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Change of Tune in MTV Upfront

Jul 8, 2007  •  Post A Comment

MTV Networks has finally jumped into the upfront advertising market, softening its resistance to striking deals based on how many viewers watch commercials.
At least one of MTV Networks’ major transactions appears to involve some form of commercial ratings, which this year have become the dominant currency for making purchases of television advertising, according to Rino Scanzoni, chief negotiating officer of media buying giant GroupM.
“Don’t underestimate the power of acceptance of commercial ratings,” said Mr. Scanzoni, who has been a leading proponent of setting ad prices based on how many viewers see the spots, rather than the shows they are placed in. “There was a lot of chatter, a lot of discussion about the marketplace resisting it, and there clearly was no resistance at all.”
Asked if that included MTV, Mr. Scanzoni replied, “No resistance at all, including MTV.”
MTV Networks declined to comment.
MTV Networks in recent weeks had held out on the upfront as other cable outlets did many deals based on commercial ratings. Those upfront sales followed the template set by the broadcast networks, which transitioned to the new ratings standard as advertisers have demanded better information on who is watching their ads.
Last month, Philippe Dauman, CEO of MTV Networks parent Viacom, told investors the company did not believe Nielsen Media Research’s commercial-ratings system was ready to form the basis for billions of dollars of commerce.
“We think it needs another year of fine-tuning for cable networks,” Mr. Dauman said.
MTV Networks’ resistance to the new system also may have sprung from concerns that the gap between program ratings and commercial ratings on MTV and VH1 is among the biggest in the industry. If those networks converted to commercial ratings, they would have to greatly increase the prices they charge advertisers per thousand viewers in order to maintain their current level of ad revenue.
Some of the channel-switching on the MTV Networks is due to the itchy trigger finger on the remotes controlled by the same young viewers advertisers covet. Some ad buyers said the company itself is responsible for the high level of zipping and zapping because of overly long commercial breaks.
At the end of the month, MTV Networks sent a memo to media buyers, outlining some conditions it would want to impose if it was to consider using commercial minutes, according to buyers who saw the document.
The memo said MTV Networks would stick to program ratings for the fourth quarter, and that commercial ratings would apply in the next three quarters. MTV Networks also said it wanted to see the creative content of commercials several weeks in advance of airing and that it reserved the rights to superimpose content while the commercials were running, according to buyers who saw the memo.
Some buyers said those conditions wouldn’t fly, but noted MTV ad sales executives were saying other agencies were taking them seriously.
Value for Money
Commercial ratings were developed to give advertisers a better sense that their money was being spent effectively. In the last few weeks, MTV Networks took other steps to reassure marketers that advertising on MTV Networks is effective.
MTV Networks signed up for the full suite of consumer-engagement measurement from IAG Research for MTV and VH1. It also signed up with Visible World, which enables MTV, MTV2, VH1, CMT, Spike TV, Comedy Central, TV Land and Nick at Nite to customize advertising and change spots within seconds, providing more precise last-minute targeting.
As MTV was getting started with its upfront sales, other cable networks were well on their way to completing their deals. Ad sales executives said while most transactions are being done based on commercial ratings, many are still being done based on program ratings, like last year.
Lifetime said it completed all of its major upfront deals, securing price increases in the high single-digit to low double-digit range on a cost-per-thousand-viewers basis. The network also said it sold significantly more ad volume compared with last year.
Other sales executives at other major cable networks reported similarly strong sales.
The TV syndication market last week also was fairly close to finished, with ad sales executives reporting single-digit increases in prices and revenue.
“We’re up across the board,” said Bo Argentino, senior VP of ad sales for NBC Universal Domestic Distribution. She said she was getting price increases in the mid single digits in daytime and higher single digits in “Access Hollywood.”
“It was a little bit better than we expected,” she said.

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