A&E Taps Actual Agency 'Booking' Data, Reveals Upfront Vs. Scatter Shares For All Networks
by Joe Mandese, Apr 25, 2013, 8:39 AM
In a move that could give it a competitive advantage over other television networks during the ufpront selling season, A&E Networks has cut a deal giving it access to real "booking" data revealing the actual amount that big agencies spend on television, including what percentage is bought in upfront versus scatter, and how much of their share is allocated to each network in the marketplace. The data, which is compiled directly from the agencies' data-processing systems and aggregated by Standard Media Index, represents the first real-world view of the marketplace, and could replace -- or at least supplement -- old school methods that networks use to "count the house" going into an upfront marketplace.
"Actual booking data sourced directly from the agencies gives us a clear picture of true market dynamics and enables us to react faster to changes in the marketplace," explains Mel Berning, president of ad sales, A&E Networks. He should know, because before joining A&E, he was head of network TV buying for one of the biggest upfront players -- MediaVest.
"Access to the majority of agencies' real data is a far better way of tracking our share against major competitors and will better inform our interactions with agencies in justifying and growing our share," he adds.
The SMI data, which is updated monthly. comes directly from the actual media buys processed by four of the six major agency holding companies -- Dentsu's Aegis, Havas, Interpublic and Publicis -- and it is already shedding some revealing light on the upfront buying process. While the share of network TV spending bought in the upfront's futures market versus the short-term quarterly scatter markets fluctuates year-to-year, the most recent data based on 2012-13 broadcast network deals processed by the big agencies shows that about two-thirds were booked as "upfront," while a third were booked as "scatter." That's a greater percentage bought upfront than for cable TV networks, which were more of a 60/40 upfront versus scatter ratio.
The percentages are significant intelligence for media sellers because they reveal important insights into not just the size of budgets, but the share available in the upfront and the percentage allocated to various networks in their mix.
Upfront and scatter buys also carry different terms and conditions that are crucial to the revenue performance of networks and the audience delivery of advertisers and agencies. Upfront buys generally have audience guarantees associated with them, while scatter do not. Upfront buys also usually come with "cancellation options," enabling advertisers to cancel a percentage of what they bought upfront if they decide they don't need the inventory later.
While no other networks currently have access to the SMI data, several undisclosed online video sales organizations currently are licensing it, according to James Fennessy, chief commercial officer of SMI, which began in Australia and emigrated to the U.S. and other global markets over the past several years.
Because Australia is the most mature market utilizing SMI's data, Fennessy said it represents a good indication of what could happen as real market data on media buys emerges in other big media marketplaces.
"What it did, is it took a lot of the BS out of the market, and made for a much more transparent transaction between the buyer and the seller [in Australia]," he says, adding: "What we saw was the early adopters were able to win share, and have been able to hold onto their share because they went with a more scientific argument: 'Look at our ratings and look at our share of ad spend -- they don't match.'"
Fennessy expects the same thing to happen in the U.S. marketplace, especially in the upfront, where networks and agencies still utilize old, ritualistic methods to gather intelligence about the size of budgets and projected demand for inventory and share allocation.
"For the first time, they can see how much money is in scatter, and how much of it is going to their competitors and where those budgets are coming from," he explains. While media and financial institutions licensing SMI's data do get category views, only the agencies participating in the SMI pool get to see their own spending and details on their own clients and brands. Everything else is aggregate, which is what makes SMI's model work for buyers and sellers.
While the four agency holding companies participating in SMI's U.S. database currently represent only about 60% of total buying power, Fennessy says it's a pretty good indicator of Madison Avenue overall.