With ad rates already averaging an all-time high of $800,000 heading into this year's Grammy Awards telecast (Billboard, Feb. 18), will CBS be able to charge even more in 2013?
Due in part to the untimely death of Whitney Houston the day before, the Feb. 12 Grammy telecast attracted a total audience of 39.9 million, up nearly 50% from 26.7 million last year and the largest viewership since 1984, according to Nielsen. But when it comes time to discuss rates for next year's show, ad buyers say they'll negotiate based on the Grammys' five-year track record, not just the 2012 numbers.
"CBS will realize this was a unique event. I don't think they'll try to price off this rating," says one major media-buying executive who bought airtime during this year's show. "But I do know they'll use it to try to get a higher price... My position would be to go back and look at historic long-term averages and use this as an anomaly."
Another executive, who also asked to remain anonymous, puts it more succinctly: "Any media buyer knows they're not going to see those types of ratings again. They have to be realistic with what they're going to go out there with."
A CBS representative declined comment on future Grammy ad rates. But CBS president/CEO Les Moonves is already planning price hikes for next year's Super Bowl, telling investors during a Feb. 15 fourth-quarter earnings conference call that he anticipates charging $4 million for 30-second spots, up 14% from this year's average of $3.5 million.
If CBS were to price Grammy ads for 2013 based on the roughly 30% uptick in the 18-49 audience this year, ads could well exceed $1 million per 30-second spot. But two media-buying executives say they expect Grammy ad rates will more likely reach the $900,000-$950,000 range, after factoring out this year's one-off boost from Houston's death and considering that the Grammys don't deliver as big an 18-49 viewing audience as other live prime-time telecasts.
The Grammys' ratings spike this year recalls a similar bump that the BET Awards received in 2009, when the ceremony turned into a makeshift tribute to Michael Jackson, who died just a few days prior. The network reached its highest audience ever when 10.7 million viewers tuned in, according to Nielsen, but ratings for the BET Awards dropped to 7.4 million viewers the following year.
With marquee awards shows like the Academy Awards and the Golden Globes on an overall downward ratings trend and prime-time networks struggling to break new hit shows, any instance of a major TV event overdelivering audience is a welcome situation for the marketplace.
"CBS is going to draw a lot of advertisers looking to be in that space," one media buyer says. "Maybe CBS can turn a bigger profit off the new guys that come in."
Networks sell ads based on a guaranteed audience, or rating point, which they often increase for live coverage of sports, news and awards shows to account for possible boosts from unforeseen events. But even at an inflated rate, CBS outperformed its guaranteed ratings by 30%, two media buyers say, which means they'll have more inventory to sell in other programming. Had the Grammys underdelivered, CBS would've had to deliver "make-goods," or free advertising, to Grammy sponsors to make up for lost ratings points.
Several sponsors that advertised during this year's ceremony say they're thrilled with the results, including Christopher Dragon, senior director of global brand marketing for Harman International, which aired two spots during this year's Grammys for JBL and Harman Kardon.
"I enjoyed it, and truly thought they treated all the details around Whitney's passing with a lot of style and a lot of class," Dragon says. "The [ratings] delivery was outstanding, the artist lineup was great . . . it was a very entertaining program."