This time last May, the advertising and media industries were bracing for a turbulent roller-coaster ride. Wall Street rather prophetically predicted the upfront would be down an unprecedented 10% to 20%. Even the ever-bullish Les Moonves of CBS complained at the Deutsche Bank media conference, "This market beats the heck out of anyone."
As we enter the week of the network upfront program presentations, the traditional starting gun for the TV negotiation season, the drums are beating a different rhythm. We hear the noises of the scatter market pricing up sharply. We read that advertiser confidence is reported to be returning. The sellers are talking the market up. And if we are to believe what we're told, it's just a matter of how high the high will be.
There is some positive sentiment in the market. But there needs to be a reality check. After all, how bad could this year have been when compared with 2009, the worst year in business since the Great Depression? Heck, even home sales are up year on year (although it's arguable whether people are paying more for them).
The fact is, there are some fundamental shifts taking place that make this a much more challenging upfront than many are predicting.
Last year, the media had a floor on which they were willing to sell. This year, agencies and clients will have a ceiling of what they are going to be prepared to pay.
In 2009, we saw at least a billion dollars come out of the upfront market, as sellers were less inclined to chase the market. The networks claimed they felt that the scatter market was always going to come back strong. If they really believed that, why did they sell any time in the upfront?
Consider major consumer-package-goods companies along the likes of Unilever, Reckitt Benckiser, L'Oréal and Masterfoods, which all went through high-profile media-agency pitches in the past 12 months. It's hard to believe that media pricing wasn't a fairly significant factor in those reviews. I can't imagine any of the successful agencies pitching higher CPMs. So despite what the vendors will be asking for, media-buying agencies will be hard pressed this year to recommend to their clients to pay more for less -- particularly given that many clients are, in fact, giving rollbacks to their customers.
If they can't find the ratings they need in the preferred places, they will look hard to find those ratings somewhere else.
A greater intensity for marketers to look beyond TV this year.
Pepsi, a fixture at the Super Bowl, this year took a pass. Instead it took the $20 million it would have spent and put it behind a cause-based social-media campaign for its new Refresh Project. Time will tell if that was a good decision, but it signaled a very deliberate and public move out of TV. The appointment of M.T. Carney as Disney Studio's new head of marketing was not just interesting because of the inspired choice to go with an outsider; it signaled Disney Studios' direction to break away from the traditional advertising (read: TV-driven) model. The studio's chairman, Rich Ross, in announcing Carney's appointment, described her as an exec who "can market a product across multiple platforms and has firsthand knowledge of new media and its effectiveness in reaching consumers."
While marketing budgets are increasing, the rebound in media will be uneven.
Dollars that in the past may have automatically been earmarked for TV are today being allocated into a longer tail of other options such as content development, social media, digital out-of-home, search, shopper marketing, direct marketing, PR and CRM programs. A recent ZenithOptimedia Worldwide forecast suggests that these areas are likely to grow four to five times more than a mature area like TV will this year.
Online video is expected to grow about 50% over the next two years, and there will again be the opportunity to combine broadcast and digital dollars together at this upfront. However, I'm not convinced that, at least for the network digital properties, this is growing share of digital dollars as it is so much slowing the shift of dollars out of TV. Certainly, the CW's decision to fully load its digital recasts of the likes of "Gossip Girl" and "90210" appears more to be a defensive rather than offensive play.
Advertisers will pay for quality, but what constitutes quality will come under more scrutiny.
I'm seeing clients under the threat of pressure on media costs challenging this notion of quality much more in 2010. Quality used to be about high ratings and reach. It used to be about premium events. It used to be about network over cable. It used to be about quality environments. It still is, but clients are also asking "At what cost?" How network offerings are valued in 2010 is likely to be very different from previous years. Agencies and advertisers are scrutinizing previous qualitative judgments down to data, dollars and sense. And this may affect how they allocate their budgets.
Ultimately, I believe we are heading for a more robust market place. However, in the words of "American Idol" judge Randy Jackson, "Hey, I'm just keeping it real." We'll see you next year.
|ABOUT THE AUTHOR|
Antony Young is the CEO of Optimedia