Presentations for the biggest television advertising market start next week. Once-dominant NBC is posting record-low prime-time ratings and billions of dollars in revenues are on the line. So why is the Peacock network’s new ad sales guy optimistic?
Mike Pilot, president of sales at NBC Universal, who five months ago was CEO of the equipment finance group at NBC parent General Electric Co., is plunging into his first upfront presentation to television advertisers.
Mr. Pilot said he’s spent 75 percent of his time at NBC Universal meeting with clients and agencies, getting to know the TV industry. Those people have been kind to him so far, he said, perhaps contributing to his sunny outlook at a time when television is going through business challenges that worry industry veterans.
Money appears to be shifting to digital and away from traditional TV broadcasts. Clients want to wait longer before committing their ad dollars. With the spread of digital video recorders, viewers are time-shifting programming, cutting the number of people who watch TV shows, and the commercials in them that pay the rent, at the time they air.
Adding to the pressure on NBC: When ratings at the network started to crumble two years ago, NBC’s upfront sales dropped by $1 billion to about $1.9 billion. Sales were basically flat last year, and longtime sales chief Keith Turner was sent packing.
Mr. Pilot thinks ad buyers are seeing changes in the network’s programming and sales message.
“We’re getting credit in the marketplace for getting back on brand with regard to quality,” Mr. Pilot told TelevisionWeek last week. “I think we had some real success in our lineup last year,” even though some shows, such as “30 Rock,” “The Office” and “Friday Night Lights,” were bigger hits with critics than they were in the ratings.
He said he’s not sure how strong the broadcast upfront market will be this year after last year’s fell 1 percent to $8.4 billion.
The scatter market has been very healthy in both prices and volume, he noted. That has universally been cited as a harbinger of a strong 2007 upfront market. On the other hand, “We could see some fundamental shifting this year in the way clients enter the upfront market,” he added.
“If that results in an up, flat or down upfront, I’m not going to be overjoyed or overly saddened either way,” he said. “I see it as a point in time in a total year’s campaign with the marketplace.”
Year-round talks with advertisers may reduce the importance of the upfront, where traditionally 70 percent or more of the networks’ ad inventory is committed.
In an early forecast, Merrill Lynch predicted NBC’s upfront take would rise 5 percent, and the Big 4 broadcasters’ would rise 4 percent.
Given the seismic changes in the TV industry, this might be the best time for a new guy to get into the mix, Mr. Pilot said. Some buyers agree.
“I think he’s going to be a good ambassador for the network,” said Andy Donchin, director of national broadcast at Carat. “He told me he wants to be a partner with clients. The business is getting complicated and he wants to navigate it together.”
Mr. Donchin wasn’t worried about Mr. Pilot’s ability to learn the industry quickly. “It’s a lot to get a handle on, but he seems like a really bright guy. I’m sure he’s picking it up,” he said. “It’s not rocket science.”
Conversations with advertisers have led Mr. Pilot to draw some conclusions. “What the marketplace has asked for consistently is a more upstream, more strategic sort of relationship” among clients, agencies and networks, in order to find the breakthroughs that lead to increases in advertising effectiveness, he said.
Mr. Pilot is jumping into a TV market where measures of ad effectiveness, rather than simple audience counts, may become the coin of the realm.
Last year, NBC also did some deals, notably with automaker Toyota, that guaranteed not only an audience as estimated by Nielsen Media Research, but a level of engagement as measured by research company IAG.
He’s open to doing those deals again.
“We and our clients found those to show some compelling insights,” he said. “I see a world in the future where that is the fundamental question we’re having with our clients-measuring us on accountability for engagement.”
The move toward buying advertising based on ratings for commercials rather than program ratings, which might happen during the upfront, could be a step for the networks toward getting paid for effectiveness, he said.
“That clearly is going to impact how we do business in the short term,” Mr. Pilot said. “I actually think it’s a good thing for the industry. It moves us all a step closer to what the clients have been asking for.”
Mr. Pilot said he’s open to doing deals based on some form of commercial ratings.
“I think we want to do deals the way our clients want to do deals,” he said. “Companies who figure out how to sell the way clients want to buy tend to do better over the long term.”
Mr. Pilot said that when he first came to NBC, he was ready to observe a totally different kind of business than he was used to.
“There are things about this industry that are very exciting, very unique, that you don’t find anywhere else,” he said. “But the most surprising thing I’ve found is how similar the industry dynamics are here to anywhere else I’ve ever worked.”