2011 Network TV Upfront Early Outlook: Exclusive Myers Forecast

The detailed 2000-2020 Jack Myers Media Business Report Media, Advertising and Marketing Investment Forecast used for this report is available exclusively to subscribers at www.jackmyers.com . If you are not able to access the site, please contact maryann@jackmyers.com. Redistribution of this report to non-subscribers is restricted.

Taking an early look at the Network Television Upfront outlook, Jack Myers Media Business Report is forecasting 2.5% growth in 2011 calendar year broadcast network TV revenues over 2010, plus 50% increases in broadcast networks' digital revenues. Combined, this represents 4.4% broadcast network TV ad revenue growth to $19.3 billion. Cable network 2011 ad revenues are forecast to increase 6.2% plus digital revenue growth of 22.5%, for a combined cable network ad revenue projection of $22.1 billion. Continued growth is projected for 2012.

The 2011/2012 Network TV Upfront Season, therefore, should be satisfying for the networks, with CPM growth in the 3% to 5% range for broadcasters and 5%-8% range for cablers (with exceptions of course for high and low outliers). As I've reported for the past several years, the total dollars invested in the Upfront marketplace are significantly less than generally reported by trade press and Wall Street analysts (Myers estimates $8.5 billion in actual 2010/2011 broadcast network Upfront investments), a dramatic 22.5% surge over 2009 Upfront spending.

This year's Upfront spending will be up in the low-to-mid single digits, as advertisers stay close to their 2010 budgets. However, network-by-network Upfront revenue increases will be heavily dependent on the promotion, brand integration and digital assets networks bring to the table as pre-negotiating ante. Those networks that are not positioned to integrate online video, apps, mobile, experiential, social, branded entertainment and other non-traditional value will be at a negotiating disadvantage. In the post Super Bowl episode of Glee, the cast sang "See the USA In Your Chevrolet," a brilliantly implemented example of brand integration (reminiscent of the 1960s Dinah Shore Show but with the creative execution on steroids).

Digital, brand integration and experiential marketing support are finally living up to the promise of being critically important components of the tool kit for legacy media companies. Agencies are actively reorganizing themselves beyond their core negotiating prowess and repositioning their business models to reflect a focus on content vs. audiences and cross-platform integration vs. single media procurement. During last season's Upfront presentations, digital and integration were largely ignored as networks focused on the basic promise of delivering original hit programs. As the economy has stabilized and social media has taken center-stage, many marketers are seeking media partners who can best help them communicate their brand differentiation and attributes.

While the importance of traditional ratings, audience share and demographics cannot be underestimated, it is digital, brand integration and experiential marketing that are growing priorities as agencies consider big Upfront deals and market share distribution. Networks once again need to focus beyond their core assets to their ability to convert those assets into marketing opportunities for clients.

Digital advertising revenues are becoming an important contributor to network TV companies' bottom lines, and it's critical for these companies to clearly communicate their superiority as marketing partners to advertisers and their agencies. Here are the economic imperatives:

• In 2010, digital represented 4.1% of broadcast network ad revenues. That total will increase to 5.8% in 2011, according to Myers projections, and to 25.8% of total ad revenues in 2020, for total projected 2020 digital ad revenues of $7.6 billion.
• Contrary to most analysts, Myers forecasts growth in legacy broadcast ad revenues throughout the next decade, so the share increase represents incremental – and not replacement – revenues for the broadcast networks. Myers projects broadcast network TV traditional ad revenues will increase an average 2.3% for the next decade.
• In 2010, digital represented just 3.3% of cable network ad revenues. That total will increase to just 3.8% in 2011, according to Myers projections, to 18.5% of total ad revenues in 2020, for total projected 2020 digital ad revenues of $6.4 billion.
• Myers projects that network cable TV traditional ad revenues will increase an average annual 3.0% for the next decade.
• Digital ad revenues will increase in the double digits annually throughout this decade for both broadcast and cable TV networks.
• This data does not incorporate incremental revenue opportunities available to legacy media companies from social, point-of-influence and experiential marketing budgets that are shifting from marketers' "below-the-line" promotional and direct marketing budgets.

The detailed 2000-2020 Jack MyersMedia Business Report Media, Advertising and Marketing Investment Forecast used for this reportis available exclusively to subscribers at www.jackmyers.com . If you are not able to access the site, please contact maryann@jackmyers.com. Redistribution of this report to non-subscribers is restricted.