Key To TV's Future? Give TV Consumers Their Own Upfront Deal

by Wayne Friedman, Apr 27, 2010, 12:45 PM

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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.

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0 comments on "Key To TV's Future? Give TV Consumers Their Own Upfront Deal".

1. Chris Vinson from Vinson Advertising
   

   commented on: April 27, 2010 at 3:55 p.m.

   You make a good point Wayne. We have purchased 2 year deals. They usually work in our favor and in the media's as they achieve security as well. Clients as a rule don't like to sign that far out so we make sure they stay cancel-able for us.

   We should have demanded more 2 year deals last summer when we were able to get the lowest prime and daytime CPM's ever. We knew the political year was coming too. Sweet hindsight.

2. Jerry Foster from Energraphics
   

   commented on: April 28, 2010 at 3:22 a.m.

   In view of rapidly changing technology and the tendency of Americans to move about a lot, especially in a volatile economy, I am surprised that American consumers are willing and able to make non-revocable plans two years in advance for their media viewing habits. And $89 per month for video entertainment? If I see one DVD film per week at $6 retail per film and satellite TV costs me $25 per month, I am looking at $49 per month as a target budget number that could be used to entice me into getting "a better deal".

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