ABC Looks Beyond Upfront (ABC Suit: "Disable the DVR Fast-Forward")

ABC HAS HELD DISCUSSIONS ON the use of technology that would disable the fast-forward button on DVRs, according to ABC President of Advertising Sales Mike Shaw, with the primary goal to allow TV commercials to run as intended.

"I would love it if the MSOs, during the deployment of the new DVRs they're putting out there, would disable the fast-forward [button]," Shaw said.

While MSOs risk losing some of their DVR customers if fast-forwarding were blocked, Shaw said the cable operators--who are beefing up their own local ad sales operations--"are in the same business we're in." "They've got to sell ads too," he said. "So if everybody's skipping everybody's ads, that's not a long-term business model for them either."

Shaw also threw cold water on the idea that neutering the fast-forward option would result in a consumer backlash. He suggested that consumers prefer DVRs for their ability to facilitate on-demand viewing and not ad-zapping--and consumers might warm to the idea that anytime viewing brings with it a tradeoff in the form of unavoidable commercial viewing.

"I'm not so sure that the whole issue really is one of commercial avoidance," Shaw said. "It really is a matter of convenience--so you don't miss your favorite show. And quite frankly, we're just training a new generation of viewers to skip commercials because they can. I'm not sure that the driving reason to get a DVR in the first place is just to skip commercials. I don't fundamentally believe that. People can understand in order to have convenience and on-demand (options), that you can't skip commercials."

Shaw said it's crucial for ABC and networks to hold these discussions with MSOs while DVR penetration is still in its early stages. DVRs are at around 10 percent of U.S. TV households. "It's in our interest and the MSOs' interest to figure out something that works for the two of us," he said.

The frequently outspoken Shaw made his comments Wednesday in a post-upfront interview where he offered up another round of no-nonsense commentary.

Looking back on the protracted upfront, Shaw said he was surprised that competitors at CBS and Fox were so quick to fold the tent and accept buyers' refusals to pay for increased ratings generated from DVR viewing. Shaw had argued earlier in the spring that the ratings jumps--which have reached double-digit percentages for top shows--had value, and he intended to charge for them. He continued that position early in the upfront until it became clear the two other networks weren't willing to hold the line, and had agreed to negotiate on "live" ratings only.

"I'm sure they told their upper management in their two companies why it wasn't a good idea for them to do so," Shaw said. "They and their management must have decided that the same thing we thought was important wasn't important."

Shaw said if he knew he'd be the lone proponent for negotiating on time-shifted ratings, he might have changed course. "Obviously, going back to last February, if I knew nobody else on the entire sell-side of the equation was going to open their mouths besides us, I don't know if we would have gone down the same track," he said.

Some research executives--even at networks with sales departments that acted differently--had argued before the upfront that ads viewed in fast-forward mode generated value for advertisers, since consumers were at least partly exposed to their messages. But Shaw said ABC was only interested in finding a way to receive compensation for un-skipped ads.

ABC's upscale audience, coupled with a strong performance in "A" counties and in leading markets, made his network a must-buy. "If you were looking for those attributes, with the programming on ABC that we deliver, are you going to move those dollars to CBS?" he said. "It doesn't make sense."

No shrinking violet, Shaw is the only sales chief at a major network to speak to the media as part of an upfront postmortem.

As questions fade about whether to negotiate solely on DVR ratings, Shaw said ABC will move aggressively to make deals based on Nielsen's new "commercial ratings," set to be unveiled at the start of the new season. He said ABC was interested in possibly using them as a currency in this upfront, but buyers felt implementing the logistics in such an abbreviated time period wasn't feasible. "We were too late in bringing that to the market for practical reasons," Shaw said. But, he added, "it's going to transform how people buy and plan television."

But Shaw said ABC executives will be fanning out to agencies and advertisers over the next two weeks to present an analysis of commercial ratings data from the last six months, which presents ABC in a favorable light. He added that some scatter business may be written based on the new ratings.

Related story...

ABC Wraps Up Ad Sales, Broadcast Upfront Total Reaches $9 Billion
by Wayne Friedman and David Goetzl, Thursday, Jul 6, 2006 8:45 AM ET
ABC HAS CONCLUDED ITS PRIME-TIME upfront sales activity to the tune of $2.3 billion, and the entire broadcast upfront market's labored four-week journey is finally drawing to a close, with the total market hitting overall revenue levels similar to a year ago--about $9 billion, according to the broadcast networks' estimates.

Final totals look like this: ABC, $2.3 billion; CBS, $2.3 billion; NBC, $1.9 billion; Fox, $1.8 billion; The CW, $650 million. My Network TV, which isn't quite finished, according to executives, is expected to pull in $50 million. A My Network TV spokeswoman didn't return phone calls by press time.

But media buying executives insist that some of these numbers are too high--with one media agency executive maintaining that as much as $600 million is sitting on the sidelines or designated for digital advertising. Concerning the latter, Mike Shaw, president of advertising sales of ABC Television Network, said that this wasn't the case.

"Very little went to digital," said Shaw. "For example, we didn't sell our broadband or VOD in the upfront. We haven't, as yet, figured out the metrics in how to sell MyABC."

Shaw added, however, that certain ABC.com and ABCNews.com Internet extensions were included in upfront deals. For its own part, NBC has said that it grabbed $50 million in new digital advertising money.

MyABC, which will be sold on a scatter basis, is the network's initiative to offer full episodes of hit shows on-demand on ABC.com. ABC has just completed a two-month trial with shows such as "Lost" and "Desperate Housewives," and is evaluating advertising and programming models.

Regardless of its conclusions, Shaw said a batch of new shows will be available on the site when the new season launches, if not before. However, he said the network would not follow NBC's example of premiering shows on its Web site--a move that has angered affiliates who feel their ratings and revenues are hurt by the alternate distribution. "Nothing will premiere online," Shaw said. "Our affiliates are going to get it first."

Overall in the upfront, ABC says it booked $3 billion for all its dayparts--selling 75 percent to 80 percent of its prime-time inventory, down from the 78 percent to 83 percent of a year ago. Media buyers say ABC got anywhere from 2 percent to 3 percent price increases on the cost-per-thousand viewers (CPM). This was similar to what Fox received--but much lower than ABC's pre-upfront wishful increases in the 5 percent to 6 percent range.

ABC benefited from the bold move to shift "Grey's Anatomy" to Thursdays, and was able to leverage its three tent pole programs--"Desperate Housewives," "Lost," and "Grey's"--to pump prime-time sales. The interest in the three boffo hits may have offset buyers' wariness about the fate of the slew of new shows ABC is introducing this fall.

As opposed to quick two- or three-day upfront markets of years ago, ABC--as well as CBS and others--needed several weeks to complete their upfront activities. Primarily, this was to hit their overall revenue goals.

Secondarily, this was to build a foundation for a healthy scatter market, since less prime-time inventory typically means potentially higher prices. The fourth-quarter scatter market starts up in a few weeks. Last season, ABC--as opposed to other networks--says it witnessed scatter increases of 10 percent or more.

This wasn't the case for the broadcast networks business as a whole. "For a variety of reasons, there wasn't the penalty for buying in the scatter market versus the upfront for the last two years," said Shaw. "You haven't been burned by buying scatter."

While he admitted that prime time took a hit in terms of cost per thousand viewers pricing (CPM), Shaw added: "We weren't down in other dayparts--morning, news, and daytime. Late night was down a little."

He said Charlie Gibson's recent success on "World News Tonight" and Rosie O'Donnell's joining the daytime talk show "The View" drew buyer interest.

Shaw took issue with the fact that ABC's somewhat delayed start hurt the network going into the upfront season. "It may have slowed us down slightly," he said. "It sure as hell didn't speed things up. But I can tell you it didn't affect one dollar, one budget from what we are looking at before the upfront began."

ABC was at the forefront of the live plus DVR viewing issue, pushing marketers to consider paying more for DVR viewing. It abandoned that issue just after the upfront market was beginning to move, when Fox and CBS began making early deals.

To those who were confused about the issue, Shaw says that ABC never intended to get paid for those commercials not viewed. He said: "We didn't want to get paid for DVR playback if the commercials were skipped. That wasn't our intent, nor would it ever have been. We just believed--and still philosophically do to this day--that the value is something other than zero."

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Ad Execs, Media Divided On Source Of Upfront Ad Erosion
by Joe Mandese, Thursday, Jul 6, 2006 8:45 AM ET
WITH OFFICIAL FINAL ESTIMATES FOR 2006-07 network prime-time upfront ad deals being reported by the advertising trade press (see related story in today's edition), it seems that the upfront market may have shrunk. The big question on the minds of both buyers and sellers, of course, is how much money has been held back for next season's scatter marketplace. The answer may be not much, according to the findings of an unscientific survey conducted online by InsightExpress for MediaPost. Asked what they believe the reason for lower upfront as spending is, most advertisers and agencies said they were either being diverted to other media, or other marketing platforms, and would not resurface as incremental network ad spending next season. Eighty-three percent of marketers and 62.5 percent of media buyers said they believed upfront ad dollars have been diverted to other sources, though opinions for the destination of those funds was split among advertisers and agencies. Half of the advertisers responding to the survey believe those budgets are going to other forms of marketing, while half the agency executives believe they are simply going to other forms of media.

Not surprisingly, only a minority of media sellers believe those funds have been diverted from network TV, with a third expecting they will rematerialize during the scatter marketplace (see table below).

The survey, which was launched in mid-June as trade publications began reporting about initial estimates for the 2006-07 upfront marketplace, also suggests that the trade press plays a significant role in shaping expectations about the marketplace, and is generally considered the most credible source for such information - more so even than public comments by advertisers, media buyers and media sellers, as well as public reports by Wall Street securities firms. It should be noted, however, that results are drawn from a relatively small base: 53 respondents, and only a handful (six) of advertisers, and therefore should be treated anecdotally.

Among press outlets, advertising trades were deemed more credible than either TV industry trade magazines or major daily newspapers in their coverage of the upfront, and Advertising Age was deemed the "most" or "second" or "third" most credible source overall, followed closely by MediaPost and Mediaweek, which were essentially tied. More than half (54.4 percent) of the respondents said they believed the trade press' coverage of the upfront, even though a slight majority (56.7 percent) said they believe this year's upfront negotiations were conducted more "secretively" than normal.

A significant minority (39.6 percent) of respondents said they feel upfront negotiations with the networks should be kept secret, though the percentage of media buyers (43.8 percent) and media sellers (50.0 percent) outweighed the percentage of advertisers (33.3 percent) who felt that way.

A slight majority (56.6 percent) of all respondents said network upfront sales data should be compiled and reported by an independent third party such as the Broadcast Cable Financial Management Association, with 83.3 percent of advertisers expressing that thought.

Despite their overall confidence in trade press coverage of the upfront, only 3.8 percent of all respondents - and not one advertisers - believe the upfront marketplace is "wrapped up" when trade publications report it to be. Nearly 70 percent of the respondents said they did not expect network upfront ad deals to be completed until after July 4th Weekend.

I can watch a one hour show in less than 45 minutes with commercial skip. I wish my DVR and DVD-recorder had the feature my JVC VCR and DVD player have - 1.5x speed. It allows you to watch a little faster. Voices sound pretty close to normal although it does tend to screw up music.

If you take away my fast forward button I won't buy your equipment. If worse comes to worse, I'll just go back to recording on DVDs or even (shudder) video tapes so I can continue fast forwarding.

One response by the networks is producing shows like ~~Treasure~~ Product Placement Hunters where they make sure to get their hints on Motorolla Razor phones, look up information on Ask.com and schedule their flights on Orbitz - continually. I think the show is just a warning on how bad things will get if everyone skips commercials.

One other thing I can see is instead of having 10 minutes of show followed by 5 minutes of commercials, going to 2 minutes of show and 15-30 seconds of commercials so you are likely to watch more of it before you hit the fast forward button and are more likely to catch some of it when getting back to the show.

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