Upfront Preview: They’re Mad as Hell–So Why Do They Keep Taking It?

This time last year, advertisers were fed up with the upfronts—and they had the stats to show why. The Association of National Advertisers led the charge, announcing that they’d officially had it with the annual melee in which up to 85% of network (and up to 35% of cable) is pre-sold over three sleepless days each May. The balance is bought and sold in calendar-year deals and the pricier scatter market. At the ANA’s annual meeting—which reconvenes this week in New York—a members’ survey showed that 57% were somewhat or very dissatisfied with the free-for-all open market known as the yearly upfront. Their biggest beefs: the "unfair pricing system" and "speculative deliverables" of broadcast network programming that "changes drastically and under-delivers." Each year, they complained, prices rose and they got less in return. ANA members were eager to address these issues. This led to a landmark meeting to discuss upfront reform—appropriately called NUDG, for Network Upfront Discussion Group. Attending the meeting in New York last April were advertisers, agencies, broadcast networks (only NBC declined to participate) and two cable programmers, Court TV and Turner. Antitrust issues (and lawyers in the room) kept pricing issues off the table. And, despite the desires of doomsayers, the upfront wasn’t scrapped and replaced with some radical new model for buying and selling TV time. Perhaps as a result of the "NUDG-ing" at that meeting, a handful of top-rated cable programming groups, including Turner, wound up closing their upfront deals ahead of the networks in the 2004 market. "In last year’s upfront there was a shift of broadcast dollars to cable," says David Levy, president of Turner Entertainment ad sales, who attended the NUDG meeting. Levy says his networks’ 2004 upfront revenue grew by "about 25%" over the year before, with double-digit growth in CPMs (the cost of advertising per thousand potential customers reached by a TV commercial). "I believe that trend will continue," Levy says. "There has always been some shifting, but typically that was always new dollars coming into the market. This was actually a real shift of money. And nobody got hurt: We’re delivering—everybody’s delivering, [while] on the broadcast side those numbers are decreasing." Last year, Turner’s secret sauce, besides having successful brands such as TNT, was its influential Millennium III research study, which showed advertisers that cable networks are an efficient substitute for broadcast. The study’s "One Television World" slogan became Turner’s 2004 upfront rallying cry. The presentation swayed media planners and buyers, as well as the Cabletelevision Advertising Bureau, which adopted the "One TV World" moniker and rebranded its own efforts. With Millennium IV due this year, Levy & Co. have a new upfront tag line: "Beyond the :30." "It’s not just about 30-second commercials," says Levy of his cross-platform (including VOD) and cross-networks pitch. "It’s about service, it’s about backroom operations, it’s about sponsorships and promotions, it’s about integration, it’s about programming and, of course, it’s also about ratings and the 30-second commercial. It’s about liability and maintaining that you get what you pay for. All those things are important when an advertiser or an agency is looking at buying a network." Dueling Upfronts ANA CEO Bob Liodice’s opening keynote at this week’s meeting will outline why TV advertising needs to be more efficient and accountable. Other sessions will focus on what advertisers need from television: brand marketing, viewer-empowering and -targeting technology and cross-network promotions, all of which will (they hope) help them transcend linear ratings and combat ad-skipping. Cable networks will try to demonstrate in this year’s upfront that they can deliver all of the above to advertisers and, in so doing, continue to shift the market in their favor. But it won’t be easy. Cable networks aren’t just competing against broadcast and syndication for upfront dollars—they’re competing against each other. Upfront competition among cable nets has gotten so fierce that The Weather Channel whisked media buyers to Quebec’s Ice Hotel earlier this month in an attempt to stand out from the pack. Luckily for cable networks, the upfront is just a part of their overall strategies; upfront inventory for cable networks typically is in the 35% range. "If [broadcast] networks lose 85% sellout in the upfront, history has shown they can’t handle that much scatter each quarter," says Discovery Networks ad sales president Joe Abruzzese. "So they try to write as much business as possible. We, on the other hand, sell every day." Discovery’s calendar-year upfront covers September to September, and brings in a third of its annual ad revenue. As with all cable programming groups, Discovery relies on cross-platform deals, which comprise about 35% of its business. These deals are made year-round. "We use all of our networks to sell as much inventory as we can to advertisers, so when we construct a deal with P&G, it’s not really upfront," says Abruzzese. "We may talk about the price in the upfront, but we’re working on the deal now." Although advertisers and their agencies almost certainly will continue (grudgingly) paying higher broadcast CPMs this year—old habits die hard—they will continue to shift more money into a broader media mix that includes online, direct marketing, gaming and branded entertainment. More Discovery advertisers are using a total communications planning strategy, Abruzzese says. Swiffer and Home Depot, for example, have cut product integration deals that tie them to shows like TLC’s Trading Spaces and Town Haul—deals that take them beyond the 30-second commercial. "We’ve done research where consumers have said, `I remember your Home Depot ads and I feel very good about Home Depot in that show,’" Abruzzese says. "That’s all the advertiser really wants. It’s not the [upfront] commoditization of `what’s the 30-second commercial worth?’" A Good Start to 2005 At the ANA confab, upfront-avoider DaimlerChrysler will give a case study explaining how it has been shifting money away from TV and offering an alternative to the upfront model that is based on the stock market. This could inspire more advertisers to abandon the high-stakes crapshoot that is network TV—and abandon cable networks as well. The stakes are high. Advertisers spent an estimated $67 billion on all television last year. Cable networks’ ad revenue for 2004 grew almost 12% from 2003, according to Nielsen Monitor-Plus. Despite the knocks, broadcast grew 12.2%. It wasn’t top dog of all media spending, however: That crown went to syndicated TV ad sales, which increased 13.7% after several years of slow growth. CAB president and CEO Sean Cunningham, also among last year’s cable NUDG-ers, estimates that cable networks’ overall 2004 upfront tally rose 17% from the previous year’s marketplace, from $5.3 to about $6.2 billion. But he’s reluctant to make predictions. "The underlying factors that caused that reordering [of cable and broadcast deals] have only been exaggerated from last year’s upfront," Cunningham says. "The rating points continue to be up. That said, every marketplace’s pacing, timing and order is unique." Cunningham refers to a CAB analysis showing that ad-supported cable will continue its streak this year of capturing more than 50% of prime-time viewing, adding, "The broadcasters are down so far [this year], so that reordering of investment priorities in last year’s upfront was smart for the advertisers and agencies that made that adjustment." Cunningham also says the momentum of the first-quarter scatter market bodes well for cable. "That’s coming after a lot of money was laid down in the upfront marketplace," he says. He offers another sign that attitudes toward cable are evolving: The CAB’s EDI (electronic data interchange)—e-business invoicing and tracking software that eliminates paper-thick excuses for not buying cable—recently was pitched to, and approved by, the heads of the top 10 agencies. "[Cable] had sort of a lingering process and stewardship challenge that we wanted to fix in order to see the full fruit of a market correction," he says. Although 30-second ads will remain the core of the CAB’s—and cable’s—business for the foreseeable future, Cunningham’s organization also is touting a "beyond the :30" message similar to Turner’s: "This is the next great evolution of selling goods and services through the television: the affinity that people have for cable brands and their desire to opt into deeper content, deeper information in a branded environment where they already have got such a predisposition for the subject matter." Beyond the Upfront Consolidated programming groups such as Turner, Discovery, NBC Universal and Viacom have become experts at cutting year-round integrated marketing deals that transcend the frenzied upfronts held in May. So when it came time for the YWCA to rebrand in January, it turned to Viacom’s cable networks. The national rebranding campaign leveraged the on-air and online platforms of MTV, MTV2 and BET. Developed by advertising and PR agency Bozell & Jacobs and featuring spots directed by acclaimed filmmaker Bronwen Hughes, the YWCA campaign included sponsorships that tapped into BET and MTV programming, such as a short-film competition (centered on HIV/AIDS education) on BET and MTV.com’s "First Ladies" music showcase. A customized magazine was distributed at YWCA venues nationally. The scale of YWCA’s campaign and ambition of its message—how the YWCA works to eliminate racism and empower women—would have been impossible to hammer out if forged within upfront time constraints, says Cort Irish, broadcast manager for Bozell & Jacobs. "The budget that we were given to launch this campaign is something that when dumped into the national media climate becomes mere pennies," says Irish. "We felt that our best opportunity to make these dollars work the hardest for us was to partner with someone who had access to multiple platforms of communication. We knew that these networks would provide us the strongest delivery against our target audience from not only a straight demographic standpoint but a psychographic one as well." ViacomPlus, the company’s cross-platform and cross-networks team, managed the YWCA campaign. "They can bring to the table a nontraditional component that you might not otherwise be able to get through investments in the upfront," Irish says. "We believed that the strongest campaign for this rebranding effort had to feature a combination of both traditional and nontraditional elements that would ultimately feed off of each other." —S.B.