The panel consisted of Donna Campanella, executive director-global media, global insights and marketing intelligence, Avon Products; Bob Connolly, VP-group director, Carat USA; Dennis McCauley, co-president of network sales, Univision; Michael Teicher, exec VP-media sales, Warner Bros. Domestic Television Distribution; Linda Yaccarino, exec VP-ad sales and marketing, Turner Entertainment; and Michael Kleha, associate director-strategic innovation, Merck & Co.
Jonah Bloom: Can you give us a sense of broadcast, cable and syndication in the 2007 upfront?
Donna Campanella: I don't see any upturn in any of the three markets. Again, the sellers are going to come out and predict that it will be up-market to try to get increased [costs per thousand], but I think flat at best.
Bob Connolly: Indications are that some money will be coming out of the traditional television marketplace [and] going into some digital areas. I go to brand meetings a lot this time of year, and a lot of clients are saying we need to be less reliant on TV. They're not saying we need to abandon television, just [be] a little less reliant [on it]. So I wouldn't be surprised if we saw some upfront budgets down a little bit.
Mr. Bloom: That's not a particularly rosy view for the sellers.
Dennis McCauley: I think the upfront is going to be ... whatever [new CEO of Univision Communications and veteran media buyer] Joe Uva says it's going to be. [Laughter.] And he thinks it's going to be a good upfront, and he knows both ends of the business, so I'm going with him.
When you speak from Univision's prospective about the upfront, it's obviously a little bit different. We're not as mature, so our upfronts are traditionally much stronger on a percentage basis than the English world, and that will continue to be the case. But ... it sure feels to me like it's going to be better than last year. ... I think the scatter market is a lot stronger, and some people think that's immaterial -- I don't. It's not just stronger because people are spending more money who are already on our air. There are a lot of new advertisers. Again maybe that's more of an issue for Spanish.
If cable folks and broadcast folks bring to the table what advertisers are looking for, solutions-based ideas including digital, I think it's going to be a healthy upfront.
Michael Teicher: The honest answer is I have no idea. And the reason I have no idea is because until a budget is submitted or an agency submits budgets, I don't think anybody could really accurately predict. Having said that, there are signs of optimism. Needless to say, there have been pockets of strength out there, but I also think we're beginning at times to overemphasize, certainly for Wall Street purposes, the importance of the upfront.
It is very clear that our business is no longer done in any short pocket or period of time. At the end of the day, we need to count the chips after 365 days. ... [As] every seller here knows and every buyer knows, there are a number of deals that we are doing that take place over the course of several months in advance of the upfront. They just get culminated at that time.
Linda Yaccarino: I really think it's impossible to talk about where the market's going to be in terms of broadcast, cable or syndication. ... you need to kind of take it up a level and think about [how] the money will follow the eyeballs. And if you look at what has been incredibly consistent over the last probably three, five, seven years, it's that the audience has migrated to programs from broadcast to cable. ... Cable should be very optimistic about this year's upfront.
Mr. Bloom: We've talked about how some of the established advertisers are moving to other media. Are there new categories that are coming into TV?
Mr. Teicher: I wouldn't necessarily say it's rooted in new categories. I don't know that there's a category killer out there, but if you look at the fact that mobile devices are multifunctional, each carrier is out there talking about different functionality that they have, whether it's video or what is coming on the horizon, the ability to pay your bills via your mobile phone, everybody has a point of differentiation that they're going to be touting.
So I think the wireless category will remain strong, and even last year the pharmaceutical category was strong. ... We're [also] really seeing a vitality in the makeup and beauty category. ... The domestic auto picture will probably be a little challenge this year.
Michael Kleha: The trend in pharmaceuticals is driven largely by product launches. It's a function of who's launching what and when it's launching. Once a brand establishes the mass awareness that it's looking for, we tend to migrate toward some alternative media.
Ms. Campanella: The beauty category has been competitive, and it is continuing to be competitive, particularly in the area of not only beauty but anti-aging products.
Mr. Connolly: One category that we're not really talking about much is something we're all very familiar with -- distilled spirits. Five years ago, the list of networks that accepted distilled-spirits [ads] was about this big; now the list of networks that don't accept is about this big. That's an opportunity for cable networks obviously, [and] it's still pertinent for broadcast and syndication. But I think that's a category that will continue to rise significantly over the course of the next few years.
Mr. McCauley: Pharmaceutical and financial are probably the two last frontiers for [Univision]. Those two categories have been huge, and cellular, obviously. For the first time next year, I think we're going to be looking at some political [advertising]. I don't know how big it's going to be if people keep on raising $25 million a week. Hopefully, it will be really big.
Mr. Bloom: Can you, as people who traditionally sold TV, expand and really offer a multiplatform deal? Are such deals becoming a factor in the upfront?
Ms. Yaccarino: It's part of every conversation that we have every day, and we really don't have our conversations that are so dedicated or specific to upfront or scatter. It's really how do we maximize exposure for our client's commercials. And those conversations operate well outside this little price negotiation period that you have in May, June or July.
You're having a conversation for networks obviously that have been around our place 25 years or so that have made their living in the linear business, but we approach multiplatforming ... especially in service or recognition to what the clients are looking for today, and that is to enhance the linear experience [of our TV shows] with extension in the broadband and wireless space.
But then you [also] have separate and distinct opportunities in the digital space, like our new comedy broadband networks Deluxe. That is completely separate from the linear brands. Clients are looking for original content that is mobile is nature, so they can maximize their investment but also capture the consumer wherever they have an appetite to consume it. ... it's a conversation maximizing exposure for a client's commercials, and we're getting better at it together.
Ms. Campanella: We are beginning to look at a holistic approach and doing 360-degree activation. So it's not just getting somebody as they're watching television; it's trying to do deals that are all-encompassing so that we are extending our relationship with that consumer in more than just one exposure.
Mr. Teicher: It's inherent upon us to really react to what the marketplace is demanding. First let's start with the consumer, because they hold the biggest vote in everything we do, and the consumer is saying, "I want certain content at certain times or certain platforms." So as a reflection upon that, marketers and their agencies are devising plans to reach that consumer at the most opportune time.
We then take it a step forward, and it's up to us as a content developer or a distributor, which we happen to be both, then to find those consumers with our relevant content. ... We're also reacting to what we see that's happening on Madison Avenue.
So the reality is that while television is up overall, which is a good thing, I see this as an opportunity to expand our business and tap into a number of different resources to really provide the consumer an enriched experience that will benefit all of us. [Instead of spending] as much time debating "TV up, TV down," I think we all have businesses to manage that have become much more complex.
Ms. Campanella: When I look back a few years ... you had to have one champion who would push [for multiplatform deals] on the client side and then get a partner at your agency to do it. I think the model has changed because now everybody is operating more as looking beyond just their specialty.
The silos certainly have been broken down. I still think you need a champion on either side to move it. ... It's now [a matter of] finding the right partner from a broadcast point of view or from a magazine point of view, because I have found in some cases that they don't talk together.
I think things are getting better. It's a question of staying focused and really talking about what you want. But it's not something that could be done at the upfront; it's an ongoing, long-term conversation. ... You're looking for bigger deals. So there are ongoing conversations that do not pre-empt the upfront but augment the upfront.
Mr. Bloom: Are you really being fair to these agencies and media owners in terms of all the demands being made of them today?
Mr. Kleha: I think we are. I have a wonderful relationship with our agency -- they do a great job of pushing us, just as well as we push them. You're seeing an evolution taking place. People coming into the industry grew up with the internet. People coming into the industry grew up with mobile devices, wireless. There's a natural integration just from existing.
You don't have the person who's spent 20 years doing one thing, or else they're rapidly going to become a dinosaur. There's just a natural progression that's taking place. ... Our customers are putting increased pressure on us, but we're putting increased pressure on our agencies. Hopefully, our agencies are putting increased pressure on suppliers, and that's kind of the way it goes.
Mr. Bloom: Michael, you think we're seeing enough investment from the client's side?
Mr. Teicher: It depends upon how you define investment. It appears as if right now the cycle is one where the sales forces at the media companies are a little bit more on their heels when we're asked to create new metrics, provide marketing extensions, branded entertainment, new research tools, etc., yet then we hear the market's going to be flat to down. That means that there's going to be pressure on us.
So our margins aren't nearly what they once were, our risk is greater than ever, our ability to really provide those experiences becomes much more risk-laden. There has to be, quite frankly, a meeting in the middle, because we can't take it on the end of price pressure, and then we're asked to invest in everything so heavily.
Ms. Yaccarino: When we say there's going to be a systemic shift in the television market or the metrics in how we execute, we need to focus on that execution, and this upfront, I think, is going to be the first year that we can say we took these baby steps. We have to all be cognizant of really concentrating on what we can execute.