Broadcast and cable networks’ advanced ad sales for the upcoming TV season are expected to hit $18.6 billion, the best showing in three years, according to the consulting firm Media Dynamics.
The New Jersey firm, which has long tracked advertising spending for what’s known in the TV industry as the upfront market, said its preliminary estimate for this year’s auction is up $800 million compared with last year, a gain of 4.5%.
Last year’s total of $17.8 billion was down 3% from the previous year, which experienced a 4.4% slip compared with 2013.
While ratings for broadcast and cable TV networks have eroded as viewers stream online video entertainment in greater numbers, advertisers continue to express confidence in TV’s ability to reach mass audiences in a short period of time.
Online advertising continues to grow at a robust pace, but this spring, ad agency executives indicated that they were directing some money back into TV. Even though TV has been delivering smaller audiences than in the past, ad buyers said the medium still has a proven track record of getting results for their products and services.
Media Dynamics Inc. President Ed Papazian on Tuesday noted there has been growing concern by sponsors over ad blockers on digital video sites that keep users from seeing commercials.
Online video had been considered the shiny new object on Madison Avenue in recent years, leading advertisers to divert some of their spending away from TV and into digital media.
As ratings declined and demand for TV time increased, the rate that advertisers paid to reach viewers -- measured in cost-per-thousand -- went up, Papazian said.
Based on the dollars taken in, the average cost for reaching a thousand viewers in the 18 to 49 age group -- the most coveted demographic for advertisers – will be $47 on broadcast TV in the 2016-17 season, up from $43 in the 2015-16 campaign.
The average cost on a cable network will be $31, up from the current rate of $29, the report said.
Heading into the upfront market, which typically takes place in late May and June, network executives were encouraged that demand for their commercial spots for the new TV season would be strong. That’s because advertisers already were paying high rates for commercials in the “scatter market,” when networks sell their spots closer to airtime.
The auction is known as the upfront because networks sell the bulk of their commercial spots in advance of the new TV season.