Media Agency Report: Order Takers No MoreI

If Casey Stengel were still alive and looking at the roster of network salespeople instead of the 1962 Mets, he might ask, "Can anybody here play this game?"Amid threats of a writer's strike, a weak economy and poor ratings performances, media buyers heading into this year's upfront season have been wondering whether network salespeople are ready for prime time.For most of the past decade, networks have been able to call the shots. That was thanks to what seemed to be an ever-expanding market, which culminated in last year's $8.2 billion upfront.In essence, the advertisers practically beat a path to the networks' doors—all sellers had to do was count the money. While most observers measuring the impact of the looming strike and dismal economy are generally optimistic over the long run, nearly everyone agrees that leverage has shifted back to the advertisers. Buyers say that means sellers are going to have to do something they've not done for the past decade—sell."In today's fragmented context, we have to buy highly dispersed schedules that cut across the traditional components of network programming—things that cut across venues and media, such as magazines and the Internet," one media buyer says. "We need to deal with people who are up to the challenge.""A decade of economic prosperity has not encouraged creative sales positioning by vendors," says Donna Salvatore, CEO of MediaVest in New York. "In an economic slowdown, the vendors need to clearly define their brands' unique attributes and teach their sales force how to sell."The past 10 years have witnessed considerable turnover at the nets, with many experienced salespeople retiring. Many of the people expected to replace them decided to make the leap to dot-coms."No one seemed to mind because you didn't need sellers to lay out a foundation," one media buyer observes. "Demand was high, and they could let us lead the advertisers to them." Now, buyers say, market conditions, combined with lousy CPMs and competition from cable, require forward-thinking network salespeople to devise innovative plans to create demand, especially when demand is significantly reduced."It's the responsibility of the networks to create the illusion that the marketplace is strong, programming is better than it's ever been and they feel confident their ad rates are reasonable," says Howard Nass, executive director for broadcasting at TN Media.Some media buyers, however, question how ready salespeople are to do that. And one suggests that network ad sales departments have atrophied from lack of experience. "Competition and fragmentation in the market have made [their] job more complex, and going into the upfront, you wonder if they're up to the job," a veteran media buyer says.There was a time when salespeople would work to build relationships with buyers. "[Now] the salespeople don't even leave their office," this buyer adds. "In order to develop fresh approaches, you have to get out. You have to assess advertisers' needs. That's not been done in many years."Network sales executives largely shrug off the comments of buyers as the usual grumblings and sabre rattling before negotiations. "I guess I'm sorry if they feel we didn't work hard to fill their needs in the past," says Jon Nesvig, president, sales, for Fox Broadcasting Co. "We thought we had, and we'll continue to do so. It's our business to do business, and we are constantly trying to figure out new methods of assisting advertisers." Dana McClintock, a CBS spokesman, disputes buyers' notions that the economic climate firms up their position against the networks."The past 10 years have been more up and down than people might think," McClintock says. "And there are always outside forces adding pressure. But for us, it's about the programming, and we feel we have had one of the strongest lineups in the past 10 years." McClintock pointed to the successful Survivor series and a new reality-based show called The Great Race, which will help insulate the network in the event of a strike.Not surprisingly, cable execs are happy to agree with buyers, and offer their industry as an option in a down market. Building partnerships and tailoring packages for advertisers is a major part of ad sales for cable networks. Broadcasters will sooner or later have to follow suit, says Lynn Picard, evp of sales for Lifetime Entertainment Services, the cable channel targeted to women."This is not a commoditized business anymore, where you're just selling time for individual programs," she adds. "Many people say that cable people are better at selling than broadcast people. We're used to selling ourselves as a brand. We have the ability to structure unique packages and cross-marketing plans that broadcasters haven't seen fit to do yet in a consistent, major way."Late last month, Viacom COO Mel Karmazin seemed to throw down the gauntlet, saying buyers must meet CBS' prices or the network would withhold up to 45 percent of its ad inventory for the scatter market. [Adweek, Feb. 19, 2001].While a number of media buyers were dismissive of Karmazin's statement at the time —calling it mere posturing that shouldn't be taken too seriously—all believed the ghosts of upfronts past will impact this year's negotiations."There's a lot of anger on the part of clients who felt the networks took advantage of the marketplace last year and rubbed advertisers' faces in it," one buyer says. "The attitude I saw time and again was, 'Line up quickly, because I can't take all of you.' "But this buyer believes that underneath the bravado of Karmazin's stance, there is a tacit recognition of a new reality."His announcement suggests that advertisers are going to be looking for reductions. He's aware of those expectations, and he's trying to gird himself. Still, the perception among prospective clients regarding the upfront is, 'Now its our turn to get even.' They're expecting price rollbacks because the past two years have relatively been flat."Another buyer, emphasizing the equanimity of marketers, puts it this way: "I think the guys who [took advantage of a seller's market] will have the most severe adjustment. Those that didn't will experience a minimal adjustment."TN Media's Nass says buyers are in the strongest position in years vis-à-vis the networks. After having been on the other side of the equation for so long, it is difficult to discern what sort of tactics they might take."Basically, buyers are going to try to play the networks off each other," Nass believes. "But in terms of predicting how things are going to turn out, there's too much uncertainty—the strike, what [Federal Reserve Chairman Alan] Greenspan will do—to say what's going to be."As for buyers' insistence that this is their year to set negotiating terms, Fox's Nesvig notes, "The media buyers are always in charge—they control the money. What the upfront comes down to is a negotiation over value. For our part, we wouldn't be in the business if we felt this wasn't the most valuable game in town."As for whether the strike talks and the soft economy influence the character of the upfront dealings, Nesvig says even the best of times come with unique challenges; the network always tries to prepare for the worst. "Looking at the possibility of the strike, that could actually become a positive for us in terms of having baseball through October," he says. "As for series, we have original programming stockpiled."Nesvig adds it's possible to overestimate the strike threat in relation to the straightforward issues that will be dealt with between buyers and sellers. "People will still go ahead and buy the schedule," he notes. "You never know how long a strike is going to last. All of us hope a strike won't happen, but if it does, you handle it the way you handle other pre-emptions. You take the pre-empt dollars and look for makegood packages."In a document he sent to his creative agency partners, Bruce Silverman, president and CEO of Initiative Media's subsidiary Initiative Partners, also counselled staying the course. He wrote that the bottom line on predicting the strike's impact on advertising is "Don't panic! The television industry has survived these situations before." But the prospect of a strike still makes buyers feel uncertain."Let's say the strike happens, and it becomes apparent there's not going to be any product in the fourth quarter," says one buyer. "Dollars might get shifted out of a medium like prime time and into the syndication market, which is typically a small market. Pricing in that market could go through the roof."Although stressing that UPN pays attention to the market the entire year, not just the upfront, UPN COO Adam Ware says his channel is well-positioned to take advantage of ad dollars that slip through the major networks' fingers. UPN has positioned itself as a brand that targets young viewers with an urban sensibility."Maybe because we're relatively new, we can come at this from a fresher approach than the majors," Ware says. "We don't pay too close attention to how they do in the upfront. But we do realize that their poor performance could be our good fortune."Pricing is another area where smaller nets and cable channels feel they can challenge the dominance of the networks, especially when buyers have the big guys in their crosshairs. "We have historically been underpriced in comparison to the networks," says Rich Sheingold, president of USA Networks cable sales. "You're going to start to see less and less advertisers participate in the network upfront because they've found somewhere else to go."

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Media Agency Report: Order Takers No MoreI

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