TV networks sell a record $19.7 billion in advertising at surprisingly strong upfront market
Television networks are benefiting from surprisingly strong demand for their commercial time.
Despite falling viewer ratings and fears over cord-cutting, major advertisers in the just-concluded upfront ad sales market placed orders for $19.7 billion worth of prime-time commercial spots on cable and broadcast TV networks, an increase of 5.9% over last year, according to the New Jersey research firm Media Dynamics Inc.
The ad sales volume was higher than what several analysts were expecting. The total represented a new record for the upfront market — when television networks sell the bulk of their ads for the upcoming season — surpassing the previous high-water mark of nearly $19.2 billion in 2013.
The major broadcast networks — ABC, CBS, NBC, Fox and the CW — increased their combined upfront ad haul 4.1% over last year to an estimated $9.1 billion, according to Media Dynamics’ analysis, which was released Tuesday.
Cable TV networks, meanwhile, collected $10.6 billion in advertising commitments, a 7.6% gain over 2016. Robust sales for cable time surprised some analysts because these channels have experienced more dramatic erosion in viewers as more consumers turn in their cable boxes and sign up for lower-cost streaming services, such as Netflix and Hulu.
“Our primary take on the 2017-18 upfront is that national TV is far from dead,” Media Dynamics President Ed Papazian said in a statement. “A number of major branding advertisers have decided that they have no alternative but to continue to use TV as their primary communications platform — despite rating fragmentation and increased [prices].”
Some advertisers have been skittish about social media platforms, such as YouTube, after discovering their ads placed alongside offensive content, including terrorist propaganda. They also were not certain about the effectiveness of ads in online video, wondering if viewers were actually seeing their ads.
Television still has an edge because of its “huge reach advantage over digital media, as well as the fact that every TV commercial is fully visible,” Papazian said.
This year’s upfront auction also was buoyed by so-called cross-platform buys. For example, NBCUniversal whipped up demand by combining sales for time on its flagship NBC network, which boasts such hits as “This Is Us,” with spots on its cable networks, including USA, Bravo, E! and MSNBC, and digital outlets including NBC.com. NBCUniversal notched its best upfront ever.
There also was increased interest in late-night shows, including NBC’s “The Tonight Show With Jimmy Fallon” and CBS’ “The Late Show With Stephen Colbert.”
Television networks across the board also sold more ads on their digital outlets, helping to plump up their totals. Media Dynamics estimated that networks will sell more than $2.6 billion in digital ads in the television season that begins in late September.
Looking at historical data, Media Dynamics calculated that the price per viewer paid by advertisers at this year’s market was a 72% increase over the 2008 upfront. And overall revenue generated for commercials placed in prime-time programs soared 18% since 2008.
“The lion’s share of this gain went to cable, which saw a 40% increase in ad revenue, while broadcast remained relatively flat,” the Media Dynamics report found.
That’s largely because of the explosion of premium shows on cable networks, including AMC’s “The Walking Dead,” FX’s “American Horror Story” and “The Americans,” and USA’s “Mr. Robot.” In 2008, there were considerably fewer high-quality originals on cable.
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