Agency Caution Stalls Upfront

NEW YORK Gun-shy media agencies are helping to delay the start of the upfront.

There are so many variables to consider in the negotiations this year, each media agency is hesitant to pull the trigger on the first big deal for fear of making mistakes that will cost clients down the road.

“Everyone is cautious about making a deal that will be trumped by a better deal going forward by another agency and not being able to adjust their own deal,” said one network sales executive, who did not want to speak for attribution. “And every agency is wondering what intelligence their competitors have that they might not have. So no one wants to go first.”

The networks are also concerned about doing commercial ratings deals for the first time and having to project those deals ahead to September 2008. “We’re going to be asked to project commercial ratings through the third quarter of 2008 when we haven’t even seen what commercial ratings for third-quarter 2007 are,” said one network sales executive. “If you don’t think that’s an issue, you’re wrong.”

“This has become a much more complicated process,” said one media agency executive. “Between the currency discussions, and product integrations and cross-platform considerations, there is just no reason to rush in and get things done. There is no scarcity of inventory and there is nothing to panic anyone into doing deals. No one feels they will lose an opportunity if they wait, but there is a concern that if we rush, we could make a mistake.”

Adding to the delays has been the demand by media agencies, led by GroupM, that commercial pods be moved in the early-morning and late-night dayparts in order to better enhance commercial viewing, since commercial ratings are going to be used as the negotiating currency for many of the deals.

“The networks’ ad sales departments may agree that commercial pods should be moved, but maybe the programming side or the shows’ producers don’t agree with that,” said another network sales exec. “Maybe David Letterman or Jay Leno don’t want to have commercials during the first 10 minutes of their shows. You’re dealing with big egos here. It is a delicate process.”

In previous years, early upfront deals could be done between a media agency and a network for a particular cost-per-thousand rate and then later adjusted if the market dynamics shifted during the course of the upfront. But this year, there are too many variables to make that a feasible option. It would be almost an impossible task to adjust rates if some deals were done with commercial ratings, some with program ratings, and in each of those cases, a different number of days was included for DVR viewing.

The third factor delaying early deals is the hard-line approach broadcast network sales departments have taken on rates. Some of the broadcast networks are asking as much as 8 percent cost-per-thousand increases for prime-time ad inventory, a figure the media agencies have initially balked at.