Bill Koenigsberg is the CEO of ad agency Horizon Media. He sits atop a firm with $2.2 billion in billings and more than 500 employees. The independently owned agency counts Geico, Cadbury, NBC Universal and A&E Television Networks among its clients. Koenigsberg, the next head of the American Association of Advertising Agencies' media policy board, talks to B&C's Claire Atkinson about Conan and Jay, who's bouncing back and who's not.
Can you give us your macro take on where the TV ad market stands as we move toward upfront negotiations happening in earnest?
There is a much brighter outlook in 2010. I think most media channels are feeling more bullish, but I think there is also a false sense of bullishness because of the awful year we just came out of in 2009. If things had deteriorated even more, we'd be in a serious economic situation.
There is a sense that the roof isn't falling in. That being said, there are certain media channels that are doing better than others. Although sellers probably felt they gave big concessions with rollbacks [in last year's upfront], the buyers were holding out for more and at the end of the day, the economic conditions probably warranted more. But some of the consolidation in the business at global ad networks has hurt their negotiating ability. Sometimes having too much is not a good thing, because it is very hard to move the money around. What are they going to tell the client, "I can't get your money [laid] down"?
How is each sector of the TV market doing?
National broadcast is having a healthy first quarter. Cable was getting healthy increases over the upfront. Syndication probably hasn't bounced back as strongly. Part of that is because a lot of off-network programming has gone to cable networks and [been] taken out of first-run syndication.
Hispanic continues to move in a positive direction. Reaching out to the Hispanic community with the right messaging on the right properties is becoming much more significant in the marketing mix. More marketers are looking to gain market share in a very lucrative consumer base that has disposable income at the end of the day. Look at general-market channels and the Hispanic channels; there's less supply [in Hispanic] and that drives up demand. The future bodes well.
Where is the upfront going to net out this year?
It's too early to tell. There's been a lot of posturing from the broadcast guys, and early signals are that they have high hopes of putting big increases on the board, but at the end of the day the dollars are not going to be up significantly. The upfront is not the market, and everybody should gain modest low-single-digit growth in totality [of the annual spend]; when you take that into the account, I don't know how that translates into upfront.
What do you think of Conan O'Brien's move to TBS? How does that change the late-night landscape?
NBC made the right move putting Jay Leno back. They have lost a little on the PR front in terms of public perception about Conan getting booted, but from a business and advertising standpoint they were not afraid to say "we missed the mark" and change course. I give credit to them for that; advertisers are glad he's back where he was.
One thing we'll see: Cable in late night typically skews younger, and in broadcast you have two hosts in their 60s. The question is, when does the mantle get passed, and with Conan going to cable some of the younger audiences will migrate. He'll get a lot of support. And TBS will promote the heck out of it. He's a proven talent and he's got a following. It's a safe choice and a good move by TBS to capture him; it will be a great lead-in for Lopez Tonight, and it will elevate the brand to another level.
What else are you seeing on the programming side that's different this year?
As we go into upfront season, I remember what Jimmy Kimmel said at last year's event, something like, "You come back each year and we lie to you, and you keep coming back every year." We're going to continue to see the reality genre, and we'll [still] see cheaper productions that can be extremely profitable. We continue to see the sitcom with ABC's success with Modern Family and CBS with Two and a Half Men.
Given your clients Geico and Mutual of Omaha, you have a purview of the financial category. What are we seeing from them and other categories in terms of a revival in ad spending specifically on TV?
The financial sector is slowly coming back, but it's nowhere near what it was three to four years ago. Insurance is all up. You have State Farm, Geico, Allstate and Progressive all vying for market share. They've all raised the ante, and that is up year-over-year. Auto has bounced back and local dealers are starting to come back, but not as fast as new autos. I think from a national standpoint we are seeing more spending, but local is lagging.
Sports [properties] have been hugely popular based on the holes the auto companies left; they're now starting to fill some of those holes again. Fast food and quick service, it's a very uneven landscape. Spending is predicated on sales ratios, and I think we've seen all together for those that it's flat year-on-year. The unemployment rate is still at 9.7%, and people are still not going out as much.
And you buy for NBC Universal and A&E Television Networks. Are media companies spending again and, if so, where?
Media companies are continuing to spend. Look at how competitive the cable landscape is, and a lot of it is first-run programming. The value of that incremental viewer has raised the ante in terms of spending in digital, in TV and on the radio. Across the board, it is up.