Drug office: flap imperils upfront buys

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The White House drug office is scrambling to avoid letting go of as much as $65 million in upfront holds for the 2002-2003 TV season-a move that could cost millions if it must buy ad time instead in the scatter market-because of congressional legislation targeting its agency, WPP Group's Ogilvy & Mather. Ogilvy maintains that House legislation passed on July 24 to preclude payments to the ad agency after Oct. 1 puts at risk its ability to commit to fourth- and first-quarter upfront buys, which would normally get reimbursed in October (AA, July 29, P. 3). Last week, drug czar John Walters met with several senators and congressmen. One part of his message: Despite the vote, Ogilvy must be able to make commitments now that it can get reimbursed for after the Oct. 1 start of the federal fiscal year.

"We are working with congressional staff to make sure that Ogilvy would be reimbursed for media buys it makes," said Tom Riley, a spokesman for the White House Office of National Drug Control Policy. "We are also trying to help make people aware of the importance of being able to make buys in a timely fashion."

The message is becoming critical in light of congressional action last week to recess for August without any final determination of Ogilvy's fate, or the amount the drug office will have available to spend. The House of Representatives approved legislation providing $170 million for the ad campaign, with $150 million of that required to be spent on advertising. A Senate appropriations bill includes only $50 million for the campaign, but the Senate hasn't acted on it yet.

As much as a third of the $65 million WPP's MindShare reserved in the upfront market for Ogilvy is due for payment by Aug. 30. While Congressional action on the campaign is likely in September, dropping the upfront buy would force the drug office to use scatter, a move that could cost as much as $12 million in media time for the year, said Alan Levitt, director of the drug office's media campaign.Upfront holds refer to commitments marketers make before the start of the upcoming TV season to buy ad time. The scatter market refers to TV ad inventory sold during the season.

Replacing the upfront holds would be complicated. The drug office requires each paid ad be matched by a free ad, and negotiations may have to start over again if the upfront holds are dropped.

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