Why CBS and Other Broadcast Nets Should Beware a Rerun of Last Year's Ad Strategy

Last Updated May 11, 2010 1:22 PM EDT

Just because network TV's 2009-2010 "scatter market" sales strategy succeeded in boosting ad revenue -- probably even beyond executives' wildest expectations -- there's no reason to think it will work a second year in a row. In fact, there are plenty of reasons to think it won't, although that's not stopping some network suits from floating trial balloons along those lines.

First, let's recap. Last year, faced with a dismal economy (and the usual overall decline in ratings), the broadcast nets engineered their inventory in a way designed to reap maximum benefits if the economy rebounded as the TV season rolled on.

Instead of selling roughly 75 percent of the season's inventory during what is called the "upfront" market, which is usually conducted in the spring and early summer before the TV season starts, they only sold about 65 percent, reserving the rest for the scatter market, comprised of inventory that is bought closer to air time.The result? Since the economy has, in fact, rebounded a bit, scatter prices have been running as much as 25 percent higher than they did during last year's upfront, making up at least some of the CPM declines that all of the networks received last year.

Enter CBS CFO Joe Ianniello, who yesterday again floated the "we might hold back inventory for scatter" strategy. Ianiello told a media conference that if the network -- which this year has seen ratings increase in core (read: younger) demos -- doesn't get good prices in the upfront, it will simply decline to sell it until later. "We got to get the pricing we want. We'll hold back (inventory) if needed," Ianniello said. (Yes, CBS is BNET's corporate overlord.)

Now, maybe his quote is nothing more than a bit of upfront bargaining going on in the press. Still, all the networks would be wise to remember there are big differences between this year and last. The biggest being that unless the current yo-yoing of the Dow continues for any length of time, advertisers will want to secure inventory early, lest they be hit with huge increases in pricing for scatter as the economy continues to dig itself out of a hole.

Because of last year's downturn, upfront increases may be substantial; according to analyst Anthony DiClemente of Barclays Capital, they could go up by as much as 20 percent. Few advertisers are going to want to sit around praying for a double-dip recession -- and a consequent decrease in scatter pricing.

The second reason is the ever-expanding list of options for advertisers today. Though the evolution is slow, with each passing year, there's more drift of viewer attention and ad dollars away from network television. Twelve months ago, it would have been unthinkable that Conan O'Brien might find more of an audience on cable, or that a media-consumption device like Apple's iPad would take off so quickly. The broadcast networks won't be able to play this game forever. (Pictured: Gary Sinise of the CBS hit "CSI:NY").

Previous coverage of the network upfront at BNET Media: