Will Strong Upfront Stick?

May 26, 2003  •  Post A Comment

The strongest broadcast prime-time upfront in years is concluding, but with the economy moving at low single-digit growth rates some sellers and buying executives are concerned whether the upfront commitments will stick.
Some believe advertisers may have been stampeded into buying too much inventory and could have buyers’ remorse in a couple of months, said media buying executives. This happened in the 2000-01 broadcast season when some $500 million was dropped before the start of the season. Advertisers could do that again or cancel money after the season begins.
“It’s something we’ve factored in, how much is going to stick in the fourth quarter and the rest of the year,” said JoAnn Ross, president, advertising sales, for CBS. “We thought last year’s money wasn’t going to be real. But from hold to order, we didn’t see that.”
The problem is that the economy is considered weak, at the same time TV advertising remains strong. “It hasn’t made sense for the last 18 months. The media economy has been out of sync with the general economy,” said Mel Berning, president-national broadcast for Publicis Groupe’s MediaVest Worldwide.
Merrill Lynch expects the gross domestic product rate this year to improve only slightly to 3.8 percent, and most marketers said they had no plans to raise ad budgets. “There is a disconnect with what the manufacturing industry has been doing with its pricing, and media pricing,” admits one veteran network sales executive. “Where is all this money coming from? The hell if I know.”
Whereas a strong upfront is usually viewed as an indicator of the health of the overall ad market, this year’s robust commitments worries other media executives.“Obviously, dollars will shift between mediums,” said Nick Matarazzo, senior VP, group director, corporate sales and marketing, Hachette Filipacchi Media U.S. One senior magazine executive, who insisted on anonymity, was puzzled by marketers flocking to TV: “The upfront continues to increase, which blows me away, because [TV] audiences continue to decrease, and marketers seem to disregard that.”
Network advertising sales executives are happy, but not all were gloating. “It is difficult for advertisers to deal with these price increases,” said Jon Nesvig, president-advertising sales for Fox Broadcasting Co. “But the flip side is that TV is still working for them. They are obviously looking for alternatives. But it’s still important to get the reach that only broadcast provides.”
Domino’s Pizza is one marketer already planning to circumvent the scatter market. “We know there will be more demand, because politicians will be competing with companies for ad space, so there will be more people competing for time,” said a Domino’s spokesman.
Another restaurant marketer who declined to be identified pointed to the past sticker shock of the scatter market as the driving force behind this robust upfront market. “I expect that the scatter market will be tight on inventory next year, and that there will be little money left to spend anyway,” the executive said. n
Mercedes Cardona, Jon Fine, Bradley Johnson and Kate Mc-Arthur contributed to this story.