Early Upfront

NEW YORK With both buyers and sellers ready to get the process under way, this year’s upfront market is getting a jump on the usual June start time. While the floodgates have yet to open, the growing array of broadcast and cable assets and increased complexity of finalizing deals means talks have started and, in some cases, a few deals have already been made.

It remains unclear, however, to what degree the shaky economy will affect spending (last year, the combined broadcast and cable upfront take was about $16 billion). Another factor for advertisers to ponder: Broadcast network prime-time viewing is down another 15 percent this season while cable viewing is up about 6 percent, according to Nielsen Media Research.

Done deals include Liberty Mutual’s NBC sponsorships covering made-for-TV movies, some Beijing Olympics programming this summer, other broadcast programming and a variety of digital extensions. Publicis Groupe’s Starcom reached agreements with Discovery Networks, DirecTV and several other networks for an array of high-definition programming set to air next season.

With so many more ways to reach consumers, buyers said they need the extra time to meet and conduct business with the growing number of vendors.

“It’s a much more complex process,” said Andy Donchin, evp, director of national broadcast, Aegis Group’s Carat. He noted that he has taken recent meetings with representatives from video networks that didn’t exist a year or two ago, including those for JetBlue Airways and Six Flags amusement parks.

“You have to embrace the new without abandoning traditional media,” explained Donchin. “They don’t work in isolation. They complement one another, so the more screens you can put your message on to extend your reach, the better.”

Complicating matters further are the broadcast and cable networks expanding the number of platforms they offer advertisers in the upfront. For years, those offerings were largely contained to prime-time TV. Two years ago, NBC put a full array of digital extensions on the table and the rest of the networks quickly followed suit.

This year, both NBC and CBS are making available every platform they have, from network, digital and out-of-home to local broadcast.

CBS CEO Leslie Moonves told investors and analysts at a media conference last month that the network would be doing “a CBS Corporation upfront” where it presents its new season to advertisers at New York’s Carnegie Hall, May 14: “We’re going to sell outdoor. We’re going to sell radio in all its forms. We’re going to sell television stations. We’re going to sell syndication. We’re going to sell network. It’s going to be a very different look than we’ve ever had before.”

NBC is taking a similar approach when it presents to advertisers on May 12 at Radio City Music Hall in New York. (It already held a smaller, prime-time-only event, but more on that later.) “Everything that the company has out there will be on display,” said Mike Pilot, president of sales at NBC Universal. This includes network and local TV, digital, out-of-home, cable and Spanish-language TV network Telemundo.

“We’re making our product available the way customers want to buy it,” Pilot added. “I think the industry is in the midst of an evolution in how media companies make product available to buyers. There will be [even] more change next year and the year after that.”

Cable’s Discovery Networks will also put a spotlight on cross-platform sales opportunities this year, according to Joe Abruzzese, the company’s president of advertising sales. Among the company’s platforms are VOD, mobile, digital, and international and educational groups.

Buyers applauded network efforts to put more platforms on display, but some said the real trick is to make them easier to buy in a single deal — easier said than done.

“Everybody is talking the right talk,” said Jason Maltby, president and co-executive director, national broadcast at WPP’s MindShare. “It will be interesting to see if there’s anything different in terms of their ability to bring them together in a seamless fashion and break down the silos that exist. That’s the challenge.”

Carat’s Donchin contended that “both sides are getting better in dealing with these cross-platform agreements. We’re not totally there yet — but we need to be.”

In a departure from past practice, NBC’s two-phased approach in its upfront pitch includes a recently completed series of prime-time presentations to smaller groups of advertisers and agencies around the country. Those presentations included the promise of year-round fresh programming (as opposed to September-May only).

Buyers applauded the pronouncement, but noted that while networks have talked in the past about a 52-week season, they have yet to deliver it.

“We’ve trained people to walk away from broadcast after the end of May,” said Maltby. “We need to train them not to, and the way you do that is you put your money where your mouth is with established marquee programs. … If they’re really talking about year-round programming, then next year I won’t see a whole bunch of season finales clustered into three weeks in May.”

NBC is also sending interested clients four or five scripts of episodes for new programs, which will give advertisers better insight into the directions shows will take throughout the course of the season than a pilot would, allowing for more informed decisions about potential sponsorships and branded content deals. (The writers’ strike forced all the networks to rely less on pilots this year.)

David Barrington, evp and managing director of video investments at Havas’ MPG, noted that the new NBC prime-time presentation format was a significant improvement over the typical glitzy upfront bash. It provided far more relevant program information and allowed lots of time for “pointed questions” at the end, he noted. “If the other networks follow NBC’s new format, we’ll all be better off.”

Bill Cella, former CEO of Magna Global, who recently opened his own media consultancy, The Cella Group, also applauded NBC’s approach, noting that NBC laid out plans for the next 18 months. “There’s a 13-month gestation period for major client promotions,” said Cella. “Advertisers are working on projects for third-quarter 2009 and to have a good read on what the network plans for summer 2009 helps their comfort zone in terms of committing that far out.”

As for NBC’s Radio City presentation, it was shorter than usual, in step with other networks that have cut some of the showbiz sizzle out of their presentations in response to client requests for more substantive offerings. Last year, Fox got its formal presentation down to an hour by cutting out the big celebrity song-and-dance numbers. This year, CBS is foregoing its traditionally lavish post-presentation cocktail party, while ABC is scaling its back.

Doug Checkeris, CEO, WPP’s MediaCom, said the changing network presentations are further evidence “of the diminishing importance of prime time in the total media mix. It’s still important, but we’re going into a different era and there are lots of other opportunities. We have to find the most productive ways to spend energy, time and money.”

Meanwhile, both buyers and sellers said they’re glad the issue of ratings currency is settled — at least for the coming season. Last year, after much drama, the industry adopted a new system based on the average viewership to commercials within a program, including three days of DVR playback.

But other metrics are also used for some ad buys, including engagement ratings, which try to assess how closely viewers are paying attention to ads.

“We’ll probably end up writing some deals on engagement ratings,” said Discovery’s Abruzzese. If so, it would be a first for the network. If those deals do get written, the company will use data from Media Metrix and IAG Research to base them on, he said.

The big question, of course, is how much money advertisers will spend in this year’s upfront due to the uncertain economy.

“I don’t think I’ve had a conversation with a client where they haven’t stressed the challenges of the economy,” said MindShare’s Maltby. “There is incredible bottom-line cost pressure across all categories.”

While upfront spending is hard to predict, several buyers noted that current TV spending (known as the scatter market) has cooled off a bit.

“Things have definitely subsided in terms of the market’s heat,” said MPG’s Barrington. “I’ve received phone calls over the past week or so from sellers” asking about clients with money to spend, he said. “It’s not as robust as it was a couple of months ago.”

Even the sellers acknowledged the current economy is an issue. “It’s a big if,” said Abruzzese. “At this point, nobody really knows how it will affect the upfront. Nobody has said they’re holding back money, but it’s early.”

Despite network efforts to boost their cross-platform offerings, Carat’s Donchin still believes that the market will be down. “I’m anticipating a little less money in the upfront marketplace,” he said. “The only question is how much.”