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Fox to Buyers: Change Costly

Apr 30, 2007  •  Post A Comment

With buyers asking for various measurement metrics this upfront, one top seller says he needs to be paid for the risk of doing something new and different.

“Some people want a lot of things, but you can’t always get them,” said Jon Nesvig, president of ad sales for Fox Broadcasting. “It’s a question of what are the risks of doing something and what people are willing to pay for it. We’re in a very strong marketplace … so to make a deal on a metric that exposes us to a great amount of risk without getting paid for that risk would be difficult.”

For the broadcast networks, the viewership losses in commercial ratings are mostly made up by adding delayed DVR viewing. How many days worth of DVR viewing to include also is open to negotiation.

To make commercial ratings work for the networks, “I would think it would have to involve at least three days out-somewhere between three and seven days out,” Mr. Nesvig said.

Given the current status of Nielsen’s ability to deliver accurate numbers, Mr. Nesvig said average commercial ratings would have to be used, rather than ratings for individual spots or a particular pod of commercials.

Those more granular measures are too unstable, he said, with potential random variations of more than 18 percent. Those random bumps could really hurt a network, because while the networks make upfront guarantees that the spots will deliver a certain number of viewers, they get nothing if viewership exceeds expectations.

“The nature of the risk in our business is that we guarantee on the downside and advertisers get the upside,” Mr. Nesvig said, “So even though there is absolutely no difference in viewing, there is a difference in measurement, and I think it’s not fair or prudent to potentially pay back some deals that catch the downward bounce while people benefit from an upward bounce on it.”

Indeed, with so much discussion about metrics, Mr. Nesvig joked: “We’re going to the metric system this year. I’m going to sell it based on centimeters.”

Like other networks, Fox has experimented with ways to try to get more viewers to stay tuned during commercial breaks. One recent test featured a snippet of content featuring an animated cab driver named Oleg sprinkled within pods. “We’re still looking at the numbers. We didn’t see a whole lot that was translatable there,” Mr. Nesvig said, although he added that the spots did drive many viewers to the Fox.com Web site.

Fox also is going to be selling digital extension of its programming online, on cell phones and in other media. “We’re going to sell our Fox content wherever it lives that we can control,” he said. (Fox content also will be distributed by a joint venture of News Corp. and NBC Universal.)

As for the Internet, Mr. Nesvig had a bone to pick with those who insist it’s such a prize medium because advertisers can tell precisely how many people are responding to their messages.

He pointed to research that indicates 15 percent to 20 percent of Internet clicks are fraudulent, and that heavy Internet users have programs that erase cookies-which means the number of unique visitors to sites is overstated.

“I really find it difficult that people believe in these numbers as though they’re real,” Mr. Nesvig said. “As much as we want [to measure return on investment] and responsibility, there has to be some common sense in here, too.”

Speaking of ROI, Mr. Nesvig pointed to an Association of National Advertisers’ study that showed 80 percent of current-year sales were attributable to long-term brand attributes. That means a company like Wendy’s is still benefiting from those “Where’s the Beef” spots. “What is the ROI on that commercial? Is it ours? I think it is a very complicated issue,” He said.

Last year, the market was full of talk of money moving to the Internet and advertisers skipping the upfront for the flexibility of the scatter market, where ad time is bought at the last minute. That allowed buyers to hold out for minimal increases in ad prices in the upfront.

This year Mr. Nesvig is bullish, with good reason. For all of last year’s naysaying, Fox had its biggest upfront ever, then followed it up with the best scatter sales in its history.

“We’re having a gangbusters year. It sounds like the other networks are having very good sales as well,” he said. “I’m not sure how much the other side shares our bullishness, but they are in the same markets we are, so hopefully they realize that.”