Buyers Demand Flexibility Heading Into Upfronts


NEW YORK Faced with the worst economy in a generation, and with ad budgets down amid predictions they will sink further as the year progresses, there is little disagreement among ad buyers that they have a lot of leverage heading into this year’s upfront television marketplace. And they will be seeking concessions including price rollbacks and significantly greater flexibility on terms and options to pull out of or reduce spending commitments made in the upfront, given the uncertainty of the economy.

The networks, of course, aren’t conceding much at this point. CBS CEO Les Moonves, however, is the only network executive so far this year to publicly predict that pricing -- at least at his network -- will be up this year. He also indicated last week that it is possible CBS will sell less inventory upfront this year.

Sellers at other networks say it’s anybody’s guess at this point how pricing will shape up in this year’s upfront market, which is still at least three months away. And maybe longer if buyers come to the table with unrealistic expectations, sellers said.

“We’re not going to give it away,” said the president of one network sales organization who declined to speak for attribution. The executive added that the market could turn into a long waiting game if buyers make unreasonable demands. Some advertisers, year in and year out, need to know upfront that they will have a certain number of impressions in place on certain nights throughout the year. “I don’t think agencies can play a 365-day game,” he said.

Moonves said essentially the same thing to analysts and investors last week at a Deutsche Bank conference in Palm Beach, Fla. “We’re never afraid to play the scatter game,” he said.

One top-tier cable sales chief, who also spoke on condition of anonymity, believes cable networks might be in a slightly better position. “There will be flexibility, there will be some concessions, and ultimately there will be a lot more negotiation. But that’s not necessarily a bad thing,” said the exec. “The broadcast guys are getting pushed [to secure price increases], but the clients are getting pushed even harder, and from every direction. They’re going to say, ‘I need concessions if I’m going to survive.’ And if the broadcasters try to squeeze too hard, a lot of business will come our way.”

And the corridor chatter at last week’s American Association of Advertising Agencies’ Media Conference in New Orleans was focused almost exclusively on the chaos and uncertainty playing itself out in the advertising marketplace and the impact that the recession -- the worst in at least 30 years -- would have on this year’s upfront. Michael Mendenhall, svp of corporate marketing and CMO of Hewlett-Packard, who addressed the conference Thursday morning, noted that 40 percent of CMOs in a recent survey believe their budgets will be reduced this year, and they expect a healthy chunk of that reduction to come out of advertising and marketing. (Speaking of 40 percent drop-offs, attendance at the annual gathering of media buyers and sellers was down that much to 650.)

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