Key To TV's Future? Give TV Consumers Their Own Upfront Deal
Television's annual game of short term versus long term is about to start.
But before it does, take a look at how one TV programming retailer is working it.
Verizon's FiOS is running an advertising campaign right now that calls for a two-year guaranteed deal where customers will spend $89 a month for scores of TV network in a big video package. A two-year deal must mean Verzion knows where it's going.
In effect, Verizon is giving its customers what TV sellers give its business marketing partners: a guaranteed upfront deal.
Imagine if a TV seller and TV marketer worked on the same parameters, making not just a one-year upfront deal, but a deal for two years. That means they'd know where 75% of their advertising dollars will be going through 2012. Sound crazy? It's a long-term future contract few if any TV marketers would consider - let alone TV sellers.
The upfront/scatter markets fluctuations have been somewhat historical. Strong upfront, weak scatter; weak upfront, strong scatter. Media agencies can typically count on this. But last year wasn't just weak in terms of pricing, down 2% to 10% depending on the network, it sank in overall volume -- big time. Cable went backwards 15% in total volume -- all dayparts -- down to $6.7 billion by some estimates. Broadcast's prime-time market witnessed a 18% drop, some executives say, to $6.2 billion.
Estimates this year seem easy: It's going to be up. All roads point to the strong current scatter market scaring advertisers into moving more of their money into the upfront. Cost per thousand viewer prices (CPMs) look to be up. That's the history. But odds are that volume might not be back to what it was even two years ago.
The upfront is evolving. For example, cable fortunes during the last upfront sank much in the same way the broadcast market did. There is also viewer erosion among some selected cable networks - a trend that used to be just the domain of the broadcasters.
While media sellers and buyers tinker, other marketers like Verizon are thinking what amount to two upfronts ahead. Considering many marketers are still making media buys close to air because of their uncertainty, this is kind of refreshing. Verizon is counting on something much more simple: that its business will grow, and -- of course -- people will continue to watch television.