B&C's 2013 Market Movers

Consensus finds more data—not C7—helps guide their spending plans
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2013 Market Movers: Top Cable Sales Execs


The most influential media buyers, the ones who decide how
billions of their clients' ad dollars are spent, say they have more options,
more information and more ways to make sure investments result in upfront sales
this year. The big picture, as far as advertiser demand for broadcast goes, is
unclear, according to six top media buyers surveyed by B&C. It's
hard to determine because dollars earmarked for video could wind up not only in
broadcast but with increasingly high-rated cable shows and digital alternatives
whose quality and reach are improving. Buyers and their clients are more and
more comfortable matching their video spend to consumer-viewing patterns. None
of the buyers seemed overly interested in focusing their buys on C7, the
live-plus-seven-days commercial ratings measurement favored by broadcasters
because it includes more delayed viewing. Instead, buyers are favoring
measurement that tells them who is watching their commercials regardless of
whether they're watching in the living room on a flat screen, in the den on a
tablet, or out and about on a mobile device. The upfront has resisted change
for years. By selling $18 billion in inventory during a few weeks in the
spring, the networks put a great deal of pressure on buyers not to miss the
market, which often results in premium pricing. Will this year be any
different? We'll know soon enough. In the meantime, see what six of the
industry's top media buyers are thinking as they prepare for a week's worth of
battle-and months of explaining the outcome to their clients.

What is the most important unknown factor in the
upfront market this year?

Chris Geraci: The level of advertiser demand is always the most
important "unknown" going into an upfront marketplace. This year,
there is more complexity around that as we see client budgets develop in an
increasingly platform-agnostic way. So, while the economic environment will
probably support flat-to-modest increases in topline spending, the question
remains, how much will the online video alternatives divert from the
traditional TV and the upfront marketplace?

Todd Gordon: The biggest unknown factor is how much money will move away
from the traditional TV market as part of a holistic video approach. We
recommend that clients take a holistic approach to their video purchases, where
traditional TV continues to be the core element of the strategy, but reach of
light TV viewers is complemented by participation in online video, cinema,
place-based video like gas stations and health clubs. We expect clients to
utilize these in a big way this year; the question is how much money will shift
from traditional TV into these other areas.

Christine Merrifield: At MediaVest, we believe consumer experiences
exist beyond a single screen/single device and we will continue to lead the
industry in accountability/research of these impressions while working
collaboratively with our partners in the marketplace. However, the concept of
"monetization without data" as the North Star falls short feels too
narrow. The market needs to develop measurement tools that offer transparency
with regard to providing content and devising transparency for all brands to
plan and amplify appropriately. Following our consumers for the right reasons
... data-led/ROI-focused, drives our thinking and propels us faster into 21st
century media. And with that, we need to build measurement tools for 24/7
real-time marketing that has become the status quo for our industry.

John Nitti: Measurement. In an environment where consumption has truly
become cross-multiple-screens, we are still struggling with measurement and
methodologies to accurately account for total audience. Couple that with the
question "Is multitasking/co-second-screen usage a benefit or
hindrance?" A benefit that can show engagement metrics and deeper
immersion in content, or a hindrance as it is simply a detractor of mind share,
further eroding the ability for a marketer's message to break through-as most
of the second-screen engagement is not tied to the content or the advertising
within it.

Amanda Richman: What's unknown until we're at the table is the degree to
which the networks will truly embrace the opportunities that digital and data
provide -- from expanded scale to cocreation of content-and develop solutions
to drive our clients' businesses forward together. My hope is that we won't be
at opposite sides of the table negotiating only on price, when we should be
negotiating total value.

Lia Silkworth: In my opinion, it is demand. We have a fairly good sense
of supply year over year, but between fluctuating economic factors, client
business results and continued digital emergence, demand is still the most
important unknown factor. For the multicultural business specifically, given
that certain categories and key advertisers are still inactive, or under-spent,
demand remains an important variable. We continue to see increases year over
year and hope that it isn't a question of if anymore, but when.

With broadcast network viewership down and many
cable programs winning their time periods, is your thinking changing about the
way you allocate clients' dollars and the prices you are willing to pay?
Merrifield
: There have never been more relevant/scalable
media options in the marketplace than there are today. We expect to continue
our journey of consumer experience architecture across all channels social,
digital, mobile and linear. Original cable programming has been making a run at
prime broadcast for many years, albeit the past few years it has gained in
favor with our consumers. It should be no surprise to anyone that one day their
persistence would pay off. ... Cable has the momentum, traction and scale that
allows for fluid/seamless options for many marketers. However, I never count
broadcasters out of the mix. Their reach and social command will continue to
attract client budgets, but the question is whether the 2013-14 selling season
will be known as the tipping point. Broadcasters fell too deep and reached too
high, and where "a few hits do not make a network," they may be met
with the same criticism cable programmers received years ago.

Geraci: As an agency, I feel we have been ahead of the curve on
understanding the migration of viewership toward cable, and that is reflected
in our clients' spending patterns. However, we still spend significantly within
broadcast, and I don't see the proportions changing in any dramatic way this
year. There have been some great success stories in cable over the past year,
and also some meaningful failures.

Gordon: We have a responsibility to seek out value and find our clients'
customers across the video landscape. As viewers have moved from broadcast to
cable, and from top cable networks to emerging ones, and from traditional TV
screens to computers and mobile devices, we follow the customer and reassess
value accordingly. And while many cable networks and original shows are
thriving, others are struggling. TV remains an amazingly powerful medium, but
increasingly we are using more sophisticated data, systems and tools to find
our audiences and build reach across the video landscape.

Nitti: The audience shift away from broadcast began years ago, and our
strategy has been evolving ever since. We continue to evaluate each program
based on our clients' individual objectives, and the way we allocate their
dollars reflects that. Our view of the market and how we have organized our
staff and investment does require and enable a thorough evaluation of content
consumption across all screens/formats to truly understand where ad-supported
supply of professionally produced content sits. This has [led], and will
continue to lead, to either a reallocation of investment or valuation of
cross-channel consumption and delivery.

Richman: Chasing diminishing supply with more dollars is not following
the consumer. At Starcom, we will invest where there is audience growth and the
opportunity to engage in more meaningful ways, subsequently shifting from
channel allocation to a more fluid investment approach.

Silkworth: The dynamics are different when the marketplace is looked at
holistically inclusive of all networks, English and Spanish. As opposed to
English-language broadcast networks, the largest Spanish-language [broadcast] networks
are growing. The Hispanic cable marketplace also has continued to see new
entrants year over year as well as consistent growth among several players.
Price is still dictated by supply and demand, and the reality is that while
growing, the supply in the Hispanic market still outpaces the demand. As the
importance of the Hispanic market continues to grow and clients seize this
important opportunity, the supply/demand balance may shift.

Is digital creating new opportunities for traditional broadcast and cable
networks or is it generating new competition in the video business?
Merrifield
: Sight, sound and motion continue to be the path to consumer
engagement-innovation, consolidation and newly established business partners
are emerging weekly. Our business has never been about "buying"
what's on the page, but now more than ever we are architecting deal structures
for the future where spot/dots are converted to data/ROI. Digital will create
opportunity for those who choose to embrace transparent data as their friend
vs. foe. Did you see the Twitter deal SMG made on April 22? This is one of the
most significant digital upfront partnerships SMG has ever activated. It
reflects the 24/7 marketplace that the industry is moving towards-and it is a
deal for the future. This multi-year upfront deal is the first of its kind to
recognize where markets are moving to, the first to focus on the value of
Twitter plus TV, and in addition it emphasizes the cocreation of new tools and
capabilities.

Geraci: It creates opportunity in that TV-based media owners still
control the vast majority of high-quality content and now have another
distribution platform upon which to monetize it. On the other hand, there are
certainly competitive forces out there who would like nothing more than to get
their hands on a piece of the TV pie.

Gordon: Mostly, I believe it is creating new opportunities. Much of the
high-quality video content being sought out by viewers radiates out of the
traditional broadcast and cable TV ecosystem. Consumers love these shows, and
they want to watch them on their own terms, which fuels a lot of digital video
consumption. And beyond video, digital media and social amplification allows
traditional TV to work harder and be more actionable than ever before. The surge
in original content production by digital publishers has become an increasing
rival to TV in terms of the quality of programming being produced, with Netflix
and Hulu being leaders in this area.

Nitti: Yes and yes. ... It is enabling "traditional" video
content providers to capture/follow the audience consumption of their content
and account for it. While digital-video pure plays grow in scale, they continue
to package and channelize their content to be more "TV"-like, in an
effort to lure marketers' "traditional" investments further into
their space. Both the consumer -- and now, more each day -- marketer are
viewing video as video, which I think is a good thing for the overall
ecosystem. At the end of the day, the most compelling content will draw the
largest and most valuable audience regardless of consumption point.

Richman: To the extent that "digital" represents new sources
of video supply, yes, there's competition for networks not only in television,
but with their full-episode player offerings. But traditional broadcast and
cable networks are evolving; they understand that digital is a growth
opportunity, social helps their content get discovered, and mobile devices are
making television viewing more engaging at home. The more we focus on the behaviors
that are converging versus competing, the more positive opportunities we'll
realize for our clients.

Silkworth: As multiscreen engagement and viewership continues to show
strong growth for all audiences, and especially multicultural groups, networks
must keep a close eye as to how to capitalize on that growth. Increasing video
streams across screens should be a primary focus for networks as it expands
their ability to capture an ever-growing audience hungry for content on their
own time and on their own choice of screen.

How important are integrations and multiplatform campaigns in deciding
whether to do business with a particular network?


Geraci:
This is all about relevancy, context and execution. We have seen
the entire spectrum of performance in this space and know that while
these efforts can certainly drive money toward a vendor, it can just
as easily drive it away, if commitments aren't met.

Gordon: Every dollar needs to work hard to deliver client business
results. Custom sponsorships consistently out-perform commercial-only deals by
a significant margin. So these elements are critical to the success of our
clients' campaigns because they drive high-level engagement and attention, and
they reinforce key brand message elements.

Merrifield: We architect deals in the language that our consumer
speak-"Where I want it, when I want it and on any device I want to
experience it on." Often, media partners with skin in this game are
the ones we find ourselves speaking to.

Nitti: It really depends on the client, but being able to integrate
brands into the content of a show organically, expand the association through a
network's digital assets, offer content that a brand can merchandise through
their owned assets and create a meaningful social dialogue are all important to
clients at some level. Being integrated into content storytelling will become
increasingly important as the ability to avoid traditional ads continues across
all formats.

Richman: Clients' needs are multifaceted; there's a role for networks
focusing on efficient reach, as well as robust multiplatform experiences.
However, as programmatic buying eventually makes its way to the television
space, reach alone won't be enough. Networks that can create content, support
our clients' ideas across platforms and leverage their audiences and assets in
meaningful ways will be best positioned for the future.

Silkworth: The ability to help ideate and flawlessly execute integration
ideas are standard in today's ad world and can impact degrees of investment.
The reality is that not every client is looking for integrations, but most of
them are and the largest definitely are. Over years, certain network players
have become known for creativity and others for flawless executions, but it is
critical that all networks ensure consistency on both fronts. It is also worth
mentioning that when developing content, networks are no longer the only
option; various models have emerged with endless content and distribution
models.

With networks pushing C7 measurement and Nielsen's making multiscreen
numbers available, how will the measurement issue play out in this upfront?
Geraci:
It's really too late at this point to get a
significant number of advertisers on board a C7 metric for this
upfront, and for a certain number of them, full C7 will never be an option for
the entirety of a flight or campaign. Nielsen's online measurement, and an
improved multi-platform assessment will certainly play a role in the
marketplace going forward long-term, regardless of the agreements made in this
year's upfront.

Gordon: This is all about accountability. Every dollar needs to work
harder, and every dollar is held accountable to deliver against a campaign
objective-to make the register ring. But how can we be truly accountable
if we don't have better estimates of the audience viewing our commercials? Our
clients are asking for accurate measurement of their creative messages across
platform on a more granular basis than ever before. Media owners offering that
level of accountability will see their share of budgets increase.

Nitti: Non-C3 metrics make sense for certain advertisers but certainly
not the large majority, so where they make sense, we are open to having the
conversation. The bigger question is how we are going to be able to accurately
measure the contributions to viewership beyond the linear screen and online
video. The growth in mobile, over-the-top, tablet and VOD are all eating away
at C3 numbers, and until we are able to aggregate them all together, we can't
paint the full picture of viewership. Affinity and passion for video content is
stronger than ever, but traditional measurement doesn't tell that story.
Nielsen and ComScore can capture some of this through OCR [online campaign
ratings], XCR [cross-platform campaign ratings] and vCE [validated campaign
essentials], respectively, but we are still lacking with respect to mobile,
tablet and set-top box VOD...we are committed to pushing as an industry and
being a part of an expedient solution.

Richman: Measurement and data have always played a role in the upfronts.
But this year in particular it's more acute as big data-in both volume and
velocity-becomes as talked about as big hits. Neither C7 nor Nielsen will be
the deciding factor concerning where the money flows unless networks make it
one. What will be more interesting is where this leads in the years to come as
we move beyond average commercial ratings to brand-specific commercial ratings
and real-time data. At that point, we'll see the upfront truly evolve to
support business goals with more precision.

Merrifield: C7 is a pure artificial inflation of supply and a masking of
paying more for less. I see no upside for my clients to jump to a metric in
which a few shows see a bump. The next industry measurement innovation is
against ROI, and target optimization. I see no benefit to C7 for my clients or
the industry; we need to move in collaboration, if monetization of all screens
is truly the goal.

Silkworth: It is a hot topic, but in my opinion not something that is as
simple a solution as moving from C3 to C7. The marketplace has changed since
the move to C3: yes, higher DVR penetration, but also a greater appetite for
accountability and measurement outside of just additional days of DVR viewing.
It is also important to note that not all networks are impacted by time
shifting to the same degree. For example, the largest Spanish-language network,
which is often the solid No. 4 broadcast network regardless of language, is almost
DVR-proof.

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