Buyers Say Advertisers at an Impasse With TV Networks

Won't Do Upfront Deals 'Outside of a Deep Negative' in Pricing

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NEW YORK ( -- Could this be the year more TV advertisers decide to take a hard line against broadcast-network price increases and sit out the upfront marketplace altogether? The concept is one that has been bandied about for years, but a perfect storm of economic woes and technological challenges lends the idea more support than before.

In a typical year, the upfront, during which the big TV networks sell as much as 80% of their ad inventory, would be close to wrapped up by now. Buyers and networks remain at an impasse over price, however, and speculation is already beginning that advertisers could decide to buy more of their TV advertising in the so-called scatter market, when TV inventory is purchased just a few weeks or even days ahead of an ad's air date.

"There is such a huge gap between what some of the sellers are posturing and what the real expectations are of clients that I feel like we're not going to go anywhere fast," said one ad-buying executive. "To put it in plain terms, if my client went in right now and if there was an agreement to anything outside of a deep negative, I'm not doing my job."

"It's going to be hard to do any deal that isn't negative," another buying executive said. "Clients aren't going to take it."

Buyers made noise last week about trying to start negotiating with cable networks, which might be more willing to acquiesce to demands to lower the price of reaching 1,000 viewers, or CPM, a typical metric in upfront talks. So far that hasn't happened, according to buyers and TV executives.

Signs it could start soon
To be sure, there are signs that business might start soon. Some networks are negotiating brand-integration and product-placement deals, which need to be brokered early because of the complexity of inserting products into programs that have to go into production. Two buyers said more clients have registered budgets, giving networks a sense of how much time they need to sell in the upfront and how much they need to hold back for scatter in order to reach 52-week sales goals.

Even so, one of those buyers indicated that client budgets are down "20% or more," suggesting that advertisers have less money to commit.

Advertisers have made noise before about sitting out the upfront. Johnson & Johnson has opted out at least twice in recent years, though buyers and TV executives said the company had some handshake deals in place with several networks that included assurances the large health-care company could get the air time it needed.

If more clients decide buying scatter is a better option for the 2009-2010 season, that will change the dynamics of the TV marketplace. There would be significantly more fluidity in the market, and clients might not be assured of getting important inventory for fourth-quarter holiday sales, the Super Bowl or in established hit programs.

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