News Analysis: Did OMD Blink? Will Cable Upfront Stink?
Both trade publications said ABC declined to comment on the deals. Advertising Age said OMD executives were unavailable for comment. Mediaweek said OMD declined to comment, but said the agency paid a 6 percent prime-time CPM increase for its 2005-06 upfront deal on ABC.
If true, the early activity sends another in a series of mixed signals ruminated around the 2005-06 upfront advertising marketplace--a market media buyers have been posturing would be relatively flat and drawn-out. A number of other analysts, including top Wall Street equities researchers, had also been predicting relatively minor upfront volume and price gains for the broadcast networks, although ABC has been seen as the best-positioned of the major broadcasters.
It also would suggest that the broadcast upfront may once again lead the cable marketplace. Cable preceded the broadcast during the 2004-05 upfront marketplace last year, and picked up roughly half a billion dollars worth of upfront market share. Top cable industry executives had been predicting the same for 2005-06, citing a long-term and fundamental shift in upfront market dynamics.
There has been speculation that a number of early cable deals have already been struck, and sources told MediaDailyNews that some upfront deals had been struck between agencies and several cable networks including Discovery Networks, Lifetime Television, and the Turner Entertainment networks several weeks ago--raising questions as to whether there was more demand and bigger upfront ad budgets than media buyers had been positioning.
Mediaweek also speculated that other agencies--including WPP's MindShare and Publicis' Starcom MediaVest and ZenithOptimedia groups--were in "serious negotiations" with ABC.
If so, the big question is whether the early activity reflects ABC's advantageous market position, or whether upfront market demand is stronger than buyers and advertisers have been letting on to. In other words, is ABC going to lead an upfront drive, or is the network simply priced so far below the rest of the marketplace that buyers are seeking to lock up good deals and lay in a base so they can wait out a longer, more protracted upfront?
The deal may also send a mixed signal to the cable marketplace, which has been trotting out powerful research--such as a new wave of "Millennium" studies from Turner Broadcasting Sales--in the hopes that cable would lead the upfront.
While he would not comment on a deal with ABC, OMD's top media buying executive, Ray Warren, told Mediaweek: "If one of the broadcast networks comes out and starts doing business, that could mean the cable networks may not write as much as they probably think they are going to write this year."
In the end, says one upfront sales vet, both the broadcast and cable markets will move when equilibrium is struck on both sides of the negotiating table. "When sellers and buyers see the marketplace in a similar way the deal gets done," says Dan Hodges, managing director of Greenwich Consulting Partners. "Timing is key, because in a moving marketplace during stable economic times, those first in usually get both price and quality."