Time-Shifted Ratings Slow Down Upfront Deals

Media buyers are optimistic that the first broadcast upfront ad deals for the 2006-07 prime-time season will be done sometime this week. They also say that’s dependent on network sales executives agreeing to distance themselves from the position of only basing audience guarantees on Nielsen Media Research’s “live plus 7-day” ratings.

While ABC at this point last year had just about completed its upfront selling, ABC sales president Mike Shaw has taken the strongest public position against doing business with any agency that would not accept live plus 7-day ratings, which take into account time-shifted viewing from digital video recorders. And heading into this week, according to buyers, Shaw continues to be adamant about it.

“Mike Shaw will not be the first [network sales president] to break,” said one major media buyer who declined to speak for attribution. “ABC should be the leader in this marketplace, but he can’t because of his position on live-plus 7.”

If ABC is not going to set the marketplace pace, it will most likely be CBS, which has the highest-rated Thursday schedule. (Thursdays are targeted by movie companies and retailers willing to pay a premium to reach viewers before the lower-rated weekend.) Fox has also traditionally done early deals with movie companies. NBC, the fourth-place network in ratings, could try to cut some early deals, but as one media buyer, echoing several other buyers, put it: “There’s not much urgency or interest in doing our first deals with NBC.”

Media agencies are also standing firm—on the opposite side of the issue—on the eve of the market’s movement. Cautioned one media agency executive, “Woe be the agency that breaks rank.”

Heading into the Memorial Day weekend, Fox sales president Jon Nesvig said, “There’s been a lot of talk, but no one can do anything until the ratings currency issue is resolved. Plus a certain amount of sparring has to go on before any deals can be done.”

Another network sales exec, who also declined to be identified, added, “Everybody’s talking, but nobody’s listening. Live plus 7 is the big hurdle.”

Donna Speciale, president, U.S. broadcast and programming for MediaVest, pointed to another damper on discussions: new media options for sale in this upfront. “Later this week, we should see more hearty discussions, but it is not going to be so cut and dry because of all the digital conversations,” said Speciale. “It’s going to take awhile.”

Another buyer, who did not want to be identified, explained, “There is no reason to rush into this marketplace and do deals. I would hope that the agencies would proceed deliberately, thoughtfully, and do deals involving product integration and digital, as well as traditional :30s.”

Yet another agency exec who spoke on condition of anonymity said he expects this upfront to mirror that of 2001, when deals were still being done in early July. Back then, though, the slowdown was the result of a dead market following the dot-com implosion. “Whenever this upfront buying starts, it’s not going to be a 96-hour process like it has been for the past few years,” said the buyer.

But everyone concedes this thinking could change if more than one of the major agencies decides to move all of its clients and spend with a frenzy. “Unfortunately, that’s probably all it would take,” said one agency exec.

One further complicating factor: This year, for the first time since 2001, advertisers seem to be in no rush to get their ad dollars laid into the networks. And if the agencies don’t know how much money their clients want to spend, they can’t spend it. Budgets have been coming in later and later each year, but this year has been the latest by far. Some agencies said they had still not received their clients’ ad budgets by the end of upfront presentations on May 18.

Part of the advertisers’ hesitance is based on the fact that the scatter market over the past four years has seen pricing close to or even equal to upfront pricing. Why rush to lock-in prices in the upfront, when you can hold onto that money and decide to spend it —or not—later in the season and not have to pay a premium?

In addition, the lack of obvious hits among the broadcast networks’ new slate of prime-time shows have advertisers and their agencies thinking that holding back dollars, —at times a gamble—may not be such a bad idea this upfront. Ideally, holding back dollars offers advertisers more options, i.e., being able to spend on spontaneous promotions during the season, and the freedom to spend on any new digital platforms that TV programs are added to during the season.

Several media agencies concede that their clients committed so much money in last year’s upfront, they had few discretionary ad dollars left over to take advantage of the digital platforms nets began offering during the season. More than a few buyers told Adweek’s sister publication Mediaweek during upfront presentations two weeks ago that they plan to hold back millions of their clients’ dollars in the upfront, for potential placement later in digital platforms that may arise during the season.

Neither cable nor syndication sales executives, meanwhile, are expected to benefit by the delay in broadcast buying. “Cable is sitting on the sidelines, waiting to see what happens with broadcast,” said one cable network sales executive. “It missed its window and now it is going to have to wait.”