In Depth

Strike Ends, TV Ad Biz Adjusts

Change Coming, Bit by Bit

It takes more than a 100-day strike by Hollywood writers to fundamentally change how business is done in television.

Almost as soon as the Writers Guild of America strike drew to a close, it looked like business as usual for some networks, with preparations for May’s annual upfront advertising presentations at Lincoln Center and Carnegie Hall in New York.

The strike did serve as a trigger for some changes to the upfront, though the shift away from the lavish seasonal bazaar preceded the writers’ walkout. And even amid a TV landscape that’s changing with digital delivery of content, the networks still offer advertisers the mass reach that marketers need to reach big audiences.

Ed Gentner, senior VP and group director at MediaVest, said TV ad-buying traditions will be tweaked, not abandoned.

“I would be little surprised if they took on the exact same form as they have in the past,” he said of the upfronts. “There need to be some changes. There are other formats that could probably give more meaningful information for the people who attend.”

Some networks, including ABC, may change their upfronts because most new series pilots won’t be ready to be screened due to the strike.

“I think it will be more of a meeting than a presentation,” said Mike Shaw, president of advertising and marketing for ABC. “I don’t think we’ll do the same amount of entertaining, and I don’t think we’ll have the same amount of talent.”

Mr. Shaw also expects that upfront negotiations, which customarily have kicked off in May, will take place in June.

ABC plans to bring back most of its shows from this season.

“I think we’re going to be able to tell people exactly what the fourth-quarter schedule is going to look like. It’s going to look a lot like this year’s fourth-quarter schedule,” Mr. Shaw said.

And while there are always some changes and preemptions, he thinks ABC will be able to account for about 85% of its gross ratings points by the time the network makes its presentation, which is not too different from a normal year.

Advertisers and media buyers have suggested the writers strike might be a catalyst that helps accelerate bigger changes in the way TV advertising is bought and sold.

“The business has changed and we need to change,” said Steve Lanzano, chief operating officer of media agency PG USA.

He said the first thing to be looked at is the timing of the upfront. With most marketers working on fiscal years that start in January, it doesn’t make sense to buy ads in May that start running in October.

“With every other media you can long-term buy whenever you want,” he said. “I think we’ve got to really re-look at this.”

But network executives said advertisers are free to buy whenever they want and that agencies buy spots in scatter 52 weeks a year. In many years, however, prices go up after the upfront, which explains why so much business is still done in June.

“We’re out seeing clients all the time, and no clients are telling us at this point in time that they’re moving their upfront,” said Mr. Shaw. “As a matter of fact, we got calls after a couple of articles went out to that effect that they don’t want us to change a thing.”

But Jo Ann Ross, president of sales for CBS, said a Carnegie Hall presentation still makes sense.

“We are looking at what’s going to serve our clients the best way, and May is the time when we traditionally sit down and have conversations in a bigger forum,” she said. “We believe that is still a great time to get out there and talk about network television and the efficiency and the value that it brings and what CBS has to offer.”

Last year, Fox cut its upfront presentation in half, to under one hour, before attendees adjourned for drinks at Wollman Rink in Central Park. The network will follow a similar plan this year. Other networks also tried to be brief.

This year, NBC has been most vocal about making changes to its upfront presentation to make them more creative and client-focused.

“Change will be made to this year’s upfront. Plans are under way and we will have an announcement shortly,” NBC said Thursday.

Buyers said the strike accelerated marketers’ efforts to find new ways to reach consumers. But one network executive said that during the strike, few clients asked for money back when shows were preempted or when they had an option to reduce their upfront buys.

“If people wanted to spend their money elsewhere, what better time than when we could have handed it back to them under standard operating procedure,” said one ad sales executive.

Making Good
With top shows preempted, Mr. Shaw said he had fewer ratings points available to sell, which affected his business. When schedules didn’t meet the guarantees made in the upfront, unsold spots were given to advertisers as make-goods, leaving the network with few spots to sell in the scatter market, where prices were jumping. That sent some money elsewhere, he said.

“All that money will come back” now that the strike’s over, Mr. Shaw said. “There’s no more effective advertising medium than television, and there’s certainly no more effective advertising vehicle in television than network prime time.”

Mr. Lanzano conceded that at this point, the networks have reason to be optimistic in the short term.

“They’re still in a good place because there’s still a lot of demand for diminished supply, but if it keeps going the way it is, there’s going to be that tipping point where people say enough is enough, I’m not going to pay for this,” he said.