May 15, 2006 Shaking Up Tradition in the Way Ads Are Sold By STUART ELLIOTT NY Times
http://www.nytimes.com/2006/05/15/technology/15adco.html?pagewanted=print The new media are giving a new twist to one of the oldest rituals on Madison Avenue, the "upfront" market. The unexpectedly fast and furious embrace of new media by the big broadcast television networks is drastically affecting the plans of advertisers and agencies to buy billions of dollars worth of commercial time. Advertisers could spend the same amount of money this year on, for example, the ABC drama "Lost," but spread their messages across the television show, and the repeats the networks now offer free online. "The networks are recognizing that the way people are consuming television is changing, and the money is going to follow that," said Joe Mandese, editor of MediaPost in New York, an online and print trade publication, adding that this upfront could well be "a watershed." The annual rite, which dates back decades, is known as the upfront because the negotiations between the buyers and the network sellers take place in the spring, ahead of the fall TV season. The 2006-7 upfront starts today, with the presentation of the NBC prime-time lineup, and continues through Thursday. After the unveiling of the schedules, bargaining begins over how much the advertisers will pay as well as which shows they will sponsor or snub. But the rapid migration of TV shows off TV and onto Web sites, iPods, cellphones and other fledgling venues is shaking up the conventions of this year's upfront market. "How is this upfront different from all other upfronts?" asked Charlie Rutman, chief executive for North America at MPG in New York, the media agency owned by Havas. He then answered his own question: "This upfront will be different because of all the choices. "I've been doing this for 30 years, and the idea of getting up in the morning, coming in and trying to find the new 'beachfront property' is exciting. The networks are doing a terrific job in opening up these new avenues to us." Along with NBC and ABC, the networks wooing the advertisers with elaborate events and parties this week are CBS; the new CW, which replaces UPN and WB; Fox Broadcasting; My Network TV, also new and a sibling of Fox; and Hispanic channels that include Sí TV, TeleFutura, Telemundo and Univision. A major difference the new media are making, Mr. Mandese said, is to shift the balance between supply (the networks) and demand (the advertisers). In previous upfronts, the networks tried to raise ad rates by stressing the limits on the number of commercials that can run during the evening hours of prime time, when TV viewing levels are highest. "There's a finite supply of time on TV," Mr. Mandese said. "But multiple platforms create multiple sources for new ads." "As a result, I don't think there's a feeling this year that the advertisers have to rush into the marketplace to make their buys," he added, which could weaken the bargaining hand of the networks. Whatever the effect on ad rates of expanding the inventory of commercial time by offering programs through new media, the networks realize they cannot stand pat. The reason is that marketers have not been waiting for the upfront market to decide between mainstay media and their new-media rivals. Rather, they are turning over a significantly increasing portion of their ad budgets to new-media specialists like AOL, Comcast video-on-demand, Google, MSN and Yahoo. "You already see ad dollars leaving the traditional media and going into the digital space," said Bill Cella, chairman and chief executive at Magna Global in New York, part of the Interpublic Media unit of the Interpublic Group of Companies. The trend "is becoming more pronounced," Mr. Cella said, adding: "I look at it not as fragmentation, but as hyper-fragmentation. It's mind-boggling." Just as "our clients have to follow their customers" into the new media, Mr. Cella said, "the networks have to follow their viewers" there. And follow them they are, with a rapidity and an enthusiasm that is surprising many agency executives on the other side of the bargaining table. "We don't know what exactly all the opportunities are going to be, but I do applaud the networks for trying," said John Muszynski, chief executive at Starcom in Chicago, part of the Starcom MediaVest Group division of the Publicis Groupe. "It would be silly of us to believe this is all going to be changing at once, but I do believe the upfront the way we've known it is no longer the case," he added. Perhaps the most prominent foray by broadcasters into the new media is the availability of shows from ABC, Fox and NBC at the iTunes Music Store (itunes.com) operated by Apple Computer. ABC is also offering episodes of selected series on its Web site (abc.com). CBS is doing the same, branding its service as Innertube (cbs.com/innertube). Last spring, during the upfront market ahead of the 2005-6 season, advertisers agreed to buy an estimated $9.1 billion worth of commercial time on the six biggest broadcast networks. That was slightly less than they bought in the upfront before the 2004-5 season, suggesting that the movement of money to the new media was under way. Because of the uncertainty that new media are bringing to this upfront market, analysts are not offering as many forecasts as they usually do. Some predict the total could increase modestly, by $100 million to $300 million, because of the appeal of the new-media opportunities. Others say those media outlets will only slow the flow of ad dollars from broadcast TV, resulting in a total similar to or down slightly from last spring's. The analysts say ABC and Fox may fare best among the major broadcasters because of the strong ratings for series like "American Idol," "Grey's Anatomy," "Lost" and "24." NBC, which is still struggling with ratings losses, may take in less money for a second consecutive year, the analysts say. Typically, the networks sell 70 percent to 80 percent of the commercial time available in a coming season during the upfront market. They sell the remainder during the season, in what is called the scatter market. ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list medianews@twiar.org To unsubscribe send an email to: [EMAIL PROTECTED]
