Muszynski predicts blossoms in spring

Sep 3, 2001  •  Post A Comment

The tide of advertising dollars that once lifted all networks has turned. How long will that tide be out?
“We’re still going to be in a fairly good marketplace for advertisers for at least another year,” said John Muszynski, executive VP and chief broadcast investment officer, Starcom Worldwide.
“We’re at bottom now,” he said of the advertising economy in general, pegging the start of the turnaround at around the second quarter of next year.
The buyers’ market is the new reality in television, with cable costs per thousand down approximately 18 percent to 21 percent overall, Mr. Muszynski said.
Even the cable-network advertising executives who until recently thought those CPM dollars were theirs by right-and who had accustomed themselves to being order takers for predictable and ever-more pricey buys-now realize that the sellers’ market of past years is gone and that they must pitch and sell for a change.
“The companies that were fairly successful in this tough [upfront] market were the ones that really understood their product and sold the attributes and the strength of their network,” Mr. Muszynski said. The companies that were not successful, he said, “basically just expected to get bought [based on past relationships] and said, `Well, I have inventory. You’ve bought it in the past. Why aren’t you buying it now?’ If I didn’t hear it 50 times, I didn’t hear it once: `That’s my money! Where is my money?’ No, no. last time I looked, it’s my client’s money. And it’s your job every year to compete for it.”
And this year that competition got significantly tougher. “In a lot of situations, we shortened the list of networks that we were actually buying,” he said. “We also recommended to our clients that they should look beyond price, look for things that were important to them and important to their business.”
Those were the so-called value-added deals with components that went beyond eyeballs to encompass less quantifiable business-building elements. “If you take a look at my title, it doesn’t say `buyer’ in there, and my group is not called the buying group. We’re called the broadcast investment group, because we are investing our clients’ dollars. And one of the things that we are looking for is the greatest return on investment.”
That doesn’t necessarily translate into CPMs. “That is one factor,” Mr. Muszynski said. “Any way that you can drive my business could be a way of getting me a greater return on investments.”
Viewed this way, even a ratings disaster like the XFL can be an advertising success. “The U.S. Army [a Starcom client] got a tremendous number of leads through the XFL sponsorship,” Mr. Muszynski said. That sponsorship’s “business building” elements featured an on-site presence, including recruiters, at the now-defunct football league’s games and a tie-in with the XFL’s Web site.
Starcom made many of its deals in the recent upfront early and in some quarters was criticized for it. “Word on the street was, `Starcom moved too fast; you paid too high a price,”’ he said.
Taking the long view, Starcom did move early, Mr. Muszynski said, but with protections for the clients built in.
“I was the first one in every single area,” he said, “and I did that for a very specific reason: I wanted to help all my sellers get a read on the marketplace. Now most of them didn’t believe me, and we had very different opinions on where the market was going, and we had differences of opinion on CPMs.”
At that early point in the upfront, Starcom might have waited, letting its competitors grind the sellers down, he said; instead, he told the sellers, “Let’s work a deal out right now-we’ll agree on a price that is most likely your price, then you protect me when the marketplace comes back to where I think it’s going to be, [and] we’ll go back to my number.”
That kind of protection wasn’t written into the contracts, he said. “This is a relationship business, [it’s] an understood situation … `Protect me and we’ll do an early deal. Don’t protect me, we won’t do anything right now and I’ll wait.”’
Still, not every network has adjusted to the new reality. On the verge of the Labor Day weekend, one cable network was still holding out for double-digit increases, he said. “The money that’s currently allocated to them, I’ll spend it somewhere else, and that’s fine.”
In the near term, one or two cable networks might fall by the wayside, but the cause won’t be the buyers’ market, Mr. Muszynski said. “There’s so much money invested in getting penetration that I can’t believe that they would take such a short-term view and say, `I’ve finally gotten myself to 35 million homes, but I’ve had a bad advertising marketplace. I’m getting out.’ I just can’t see that happening.”