ABC Still Believes in TV, but Explores Digital Options

An Upfront Q&A With Mike Shaw

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NEW YORK (AdAge.com) -- ABC's President-Sales and Marketing Mike Shaw is widely acknowledged to be the man who can set the pace for this year's TV upfront market, kicking off with the broadcast network presentations next week. The name of the game: securing the biggest possible portion of the approximately $18 billion in marketers' annual TV commitments. Here, Advertising Age's Claire Atkinson talks to him about establishing digital beachheads, HDTV and how the digital video recorder debate will shake out.
Mike Shaw
Mike Shaw Credit: Darryl Estrine

MediaWorks: Do you think we should be writing about a video upfront rather than a TV upfront, an idea that Starcom CEO John Muszynski has floated.

Mike Shaw: The majority of what we see in terms of broadband streaming and video on demand will come to market later, though we are starting to do deals. We are in the middle of test and we will have some broadband streaming as part of what we bring to the upfront, but we need to do the test. Pieces of ABC.com and ABCNews.com will be available, but I don't believe it's all going to be there. The video-on-demand deals (with Comcast and Time Warner Cable) are literally being negotiated, and those deals will be part of our new media offering.

I think what John was saying was taken out of context. We sell 52 weeks a year. What he was trying to say is that you're not going to have an upfront for new media, that will come to market later. It's like product placement three years ago. If you sold something, then the chances of screwing it up were monumental. You have the same thing. Our streaming of prime-time shows is a test. I don't know the metrics we'll use, and whether people will watch on a computer. Is there a local component? There are a gazillion issues that are real and logistical. We all have to sit down and decide all of this. It's all coming and it's all part of the communications strategy that happens 52 weeks a year. The reasons people put money down in the upfront, they get the weight, 12 of last 14 years that upfront strategy gets you cheaper pricing, more money is shifting to scatter because there's no penalty, and certain brands love to spend closer to air.

MediaWorks: How much money will we see moving to digital media? One estimate last week pegs it at $500 million in the next 12 months?

Shaw: We do not have a good read as to the total amount that will be spent, but we know advertisers are interested in these opportunities. ABC is being very proactive in finding new ways for advertisers to reach their customers, and we have the content everyone wants. ABC is in a very good position to build out these new digital platforms, and bring them to market.

I believe in all of this potential, but we're still in the large mass audience deliverable, [digital media] is layering and it's complementing and supplemental to what you're already getting. What all the platforms want is the great TV content to be made available. We're in a great sweet spot; we have it and can monetize it. It's just difficult to figure out how much.

MediaWorks: How did last year's upfront take compare to how you did overall for the full year?

Shaw: ABC scatter pricing was much higher than upfront. I only care about that 52-week number. If you're buying a ton of cable, I'm not sure you need the upfront. For others, they need some of higher rated shows, certain weeks, periods of time, where it's absolutely critical when you have a new launch schedule, a promotion -- you have to have weight. The upfront still offers a lot of options.

MediaWorks: What economic factors have the greatest effect on upfront dollars?

Shaw: High oil prices affect everybody, the product, getting it delivered, your cost, your customer's cost of getting to you. They affect everybody; no single factor affects us more than that, apart from inflation. The economy looks better than people thought.

MediaWorks: Who or what is your biggest competition for dollars?

Shaw: I don't know what people have done with their mix. We feel good, we have a lot to offer, high definition as it continues to build out. You have to look, though, at network prime performance; it is flat with the year previous. Most people would have said we'll erode 5%.

One of the reasons has to be high definition. All the networks send out programming in HD and we've upped the ante, we've made the best marketing tool even better. We are in a position to reap a windfall, 16 million HD sets have been sold this year, in 2010, 50% of the country will have one in their home I'm hoping we can push that.

Share on the networks will go up, not erode. Because of that HD is hugely important to the future. I go to the HD channels first -- it's a fundamental change in the way you watch TV and that's exciting.

MediaWorks: What's the most common negotiating tactic you hear from buyers?

Shaw: "If you need a bigger budget, help me with the pricing"; "I need a cool integration that's going to pop." That hasn't changed, what I'm not hearing anymore is "I'm moving money to cable and syndication."

MediaWorks: How will the DVR debate be resolved?

Shaw: I don't know, people need to do business with each other. We'll do something that's fair for both. Cable shows are not what people are taping for watching later, their numbers don't really change. We'll find a way to do it. For 20 years anything recorded on VCR has been counted.

MediaWorks: Do you have a DVR?

Shaw: Yes

MediaWorks: Do you ad skip?

Shaw: Sometimes. Generally I don't, because I'm in the business of watching ads. But it's counterintuitive. I graze more with the remote, maybe I'm seeing more ads, even if I'm looking. Maybe I'm a typical guy -- a lot of guys use the remote and they check around the dial, I don't know.
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