What is REALLY Going on With the Upfront and Why One of Our Most Esteemed U.S. Presidents was Wrong

Jul 22, 2009  •  Post A Comment

This is based on a number of conversations I never had with some of the very top executives on both the buying and selling sides of the table, if you catch my drift.

What’s controlling the slow-as-molasses-Upfront Marketplace is pure, unadulterated FEAR. Fear at the client level, fear at the media agency level, fear at the networks.

And Franklin Delano Roosevelt, one of our most esteemed presidents, was wrong when he said that the “Only thing we have to fear is fear itself.”

No, the fear is real. It’s fear all these players have of losing their jobs.

It starts at the client level. One major media agency executive I never spoke to tells this story, or so I hear:

“The meetings at the client used to be with the heads of media and maybe the CMOs. Now it’s just as likely to be with the CEOs and the CFOs and the heads of procurement.

“And the meetings go something like this. The CFO says he’s heard that P&G tore up all its media agreements and are now getting much better deals. The networks are running scared. For instance, we should be getting maybe negative 9 or 10 percent at CBS.

“I say no, what you’ve heard about P&G isn’t true. And the networks aren’t running scared. In fact, in scatter they are doing pretty well now. Third quarter scatter is doing quite well for them, in fact. And CBS is never going to give you negative 9 or 10 percent.

“The CFO then looks at me hard and says that I don’t understand the marketplace and this meeting is over.”

This person is clearly one of the gutsier media agency executives who’s been around a long time and whose kids are probably out of college, so he or she isn’t in the grip of the fear as much as some others might be.

Clearly the economy has everyone spooked. The pressure on the clients’ bottom lines has never been greater. For the value they got for every dollar spent in the past they want double that value.
And the buyer is right. Scatter for the third quarter IS strong. If Jo Ann Ross at CBS approved an upfront deal at negative 9 or 10 percent she’d probably be fired.

And if it came out publicly that a media agency did business at CBS for up or flat or even negative 1%, they’d probably be fired by the client.

And if the CFO at the client approved a deal with CBS for up or flat or negative 1% they’d probably get fired by the CEO.

And so it would go. Or so everyone thinks. Perception, as they say, is reality.

So the giant game of Chicken; this giant stare-off with billions of dollars at stake, goes on.
But here’s what’s true. The sellers do indeed have something the buyers need. Advertising on television, as study after study has shown, DOES work.

Some deals are, quietly, getting done.

Buyers are finding that as time has progressed since May, clients are calling them, saying let’s add maybe 20 more gross ratings points to our plan, or let’s extend that campaign we want to do by a week. So, slowly, the budgets are coming back.

As the money builds, that might be an incentive to get an upfront deal done sooner than later.
But then the fear sets in again. The client thinks, well, I’m not really getting penalized too much by waiting and buying in scatter. Usually there’s been no premium, and I’m only paying one percent or two percent over upfront prices.

Accompanying fear—and partly causing it—is that other business bugaboo, uncertainty.
When the uncertainty about the economy starts to subside, the fear will start to subside and there will be a return to more normalcy.

This normal might be somewhat different than the old normal, but it’ll be better than what we’re going through now.

Meanwhile, let’s look forward to the upfront becoming more robust as we approach August. I hear it’s the new June.#


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