Packaged goods again hold the key

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The upfront TV market is often compared by agency media buyers to a tightrope walk. Media buyers are balancing getting advertisers the guaranteed time they want at a price they and the networks feel is livable.

But this year, media executives say they're struggling to find that balance between schedule and price, primarily due to expectations that Internet companies are going to demand upfront time rather than settle for scatter-market remnants.

"Every time a company is burned in the scatter market, they're more eager to get their time in the upfront," says Jon Mandel, co-managing director, MediaCom, New York, the media unit of Grey Advertising, New York. "Many dot-coms are in that position, and they expect to be able to move from scatter to upfront this year. The big question that remains is whether they have the budgets and funding to pay upfront prices."

"We're hearing the upfront may be well up into the double digits, pushing into the $8 billion range," says Aaron Cohen, exec VP-director of broadcast, Horizon Media, New York. "But I can tell you this: Longtime advertisers, [such as] the packaged-goods companies especially, aren't going to be happy about paying double-digit increases, no matter what is the reason given."

In a recent report, Morgan Stanley Dean Witter & Co. analyst Michael Russell writes that the "decline in the stock market comes at a bad time -- just before TV upfront prices in May" and that "advertisers may balk at paying up in light of a downturn in the stock market."


However, agency media executives contend it's not the stock market that will drive their strategy.

"The biggest question, and one that we're spending a lot of time on trying to answer, is whether longtime big-spending network TV advertisers, like the consumer-goods companies, find the market to be too overpriced," says Mr. Mandel.

"Frankly, many of these established companies are not so wedded any longer to having to be on TV, there are so many other media for them to spend their money."

Whether using magazines, radio and outdoor or going online with banners, buttons and links, "established advertisers feel they have more flexibility to move money around," says Mr. Cohen.

"If the upfront doesn't suit their budgets," he adds, "they are far more ready and flexible in moving to other media. Many of the dot-coms believe they don't have that flexibility -- they feel so deeply that they need the upfront network time and they'll pay seemingly anything to get it."

Agency executives say one dot-com that is likely to participate in the upfront this year is discount broker Ameritrade Corp., which is currently airing spots that feature a nerdy office worker who wows his boss with his online trading skills.

Ameritrade says it is on track to spend $200 million in its current fiscal year, ending Oct. 1, 2000, with as much as $250 million in advertising slated for the next fiscal year. Itwouldn't say how much of that would be dedicated to TV upfront buys. There are inklings, however, that some advertisers may indeed avoid the crush of upfront.

Network TV spending overall among beverage marketers (coffee, tea, juice) dropped 10.8% in 1999 to $248.5 million from 1998. Longtime TV mainstay, the household products category, fell 14.3% to $273.2 million from the previous year, according to Competitive Media Reporting.


"We're clearly in a mixed bag world," says Mr. Cohen. "The networks believe, as [CBS President-CEO] Les Moonves so well put it, that `anyone who thinks the upfront market is going to be soft doesn't know what they're talking about.' "

He adds: "What we're seeing is there's no sense of panic among [non-dot-com] clients, that they have to have network time, no matter the cost."

Bill Cella, exec VP-broadcast and programming at McCann-Erickson Worldwide's Universal McCann media unit, New York, contends if the networks set prices too high, "there will be even more of a shift out of network TV and into spot and local TV, radio and print.

"There is a palatable feeling among advertisers," says Mr. Cohen, "that their network TV advertising is simply one medium among many, that network TV doesn't make or break their campaigns."

Getting shut out of the market is becoming less of a concern.

"I don't foresee getting whatever is necessary for clients' campaigns," says Bob Igiel, president-broadcast division, Media Edge, New York. "There is no network that we can't buy around."

"The psychology has shifted," says Peter Gardiner, managing partner-media director, Bozell, New York. "We're advising clients that it's not necessary to rush into upfront."

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