(Subscriber Report) Scatter Forecast, Plus First Look at 2010 - 2015 Broadcast and Cable Network TV Ad Revenues

Follow Jack Myers39 Twitter at jackmyerscomThe most important question being discussed in the television business today is quotwill the scatter market be strongquot With networks amp8211 both cable and broadcast amp8211 holding significantly more inventory going into the fourth quarter 2009 and 2010 than they have in recent years they have bet the bank that scatter will not only outperform the Upfront on a costperthousand basis but that there will be sufficient demand to meet overall budget goals They didn39t have much choice in the matter since total ad spending is down and networks successfully maximized their revenues per unit in the depressed Upfront marketplace In this week39s report I share insights on likely scatter market conditions and some interesting nuances to the justconcluded Upfront Also in this report is my first look at the longterm economic prospects for the broadcast and cable network advertising marketplaceYou are receiving this email as a corporate subscriber to Jack Myers Media Business Report Redistribution in any form except among approved individuals within your company is prohibitedI am forecasting that broadcast network television advertising revenues will decline 80 in calendar year 2010 following an estimated 90 decline in 2009 Since the broadcast networks are also suffering from overall ratings declines it would require increased CPMs to substantially exceed previous year revenue levels to achieve flat or positive growth The trend of 1 to 8 CPM reductions from the 20082009 base should continue in the scatter market While CPMs in the scatter market will be down on a yeartoyear basis they will be 20 to 15 better than Upfront CPMs varying by network quarter and advertiser Based on our market checks it is reasonable to assume that fourth quarter scatter will be strong while first and second quarter scatter growth will again be moderated picking up slightly in the third quarter 2010 Overall it39s my best bet that overall sellout levels for the broadcast networks for the full season will be slightly less than previous years but any shortfall will be compensated for by direct response political and online revenues Overall considering ratings losses 2010 will be a relatively positive year for the networksLongterm I am forecasting a 20 revenue decline in broadcast network revenues for 2011 followed by three years of relatively flat performance amp8211 plus or minus 10 This assumes the networks adopt advanced strategies for generating incremental revenues through online mobile and especially promotional and databasedriven business models Insistence on traditional 30second commercial exposure using demographic impressions as currency is a surefire route to newspaperlike double digit revenue declinesFor cable network TV my forecasts are only slightly more bullish and I will be adjusting my spending forecasts to reflect Upfront spending and CPM declines I am now projecting calendar year 2009 network cable advertising revenues will move into the red declining as much as 35 with continuing projected declines in 2010 of 25 Adding insult to the injury of these revenue losses for the cable industry is that increased investments in original drama and comedy content sports programming and leadingedge reality programming has translated into strong ratings gains However supplydemand realities penalize rather than reward networks for positive ratings performance creating more inventory in an already oversupplied marketplaceLongterm my forecast for cable network television is more positive because of the investment being made not only in original programming but in the new business models required to capitalize on this content My forecasts project 80 growth for cable network ad revenues in 2012 followed by sustained 40 to 80 annual growth through 2015 Within this growth market the lions share of growth will go to those networks than can avoid the pitfalls of pricing commoditizationLast week media agency MPG a division of Europeanbased Havas conducted its second online media buying auction investing several million Upfront dollars for client SearsKmart The first test auction several weeks ago proved the viability of the auction model for the agency and last week39s more advanced effort involved most of the major and several secondary cable networks Overall the experiment was well received by both networks and the agency It39s arguable whether MPG gained any real CPM advantages compared to manual persontoperson negotiating but the auction did result in a reallocation of budgets among cable networks and reaffirmed that marketers and agencies are wiling to use technology to shift media buying from a human negotiating process to a computerbased procurement modelInevitably cable networks are being forced into a marketplace in which their individuality and unique assets are being devalued Networks with limited resources that can muster meaningful ratings with low overhead costs and minimal programming investments will achieve greater parity in an auctionbased system enabling advertisers to reduce their media costs by constantly zerobasing their buys Loyalty sponsorships incumbencies and creativity will become less importantOne model for countering this dismal future is to focus on creativity loyalty marketing sponsorships incumbencies database marketing and other nonCPM based offerings The role model within the television marketplace remains Turner Broadcasting which invests millions annually in support incentives that help build marketing partnerships directly with clients TBS has the added resources of the Time Warner Global Media Group now headed by former YampampR creative guru Mark D39Arcy D39Arcy39s former copresident and partner at TW John Partilla recently departed to head business development for Clear Channel D39Arcy39s group enables Turner and TW39s other divisions to provide the creative capabilities required to implement some of their more inventive offerings Media agencies under severe compensation pressure from clients are often unable to encourage or support media creativity because of their own creative limitations Several other networks including Hallmark Channel and Scripps Networks provide clients and agencies with creative production and marketing supportJack Myers consults with media agencies and marketers on transformative business models and revenue growth strategies He can be contacted at jmjackmyerscom

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(Subscriber Report) Scatter Forecast, Plus First Look at 2010 - 2015 Broadcast and Cable Network TV Ad Revenues

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(Subscriber Report) Scatter Forecast, Plus First Look at 2010 - 2015 Broadcast and Cable Network TV Ad Revenues

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