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New Media, Same Dollars and Cents

May 1, 2006  •  Post A Comment

When media machers speaking at TelevisionWeek‘s Upfront Summit last week in New York sounded off on some of the key issues affecting the media business, buzzwords like “engagement” and “multiplatform marketing” got a real workout.

But one group of panelists paid particular attention to the traditional terms “dollars and cents,” voicing the expectation that ad spending would continue to shift from broadcast to cable, particularly in prime time.

David Cassaro, president of Comcast Network advertising sales, predicted cable will gain between $500 million and $750 million, partly due to the folding of The WB and UPN, partly through growth and partly because of advertisers’ experimenting with multiplatform campaigns.

Mr. Cassaro said that last year almost $1 billion in upfront ad revenue migrated from NBC, which after years of dominating the ratings among 18- to 49-year-old viewers had become the highest-priced network in terms of cost per thousand viewers, or CPM.

“The impact on CPMs was profound because, on average, the difference between NBC’s CPMs and [ABC’s], which was the primary beneficiary, was about 15 percent,” he said. “When the dollars got remixed, the overall impact on the bottom-line CPM of broadcast prime time-just broadcast prime time-was down. That’s not going to happen this year, because another billion dollars isn’t going to move off NBC.

“Maybe $100 million, maybe $200 million will move off NBC and get redistributed, but again, the 15 percent delta between NBC and ABC doesn’t exist anymore. It’s more like 8 percent. It’s even tighter with CBS and with Fox, so you’re not going to see that dynamic.”

Even with those lower broadcast CPMs, “The value proposition that’s cable still exists, but when you add it all up, even in a marketplace that is sort of clouded-up a bit or down a bit, no one knows-I think you’re going to see a fair amount of money moving to cable just for pricing reasons,” Mr. Cassaro said.

Louis Carr, president of media sales for BET, also thought money would flow to cable.

“I think people are going to be looking for convergent ideas across multiplatforms,” Mr. Carr said. “I think cable can do that better than other mediums out there right now, so I do think the money will move and I do think you’ll see a lot of creative ideas this year, whether it’s branded entertainment, product placement, showmercials, whatever the case may be. “

Bob Cesa, executive VP of advertiser sales for Twentieth Television and DirecTV, who is also representing the new MyNetworkTV, said, “There is going to be a certain amount of dollars that flow out of network into alternative media. I’m hoping that syndication will be one of the beneficiaries of that movement of money, and I think we will.”

The panel also discussed the new media buzz that may have overshadowed the traditional business of buying and selling 30-second commercials.

“It’s human nature for us all to be interested in the new thing in town,” Mr. Cesa said. “We also tend to take for granted the tried-and-true media, the linear options.”

He said that while working on DirecTV, he sees a lot of money being invested in interactive advertising. “Advertisers are embracing it, they’re interested in it, because they have to be,” he said. “It offers a great opportunity to have one-on-one marketing with your customers, and it’s accountable and it’s measurable.”

But he admitted that he gets “frustrated when I try to sell those same advertisers a syndicated spot. They’re spending so much time on platforms that reach 7 or 8 million homes, when I have something [with which] they could reach 110 million homes,” he said. “They’re not neglecting the traditional :30s. They’re using [them] as a launching pad to do other things.”

Even MyNetworkTV, though not yet on the air, is working on its Web site, original online content and the ability to link with News Corp.-owned MySpace.com and advertiser home pages. “We’re working with our mobile entertainment group as well,” he said.

“For some agencies, it might be taking up too much time of certain executives, but my group is really focused on all these innovations,” said Tracey Scheppach, VP and video innovations director for ad buyer Starcom USA. “Sometimes I feel like it’s moving so quickly it’s hard to digest, but other times there are pieces of the industry that aren’t moving fast enough, like measurement, and how we actually buy those and evaluate them against more linear programs.”



Time-Shift Worries

To some, new media alternatives such as digital video recorders and video-on-demand are scary.

“A lot of these devices, namely DVRs and VOD technology-even broadband-these are time-shifting devices, and time-shifting devices mean that people are concerned about people watching outside of the typical linear schedule, and if they’re watching outside of the typical linear schedule and the devices have the ability to skip or [fast-forward] through commercials, everybody gets a little nervous,” Mr. Cassaro said.

“We’re spending an inordinate amount of time on a very small percentage of the viewing. But the reason we’re all doing that is very valid. The reason we’re doing that is because there is a day coming when linear schedules as they exist will not pack the punch that they do now,” he said. “So in reality everyone wants to experiment, everyone wants to evolve, everyone wants to understand the metrics and all the things that go with it.”

Mr. Cassaro said, “The best way to play in this space right now is to lock onto a brand or a program where you can do all the extensions. If the advertising is right for the content, and consumers are opting into the content, it’s not that big a stretch that they’ll probably opt into the advertising as well.”

“One of the things a lot of marketers are recognizing now is that you have to learn consumers’ habits, lifestyle and culture a lot more, and I think that’s why a lot of these new media technologies are being talked about,” Mr. Carr of BET said.

At its upfront presentation last week, BET unveiled a new broadband site and a program that lets advertisers co-market local events.

“Our upfront slogan has been ‘Whatever Whenever Wherever,'” Mr. Carr said. “We’re trying to understand our consumer habits and be everywhere that they’re doing everything.”

He said it was increasingly important to reach beyond traditional audiences because African American and Hispanic viewers combined now represent a majority in many of the top 20 markets.

“When people start planning, they have to think, ‘Who am I planning for? Who am I really sending my message to? How do I get through to them? Will the message really get them engaged, will it pull them in from an emotional standpoint?'” he said. “As people start to look in this upfront, they’ve really got to think about the demographics and think about the lifestyle and the culture of those demographics and are they different from five years ago and place the proper value on them.”