NATPE: Branded Entertainment Is Topic A

The main draw for Madison Avenue won't necessarily be first-run shows
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The buzz among top media buyers at this year's annual TV syndication
mart, NATPE 2005, won't be the new first-run shows starring supermodel Tyra
Banks or Howard Stern sidekick Robin Quivers. Media buyers and syndicators in
Las Vegas will be far more interested in branded entertainment, or deals that
integrate clients' products and brands into TV programs, either as product
placement or as part of the script.

This is the same topic that has been driving early talks between media
buyers and the broadcast and cable networks, as well as the Hollywood studios
that supply them: the prospect of getting in on the ground floor of an
opportunity to integrate their products and brands into what could be the next
big hit.

The problem, say Madison Avenue media buyers, is that the syndication
business hasn't generated a big list of hits lately. The most successful
shows launched over the past couple of years—NBC Universal's
Ellen Degeneres Show and Buena Vista
Television's Tony Danza Show—are getting
ratings that would be considered respectable by cable-TV standards but are not
exactly the kind of numbers advertisers expect from broadcast-TV hits.

“None of those were really a breakout show,” notes Brad Adgate,
senior vice president and director of corporate research at Horizon Media, New
York. “The last genuine hit in syndication would be Dr. Phil.

Now syndicators and advertisers alike are looking to develop a wide
array of branded entertainment opportunities. Already, off-network shows
feature product placement technologies that can place brands in series that
have already been produced. Warner Bros. Domestic Television Distribution has
been leading some of those conversations for off-network shows like
Friends and Drew
Carey.

Tie-Ins must seem natural

Frank Zazza, president of iTVX, a company that tracks product-placement
deals on television, says one of the problems with virtual product placement is
creating tie-ins that seem natural and organic with the original production.
For example, placing a box of Tide detergent on the counter of Café Perk
on the set of Friends might seem contrived,
but placing a container of Tropicana orange juice on the table in Rachel and
Monica's apartment while they're having breakfast might seem perfectly
natural.

The NATPE agenda has several sessions devoted to the topic, including
panels on “branded entertainment” and “advertiser as partner,” but
Richard Linnett, director of MPG Entertainment, the branded entertainment unit
of media agency MPG, New York, says the real action will be in the exhibition
booths and in the dining establishments surrounding the conference. “People
will be flocking to NATPE to talk to producers,” he says.

While Madison Avenue has watched branded-entertainment deals heat up in
syndication recently, it is The Oprah Winfrey
Show
's landmark deal that gave new Pontiac cars away to every
member of the studio audience that has captivated the ad industry.

“Now everyone is looking for their Oprah deal,” said Jana O'Brien, executive vice
president-executive director of strategic research at General Motors Planworks,
the unit handling GM's media planning, during a recent industry
conference.

“It created a whole ruckus out there,” says iTVX's Zazza. “It
opened up syndication for millions of dollars in product placement.”

The syndication business had already been stepping up such deals when
the Oprah/Pontiac agreement broke, he says,
citing similar plugs on Ellen Degeneres, Tony
Danza
and other first-run talk shows. He says product placement has
always been an integral part of syndicated game shows but is more a legacy of
conventional “promotional-consideration” deals, in which marketers supply
free product as prizes and pay a small fee for 10-second promotional IDs.

A big question in the minds of both buyers and sellers attending NATPE
this year is how big the branded-entertainment market could actually be.
“While theoretically the inventory is unlimited, we are all working together
to define what is appropriate from the point of view of the show, the brand
and, of course, the consumer watching at home,” says Michael Teicher,
executive vice president, media sales, for Warner Bros. Domestic Television
Distribution, which sells a mix of first-run programs like
Ellen Degeneres, as well as some of the
highest-profile off-network series. “If these things are forced, they will
become overdone and ineffective.”

Aside from branded- entertainment opportunities, media buyers aren't
buzzing about the prospects for any new shows being offered in syndication this
year, with the possible exception of Martha Stewart's. While few details have
been made available, the show is being produced by reality-TV impresario Mark
Burnett, known for hot reality shows and ample product tie-ins. “Everyone
will be watching that one, because Martha Stewart and Mark Burnett are great
programmers,” says iTVX's Zazza, “but they're also great
marketers.”

But even that's no guarantee for success in a business where new hits
have been difficult to create, mainly because established shows continue to hog
the most valuable timeslots on TV stations. That makes it difficult to get the
coverage and clearances necessary to get big ratings and big ad dollars.

Syndication's Stable Ratings

Consider Dr. Phil, which by most
standards was the last legitimate hit in syndication. The show posts
respectable ratings by first-run–syndication standards, but it isn't
exactly sizzling in advertising demand. At about $38,000 per national 30-second
ad unit, Dr. Phil commands a fraction of the
ad rates generated by top off-network syndicated series, which reap ratings and
ad prices more akin to their first-run broadcast-network counterparts than to
first-run syndicated shows (see table).

As modest as demand for Dr. Phil is
in the current advertising marketplace, first-run newcomers like
Ellen and Tony
Danza
are generating ad rates more like cable than broadcast,
fetching about $14,000 and $10,000, respectively, per national 30-second ad
unit.

Despite the lack of significant new product, syndication continues to
hold its own, delivering stable overall ratings in a marketplace where ratings
continue to fragment for broadcast networks. As a result, syndication was the
fastest-growing medium, next to online media, in terms of advertising budgets.
“We're up 17.4% this calendar year,” boasts Mitch Burg, president of the
Syndicated Network Television Association, referring to the trade group's
analysis of advertising spending data for 2004.

Dearth of Sitcoms

Moreover, media buyers say there don't seem to be any significant new
shows coming down the syndication pipe. “I'm not hearing any early buzz on
any new programs or genres,” says Ray Warren, managing director and head of
the national broadcast group at OMD USA, New York, who doesn't even plan to
attend this year's NATPE convention. “There's nothing coming off the
blocks.”

Andy Donchin, director of national broadcast for Carat, New York,
agrees, noting that part of the problem is a shift by the major broadcast
networks away from scripted programming, especially sitcoms, and toward reality
fare. He warns, “There has been such a dearth of good sitcoms on network TV,
you have to wonder what's coming down the pipeline.”

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