It’s Quincy M.E. time on Madison Avenue, that postmortem period where we weigh and catalogue the upfront’s vital organs and try to divine meaning from the entrails.
Given the speed and relative lack of discord that colored this year’s deal making, you’d be forgiven for thinking that the inquest might be a little light on discovery, one of those episodes where Jack Klugman spent most of the hour throwing back beers at Danny’s Place.
While there’s still some final mopping up to do in the pathology lab, the larger truths of the 2010-11 upfront are in plain view on the slab. If this year’s market is indicative of anything, it’s that advertisers really don’t like paying 30 percent premiums for scatter time, and that as a result of this understandable aversion, a good deal of money that normally would have been reserved for scatter buys next season was moved into the upfront.
Media buyers estimate that close to three-quarters of new upfront money was pulled out of scatter reserves, a monetary shift designed to prevent clients from having to cough up the double-digit increases networks are likely to command for buying spots in-season. (Sellers suggest this figure is a rhetorical flourish designed to undermine the strength of the market.
“Sure, we took scatter money in the upfront, and we booked that money at scatter rates,” said one ad sales executive. “But we also saw upfront clients who wanted to make bigger investments than they did a year ago, and those extra dollars were priced on a tier. That this is all a matter of scatter moving into the upfront is nonsense.”)
While total upfront volume is estimated to be nearly 20 percent higher than 2009-10––adding up to some $8.3 billion for broadcast prime time, $7.9 billion in cable commitments and another $2.4 billion for syndication––full-year expenditures are likely to be up by only a few percentage points.
“There’s definitely growth,” said Rino Scanzoni, chief investment officer at WPP’s GroupM. “But when you add it all together, we’re probably looking at 3 percent overall organic growth, all in, for 2010,” he said of national TV ad expenditures. “Cable will be a little north of that, broadcast a little south.”
The good news is that marketers are spending more freely this year. Autos are back in a big way and will likely invest a “couple hundred million” more on advertising this year than they did in ’09, per Scanzoni.
Before the upfront had even begun, auto had already held its ground as the most media-friendly category, as manufacturers and dealers revved up their first-quarter ad spend by 18.6 percent to $3.02 billion, per Kantar Media analysis.
Naturally, the big gains in this year’s upfront were also a function of the debased 2009-10 market. “Advertising is flattening out in national television,” said Tim Spengler, president of Initiative USA. “The upfront was up 17 percent? Great. Last year it was off 15 percent.”
The year immediately following a recession is almost always marked by a particularly robust upfront market. For example, on the heels of the 2001 downturn, the Big Four turned around and notched a 20.9 percent increase in upfront commitments pegged to the 2002-03 season. At the time, the haul was the second richest in history, trailing only the prebust 2000-01 bazaar.
On the morning of May 19, David Levy called his shot from the front seat of a Lincoln Town Car. En route to his network group’s post-upfront presentation luncheon, the president of sales, distribution and sports, Turner Broadcasting System said he would look to strike broadcast-parity CPMs with TBS’ newest attraction, Conan O’Brien. By all accounts, he did precisely that.
“I believe this is the first program on ad-supported cable to get broadcast CPMs,” Levy said last week. In securing cost-per-thousands in Letterman and Leno territory, Levy won the first victory in his ongoing battle to repeal what he calls TV’s “legacy tax.”
“We’re still not at a parity with all our original shows, but we’re getting closer all the time,” Levy said. “Conan’s the proof we have when we say, ‘You can’t just throw all this stuff––our shows, USA’s, Discovery’s, you name it––in a separate cable bucket. That’s just not going to work anymore.’”
If cable is no longer a collection of efficiencies, broadcast is also looking to cast off some of the old ways of doing business. One of the more interesting developments in this year’s upfront was The CW’s approach to packaging ads in broadcast airings and full-episode online streams––drafting what buyers say could be a blueprint for the entire industry.
The new approach adds a TV-sized inventory load to shows streamed online, at CPMs that will be reduced from previous years and in line with linear TV rates. In an early test, ratings data seemed to suggest that viewers tolerated the increased spot loads.
Of course, given its young target demos, The CW has a more urgent need to monetize its online viewing. Motivation aside, Scanzoni and others believe the industry will “move to an aggregation model,” in line with The CW’s approach, “where audiences will be aggregated between TV, the DVR and online viewing all cumed up.”
Buyers have been responsive to CW’s first draft, saying it represents a bold, yet pragmatic way of thinking about convergence. “Kudos to The CW for trying it…This could be a model for the industry,” said Donna Speciale, president of investment and activation and agency operations at Publicis Groupe’s MediaVest. Speciale noted that most of her clients bought the package in one form or another, adding that those who did “got some nice cutbacks in rates.”
As the networks twiddle the knobs on the digital picture, most execs are espousing a similar refrain as far as the core TV business is concerned. “Clients gave television a huge vote of confidence for its value as a marketing tool, and I don’t think that’s going to change any time soon,” says Rich Goldfarb, svp, media sales, Fox Cable Networks/National Geographic Channel. Goldfarb has reason to be exuberant. If total cable volume is up 18 percent to 20 percent, NGC’s upfront haul is closer to 40 percent above last year’s.
While most cable sales bosses had long since hit the links as of June 25, Scripps Networks Interactive still had a small amount of housekeeping to attend to before it was officially wrapped. But as Steve Gigliotti notes, slow and steady wins the race. The evp, ad sales and emerging media for Scripps Nets said registrations were up by some 40 percent heading into this year’s bazaar, and that he actually had to turn down a good bit of money.
“I’d love to write it all, but I have to preserve enough inventory to satisfy advertisers who have scatter needs,” Gigliotti said, adding that volume is up 25 percent versus the 2009-10 upfront.
After a seasonal dip, third-quarter scatter appears to be as robust as the first half of the year, when CPMs were up as much as 30 percent over upfront rates. And while buyers warned that the cupboard would be bare once 2011 rolls around, a famine needn’t necessarily follow the feast.
“I can’t tell you what’s going to happen six months from now, and neither can anyone else,” said one ad sales boss. “Will we see a less vigorous scatter market in the fourth quarter? Could be. But we all did so well in the upfront that shouldn’t be a problem. I’ll start worrying if the tap shuts off next spring.”