While many participants see the 2002-03 upfront shaping up as the second straight buyers' market — after years of being a sellers' market — there seems to be little agreement on what to expect beyond that.
Historically, upfronts have served as the best way for clients to get costs-per-thousands guarantees, cancellation flexibility and choice inventory, said Pfizer Inc. vice president of advertising services Kaki Hinton at the Association of National Advertisers' Television Advertising Forum two weeks ago.
The 2001 upfront was "a strong market, a buyers' market," she said.
When she asked the ANA panel for their 2002-03 outlook, Turner Broadcasting System Inc. executive vice president of programming Garth Ancier said, "Of course, as networks, we [he and Lifetime Entertainment Services CEO Carole Black] think we're going to see a wonderful upfront."
Black added that, in contrast to the 2000 blitz and the more disorganized 2001 upfront ("it's still going on!" she joked), she hoped this year's marketplace would be "more of a partnership" between programmers and buyers.
In a feature written for an issue of ANA's magazine The Advertiser, distributed at the forum, Sara Lee Corp. senior media manager Lauri Bauer indicated that buyers may have been spoiled by the significant cost savings across various media last year.
After the dot-com collapse, advertisers were "not bashful" about seeking "rollbacks" from the rate inflation sparked by that free-spending category in the late 1990s.
But the two client executives on the ANA Forum panel said very little about how they saw the marketplace shaping up — even though the upfront was plugged as a topic of discussion at that session.
According to Unilever U.S. Inc. vice president of media services Brad Simmons, last year was "a correction" of 2000. Looking ahead, "At the end of the day, it is supply and demand," he said.
But there were hints as to how buyers and sellers view the marketplace from different perspectives.
Johnson & Johnson corporate vice president of advertising Andrea Alstrup said, "In a partnership everyone needs to be realistic" regarding ad budgets and projected audience deliveries.
"Networks that didn't deliver are suffering now," Black added, without mentioning any specific names. But various other industry sources cited ABC and Fox as notable examples — hard-hit with make-goods for series posting lackluster ratings since fall.
Then, there's the issue of cable ad rates being negotiated down despite basic networks' burgeoning ratings. According to Black, cable is still seen as having a lower value to advertisers than broadcast.
Ancier added, "There's still CPM differentials."
SELLERS' CRYSTAL BALL
Among the sellers, Discovery Networks U.S. executive vice president of ad sales Bill McGowan once again has been the most vocal about the upfront's outlook.
Early last month, he kicked off the annual speculation on the size of the upfront when he projected that basic cable programmers will amass $4.5 billion, up 12.5 percent from a year ago, while the broadcast networks will stay flat at $7 billion.
"I hope he's right," said president of Turner Entertainment Group sales and marketing at Turner Broadcasting Sales Inc. Mark Lazarus. More conservative in his own revenue forecast, Lazarus said, "I think we're looking at a 5 to 10 percent or so increase."
But executives at Turner — claiming to account for 25 percent of cable's upfront business — typically lowball the annual dollar volume.
Lifetime Television's executive vice president of ad sales Lynn Picard said, "I do think cable will be up, but 12.5 percent seems a little high to me."
But, given the slumping Nielsen Media Research ratings performances by ABC and Fox, "broadcast will likely be flat or down," Picard predicted.
Bravo senior vice president of ad sales Hanna Gryncwajg said only: "the marketplace for cable certainly will be better both in revenue and CPM growth than last year."
She estimated the latter measure could be in "the mid-single digits."
CABLE: 'SLIGHTLY' UP
At Bravo sister service MuchMusic USA, senior vice president of ad sales Bob Dahill said: "I think the cable upfront will be up slightly in dollars."
As for anticipation that cable's upfront will precede broadcast's, as voiced by McGowan, Lazarus observed, "That's something we believe is the right thing."
Lazarus — echoing what Turner executives have proclaimed for years, starting with the former Steve Heyer regime — said "TBS [Superstation] and TNT [Turner Network Television] are clear substitutes for the broadcast networks in ratings and reach."
But Dahill is among those who foresee broadcast going first — as usual.
Whether the marketplace continues in an "orderly" fashion will depend on how aggressively or stubbornly those broadcasters do business. "Cable won't lead," he added, "but there may be some overlap [with broadcast's upfront]."
McGowan has also predicted that the upfront would begin to change into a year-round marketplace.
Lazarus agreed with McGowan to a point. He said that buyer/seller haggling may prove lengthy and that it may begin shifting. "It is evolving to a 365-day business, absolutely; things change."
But Dahill doubted a year-round marketplace is likely yet, largely because the networks' sales forces as a whole are not yet organized to cope with that kind of a workload. And they lack rate and package structures set up for year-round business, he added.
"Do they have the systems and resources [in place] to do that?" he asked. "It could occur, but over time," he concluded. "Given the extremes of the past two years, it makes sense to do that."
Networks now introduce more and more new programming throughout the year rather than concentrating on the fall as they used to do, he added.
In late April, Jack Myers Report
released updated projections that cable's upfront would grow by 4 percent, to $4.2 billion, while broadcast's should decline by 3.3 percent, to $6.7 billion.
Myers also put the year-ago broadcast upfront total — just over $6.9 billion — somewhat below McGowan's estimate, though both concurred on cable's amassing $4 billion.
Publisher Jack Myers also predicted a shift of funds from TV to cable, with Comedy Central, FX and Lifetime among the main beneficiaries for being "reach vehicles within appealing targeted segments."
'GROUPS' HAVE EDGE
Myers said cable groups like Discovery Networks, ESPN and Turner also stand to benefit, along with such cross-platform entities as AOL Time Warner, Viacom Inc. and News Corp.
On the broadcast side, Myers saw ABC and Fox losing the most in upfront ad sales, down a projected 17 percent and 14 percent, respectively — versus a 7 percent dip for NBC but a 14 percent uptick for CBS.
As for costs per thousands, Myers said, "Broadcast networks have been publicly and privately projecting that upfront CPMs could potentially increase more than 5 percent and as much as 10 percent.
"Conversely, media buyers report that clients have estimated CPM decreases
of 6 to 10 percent," he added.
Should that potential confrontation occur, Myers said his latest survey of more than 100 client and agency executives indicated that the major cable networks stand to gain the most, particularly network groups like Discovery, ESPN and Turner.
But Lazarus disputed the Myers predictions and maintained that "[the upfront] will not necessarily be protracted" and that the ad community "is not walking away from the traditional upfront," concentrated in May and June.
Picard sees the upfront timetable differently. Given all the ad-agency and media consolidation that's occurred in the past year or so, she said, "Groups of broadcast and cable may be moving together."
Although she agreed that "more business is being done year-round," Picard said, "Still, I can't see [the traditional upfront] going away."
Nor did she look for the "protracted" bargaining that Myers expects. "I don't think that at all," she maintained, citing all the ad-agency/media-buying consolidation as the key reason. Where McCann-Erickson, Universal McCann and TN Media Inc. bought separately a year ago, she said, this time around McCann's upfront buying is being centralized at Magna Global USA.