Buyers to Nets: Let’s Talk Upfront

NEW YORK Delays in the development of new original-scripted TV series programming — due to the recently resolved three-month Writers Guild of America strike — will have little to no impact on the upfront ad-buying season, according to media buyers polled by Mediaweek during last week’s American Association of Advertising Agencies’ annual media conference in Orlando, Fla.

While no one was posturing heavily in discussing the marketplace, most buyers agreed that the broadcast networks’ prime-time upfront take could total slightly less than last year’s $9 billion, with various clients shifting only small portions of their spend into cable, digital or nontraditional media.

And as far as not knowing what new scripted fare will be on offer in fourth quarter and beyond, buyers said new network fare only constitutes about 20 percent of their total buy anyway. And even then, they pointed out, many of the new shows presented never make it to air, or at least not when originally scheduled.

“The writers’ strike may facilitate moving a bit more dollars out of broadcast and into other alternatives, but that’s because most agencies and advertisers spent time looking at those alternatives to cover themselves in case the strike continued longer than it did,” said Tim Spengler, president of Initiative USA. “But if the broadcast networks price themselves reasonably, we’ll buy them. Any dollars that move will be an incremental change, not a sea change.”

Buyers were in accordance that average commercial ratings per show plus three-day DVR viewing (coined C3 last year) will continue to be the currency used in this year’s upfront. “I think we all have to give C3 another year,” said David Verklin, CEO of Aegis Media Americas and CEO of Carat America.

Having a limited number of new scripted shows available for the fall doesn’t seem to worry Donna Speciale, president of investment and activation at MediaVest. She noted that she plans to focus her buying in this year’s upfront on the top-rated shows.

Speciale agreed with Spengler that clients would not move or hold much money back unless the networks become unreasonable in their cost-per-thousand increase demands. “No one will hold back a lot of money, but even if each client holds back or moves a little, cumulatively it can mean a chunk of less dollars for the networks,” she said.

Bill Koenigsberg, president and CEO of Horizon Media, said he believes the networks and agencies would find common ground without much delay. “At the end of the day, the networks have a big motivation to work with us. We have big dollars to spend, and there’s no need for us to not work together,” he said.

Marc Goldstein, CEO of media conglomerate GroupM North America, which oversees media agencies MindShare, Mediaedge:cia and MediaCom, said this upfront, like last year’s, would be “all about analytics.”

“You have to get a perspective of where the upfront should be in terms of price and then make a decision as to whether you buy early or wait,” continued Goldstein. “Analytics drove Rino [Scanzoni, chief investment officer for GroupM], to buy early in last year’s upfront. And that decision proved to be more than the right thing to do.”

While formal upfront negotiations may not be going on right now, conversations have been ongoing throughout the season about potential deals that could be done, either short or long term.

“General discussions are going on right now,” Goldstein said, “because we already know what 80 percent of the networks’ schedules for the fall will be.”

As far as pricing, the networks are most likely headed into the upfront market looking for sizable increases because current pricing for scatter inventory is trending between 40 percent to 50 percent higher than what advertisers paid in the last upfront.

But agency execs are quick to point out that those high prices are anomalies that have been artificially created by the failing ratings of network shows, whose make goods tighten prime-time inventory. Buyers are hoping the networks are able to pay off all make goods by the end of May when this season officially ends. But, like last year, they believe many will again carry over into next season. If that happens, the buyers say they are more aware of the consequences and may buy differently in the upfront.

Verklin said he might try to protect his clients by advising them to commit to sizable ad buys in the upfront. But, he added, if scatter pricing ends up lower in the fall, then he’d be more likely to instruct his buyers to exercise cancellation options.

Other buyers questioned the ethics of that strategy. But Verklin said if the networks could artificially raise prices by carrying over make goods, the agencies should have the right to protect their clients using other allowable means in the buying process.