The starter's gun hasn't sounded, but the mania has already begun, as networks pore over how best to bring their assets to market and agencies wrangle over myriad measurement issues, from engagement to commercial ratings to the continuing "live plus" ratings debate. Then there's the headache of how digital will roll into those complex package deals.
So what's the upfront going to do this year? Without the benefit of the program-development slates, which ad buyers ad buyers receive March 19, most executives suggest a market that looks remarkably similar to last year's, when the TV networks banked around $9.1 billion. Digital estimates range anywhere from $500 million to $1 billion. Some suggest the whole buy will be regarded as digital. Meanwhile, CBS is rebranding its nontraditional offerings as "interactive."
Don't expect speedy wrap-up
Anyone looking for a speedier market this year will be disappointed. Packages tying up everything from prime time to online will require more heads at the table and could result in more pre-upfront deals.
The most pressing issue is which currency the industry will use -- program ratings or commercial ratings. With NBC also throwing engagement metrics into the mix, the question is: Who will guarantee what? Ratings-performance guarantees are one of the prime benefits of buying upfront vs. scatter, the year-round ad market.
If program ratings remain the standard for most, the debate will be over payment for viewers watching in DVR playback mode, who currently are not counted.
In 2006, agencies stood firm and decided they'd pay only for people watching shows live, based on the assumption that people fast-forward ads on DVRs. That means all the networks have missed out on added impressions. Fox and ABC occupy the No. 1 and No. 2 slots for most popular shows watched in playback mode, and one estimate suggests they each missed out on some $600 million in ad revenue due to the live-only currency.
Some of the more conciliatory agencies are saying they're prepared to give a little, suggesting they might pay for live-plus-same-day viewing. CBS has been among the most strident in suggesting it will not do business again on a live-only basis.
But if the currency isn't live-only, what will it be? Will marketers pay for viewers delaying "Grey's Anatomy" for 10 minutes? Twenty-four hours? A few days? Any decision would affect pricing because it would add more eyeballs. If more people can be counted, the cost of reaching 1,000 viewers (the CPM) goes down, and the networks will have more impressions to sell. "It's a hidden way to get more money for the networks and still give a win to the agencies, who can say, 'Look, the CPM went down,"' said Larry Fried, chief revenue officer-national TV at Sqad, a TV tracking firm.
If commercial ratings become the currency, a whole different set of issues will come into play. "The agencies are going to be using new data to determine how the dollars are going to be spent in this year's upfront, and the most important new data will be based on commercial ratings," said ABC Sales President Mike Shaw.
Mr. Shaw foresees a wholesale reordering of upfront dollars based on which TV channels perform best in commercial viewing. The theory goes that the most engrossing programming tends to retain the most viewers through commercials.
Clearly, the financial implications of a change to commercial ratings could be significant. As one buyer said, "If one network's [commercial pod] drops off by 6%, do you need to negotiate an increase of 6% on the CPM? Another network might have a drop-off of 10%. Will you let them raise the CPM by 10%? Suddenly they might have a price advantage."
NBC's engagement guarantee
Then there's engagement. Last week, NBC Universal's president of research and market development, Alan Wurtzel, said the Peacock Network would offer guarantees on certain engagement metrics -- an enticing idea but one that could complicate the buying process with another metric, one that could be subjective from network to network and fuzzy at best.
While NBC is trying to downplay its significance, the news certainly gives the network an early start as far as upfront positioning goes. "This is one of many kinds of things we're trying to do. One size doesn't fit all," Mr. Wurtzel said. "We are trying to develop an array of metrics. Nielsen is still the primary guarantee; engagement is the secondary guarantee."
But even that raises the question of whether the metric will measure viewers' engagement are with the programs or with the ads. NBC Universal's Bravo and Time Warner's Turner are said to be discussing deals based on how engaging marketers' commercials are, as measured by IAG.