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Direct Response Marketing

DR Prices May Rise as Cable Sells to Branders in Upfronts

2 Apr, 2014 By: Doug McPherson

LOS ANGELES – Direct response marketers may have to dig a little deeper into their already tapped pockets to buy cable ads this year if – as seems likely – cable sells more to branders in the upcoming upfronts.

Insiders say DR, already feeling pain from rising 2013 cable rates, could hurt more in 2014 as brands grab more inventory.

Marisa Guthrie, a writer with the Hollywood Reporter, says the demarcating line between broadcast and cable may be fading fast for viewers who quickly are becoming platform agnostic. But that divide likely still exists in the minds of one important constituency: media buyers.

In this upfront selling season, analysts say cable executives will make their cases for a bigger slice of buyers’ TV budgets with more original scripted content and splashy event specials while touting ratings that are closing in on broadcast competitors and, in some cases (AMC’s ”The Walking Dead”), surpassing them.

But Guthrie and others says cable execs can expect significant push-back because — in spite of a handful of sought-after series — it’s difficult to undo the legacy pricing bases that broadcasters have enjoyed for decades.

Analysts say there is still a 3:1 rate gap between broadcast and cable when it comes to upfront efforts.

SNL Kagan senior analyst Derek Baine told the Hollywood Reporter that while the cost-per-thousand viewers gap “has been closing over time, it’s been closing at a slower pace than everybody had predicted. There are still a lot of low-rated shows on broadcast that are getting higher CPMs than comparable shows on cable by a wide margin.”

In the meantime, cable’s ad growth also is plateauing. The Cable Television Advertising Bureau says ad-supported cable networks took in $10.2 billion in upfront commitments for the 2013-14 season, a 4-percent gain from 2012-13.

To compare, ABC, CBS, Fox, NBC and the CW generated $9.15 billion for 2013-14. While it was the third consecutive year that cable outstripped broadcast, cable notched a 5-percent increase in 2012-13 (to $9.8 billion), a 16-percent increase in 2011-12 and a 19-percent increase in 2010-11, when the industry was digging out of the recession.

“The Walking Dead” has been the top-rated cable TV show in the 18-to-49 demographic for the past two seasons. The show now commands among the highest CPM rates on TV, at close to $350,000 for a 30-second spot during the upfront selling season, according to Adweek. By comparison, buyers ponied up an average of $326,000 for a 30-second spot on CBS’s ”The Big Bang Theory,” the top-rated scripted show on broadcast.

The problem for cable execs, Guthrie says, is that there’s only one ”Walking Dead.”

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