(Our detailed forecast is below.)This year's Upfront negotiations are likely to unfold as an almost-carbon copy of last year's, with cost-per-thousand inflation running slightly below last year's final results. The annual Myers Upfront Inflation Forecast is published below, reflecting the composite perspectives of buyers and sellers plus Myers' proprietary economic analysis. Over the past decade, Myers' forecasts have been recognized as the most accurate industry assessments of economic market realities.
Unlike last year's Upfront discussions, audience erosion is front and center. While buyers reject conversion from C3 to C7, deals using the extended time delay are actively being discussed. First-quarter primetime Adult 18-49 broadcast viewership trends were down -16% using Live+Same Day year-over-year, with C3 at -15% and C7 at -13.5%, respectively (including specials and the Super Bowl). Total primetime C3 audience delivery is down -8% with Cable's C3 A18-49 primetime audience delivery declining by three percent. The differential between same day and C7 is meaningful. The impact of C3 viewing lifted primetime A18-49 audiences by 19% for broadcast and 3% for cable vs. live viewing.
An even more relevant factor in this year's Upfront negotiations will be the added value of online video viewing, especially for broadcast and selected cable networks. With Nielsen's introduction of Online Campaign Ratings (OCR), integrated TV and online data is available for the first time and will factor into the networks' success in capturing more than 50% of all digital video ad spending this (calendar) year. Notwithstanding this success, buyers will use digital options as leverage in their negotiations; networks that integrate their legacy and digital video offerings will benefit.
Even with declining ratings and expanding digital options, broadcast and cable networks' costs-per-thousand will continue to increase. Overall demand is expected to increase two to three percent over last year's Upfront market. Broadcast revenues are projected to decline 2% to 3%; cable revenue volume is forecast to increase 7% to 9%; syndication volume is projected to increase 2%.
Advertising remains a reach-focused business, and network TV remains the dominant vehicle for delivering reach, unequaled by any emerging competitor – yet. There are only a few premium programs – broadcast, cable or digital – that command the highest costs and that are the catalyst for Upfront negotiations. Marketers that opt out of the Upfront are relegated to the second tier of programs. The Upfront is much like a concert or sports event; if you want to sit in the best section and be assured the best seats, you need to make an early commitment, except in the Upfront you're also loaded up with mezzanine and bleacher seats. The alternative is to pay scalpers more at a later date for the less appealing seats without access to the best seats in the house. As fewer and fewer seats are available, prices continue to rise. This year, more money will be invested in digital but the costs-per-thousand for network TV inventory will continue to be on the rise.
The forecasts below reflect projected averages, which assumes some networks and syndicators will outperform the average, and others will under-perform. Sellers, of course, are seeking increases at the high end of these averages, and buyers are seeking to book business at the low end.
|JACK MYERS MEDIA BUSINESS REPORT|
|2013/2014 Upfront Inflation Forecast|
|OVERALL UPFRONT SPENDING VOLUME GROWTH:||+2.0% - 3.0%|
|Broadcast Revenue Volume:||(-2.0% - 3%)|
|Broadcast Digital Video Revenue Volume||+40.0%|
|Cable Revenue Volume||+7% - 9%|
|Cable Digital Revenue Volume||+25.0%|
|Broadcast Syndication Revenue Volume||-+2.00%|
|Online Originated Video Revenue Volume||+70.0%|
|(Annual 2013 vs. 2012)|
|AVERAGE COST-PER-THOUSAND GROWTH|
|Broadcast Network Primetime||+5.5% - 7.5%|
|AM News (7-9 AM)||+3.0% - 4.0%|
|Daytime||+6.0% - 8.0%|
|Evening News||+2.0% - 4.0%|
|Latenight||+5.0% - 6.0%|
|Broad Based||+6.5% - 8.5%*|
|Small Niche||+2.5% - 3.5%|
|Lower Rated||+2.0% - 3.0%**|
|High Demand||+5.0% - 8.0%|
|Mid-Demand||+3.0% - 6.0%|
|Low-Demand||+0.0% - 3.0%|
|Broadcast||+5.0% - 7.0%|
|Cable||+5.0% - 8.0%|
|Source: Jack Myers Media Business Report Upfront Forecast|
|©Contents copyright, 2013 Media Advisory Corp|
|May not be redistributed except to corporate members of Myers Media Business Network.|
|*Selected original programming and new off-network content such as Modern Family|
|on USA are expected to command higher CPM increases|
|**Selected networks with a low CPM base rate and ratings growth are expected to outperform market averages.|
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