Trying to Keep the Viewers When the Ads Come On (Dinosaur Media DeathWatch™)

As the big agencies get ready for the biggest week of the year for the biggest advertising medium, changes are coming that can only be called, well, big.

The medium is of course broadcast television, which remains a powerful way to peddle products despite the recent inroads made by alternative ways to watch programs, which include the Internet, digital video recorders, cellphones, DVD players and video on demand.

Beginning today, the, er, um, big broadcasters will reveal their prime-time lineups for the new season in a week of lavish, star-filled presentations at Manhattan landmarks like Carnegie Hall and Madison Square Garden.

For years, the presentations during what is known as upfront week — so named because the agencies decide to buy billions of dollars of commercial time before the fall season starts — have remained essentially the same. Season after season, the spiels were mostly confined to rote reiterations of the value of buying spots on broadcast television.

But the growing popularity of the alternatives to watching TV on TV sets is forcing the networks to change decades of habits.

For instance, ABC is scheduled to describe at its upfront presentation tomorrow an extensive promotional initiative called “ABC start here” in which TV is just one medium among many. The campaign is intended to help guide consumers through the maze of devices on which they can watch ABC entertainment and news shows.

“It doesn’t matter — TV, online, iTunes, whatever,” said Michael Benson, executive vice president for marketing at the ABC Entertainment unit of ABC, part of the Walt Disney Company.

“They have control,” Mr. Benson said of viewers, “and we’re not going to fight that. We want to make it easy for them to get what they want, where they want, when they want.”

http://www.latimes.com/entertainment/news/business/la-et-channel14may14,1,7809494.story?coll=la-headlines-business-enter

CHANNEL ISLANDS | SCOTT COLLINS
Getting upfront and personal for network advertising dollars
SCOTT COLLINS

May 14, 2007

MENTION the term “TV industry” and people might conjure up a glamorous image of Kate Walsh and Patrick Dempsey in formal attire, splashed by klieg lights. But what really rules the profession is mathematical and dull and not sexy at all. It’s those statistics known as ratings, and they’re about to form the basis for a major behind-the-scenes battle.

Every network has a research department that slices and dices the numbers from Nielsen Media Research, in hopes of convincing advertisers that tens of millions are watching or, if that fails, that at least a goodly portion of high-income, highly suggestible people ages 18 to 49 are watching. TV research is about as scintillating as an Internal Revenue Service form, but these industry drones do the scut work that winds up paying for Walsh’s pedicures and Dempsey’s hair gel.

Right now, though, the big TV networks are on a collision course with the advertisers that subsidize their shows, including the big hits like ABC’s “Grey’s Anatomy,” Fox’s “American Idol” and NBC’s “Heroes.” The battle has the potential to get very ugly indeed over the next few weeks. And it’s all about ratings — or, more specifically, how to measure and assign monetary values to the rapidly dwindling broadcast TV audience in our era of TiVo and the Internet.

Why should you, the average viewer, care?

Because what happens will decide how and what you watch, what devices you watch it on and how much you pay for that privilege. And although no one has all the answers, these questions are going to be decided starting now, not at some fuzzy point in the unseen future.

Today, NBC will officially unveil its fall schedule for advertisers in New York, with other networks following this week. Then the networks’ salespeople will enter several weeks of negotiations with advertisers’ representatives over the bulk of commercial time, which is bought in advance for the new season — an annual rite known as “the upfront.” Last year, advertisers salted nearly $9 billion among the five English-language broadcast networks during these preseason negotiations. Both sides seem to agree that the figure will likely be flat or even lower this year, as networks frantically try to hold the line against years of audience erosion.

Of course, advertisers and TV networks have had a love-hate relationship for more than half a century. But this year will bring some key differences.

snip

http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=60255

Upfront Deals Will Use Both Commercial And ‘Live Plus Three Day’ Ratings
by David Goetzl and Wayne Friedman, Monday, May 14, 2007 7:00 AM ET
AS THE BROADCAST UPFRONT SEASON begins today with NBC’s presentation, buyers and sellers appear to be largely in agreement about the currency that will be used once the deal-making begins. In a move that essentially marks a quid pro quo, the opposing sides are gearing up to negotiate using a combination of two data streams: average commercial ratings and “live plus three day” data covering DVR viewing, according to multiple sources.

One driving force appears to be GroupM, the massive WPP buying operation that encompasses four major agencies and does some deals leveraging dollars from all of them. Chief Investment Officer Rino Scanzoni has said he favors using average commercial ratings, and sources said GroupM also wants the “live plus three day” ratings (derived by adding “live” viewing to DVR viewing over the three days after broadcast).

A GroupM representative confirmed the commercial ratings push, but declined comment on the DVR stream.

But the GroupM position looks to be contributing to a sort of snowball effect, as other buying entities and networks now believe that the estimated $8.7 billion broadcast market will settle that way, sources said. Count executives at marketer Procter & Gamble among them, a source in contact with them said. With P&G thinking that way, that likely means two other major agencies are looking to go in that direction: MediaVest, which handles TV buying for P&G, and Carat, which works on planning for the large packaged-goods advertiser.

Multiple sources said the major broadcast networks (ABC, NBC, CBS, Fox and CW) have indicated they will agree to those terms, although one executive at a major buying agency said when their commercial rating/”live plus three day” position was expressed to the networks, the networks by and large simply “listened.”

“We look at it as the best way to move in this market for our clients, and I think the networks have looked at it and said this is in our best interest too,” said Lyle Schwartz, the research chief at Mediaedge:cia.

A representative for P&G said the marketer hasn’t made any decisions and “it’s too early to speculate.” MediaVest and Carat did not immediately provide comment. Representatives for all five networks did not provide comment.

Sources did caution that the apparent consensus on currency could break down, perhaps creating a standoff. There’s also some belief that certain buyers aren’t prepared to do deals with commercial ratings.

More broadly, there’s the issue of whether the would-be currency would lead to a decrease or uptick in the market, and which side it would favor. If commercial ratings yield less inventory to sell, networks will no doubt try to increase pricing to stabilize or bolster unit costs.

So far, this year’s early consensus contrasts with last spring, where buyers refused to pay for any DVR viewing and would only negotiate on “live” data. ABC resisted and fought hard for some DVR payment, but the combination of buyers closing rank and the other networks failing to join in holding the line allowed the buy-side to win the battle.

Under the emerging consensus now, buyers would be able to achieve guarantees based not on how many people view a program, but on the average number who watch the actual commercials within the show—and theoretically would not have to pay for ads skipped via DVRs. Networks, on the other hand, would be able to monetize DVR viewing by receiving payment for ads viewed with the devices—something they have failed to do and are hungry for.

The “tradeoff” would allow both sides to please key constituencies. Buyers would be able to tell their clients that they are only paying for the more desirable commercial ratings. And networks would be able to tell Wall Street that they’re now getting paid for DVR viewing—something investors have worried about, as some believe the DVR could eventually kill the networks’ main revenue source.

The principal reason buyers appear willing to move off the “live”-only push is the coming launch of both average commercial ratings and the “live plus three day” stream from Nielsen at the end of this month. Together, the data will derive an average rating for all commercials aired in a particular show, starting with the “live” broadcast and stretching over the ensuing three days.

But buyers, in theory, won’t have to pay for ads that are fast-forwarded through, since an ad that is skipped via a DVR does not count toward the commercial rating. The potential downside: If only one second of a commercial is watched and the rest skipped, that counts as a commercial viewed.

The “live plus three day” movement is less than ideal for retail and movie advertisers whose ads lose relevancy after the 24 hours or so following a “live” broadcast—and a buyer at a leading agency said the retailers are indeed unhappy. But he suggested that would serve as an impetus to alter creative so that it would have a three-day shelf life. Fox, in turn, is working on a possible solution where new ads could be inserted into programming recorded on DVRs, which would then appear when the shows are played back.

Agencies could ask for a separate currency such as “live plus same day” viewing for retail and other clients, but that could lead to significant “back office” complications and other flux. On the other side, a network like ABC may still push to do some deals involving a “live plus seven day” metric, leading to other complexities.

Once the currency is agreed upon, then the upfront could take on a texture very similar to years past, where negotiations are based on traditional issues such as ups or downs in volume and CPMs—direct results of supply and demand. There are some additional factors, however—such as whether buyers will push to add some “bolt-ons” in their guarantees based on engagement data from, say, IAG Research or proprietary studies that networks and buyers have conducted together.

Buyers and sellers, of course, disagree on how strong the market will be, with some sellers predicting perhaps a 3% volume jump and buyers suggesting a 5% decline. Merrill Lynch’s Jessica Reif Cohen projects that total volume for the four major broadcasters will jump 4% to $8.7 billion, with CPMs up at the same rate. A strong scatter market is a factor in her predictions, she wrote recently.

While commercial ratings appear primed for the broadcast negotiations, the cable marketplace could go in any number of directions. Cable sellers have indicated that they prefer to do deals without them this summer, and then ease them in over the next 12 months.

But some networks with inventory to fill such as a lower-tier channel, or even larger ones looking to grab share, could offer advertisers the option.

Mel Berning, who oversees sales for A&E and the History Channel, said due to questions about the accuracy of the data in cable and the risk of not making a “rational transition,” it makes sense to hold off in the short term. But if clients demand it, he will consider it.

“If we have a big client who tells us that’s the only way we’ll do business, we’ll have to look at it,” he said.

But he added that agencies are expressing a desire to do a variety of deals, ranging from the traditional program ratings to exact-minute ratings to other engagement metrics.

“Cable’s always been nimble, and we’re going to be nimble again this year,” he said

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