Commentary by Scott Donaton


An Absurd Business Procedure in Today's Market

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It's time to abolish TV's upfront marketplace.

This is the third consecutive year that sentence has topped this

Scott Donaton, editor of 'Advertising Age.'
column in mid-May. And while I like to believe my words carry some weight, money talks loudest. So, to bolster the argument, I've brought along one of the biggest ad budgets in the business. If you won't listen to me, perhaps you'll listen to Jeff Bell.

Antiquated model
At the recently concluded Marketing Forum, a captive-audience conference held aboard the QE2 as it floated off the coast of Atlantic City, I participated in a panel discussion on the intersection of Hollywood and Madison Ave. Bell, vice president of marketing communications for DaimlerChrysler, sat to my left. As the panel concluded, he unclipped his wireless mike, turned to me and said, "You want to talk about an antiquated model? Let's talk about the upfront."

Let's do.

And let's remember that DaimlerChrysler is a Top 10 U.S. advertiser with a $2 billion budget. When Jeff Bell speaks, two things happen: 1) he shares his viewpoint with blunt certainty; 2) people listen.

There are many reasons the upfront is an absurd way to conduct business in today's media market. It flies in

the face of media-neutral planning, cross-platform selling and long-term brand building. And even though it was less frenzied last year as it dragged on in a buyer's market, it remains a macho ritual marked by chest-thumping, posturing and frantic negotiations.

But buyers and sellers are comfortable with the devil they know. That's particularly true for network TV ad sellers, who remain at an advantage even in buyers' markets because they control how much inventory is for sale, artificially regulating supply and demand.

Distorting supply and demand
"Look," Jeff Bell said to me back on land, "it's no more complicated than this. Economics theory suggests there's supply and demand and that sets prices and values. The upfront is a distortion of a clean and simple market model."

It would be more intelligent, Bell said, to have buyers pay a certain amount

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for a certain audience share and a different amount for a different share. "Pay for what you get," he said. "Right now, it's lose-lose. When programs underperform, instead of a rebate, this concept of make-goods comes into play. Now you fill the market with make-goods, which crowd out available inventory that could be sold by the networks. You've distorted the marketplace. You don't know what the true pricing is. It makes prices artificially high, and then you have unhappy clients."

Cross-platform packaging
There's also the view that the advance commitment of billions of dollars in ad spending to one medium is odd at a time when the buzz is about cross-platform packaging and integrated marketing. With TV dollars taken off the table in the spring, every other medium is left to fight over scraps later in the year.

"We have allowed ourselves to be divided and conquered to some degree," Bell said. "If I'm a brand steward, how can I engage in this frenzied negotiating period and then in the fourth quarter negotiate magazines and Internet and out of home? It's separate and unequal. That's not good brand stewardship."

It's also nonsensical since many of those media properties reside under the same corporate umbrella. One possible scenario is the emergence of a cross-platform upfront. The big package deals crafted by Viacom, AOL Time Warner and Walt Disney Co. provide the first glimpse of how that might work.

True change won't come, though, until both sides of the table want it, Bell believes. "It can't be driven by just the buyer or just the seller," he said. "It needs to be understood and developed together."

Pay attention. He has a budget.

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