As Upfront Talks Stall With Broadcasters, Buyers Eye Cable

Agencies 'Looking for Soft Spot' to Get Lower Pricing on Ad Inventory

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NEW YORK (AdAge.com) -- To jump-start a stalled TV upfront marketplace, media buyers say they are considering doing business first with cable outlets and syndicators, which they hope will be more amenable to rolling back prices for recession-scared clients. But buyers may not find what they are seeking.

Nearly two-and-a-half weeks have passed since the CW's presentation capped off a week of showy entreaties for marketers to plunk down ad commitments -- all part of the annual upfront marketplace in which TV networks routinely sell about 75% to 80% of their ad inventory for the coming programming season. The problem? Both sides are posturing, and have yet to reach common ground. Ad buyers say their clients are insisting on rollbacks in the cost of reaching 1,000 viewers -- otherwise known as a CPM, a common measure in these negotiations. And networks are maintaining their demand for price increases, often in the single-digit percentage range.

As such, cable could represent one way to spark the market. "If broadcast holds as firm as they seem to think, then yes, it might make more sense to set the market in other areas first," said one buyer. "We have to use our time fortuitously"

Will cable go first?
The sentiment comes as buyers say they face extreme pressure to find some way to save money for advertisers. "It's going to be very difficult to go to clients with anything that has a plus sign in front of it, or even flat," said another buyer. "Cable could go first."

It's relatively uncommon for cable deals to spark the upfront market. Not since 2004 have buyers opted to go to cable first. At that time, companies including Ford Motor, Yum Brands' Taco Bell and several movie studios opted to put money down at Time Warner's Turner Entertainment and Viacom's MTV Networks, among other places, in a move some clients suggested was a reaction to seeing broadcast ratings decline after forking over double-digit CPM increases.

This year, the effort seems like a feint, a test to see if broadcast networks will blink and lower CPM demands in order to keep upfront money flowing into their coffers. It's not entirely clear that cable will be willing to offer the rollbacks marketers seek. At least one cable entity has yet to do any significant business, a sign that marketers may have real trouble forcing prices down. "They are looking for a soft spot," said one cable executive. "If we say no, then they are at a real stand-off."

Broadcast networks contacted declined to comment on upfront negotiations, with most reporting that no serious negotiations had begun.

Deal-making might go until summer
The dynamic simply illustrates a trend with which most upfront parties are familiar. With the economy still flailing about, advertisers are looking to spend less overall. With parties at such an impasse, the upfront market is likely to limp along into the middle of the summer. Typically, the broadcasters wrap up business by mid-June. In this go-round, however, Detroit's woes are also affecting deal-making: Chrysler is not going to take part in the upfront, and General Motors ability to do so is seen as limited. There's less reason to put money down quickly, although certain marketers will need to reserve time during the holiday season and the Super Bowl.

While marketers control the purse strings, TV network executives are hoping the economy continues to improve. As the economy stabilizes, advertisers will feel more comfortable making outlays and media outlets will be able to get closer to the prices they seek. With negotiations at a stand-off, most TV networks expect to do more sales in scatter, or in ad time bought closer to air time, rather than the upfront, which requires money to be put down months in advance.

While both sides bicker, more clients have begun to register budgets, a necessary first step before negotiations can begin. This year, budgets were slow to be finalized by many marketers. Media agencies were also still trying to resolve third-quarter TV buys much later than usual, as broadcast networks looking to accommodate marketers allowed deadlines to drop and options to go well past the time typically required. The cable executive said he had been contacted by one mid-size buying agency and one large agency, which indicated they "were ready to go."

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