Networks Get The Better Of Buyers In Upfront

During the 2004-05 upfront marketplace, media buyers were supposed to deliver a clear message to the Big Six broadcast networks: Don't push your luck. Actually, no such luck: The networks hauled in the same amount of money as last year—around $9.3 billion—while selling a lower percentage of their inventory. And this after five of them showed ratings declines, several of which were hefty, double-digit drops.So what happened? Tired of taking the blame for pouring dollars into broadcast despite the declining ratings, buyers pointed fingers at clients. "It is very frustrating," said one media buyer at an agency that spent more than $1 billion in the broadcast upfront. "All the advertisers talk a tough game [publicly] about wanting to move money out of broadcast, but by the time the upfront rolls around, the money is still there, and we are told to spend it in broadcast."In January, when advertisers began to formulate budgets, their message to buyers and the networks was that significant upfront money would move from broadcast into cable and possibly other media. That feeling was solidified in March, when an Association of National Advertisers survey of 165 ad executives at more than 75 major clients showed that a majority were not only unhappy with the upfront process, they also felt that with declining ratings, broadcast should not get rate increases. Then, there was an early flurry of spending on the major cable networks a few weeks before the broadcast upfront, which saw a nearly two-week delay in the start of buying, following the networks' programming presentations.But cable proved to be a mixed bag. While advertisers put more money into cable budgets, the wealth did not trickle past the top 10 networks. The top-tier networks consumed more than half the total of about $6 billion, which represented a 14-15 percent hike. "Fourteen percent growth is a great year, but it was incremental growth," said Bruce Lefkowitz, evp of entertainment ad sales for Fox Cable Networks Group.Any jubilation over the cable upfront was tempered by the fact that CPM hikes ranged from flat to the low double digits, with smaller networks fetching increases of 3 percent at best. The broadcaster with the biggest audience declines, ABC, secured an average increase of 5 percent.For media buyers, negotiating deals with cable first did not have as great an impact on broadcast pricing as they had hoped. By laying down the bulk of their cable dollars on the top nets, buyers thought they could scare broadcasters into more efficient deals, but the strategy backfired, agency executives said. The move tipped off the networks to the fact that the new dollars allocated to cable had been spent and that no more money was going to move. Some clients in categories like packaged goods and soft drinks did cut back on broadcast. But as one buyer put it: "Each client moving a million or two from their broadcast budgets into cable was not going to make a major difference."Also this year, movie-studio clients put pressure on agencies to get their money down quickly, particularly at younger-skewing networks Fox and The WB. That led to a domino effect: Once one studio agency completed its deals, the others followed suit, assuring Fox and The WB of their asking price: 7-8 percent CPM increases. "The studios screwed up the marketplace," summed up one media buyer.Once the studio deals were done, those agencies looked to land other time-sensitive clients. Then Fox and The WB pushed the shops to complete all their buying, spurring the agencies without studios to jump in. Interpublic Group's Magna Global and WPP Group's MindShare were the last to cut deals with several networks, determined to get better rates. But the networks decided to sell about 5 percent less commercial inventory than last year, enabling rates to stay constant with earlier deals.

Brand Marketing

Networks Get The Better Of Buyers In Upfront

Megan Larson

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Megan Larson