Measurement and currency debates are top of the agenda, assuring full employment for statistical gurus on both sides of the table.
A typical conversation with an agency chief might touch on whether live or live-plus-time-shifted viewing gives the best sense of performance. Or whether the agency should stick with program ratings or opt for commercial ratings, and whether it should look at second-by-second data, minute-by-minute data or average commercial minutes as the yardstick.
"The biggest issue is measurement" this year, says Jon Nesvig, president-sales at Fox Broadcasting Co.
Some are prepared to stick their necks out and take a guess at how the coming season will play out.
At least a handful of the gimlet-eyed broadcast buyers say the health of the upfront won't be any worse than last year, when broadcast networks brought in about $9.05 billion.
Networks might have a touch more cause for cheer because scatter pricing has been buoyant and certain major ad categories are spending. Some buyers suggest the overall economy is in good shape, and that bodes well for a modestly successful upfront.
"For the first time in a while, it's very solid; it feels different," says Bill Morningstar, exec VP-sales at the CW. "There's not as much doom and gloom. It's more about moving the business forward, and the economy seems solid."
"Pharmaceutical is sandblasting everyone with new products coming out," says Larry Novernstern, exec VP-joint managing director of Optimedia's NewCast division. Another executive suggests Detroit autos could be making a comeback in the 2007-08 season. AT&T continues to spend big on its rebranding efforts, while Apple's iPhone is just around the corner. Movies are also expected to be slightly stronger than in past years.
But even as advertisers get ready to spend, networks are being slammed with alarming decreases in their shows' ratings. Many TV shows, including some top performers, have slid in their ratings for live viewers -- those who aren't using digital video recorders.
Live has become a key measurement because in last year's upfront, the networks yielded to agency demands to negotiate using only live ratings.
"Last year was an adjustment," says one upfront veteran on the agency side. "The integrity of the upfront is based on the premise that the guy who steps up [in other words, the advertiser that buys during the upfront] should have a price advantage. The last few years, the gap between upfront pricing and short-term [scatter] pricing has gotten [too] small, and it needed to be rebalanced. Last year was nothing more than a correction."
A correction in favor of the advertiser, that is.
Shifting the load
"The elephant in the room -- whatever the measurement system -- is if less people are watching TV than a year ago, is the advertiser going to pay more or is the network going to take less money?" says John Swift, exec VP-managing partner, activation, at PHD, New York.
Mr. Swift likens the upfront market to a pair of scales. On one side is the "must-have TV deal at any price" and on the other the "exponential growth of other options" such as digital media. He suggests the industry has reached a tipping point, with the other options now heavier than those must-have deals.
|Note: NBC includes $300 million on NFL. Source: Advertising Age reports|
While Mr. Swift praises the accountability of TV, "I don't think advertisers would tolerate any more than a modest premium."
So who's got the programming goods for next season? All eyes are on News Corp.'s Fox and what it might offer advertisers interested in the digital domain. So far, there's been precious little detail on the News Corp./NBC online video joint venture, though it's certainly intriguing buyers.
Digital comeback for NBC
Last year saw a major shift of dollars away from NBC, which netted $1.9 billion (including $300 million allocated to sports, which aren't typically included in the upfront numbers).
Buyers say NBC has done a good job of connecting with the ad community and is making what's arguably the best digital pitch of all the big networks, alongside a more open attitude to product placement opportunities.
CBS was the top earner during last year's upfront, bagging an estimated $2.4 billion. But in 2007, one major agency buyer voices concern that the network is in danger of resting on its "CSI"/"Survivor" laurels. While ratings have remained strong, there's a fear that wear-out in the mainstay franchises could put CBS in a tough spot.
JoAnn Ross, president-sales at CBS, says: "If you look across the schedule, there are at least two to three successful series on virtually every night of the week, which provides a great foundation to introduce and nurture new shows."
Ms. Ross also says CBS has a lot of fresh material in the pipeline. "We have thrown away the rule book, and looked at things that are very different and not imitative of what's already out there," she says.
Contenders for a spot on CBS' fall schedule include "Viva Laughlin!" about a small casino town in Nevada. The show is based on the BBC show "Viva Blackpool!" It's the first network TV production from actor Hugh Jackman, who will help adapt and appear in the show.
The network will also detail CBS Interactive's audience network, the company's response to the News Corp./NBC online video venture.
Stalwart shows may also be a concern for ABC. Many observers have noted how "Lost" has struggled to maintain momentum this season and just how badly ABC is down in live ratings -- partly a victim of its own popularity because the network gets no credit for viewers who watch its shows on their DVRs. Still, ABC continues to own much of Sunday and Thursday nights.
The CW, a joint venture of CBS Corp. and Time Warner, has one of the most buzzed-about new concepts this year, a show called "Gossip Girl," which follows the lives of rich New York youngsters through a set of anonymous internet postings. While the CW got off to a slower start in the ratings than anticipated, this coming season the network is expected to prove itself.
More dollars online
One thing everyone is certain on: Digital spending will grow. Optimedia's Mr. Novernstern reports that if digital was 1% or 2% of clients' spending last year, this season it could be 2% to 3%. PHD's Mr. Swift says it could total $500 million to $700 million, still a drop in the bucket against the $20 billion TV upfront market that also includes cable and syndication.
"The various efforts by the broadcast networks to exploit digital opportunities are still in the very early stages. ... I don't think anyone is monetizing it fully [yet]," says Irwin Gotlieb, CEO of Group M. "We're missing the boat a little. The focus has been on repurposing for digital as opposed to taking advantage of digital delivery.
"We can do far more with the base activity. What's the value of addressability and what are the implications for the medium? It's very exciting, but it will have little impact on this year's upfront, though it will have significant impact in future years."