The upfront needs an extreme makeover. Just ask advertisers. The estimates are off. The shows are iffy, and the timing stinks. The big money wants the process moved several months forward—a fall surge, not a spring disaster. After years of protest, ad agencies and clients have reached their breaking point. A new survey by the Association of National Advertisers (ANA) showed that almost 60% of advertisers are dissatisfied with the upfront. And almost as many believe the networks should jump-start the change.
A short list of the problems:
- The spring upfront makes advertisers devise ad-spending estimates 16 months in advance of when the money is actually spent.
- The process of spending $9 billion or so is sometimes crammed into what often amounts to a 48-hour period, with negotiations that literally go all night. Buyers aren't at their best at 4 a.m. and sometimes make mistakes.
- Advertisers are forced to plunk down millions on shows that many times are gone in four weeks, and their money ends up in replacement show they had no idea they were buying. Think about Coupling, NBC's great white hope for the 2003-04 season. It arrived DOA and was axed after four episodes.
At least two of the networks are on board, endorsing a shift to assuage clients. "We'll do it whenever they want to," says Mike Shaw, president of sales for ABC. Fox sales chief Jon Nesvig echoes the sentiment. Shaw adds, in fact, he wouldn't object if advertisers scrapped the upfront altogether and made all their buys in the scatter market.
And there is growing support for Shaw's position. "The upfront is an inefficient market," Alec Gerster, CEO, Initiative Worldwide, told BROADCASTING & CABLE in February. "It's a non-liquid market, and its timing is bizarre. The September-to-September broadcast year doesn't make sense in today's business environment."
No one is saying the process should be totally scrapped. Even those espousing change aren't sure that radical
change is needed. "There is an opportunity to fine-tune the process," suggests Joe Uva, president and CEO of OMD Worldwide. "Whether it requires wholesale change I'm not sure."
Carat CEO David Verklin agrees. He supports moving the upfront to the fourth quarter, more in line with the budgeting process of his clients, as well as a daily "closing bell" on negotiations during the upfront so that talks don't go on all night. "Is it heresy to say, 'We'll go home at 8:00 and restart talks the following morning'?"
The ANA, which zeroed in on the issue at a recent conference, asked a committee of leading industry figures to examine the process and recommend changes. There is a big "if" to be decided first. The ANA's legal department wants to make sure that gathering advertisers and agencies together to propose a new market structure doesn't violate collusion laws. The legal issue is restraint of trade, though it appears that, as long as pricing issues aren't on the table, advertisers can discuss the mechanics of the business. ANA Executive Vice President Daniel L. Jaffe expects a legal verdict within a week or two.
However, getting consensus on a new start date for the upfront may be tricky. The survey showed that over half the respondents want the upfront moved ahead. Of those, 14% favor August; another 40% want it to happen in September or October, when advertisers are setting budgets for the following year. Illustrating the dissatisfaction with the status quo, only 8% cited June—and that's usually when the frenetic upfront takes place.
Verklin is optimistic the committee can get a consensus for a fourth-quarter start, but he cautions, "It will probably take a transition period of about 36 months. It won't happen overnight."