Q&A: Carat’s Andy Donchin

NEW YORK Andy Donchin, evp, chief investment officer at Aegis Group’s Carat, says the current recession will redefine how buyers and clients allocate their future ad expenditures. “It’s changed the way we look at our business forever,” he maintains.
In the following Q&A, Donchin explains the “new normal” and discusses what clients will expect from sellers in this upfront and beyond.
How will this upfront differ from the previous few given the economy?
It’s pretty clear volume will be down, but beyond that it’s a little too early to tell. We’ve got to see what kind of [dollar] volume shows up. It’s all about supply and demand, and we’ve got to figure out what those mechanics are.
Okay, but there’s no question there will be an upfront, right?
There’s definitely going to be an upfront. To what degree is still to be determined — in terms of both volume and the amount of money clients actually decide to spend in the upfront versus the scatter market.
It’s clearly a buyer’s market right now. How will buyers exploit that in the upfront?
We want to realize more efficient pricing. We’re looking for savings. More now than ever, clients have been very adamant that they’re looking to achieve their gross-rating-point objectives and spend less money doing it.
This industry has been through recessions before, but this one seems to have confounded advertiser plans more than previous downturns. Why?
It’s somewhat unique because this one is so much more of a consumer recession than a business recession. And it’s affecting consumers of all income groups and therefore to a greater degree all consumer marketing plans.
When will things get back to normal?
Even if prosperity came back tomorrow, I think there will be a new normal. This recession has changed the way we look at our business forever. We’re prudent now, but I think we’re going to be a lot more prudent moving forward in terms of where we can cut and what’s really working for us in order to achieve greater accountability.
Has the current environment fueled a greater demand for flexibility by clients with respect to their national TV buys?
I wouldn’t argue with that. There’s always been some flexibility built into deals, but there is going to be much more focus on that moving forward. There’s a need on the client side to be in control of the money longer both in the upfront and scatter markets. In the case of the latter, that’s why you’re seeing the money come in much closer to airdate now.
Will there be a sizeable shift of upfront dollars to scatter in order to achieve that flexibility?
Yes, I could see a greater reliance on scatter because of the need to have greater flexibility. But remember that for the past couple of years there’s been a shift of money from scatter to upfront. Will some of that money move back to scatter? Absolutely. There is a client need to be able to maneuver more nimbly in the marketplace as marketing plans change. That said, the upfront continues to work for both sides.
Will more marketers skip the upfront altogether in order to achieve flexibility?
Some advertisers may do that.
What about timing? Will negotiations be extended and blast out to the summer?
Possibly. It could be a longer process because we’re all trying to feel each other out here.

David Levy, the head of Turner Broadcast Sales, has made a pitch to clients and buyers to conduct a single market combining both the broadcast and cable networks on the theory that prices will go down with a bigger group of seller competitors. Reaction?
We do try not to silo it as much. But network TV is still dominant in ratings and reach. We don’t want to pay the same [cost per thousand] for half the rating. And when you do the math and only buy the top cable shows out of a network prime-time budget that’s what happens.