CPM price increases from the high single-digits to high teens over the upfront. Again, cable nets believe this bodes well for the upfront.