Group M, NBC Finalizing Upfront Deal

Network Getting Mid- to High-Single-Digit CPM Increases

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NEW YORK ( -- General Electric's NBC network and WPP Group's Group M have largely completed their upfront negotiations, according to people familiar with the situation, with the Peacock network securing price increases in the mid- to high-single-digit percentage range.

But it potentially could have been much more. Advertising Age has learned that Group M and NBC Universal in recent weeks have explored the idea of possibly doing a large cross-platform deal that would have encompassed NBC Universal's broadcast and cable outlets, among other assets, according to a marketer familiar with the situation as well as two media buyers. Group M and NBC Universal signed off on a large pact last year, valued at worth more than $800 million in advertising inventory across NBC Universal's cable, broadcast and digital properties.

Last year's upfront
That deal helped set the tone for the 2007 upfront marketplace, because it included the adoption of so-called commercial ratings, which measure the viewership of ad breaks that are not skipped through with digital video recorders within three days' time. The agreement also lent a boost to Michael Pilot, who took the reins of NBC Universal's ad-sales operations in late 2006, and was supervising the company's upfront negotiations for the first time.

Some marketers have the impression that certain of NBC Universal's cable outlets balked at the idea of a cross-platform pact this year, thinking they could get better prices for their ad time if they negotiated separately from the broadcast network. Some cable executives, the marketer said, felt they took a hit on money last year in order to fuel the larger agreement. "The cable guys are saying they got hosed last year," this marketer said. Instead, Group M is negotiating separate deals with various NBC Universal assets, this person said.

A Group M spokesman said the media-buying operation denied there were explorations this year for a cross-platform deal and declined to comment on negotiations with the NBC broadcast network. NBC declined to comment.

The potential development illustrates the difficulties of negotiating cross-media agreements. More advertisers are demanding ad pacts that put their commercial messages on TV, online and in emerging media properties. But they also increasingly want their ads to be tied to specific elements in programs or the channel on which they are seen. Within big media companies, it can still be hard for executives in different venues to all support the same goal.

Once held promise
Cross-media deals were once seen as one of the keys to the future, particularly in the last decade in the wake of Viacom merging with CBS and Time Warner merging with America Online. Viacom made headlines in 2001 by carving out a $300 million cross-media pact with Procter & Gamble, one of the largest U.S. advertisers. At the time of the deal, executives from both sides said "cross-platform agreements will represent up to 40% of all media arrangements in the coming years."

What has shaken out in recent years is that individual marketers will use a number of assets within a large company to support a specific mission. The American Legacy Foundation recently launched a new anti-smoking effort with Walt Disney, valued at between $20 million and $25 million, which calls for traditional ads to run on properties including ABC, ESPN, Lifetime and ABC Radio. In all instances, individual pieces of content tailored to the channel in which they run are also being placed and planned.

Group M's willingness to sign off on mid- to high-single-digit increases at NBC, which has trailed Fox, ABC and CBS in the ratings, is another sign that this year's upfront is appearing more robust than many had previously thought. ABC has been able to secure 9% CPM increase, and Fox has in some cases been able to secure low double-digit increases, according to people familiar with the matter. The question will be whether these price hikes translate into additional volume during a time when many marketers are nervous about a shaky U.S. economy and widespread ratings erosion at the big broadcast networks.

Media buyers are predicting the large part of the broadcast market could be done by week's end, with ABC and Fox leading the marketplace. Fox has been aggressively seeking price increases of 20% or more for its "Remote Free TV" idea, in which it promises to run half the usual amount of commercials and promotions during its new dramas, "Fringe" and "Dollhouse," according to one buyer who has seen a network plan. It's not clear if anyone has agreed to those rates yet or not. Fox declined to comment.
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