Though they hate to admit it, advertising buyers and sellers are already gearing up for next season’s upfront, the annual bazaar at which billions of dollars of revenue is at stake.
A&E, for example, last week began holding a series of development meetings with clients and buyers to show off what its 2006 schedule might look like.
“I think everybody starts the cycle earlier,” said Mel Berning, executive VP of ad sales for A&E Television Networks. “To some extent the conversations go on year-round, but we’ve got extra motivation this year because of ‘CSI: Miami’ and ‘The Sopranos’ coming on A&E. So we want to plant a seed in the minds out there that we need a bigger share of the budget. We think we’re going to deserve it based on the audiences we’re going to be delivering.”
A&E has good reason to get a leg up on sales for its new schedule. The network invested a record $2.5 million an episode for repeats of “Sopranos,” and more than $1 million an episode for “CSI: Miami.”
Other networks are also talking to clients and working on presentations. While it’s still early, they’re gathering intelligence about the size and shape of the upfront market, which, despite complaints about the way it operates and a lot of discussion about the devalued state of the 30-second commercial, remains almost inescapable for most marketers.
Some executives said that pre-upfront work is going on earlier than ever because of the time it takes to put together more complicated deals involving product integration and branded entertainment.
Veterans, however, contend that sales have always been a year-round process, with preparations building from low-pressure meetings in the winter to the frenzy around Memorial Day.
“There’s this big fallacy out there that people start thinking about it at the end of April and it all kind of happens in four weeks and then everybody goes fishing. It’s not that way at all,” said Rino Scanzoni, chief investment officer at Mediaedge:cia. “We’re always thinking about and planning for the upfront.”
On the other hand, as one ad sales executive noted, “There are still a few people trying to figure out what they spent last year.”
The broadcast networks began planning the 2006 upfront as soon as the 2005 upfront was done.
“We all talk 365 days a year,” said Jon Nesvig, president of ad sales for Fox.
Mr. Nesvig said the broadcast networks have to book their venues almost a year in advance because there are few places that can hold the thousands of people invited to the presentations-and the jumbo shrimp- and alcohol-fueled receptions that follow.
The holidays often bring clients to New York, where they meet with network sales executives.
“At these Christmas parties, there’s all kinds of chat going on. We chat for a living,” Mr. Nesvig said.
At this time of year, networks try to find out about clients’ marketing plans, such as new product introductions, and let them know about special opportunities that might be available next season.
“Everybody starts thinking about it and looking at how the new season is progressing and what the marketplace looks like and what the opportunities are,” Mr. Scanzoni said. “Everybody’s starting to think about it this time of year.”
“Internally and externally, yes, we’ve already started … let’s call them preliminary conversations, because it’s not like we’re negotiating rates and sponsorships,” said David Levy, president, entertainment sales and marketing at Turner Broadcasting.
Setting Up Strategies
Much of the internal conversation is about technology and setting up strategies for broadband, wireless and VOD. To be ready to deal with those areas in the upfront, Mr. Levy last week created a new media advertising sales and marketing team to be headed by senior VP Chris Eames.
“Broadband, video on demand and wireless are not just blurring the lines of traditional media distribution, they are erasing those lines,” Mr. Levy said. Along with branded entertainment and product integration, which the new unit will also deal with, “this is a very heated area and I need focus on it.”
A&E Network last week started inviting groups of about 30 client and agency executives to its screening room at its East Side headquarters for meetings to go over the networks’ performance, and to develop plans going forward to 2008.
“We’re probably a little ahead of ourselves, although I like this cycle because I think we’re out in front of a lot of the mess,” said Mr. Berning. “We’re looking at faces where people are actually listening and they’re engaged and when you do that in March and April, you get this glazed look.”
After this round of meetings, A&E is going to go back to the agencies to talk about “The Sopranos” in earnest during January, February and March.
“There’s a lot we want to talk to agencies about, in terms of added value, vignettes, some interesting interstitial material we could put together,” Mr. Berning said. “We have a lot of ideas and we need to talk to them about them early in the year so we can get it into the planning cycle.”
Engaging Pitches: Bruce Lefkowitz, executive VP-ad sales for Fox Cable Entertainment Networks, said he’s begun work on the upfront presentation for FX now because the holidays are coming up and “it’s got to be ready to be on the street in March.” This year, for the first time, FX is planning a more research-focused presentation, Mr. Lefkowitz said. In past years, the network has touted its brand promise, its ratings growth and new shows. This year, it will focus on “behavior, engagements and transactions” and show clients viewers’ past purchases and intent to purchase in the future. At a time when clients have a harder task than ever in terms of determining ROI, those variables are a lot more important than the traditional age, sex and income.
At this point it’s tough to forecast how the upfront will go.
Mr. Berning observed some good signs. “The money’s there in scatter. We’ve enjoyed a decent fourth quarter and we think first quarter will also be pretty good and the economy seems to be holding up,” he said.
“If money was held back in this year’s upfront and the volumes weren’t as strong as people would have liked, we’re seeing it develop in scatter,” he added. “We’re into a little bit of a new marketplace, where it’s negotiated closer to air. Clients and advertisers are maintaining their flexibility but if you’ve got good product you’re still getting the bucks.”
Mr. Scanzoni also said he thought the upfront market would continue to be de-emphasized.
“More clients are trying to look at television investment on a more ongoing basis,” he said. “It’s a little bit too early to say, but one thing is very clear. Again there isn’t a lot of upward pressure in the short-term market, and anytime you have that, it will continue to suppress any kind of real growth spurts in the upfront.”
In a research report issued last week, Merrill Lynch analyst Lauren Rich Fine lowered her projections for 2006 ad spending on broadcast television and raised her estimates for cable.
With auto and movie studio spending likely to flatten, her new prediction calls for 3 percent growth in network television, 6 percent growth for TV stations and 7 percent growth for cable.
She said that the growth of Internet advertising, which is more measurable than television, “has capped the ability of traditional media companies to raise ad rates.”
Ms. Fine forecast a 25 percent increase in Internet ad spending.
But Mr. Nesvig countered some of the gloom and doom surrounding the value of commercials in general and broadcast television in particular.
“Our business is actually pretty good,” he said, adding, “it’s important that we evolve, and I think we are.”
He listed ways network television can be made more valuable to marketers, including product integration, virtual placement, placement of special ads at the end o
f commercial pods, and personalization of ads using technology such as Visible World.
“Things are going to change dramatically in five years, but if you implement your media plan for the way things are going to be five years from now, you ain’t going to make it there,” he said. “Everybody is using the Internet and viral marketing and looking for the best combination, but in most cases that still seems to involve some network television, so it’s all about share and that’s been an ongoing game.”
A&E Redesigns For Broadband Ads
A&E Television Networks is looking to pump up its broadband and online ad sales.
“We’re jumping in pretty hard,” said Mel Berning, executive VP of ad sales.
The Web sites for AETN’s channels are being redesigned and relaunched, beginning with the A&E Web site in January, followed closely by History Channel’s.
“We’re adding broadband players for both brands and probably also for Biography,” Mr. Berning said. “There are real opportunities for short-form content, and we can drive a fair amount of consumers to our Web sites or to these broadband players because they want to learn more about history or they’re doing research about biographical figures or celebrities.”
The company is aggressively working to get access to the broadband rights to as much of its television content as possible.
Mr. Berning expects to package broadband video with television advertising.
“We’re more interested in selling an overall comprehensive package across those platforms than just selling some Web site banner or buttons to an advertiser,” he said. “We want to service their needs across online, across broadband and on our linear networks.”