The Market Movers

The industry’s most influential media buyers reveal vital issues for the 2011 upfront
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Upfront season has begun. Cable networks are announcing their programming plans for next season, holding star-studded parties for media buyers as part of a process that will determine where more than $16 billion in advertising money will be spent.

Buyers expect this year’s market to be up, and network executives are even more bullish, already predicting that price increases could top the double-digit level, with record-setting volume.

B&C has put together a dossier of the biggest players in the upfront, the people who will shape the market and set a course for how successful the 2011-12 TV season will be.

The first list features the handful of key buyers who can move the market, deciding which networks will give them a good deal and helping their clients reach their target audience. The second list features the top sales executives who represent the biggest networks.

Here’s what the big players say is on their minds as this year’s upfront plays out.

GROUP ONE: THE BUYERS

With audiences fragmenting, what can programmers do to enhance the value of the spots they sell?

Chris Geraci: Audience fragmentation has direct correlation to audience size, and programmers can try to stem the tide of audience loss by continuing to invest in the quality of the product that they put on the air. Television programming remains one of the core drivers of the entire entertainment industry, and a clear and direct focus on what makes great television is the best way to deliver value. Programmers can also increase efforts to innovate across a wide spectrum of factors within their control, from program scheduling that continues to move away from a “broadcast year” cycle to the increased use of their digital platforms for both viewers and advertisers.

Elizabeth Herbst-Brady: With everincreasing content options available on a multitude of different screens, it has become more of a challenge than ever for advertisers to connect with broad audiences. However, there are several ways to counteract that fragmentation. Advertisers have been able to take advantage of integration into programs. In addition, programmers can blur the lines between program and commercial to minimize skipping, keeping audiences more engaged by offering live commercials, integrations, or custom spots featuring show talent. Most of the major cable networks have extended their offering to engage the audience, including relevant placement, integrated and cross-platform programs. These initiatives are very valuable to advertisers and can bring value to the consumer. All of the programmers should also embrace social media platforms to help build viewer loyalty.

Ava Jordhamo: Programmers need to increase innovation in pod structure, pod formatting and brand integrations.

Mike Rosen: The overall viewing experience, whether live or time-shifted, should be carefully considered and constructed when it comes to both program and non-program content—which is why I am so optimistic that addressable advertising will enhance that experience, making the non-program content as relevant to the viewer as the program they choose to watch.

Rino Scanzoni: Invest in programming that differentiates your brand and delivers an audience profile that diversifies your appeal across key advertising categories. Go beyond just selling eyeballs to advertisers and become a marketing solution partner. Carefully manage commercial placement logistics to maximize audience retention and minimize ad-skipping.

Donna Speciale: Programmers need to develop content that can be served in different formats and distributed across multiple platforms—on-air, online, mobile, digital out-of-home, apps—wherever the audience will see it. Rethink the traditional 30- or 60-minute programming. Try different formats. Maybe on-air, your content is long-form, but has clear, smaller units that can be viewed in shorter pieces across various devices. Think Saturday Night Live. It works in long-form on television; it’s also great as a content snack online, on mobile, etc., as individual skits. We need to strive for that liquidity of content more often.

What is the biggest unknown factor in the upfront market this year?

Geraci: The obvious response is, of course, the status of the NFL season. On a more macro level, we are still clearly operating in recovery mode with regard to the U.S. economy. Therefore, I think the biggest unknown is on the demand side of the equation, and how recent business results will impact U.S. TV budgets. Also, the global environment is having some dampening effect on demand currently, but how much of a factor that will be as we approach the upfront remains to be seen.

Herbst-Brady: I think the most important factor is understanding the volume as both the sentiment and reality for this number drive the market.

Jordhamo: The effect global events will have on the domestic economy is a huge unknown. The NFL [as of now] is also a big unknown.

Rosen: The dizzying pace at which world events impact the global economy creates a level of unpredictability that goes well beyond historical trends, and the standard correlation between scatter trends and the upfront gets more challenging in this environment.

Scanzoni: The impact on commodity price increases on corporate profits and consumer spending. If they cannot be passed through fully, it will negatively impact marketing spend.

Speciale: The NFL lockout is the biggest factor. If it happens, its impact is far-reaching beyond the NFL schedule. It will affect much of primetime’s and cable’s inventory and pricing. It will also challenge every platform where advertisers have NFL marketing partnerships— online, in-store, mobile.

Les Moonves said he thinks CBS will get double digit increases in the upfront. Is a 10 percent increase a real or psychological barrier in pricing and is it likely to be breached?


Geraci: Agencies and advertisers are too sophisticated to have any one number (inflation factor or absolute cost) serve as barrier to getting business done. While I don't think we are looking at a 10% level marketplace in this year's upfront, a careful assessment of the supply and demand factors will determine the price differential around which most of the deals will be situated.

Herbst-Brady:
The seller always has the right to decide the price at which they wish to sell their inventory. The question, how much volume do they want to garner in the upfront? While the market was strong last year and scatter persisted through the fourth quarter of 2010, the current scatter volume has abated. In addition, we are just entering the quarter in which all the "stimulus" money will cease to be available. It is less about a "psychological" barrier and more what is simply affordable. There are points when advertisers need to seek other solutions. The proliferation of screens and the rise of digital opportunities continue to grow in importance every year to advertisers.

Jordhamo:
It is a real psychological barrier. In many cases in last year's marketplace, the math indicated a higher CPM increase than what we saw. I am a buyer about to head into an upfront season...I do not think it will be breached.

Rosen:
No purchase ever exists in a vacuum, and inflation against any specific media platform, network or day part is no different. And every media plan that is written and every buy that is made is going to be a function of the price/value relationship at the time relative to other options. That is not a function of barriers, but flexibility if the price/value relationship starts to tip in the wrong direction.

Scanzoni: What matters is what the total price potential of the market is not the upfront. If the upfront is priced below total market potential you invest in it, if it is above you short the market.

Which network, broadcast or cable, are you paying more attention to now than you did last year?

Geraci: We pay attention to all viable national networks, and at this time of the year, there is more danger in giving a specific answer to that question, than not.

Herbst-Brady:
It is my job to pay attention to all of them every year.

Jordhamo:
I'm paying more attention now to the NBCUniversal networks but I pay attention to many networks across broadcast and cable... I watch a lot of television.

Rosen:
Any year during which there is a change in programming leadership at two of the major broadcast networks (ABC, NBC), it is fascinating and exciting to see how those networks evolve under different creative visions.

Scanzoni:
We are looking very carefully at several cable entertainment networks that are starting to experience sustained audience losses to determine if this is a trend or short-term aberration.

Speciale: NBCU. With the merger of NBC and Comcast, I'm excited to see how this new entity will approach the marketplace.


Overall TV ad spend in 2011 versus 2010 - will it be down, flat or up?

Geraci: Up, slightly, certainly not nearly to the degree by which they grew last year.

Herbst-Brady:
We believe it is more valuable to track ad revenue than ad spend. The MagnaGlobal model states that the overall national TV ad revenue is estimated to grow 6.8 percent.

Jordhamo:
Up.

Scanzoni:
Up 2-3%.

Speciale:
Likely slightly up. While ad spending is going in the right direction, many international and domestic factors, such as the crisis in Japan, Middle East unrest, the U.S. unemployment rate, are all impacting consumer outlook and will ultimately affect ad spend. Only time will tell.

What is your favorite, can't-miss show to watch on TV now?


Geraci:
If I have to name just one, Fringe on Fox. The subject matter is a bull's-eye for my interests, and the acting and overall production is excellent.

Herbst-Brady:
Here are some of my favorites: Mad Men, The Good Wife, 30 Rock, and The Glades.

Jordhamo:
There is too much good TV on to have just one favorite...in any given week, these are the ones I won't miss, even if I'm traveling: Idol, Parenthood, Cougartown/Mr. Sunshine, Top Chef and I am counting the days until Treme comes back (4/24).

Rosen:
Selfishly, I am going to have to say that the men's lifestyle series Inside the Vault is my favorite, as it represents a ground-breaking General Motors effort, led by Starcom and our content development experts Liquid Thread, to envision, explore and develop an advertiser-as-programmer paradigm. And in a paid/owned/earned marketing environment, the power and ROI of advertiser-developed content is unprecedented.

Scanzoni: Late Late Show with Craig Ferguson.

Speciale:
Modern Family. It's hysterical and I think everyone, in some way, can relate to the wacky dynamics that every family has.

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