Upfront 2010

Why Today's Upfront Matters Less Than You Might Imagine

Ad Age Answers Your Questions on TV's Ad-Buying Season

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NEW YORK (AdAge.com) -- At press time, negotiations for the 2010 upfront were close to complete among the five broadcast networks, with some top-tier cable outlets doing deals as well. Advertisers typically place the bulk of their TV spending down during this process every year, hoping to lock in good prices for ad time.

If the economy booms later in the year, marketers will be happy, having avoided ad-price increases in the "scatter" market, in which ad time is purchased on an as-needed basis. And if the economy stumbles, advertisers will wish they'd had more patience and fortitude.

But as technology forces huge changes in consumer habits and the roles of the traditional media, the upfront itself is losing some of its oomph. Below, we explain why:

Isn't the upfront the be-all and end-all of advertising? We're talking ad spending totaling between $8 billion and $9 billion dollars, for Pete's sake!

Those numbers do sound impressive, we agree.

Keep in mind, however, that the upfront "commitment" totals you hear whispered from "in the know" sources every year represent money that is promised, not paid. Advertisers make a commitment to pay for ad inventory that won't show up until September, holiday time, or even later. By the time those moments come around, a TV network may have yanked a program off the air (more than three-fourths of new TV shows flop) or rearranged the prime-time schedule it touted in the spring. Advertisers may not like whatever shows up as a replacement. Or they have the option each quarter to pull some portion of the money they committed out of the mix. The only sound measure of ad revenue for each network isn't the "upfront" total that leaks out every summer in press reports, but the amount counted up at the end of each net's fiscal year.

Says who?

Well, it's not just us. A recent Barclays Capital report noted that "scatter" advertising, sold on an as-needed basis much closer to the time commercials are supposed to air, played a much bigger role in affecting TV-network ad revenues. Given a spate of new venues for video distribution and the constant introduction of new TV programs at different times of the year, the report suggested that the upfront's reliability as a barometer of the health of TV advertising was fading.

How real are the numbers we hear for each network every year?

Sadly, your guess is as good as ours. Where some of the networks -- most notably ABC -- once touted upfront results via press release, the media companies have gotten much more tight-lipped about the entire process as their business has gone into flux. Numbers are typically cadged from ad buyers and then debated with TV-industry sources until some sort of agreement is reached. But the numbers really represent estimates of activity, and should not be taken as bona fide.

With upfront volume expected to increase 10% to 30% at each of the four big broadcast networks, isn't this a sign of renewed interest by marketers in broadcast TV?

In some ways, yes, but the figures stand in comparison to performance during an extremely weak 2009. In other words, the volume increases come off a lower-than-normal base from a time when many marketers were holding tighter to dollars owing to a foggy economic picture.

According to research from Barclays Capital, ad dollars committed to many of the networks aren't likely to top those committed just two years ago. ABC is expected to take in $2.21 billion, Barclays said, up 16.2% from the $1.9 billion it secured in 2009's prime-time upfront market, but not enough to match the $2.51 billion it attracted in the prior year. CBS is expected to secure $2.43 billion, up 27.5% from the $1.91 billion it attracted in 2009, but not enough to surpass the $2.5 billion it secured in 2008, Barclays said. NBC is expected to take in $1.65 billion, up 12.8% from the $1.46 billion it secured in 2009, but not enough to beat the $1.85 billion it attracted in 2008. Fox was projected to take in $1.96 billion, up 22% from the $1.61 billion it attracted in 2008 and a hair more than the $1.95 billion it got in 2008, according to the report. The overall picture shows the big broadcast outlets continuing to lose slivers of their ad cash to digital media and emerging ad techniques.

What should I read into reports that Fox was able to do business much earlier than its rival broadcast networks?

Fox topped its competitors in reaching viewers between the ages of 18 and 49 in the recently completed season. What's more, Fox only broadcasts two hours of prime time most nights, making it easier to sell out faster. Don't forget that Fox also has a spate of valuable sports properties -- the Super Bowl and World Series among them -- with which it can package its prime-time ad spots.

So with all this room for debate, what's the upfront really good for?

If one takes the numbers circling 'round the upfront as directional indicators, then the event remains a decent gauge of marketers' interest in broadcast television. Follow the volume totals each year -- and compare them to past years -- to get a sense of what broadcast-TV's place is in the media mix from one season to the next.

OK, so I know not to trust the estimates thrown around every year, but I still want to know -- what is the prevailing estimate?

Speaking v-e-r-y generally, if you add about 15% (some networks may do worse or better) to the high range of our estimates from last year, you would get about $9.1 billion. That's just a hair short of the $9.2 billion in commitments we estimated the five big broadcast networks secured in 2008.