• by Paul Gough , March 13, 2003

Network chiefs may be optimistic about the prospects for a much higher upfront this May, but two media buyers say it’s too early to call.

Two months and a possible war away from the upfront, predictions call for a $9 billion upfront and even double-digit CPM increases, at least in broadcast. But Donna Wolfe, director of broadcast negotiations for McCann-Erickson Worldwide, said the upfront is all about supply and demand; it’s clear the supply is there but no one knows the demand. Wolfe said speculation is just that: speculation.

“It’s still very early. I’d love to know where the math comes from. I can’t find it,” she told a packed Television Advertising Forum, held Thursday in New York and sponsored by the Association of National Advertisers.

“If you look at the economic situation, with auto sales down, consumer psychology weak, with everything else going on in the world … I can’t see how anybody can think that there’s going to be more money in the marketplace,” Wolfe said. The networks will only get double-digit CPM increases if there’s more money in the market. “I think it’s premature to predict the money,” she said.

The double-digit CPM increases were interesting in view of at least another 5% decline in overall ratings for the network again this year, said David Verklin, CEO of Carat North America. And he and Wolfe didn’t think much of the predictions, widely reported in the trade press and elsewhere, about buyers talking about higher prices. “It will not be plus 25% if my company has anything to do with it,” Verklin said.

Joe Abruzzese, president of network sales at Discovery Communications and former head of sales at CBS TV, agreed it’s too early to see what’s going to happen with the upfront. He noted that forecasts before last year’s upfront were for a decrease of 3.3%; instead, it was up 25%. “It’s hard to make those predictions,” he said. But at the same time, he noted that there were good signs in the market, including high scatter pricing and ratings for the season. “If everyone’s chasing ratings points, it will be a good upfront,” he said. Abruzzese said TV was like a pitcher after a good season: paid well the next year.

One potential bright spot in the upfront: Football. Edward Erhardt, president of consumer marketing/sales at ESPN/ABC Sports, said the NFL market was strong. Erhardt said football was a patriotic sport and it could reap rewards, particularly in primetime.

Like most talks of the media economy of late, the possibility of war in the Persian Gulf hung over the proceedings. Verklin said Carat had done regression analysis of the past several conflicts – including the 1991 Gulf War and 9/11 – and determined that if war starts, there will be at least six days without any advertising and between four and six weeks of what he termed a decline in advertising. He pointed out that the analysis was for the best-case scenario of a quick war. Abruzzese said that when normal conditions returned, “my guess is that demand for advertising will be strong.”