TV broadcast networks wrapped up the spring ad selling season with gains after a slow start, thanks in part to an industry shift to commercial ratings from program ratings.
"It was truly a transformational 'upfront,'" says Mike Shaw, president of sales and marketing for ABC networks, a division of
. "The television advertising business just changed by switching to a new metric for measuring audiences. The entire advertising business and everything it was based on just got turned on its head."
Commercial ratings measure viewing during commercial breaks as well as during programming, and after tough negotiations, the industry settled on a metric that includes viewing from
machines and other digital-video recorders for as long as three days after a program airs.
Given this year's changes to the longtime ritual on Madison Avenue, ad deals were more complicated in May's so-called upfront selling season. The end result, however, was as good as or a bit better than last year. Network broadcast advertising is expected to increase 2.5% to $18.45 billion in 2007 from a year earlier, according to a report by PricewaterhouseCoopers.
"Advertisers were more optimistic about this coming year than last year," says Shaw. "It was a pretty robust marketplace in general. We could have kept selling and selling, but we ran out of inventory."
For its part, ABC said it racked up $2.4 billion in prime-time ad commitments, up from $2.3 billion last year. The network said it posted 8.5% to 10% price increases for its prime-time ad slots, and several sources said those increases led the industry.
ABC comes from a position of strength with its popular lineup of prime-time shows, such as
. The network, along with its counterparts, benefited from high prices for ads in the so-called scatter market, where buyers can lock in advertising close to a program's airtime. That pushed spending into the upfront, where buyers cut ad deals for the year.
Also, Shaw says that commercial ratings show the broadcast networks' ability to hold an audience throughout a commercial break during hit shows.
"With program ratings, it was much easier to move money away from ABC and buy a different alternative that was cheaper," says Shaw. "Now, money was shifted back to the networks, because when you reorder your ad budget based on where your commercials are actually being seen, we're right at the top of that list. This went a long way toward re-establishing and buttressing the prominent position we hold in television advertising at the networks."
Despite this year's gains, networks are still facing a long-term downtrend in audience and ad spending due to the rise of digital media. All television networks are
struggling to keep pace with the red-hot online ad market, which is dominated by search providers such as
Furthermore, the proliferation of DVRs allows consumers to fast-forward through TV commercials, and Nielsen's commercial ratings don't credit networks for ads that are skipped, even though the TV industry argues that there is some commercial value to those ads.
A source familiar with the matter said that
led the industry in overall sales volume in the upfronts, securing $2.5 billion in ad commitments this year, higher than the $2.2 billion to $2.4 billion it secured last year.
A CBS spokesman said the network posted a 3% to 5% increase in sales this year compared with last year.
Fourth-place NBC, owned by
, secured $1.8 billion to $1.9 billion in ad commitments for the season, leaving it basically flat with last year's results, according to a source familiar with the matter. A spokeswoman for the network declined to comment.
Scott Grogin, a spokesman for
Fox Broadcasting, declined to comment for this story.