Jitters Mount As Upfront Nears

Just six weeks before the broadcast networks are scheduled to introduce their 2001-2002 season prime-time schedules and begin selling advertising time in the upfront, uncertainty is building in the marketplace. With the economy in a downturn and potential strikes by TV writers and actors looming, the networks are steadfastly professing that they will be able to soldier on with contingency schedules heavy with non-scripted fare such as newsmagazines, game shows, sports and reality programming. But advertisers are not necessarily buying that pitch.

Donna Salvatore, CEO of Mediavest, whose clients spend more than $1 billion annually in the broadcast upfront, last week questioned whether the networks’ contingency programming can meet the audience needs of many advertisers. “The problem from our side of the table is that a lot of demos for this programming will be different than they are from traditional TV comedies and dramas,” Salvatore said at an Association of National Advertisers TV Ad Forum. “Rather than offering the reach that advertisers are used to, [the backup shows] will be too specifically targeted, and some demos might not get enough weight.”

Salvatore specifically cited the young female demo, which traditionally registers significantly lower viewing on newsmagazines, game shows and sports programs. “If younger people do not find shows they like, they will defect,” Salvatore warned. She added that the fourth quarter, when the effects of the possible strikes would hit hardest, already has a high concentration of sports telecasts in prime time, even without the addition of more sports in a replacement-programming scenario.

In addition, buyers said, reality programming attracts a higher concentration of light TV viewers who tune in for a particular reality show but do not watch television on a regular basis and are therefore less attractive to advertisers.

In addition to concerns about replacement programming, advertisers have signaled that the current business slowdown will force them to be more selective this year in how they spend their upfront budgets. “This is a very different economy, and we will be making our marketing decisions on a brand-by-brand basis,” said Bob Wehling, global marketing officer for Procter & Gamble. “[Spending on] some brands will go up, some will go down.”

For some P&G brands, ad dollars will be shifted out of network TV to more targeted media, Wehling said. Brands targeted to mass audiences, such as Tide detergent, will continue to be advertised heavily on the networks, but more demo-specific P&G brands like Cover Girl products (which are aimed at teenaged girls) could see their budgets shifted from TV to less-expensive media, such as magazines and the Internet, Wehling said.

With so much uncertainty in the air, buyers are hopeful that the networks will be less aggressive in pricing their inventory in this year’s upfront selling season, expected to begin after the nets introduce their fall prime-time schedules in mid-May. “The networks may have to reduce prices in the upfront to sell more inventory, or run the risk of being stuck with [inventory] in scatter,” said Tim Spengler, executive vp and director of national broadcast for Initiative Media North America.

One thing buyers and the networks do agree on is that there will be fewer dollars spent in this year’s upfront than in 2000, when $8.1 billion was committed. Buyers expect the broadcast upfront to top out at about $7.3 billion this year, a decline of about 10 percent. From the networks’ perspective, the falloff actually would not be that great: Subtracting the estimated $400 million in cancellations exercised by advertisers this season, the amount actually spent from last year’s upfront commitments is closer to $7.7 billion–about 5 percent higher than this year’s anticipated upfront take.

Now both enduring more sober times, buyers and sellers agree that the pace of last year’s record upfront was too frenzied. “If the networks hadn’t been so greedy last year and we had not allowed ourselves to walk into the slaughter like we did&we wouldn’t be saying the market is a disaster right now,” said Gary Carr, senior vp/associate director of national broadcast for Initiative Media.

“The problem with the advertising business is that the end of ’99 and the beginning of 2000 were too phenomenal,” Viacom president/COO Mel Karmazin said last week. “Last year, if we had been smart, we would have hit a certain number, then stopped selling advertising,” Karmazin said in reference to CBS’ 2000 upfront.

“Certainly the recession fever has come quicker and been more sustained than we anticipated, but the debate is still open as to whether the recovery will come by the end of this year or in 2002,” said David Poltrack, CBS executive vp of research and planning. “If marketers believe the recovery will come sooner than later, they will continue to spend advertising dollars and won’t cut their upfront spending too much.”

–with Daniel Frankel and Megan Larson