OPTIMIZERS & TV UPFRONT: HOW THEY AFFECT AD BUYING: BURNETT'S USE OF NEW SOFTWARE REVISES SPENDING FOR 4 ADVERTISERS

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One of the biggest questions of the current upfront-sales marketplace for next fall's TV season has been the impact of more widespread use of "optimizer" software.

Going in, the prediction was the computer programs would speed money out of the most expensive daypart-network prime time-to other, less-expensive dayparts, as well as to cable and syndicated fare.

2ND YEAR USING OPTIMIZERS

One of the nation's biggest buyers of TV ad time, the Starcom Media Services unit of Leo Burnett Co., Chicago, agreed to share with Advertising Age information about what shifts are occurring in the upfront, in order to explore this issue. Besides buying more than $1 billion of TV advertising, Starcom is in the second year of using optimizers to assist in planning and buying; many ad agencies and media services are employing optimizers for the first time this year.

"The optimizer is shifting power back to the planner and the buyer," said Starcom President Robert Brennan, in voicing his unequivocal support for the new tools.

BROADCAST NETWORK SOFT

"This was the first upfront where ABC, CBS, NBC and Fox were not in control of the dialogue of the upfront," he added. "I don't think the total market has been soft; the broadcast network market was soft. . . . [And that's] because of this shift in power that optimizers are giving back to the buyers. They've given us knowledge, real-time information."

The four broadcast networks claim to have written $6 billion during this upfront, equaling last year's total. The WB wrote $250 million to $300 million, and UPN about $150 million to $200 million. Syndication hit $2.2 billion, according to the Advertiser Syndicated Television Association. Cable hopes to write $2.5 billion to $2.8 billion worth of business.

IMPROVED EFFICIENCY

The agency claims its use of optimizers has improved efficiency to such an extent that clients-at no additional cost-are averaging an increase of 15% in the number of weeks on-air for most brands and are getting an extension into different dayparts as well as more cable and syndication usage.

Starcom used four real examples to illustrate the situation (see charts), with the stipulation client names could not be revealed.

In case No. 1, for a client with a $20 million to $60 million TV budget, Starcom got a 15% savings by putting 5% less money in the hot network early-morning daypart; adding 2% into the soft daytime market; adding 4% in prime time; adding 2% in syndication; and shifting 7% into cable.

That optimized schedule allowed for four more weeks of exposure for the client's spots-5% of the TV budget-and for the purchase of some print advertising. And reach remained constant.

RATINGS INCREASE 15%

In the case of client No. 2, in the $60 million-plus budget category, Starcom shifted 8% of its money out of prime time after optimization, adding 3% in syndication and 5% in cable. And it increased target ratings points by 15%.

John Muszynski, senior VP and executive director-national TV buying group, said case No. 2 was "a perfect example of us anticipating that the market would be one thing, finding out during negotiation that it was another, and making changes in midstream."

Specifically, he said the pricing of certain syndicated and cable fare was "somewhat different than our early read on the situation and we made adjustments, increasing the share of budget we spent in those dayparts for that client."

He also noted the shop was able to move swiftly to react to network news pricing being lower than anticipated and early morning time being higher.

PRIME-TIME CUT

The client in case No. 3 also was working with a budget of more than $60 million. Before running its optimizer programs, Starcom had 30% of the budget in network prime time. After the optimizers were applied, Starcom moved all of the client's money out of network prime time, increased its cable buys 10% and increased its syndication buys 3%.

Further, Starcom put 9% of the client's budget into early morning and 14% into daytime-neither daypart was in the plan before using optimizers-achieving the same reach and saving the client 20% of budget per flight.

For a low-budget client that spends less than $20 million, case No. 4, Starcom was able to keep the reach flat and increase the campaign eight weeks, with 28% more target ratings points after optimization.

In this case, cable TV spending remained constant, early morning was up 10%, daytime was down 5%, prime time was down 10% and syndication was up 5%.

According to Kate Lynch, VP-director of media research, Starcom uses two optimizers. A customized version of the well- known Super Midas optimizer is used for dayparts; a customized version of Spot On, an Australian product, concentrates on program projections and can make changes based on pricing.

NETWORK BUYS SHRINK

In total, thus far during the 1998-99 upfront marketplace, Starcom's expenditures on ABC, CBS and NBC, on a share basis, have shrunk 5%, compared with last year. Its spending on Fox, the WB and UPN decreased 1%.

On the other hand, cable received a 5% increase-in line with what a number of other agencies have said they've done-and syndication spending is up 4%.

More telling, over the past two years, ad dollars going from Starcom clients to ABC, CBS and NBC have been reduced 8%, while spending on cable has increased 9%. Syndication spending only increased this year.

"There's going to be significant long-term effects with us having information that sellers don't," Mr. Muszynski said, noting that the sellers don't know which TV shows the optimizers have indicated are a client's best buys.

He also said optimizers would be an important factor in the scatter market for TV ad time made on a daily basis after upfront sales have closed.

"Spot On allows us to very quickly update both pricing and rating/reach projections on the fly as we go into each scatter decision," said Ms. Lynch.

Optimizers have given Starcom "flexibility in our program mix, regardless of the daypart or if it's network, syndication or cable," Mr. Muszynski said.

As an example, for the last few years seemingly all blue-chip marketers have wanted to advertise on NBC's hit "Seinfeld," even though it was the most expensive prime-time show.

But, Ms. Lynch pointed out, if a client is targeting men age 18 and up in households with an income of more than $40,000, for the $450,000 price of one 30-second spot on "Seinfeld" the marketer could have a mix of targeted programming on ABC, A&E Network, CNBC,CNN, CNN Headline News, Comedy Central, Discovery Channel, ESPN, ESPN2, MSNBC, TNT, USA Network, VH1 and WGN.

"A more general mix can deliver both more target ratings points and more reach against this tight demo, if pure delivery is what the client" needs, she said.

Perhaps the most valuable lesson Starcom has learned from using optimizers over the past two years, Ms. Lynch concluded, is the "old thinking that you had to use [network] prime time to establish your reach goals is just not true."

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