TVB chief Steve Lanzano says among this year's strong local categories are automotive, home furnishings, DIY and health care. On the network side, CBS's David Poltrack says sales "are up 10% in the first quarter so it's looking good so far." He also predicts high advertiser demand for network inventory during the upcoming upfronts.
2016 Ad Sales: Local Core +4%, Network +10%
TV stations should see local advertising sales growth this year in the mid-single digits, while national spot ad sales on local stations “will probably be flat” compared to last year, said Steven Lanzano, president of the Television Bureau of Advertising, at a Monday session at the NAB Show in Las Vegas.
At the same session on the ad sales outlook for the rest of this year, CBS Chief Research Officer David Poltrack said ad sales on network television should grow by nearly 10%, much of which will be due to ad sales related to this summer’s Olympics in Rio de Janeiro airing on NBC.
“Local will be up between 3% and 4% [not counting a bump from political ads],” Lanzano said. He noted, however, that automotive has been a strong category for local TV since last year. And he sees the trend continuing in the remainder of this year. “In September and October of last year, the automotive market was up 12% and 14%, and we’re up mid-single digits this year already,” he said. “First quarter was very good for automotive, which [is] the first time in three years I can say that.”
In general, local ad sales so far this year are up about 2% over last year and “national’s been flat to down about half a percent,” Lanzano said. “Second quarter started out a little slow,” he said, “but the pacing has gotten better. I’ve seen some of the pacing numbers and they seem good. Retail is still a little bit sluggish. [Consumers] still aren’t spending and that’s the bottom line.”
Another category that has been challenging for local TV is quick-service restaurants, Lanzano said. “We still have a challenge with QSR business. That’s because when concepts grow and go national, they go to national cable. So that’s still one of the problem children that we have.”
But on the plus side, local TV is seeing robust ad sales in the home-furnishings and do-it-yourself categories, as well as health care, Lanzano said. Another category that is doing very well is legal advertising, he said. “The legal profession and lawyers has really exploded on a local level.”
Long-term, one trend that the TVB doesn’t see changing anytime soon is the predominance of local advertising on TV stations over national spot. “Ten years ago, our business was basically 70/30 national to local and that’s been reversed,” Lanzano said. “Our business now is probably 30%-35% national and 65%-70% local. I think we’re going to continue to see that play out. As you get into markets 50, 60, 70-plus, that could go to 85%-90% local,” he said.
National spot, Lanzano said, should finish flat for the year.
Meanwhile, network TV ad sales so far this year are tracking according to forecasts made last year, Poltrack said. He said he predicted last year that network TV would be up 9.5% this year — “5% underlying and then the other 4.5% coming from the Olympics,” he said. “The broadcast networks are up 10% in the first quarter so it’s looking good so far.”
He predicted a high demand for network inventory on the part of advertisers during the upcoming upfront sales season for two reasons. He described one of them as a “rebound” of advertisers who are coming back to TV after unsuccessful forays into digital. “We’re now seeing the shift back [to network TV] which we started to see in September 2015 and which definitely was apparent in the first quarter of 2016. And I expect it will continue to be apparent through the upfront and throughout this year,” Poltrack said.
The other reason why he expects upfront demand to be high is because it wasn’t as high last year. As a result, the networks held back inventory during the upfront and wound up selling more inventory in the subsequent scatter market at higher prices. Advertisers seeking inventory at lower prices will now be coming back to the upfront, Poltrack said.
“The networks took a risk [last year] and they decided they were going to sell less upfront because they felt they couldn’t get the pricing upfront and they were going to gamble on the scatter market. And that gamble paid off big time,” Poltrack said. “The scatter market went through the roof in the fourth quarter and it continues to be in that situation, and the scatter market now has generated significant premiums. A lot of advertisers held out for scatter, did not spend much money upfront, and they ended up paying those huge premiums for scatter. So we are anticipating a significant amount of greater demand for upfront this year,” he said.
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