No Matter How You Spin It, Upfront Has Marketers Paying More for Less

If Les Moonves Isn't Running a Protection Racket, He's at Least Price Gouging

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Bob Garfield
Bob Garfield
There he goes again.

Every year at this time, Les Moonves of CBS shows up at a Wall Street investor conference to boast about how he's going to stick it to the advertisers. "Strong double-digit price increases," he says. And if the market is softer than Moonves predicts, he threatens to do what he did last year and hold back inventory till later in the year, when panicked buyers presumably will pay through the nose for scatter.

So, no, not a big subscriber to customer-relations management is Les Moonves. Not one for client golf. Other vendors intentionally duff an approach shot. Moonves clears his throat on your backswing.

Pay now or else? While he was at it, he also threatened to cut loose CBS affiliates that don't surrender a slice of their cable-retransmission fees to the Black Hand. I mean Black Rock. Doesn't this all have a sinister "Godfather Part II" vibe? I'm thinking of the Little Italy don in a white suit. What became of him, anyway?

And if not a protection racket, he's running the last-chance gas before Death Valley. As audiences fragment, the largest audience of all -- even the Incredible Shrinking Mass Audience -- becomes disproportionately valuable, adhering to a certain perverse logic of scarcity. Unless you don't actually have enough gas to get the customer through the desert.

I mean, what am I missing here?

Not a rhetorical question, necessarily. The key to understanding is learning, and the key to learning is the willingness to seek out the learned -- not just to seek them out, but to sit at their feet, quietly drinking in the knowledge.

That is why I called Rino Scanzoni, chief investment officer for Group M, the WPP media-buying colossus. At the upfront, Rino is the guy with the checkbook. And last year, while most of his competitors were holding back, he urged clients to go on a spree -- a strategy that he says paid off big when the scatter market inflated from desperate year-end buying. So here resides the voice of experience and expertise. Sure enough, our discussion was filled with learnings:

Me: "What the f___ is it with you people?"

Scanzoni: (chuckling nervously) "Not sure I understand the question."

Me: "Why are you bending over for Les Moonves?"

Oh, that.

Well, perhaps unsurprisingly, Scanzoni rejects my premise. First of all, he says, he pays no attention to the annual posturing of network honchos. Not only is Moonves trying to manage expectations among buyers, he says, "He's obviously got to drive his stock price. This is just to stroke Wall Street."

Maybe, but Wall Street hates surprises, which would suggest CBS really does intend to have its way with Madison Avenue. It's easy enough to argue that buying pricey network time still returns value; everybody uses sophisticated econometric modeling to weight the variables. Still. I ask Scanzoni, never mind self-interest, what about self-respect? That's when Scanzoni tells me something extraordinary. After some preliminary boilerplate about supply and demand, he makes the startling assertion that CPM increases aren't a critical indicator of the marketplace. "You can't take CPMs to the bank," he says. Not only have Moonves and his counterparts not been able to bully their customers, advertisers have enjoyed "significant disinflation."

Really? I remain confused. It seems pretty basic that forking over a premium for dwindling mass-ness is paying more for less. For crying out loud, the aggregate prime-time rating of the Big Four networks for viewers 18-to-49 in the first quarter of 2010 was 12.

Twelve. The other 88% were doing something else. And as the economy improves, more of them will be leaving the house more often. Moonves likes to flaunt his ratings leadership, but the numbers bring to mind the over-70 category in the local 10K. Sure, some geezer will beat the other geezers. Just don't focus too hard on the winning time.

In the last week of December last year, the highest-rated TV series was CBS's "The Big Bang Theory." It was viewed by 5.6% of TV households. Fifty years earlier, the CBS top show "Gunsmoke" was viewed by 40% of TV households.

And let's consider the 8.5 million households that watched "The Big Bang Theory." Three million of those households have DVRs. The impact of ad-skipping remains inconclusive, but it is vast and growing. I mean, you ... do you watch the ads on playback, or do you fast-forward through them?

That's what I thought.

Between the 15% who don't sit through commercials in real-time and the DVR skippers, I think it's reasonable to assume that the actual viewership of advertising on December's top-rated network program was in the 6.5 million range. Moonves thinks that gives him leverage. I think he's blowing "Gunsmoke" out of his aspirations.

So tell me. Where is the disinflation? If The Chaos Scenario is providing value I cannot see, show me how. My mind is open at least as far as Les Moonves' mouth.

Bob Garfield, now a consultant, has reported on advertising, marketing and media for 28 years.
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