Upfront Navigator: Agencies, Clients Like Status Quo

Apr 25, 2005  •  Post A Comment

Last year, advertisers angry about double-digit increases in the cost of commercials on the broadcast networks looked to make changes in how the upfront was done.

The head of one of the major media-buying agencies, David Verklin of Carat, took the lead. He proposed a series of changes including having an opening and closing bell for upfront deals to curb the late-night, cold pizza-fueled rush that some saw as helping to push prices higher.

Mr. Verklin got as far as forming a committee to consider the reforms, but ultimately, no changes were made.

The upfront was conducted more or less as it has been for years. But the results were somewhat different. Early money moved to cable. The networks took in smaller increases.

This year, while advertisers still have some gripes-including the notorious integration fee that networks charge for inserting commercials into the network feeds-there seems to be little clamor for major changes in the way the upfront is conducted.

One radical change is being pushed by Julie Roehm, director of marketing communications for Chrysler Group Marketing. At last month’s Association of National Advertisers television conference, she put forward a model that would make the TV-buying business more like the stock market, with a third party handling the upfront like an IPO auction and with clients having the ability to buy and sell spots on a secondary market.

Predictably, the networks objected to putting a third party in charge of selling commercials, which are, essentially, their product.

Cable will also be a big factor in what happens with the broadcast upfront.

Last year about $500 million shifted from broadcast to cable. And it moved early with networks including MTV and E! making significant sales even before the broadcasters unveiled their schedules.

This year, estimates of how much money could be in play between broadcast and cable range from another $500 million up to $1 billion.

“I don’t see it,” Mike Shaw, president of sales and marketing for the ABC Television Network, told analysts. “If you look at prime time, and look at adults 18 to 49, which is the largest demographic sold in prime, the networks are flat versus a year ago.”

Andy Donchin, director of national broadcast at Carat USA, suggested that market leverage and higher ratings aren’t the reason why cable deals are getting done before the broadcasters are ready to sell.

“A lot of it is there’s just so much cable we want to get a head start on it,” he said. “There is so much to do out there, everyone wants to start talking already.