Cable networks and syndication programmers will try to capitalize on the broadcast networks' gains this upfront--but unlike the broadcasters, they will enjoy a wider range of upfront sales results. Cable networks will ask for double-digit increases--with the hope of getting anywhere from 5% to 8% on the cost-per-thousand viewers (CPMs). This 5% to 8% range is about what many established cable networks give up when viewers go from watching programs to commercials. Networks will ask for these hikes because of a strategic shift in inking deals. They are now based on commercial ratings--abandoning the decades-long practice of cutting deals based on program ratings. For the most part, it will be the older cable networks that will get their intended program price gains, predicts one media executive. Networks that target older viewers, such as TNT, TBS, A&E, USA Network, Lifetime, Discovery and TLC, says viewers generally stay with programs through commercials. Younger-viewing networks, such as MTV's stable, E! and Oxygen, generally lose more viewers when commercials appear. Cable networks that don't do well in keeping their viewers during commercial breaks could suffer in the upfront process. "Cable networks that lose 10% or more will have a big problem, because marketers will be hard-pressed to pay double-digit increases to make up for those losses," says one veteran media agency executive. These channels, according to one agency, include networks such as MTV, which loses 12% of its viewers when going to commercials; ESPN Classic, also down 12%; Bravo, 10%; AMC, 10%; WE, 10%; Oxygen, 9% and Versus, 9%. The better program-to-commercial networks are channels like Nickelodeon, only losing 1% of its viewers; Lifetime, 5%; TV Land, 4%; TBS, 5%; TNT, 6%; USA Network, 6%; A&E, 7%; Discovery, 8%; and TLC, 8%. Syndication generally doesn't have this problem, as its commercial ratings have been found to be closer to respective program ratings. Still, buyers say there will be wider ranges of pricing when it comes to syndication programming due to general underperforming shows. Programmers will ask for as much as 10% to 12% or more in CPM increases for daytime talk shows, such as "Oprah Winfrey" and "Dr. Phil," but will probably settle for prices in the 6% to 9% range. Other upper-tier syndication shows, including many magazine shows and some off-net sitcoms, will also command similar daytime pricing hikes. But lower-tiered syndication programming will probably suffer--grabbing only 2% to 4% increases on CPMs, according to media-buying executives.
The CW wrapped its upfront late last week with an estimated volume increase around 2%, giving it a $640 million take. That modest increase came despite CPM increases that were said to be in the 11% to 12% range, reflecting some impact in the change in currency that incorporated commercial ratings for the first time. The bulk of the deals were made using commercial ratings for the "live plus three day" DVR-viewing period. "In just our second upfront, we exceeded our revenue goals, adding over a dozen new advertisers with great strength in categories like wireless, retail and theatrical, a bull's-eye for the CW's young adult viewers," said Bill Morningstar, executive vice president of sales. CW received some early momentum when its new "CW Now" was bought out by agency MediaVest almost as soon as the network said it would be on the fall schedule, along with four other new shows. CW was able to bring in more dollars--perhaps by selling a higher percentage of inventory--after a lackluster first year. The network declined comment. It finished the season in its target 18-to-34 demo with a 1.4 "live" prime-time rating. That was equal to the performance of both the WB (1.4) and UPN (1.4)--the two networks that merged to form the CW. The promise: the whole would outperform the parts--although the new network faced a marketing challenge in introducing itself. If CW's take did achieve a $640 million price tag, the five-network broadcast upfront could have yielded $9.1 billion to $9.2 billion.
First Google announces an agreement to acquire industry leader DoubleClick. Then WPP acquires 24/7 Real Media. Then Microsoft strikes a deal to acquire aQuantive and its Atlas DMT unit. Now Aegis Group has purchased Bluestreak.com, marking the latest deal in what has become a frenzied market for online ad-serving businesses. While Aegis' paltry $12.5 million acquisition price is a pittance of the $3.1 billion Google has offered for DoubleClick, the $6 billion Microsoft plans to pay for all of aQuantive, or the $649 million WPP paid for 24/7 Real Media, the deal nonetheless signals a virtual land grab for the ad-server marketplace. "This is something of a landmark deal for Aegis," stated Aegis CEO Robert Lerwill, acknowledging that, "Ad-serving is in the spotlight right now, and we believe the combination of media and ad-serving is the most interesting of all." Lerwill added that Aegis' agencies and clients would continue to work with other industry ad-servers, but said, "owning our own technology in-house will give us a step change in product development across both search and display." Aegis, which is the parent of Carat and other media networks, said it would integrate Bluestreak into its digital agency network Isobar, now the world's biggest provider of interactive advertising and media buying services. Founded in 1999, and active in the U.S., the U.K., France and Germany, Bluestreak already had deep ties with Aegis, and is the only ad server currently integrated into Isobar's proprietary paid search bidding agent, iSEBA. The relationship began in 1999, when Aegis and Bluestreak collaborated on the first U.S. rich media ad effort for client Pfizer's Zithromax brand.
Bob Wright, in a keynote role as vice chairman and executive officer of General Electric, last week chose a new Chicago conference organized by the telecom industry as the forum to show off NBC Universal's plans for the "first-ever broadband coverage" of the Olympics. Next year's Beijing summer games will feature live streaming of 24 sports and more than 1,000 hours of online coverage, according to a promotional video Wright unspooled. Wright also used the occasion of NXTcomm, touted as the first conference for the "converged communications, information and entertainment industries," to call on the telecom industry to work together with content owners to develop new advertising models for the new media. Joking that he was the only voice from the media/entertainment industry speaking at the conference, Wright said: "We're all in the business of aggregating audiences and delivering them to advertisers." To help this happen, he said that all parties must also work together to define technological standards ("we need uniformity of standards to have ubiquity of distribution"), and to protect content from pirates. Stating that the "lean-back experience" of watching TV differs greatly from watching a two-inch screen, Wright said "the mobile handset is the perfect place to exploit the possibility of targeted, personalized and interactive advertising." But in order to do that, he returned to the "we need to work together" theme--this time, "to mine the data while protecting our customers' privacy." Mobile, as a vehicle for watching highlights on the go, was also featured in the Olympics video. Clearly designed for the advertising community--and even featuring Coca-Cola banner ads on its sample online screens--the video said that NBC will show 2,400 total hours on all its platforms, including broadcast, cable and its NBCOlympics.com Web site. Over 17 days of coverage, that equals "six days worth produced every single day." NBC predicted 200 million total viewers, as its original $3.5 billion deal for U.S. rights to all Summer and Winter games from 2000 to 2008 draws to an end. NXTcomm was jointly run by the Telecommunications Industry Association and the United States Telecom Association.
Several months ago, Bravo tossed ideas around for an overarching upfront pitch. That's when Frances Berwick, head of programming, sent an e-mail suggesting that "Affluentials" serve as a description for an upscale, trend-setting audience. Some slight tinkering yielded "Affluencers," which the network plugged in meetings with agencies this spring. Now they've taken it to the streets of New York. In a campaign targeting media buyers, the network's melding of "affluent" and "influential" to create the "Affluencer"--now being trademarked--is on placards above subway entrances and the platforms below. It's on phone kiosks and other outdoor real estate. Plus, placements touting the newly coined psychographic are strategically located near the major buying shops. The creative features a man and woman--each presumably smack in the middle of the network's 18-to-49 target--about to buy the latest HDTV or the hottest fashions, then tell others about them. Jason Klarman, executive vice president-marketing and digital, who headed the campaign, calls it a "qualitative message about the audience and who's watching." Bravo also takes its consumer tagline--"Watch What Happens"--and stretches it into the media-buyer-friendly "Watch What Happens When You Buy." Besides the out-of-home effort, which also includes "wild postings" and network decals splayed at the doorsteps of the big agencies, the campaign employed other nontraditional tactics to reach the trade. Those included a presence on Web locales, such as Gawker, PerezHilton and AOL Instant Messenger, targeted by ZIP-code, so only those visiting in, say 10017--home of MediaCom and Initiative--would be exposed. Cable networks frequently run out-of-home campaigns in New York but employ consumer-oriented creative, hoping it has a runoff influence on media buyers. By going with a straight trade effort, Bravo attempted a more direct pitch as sort of a hot-knife-through-the-clutter tactic. "Bravo is about being unexpected, surprising and creative in our approach in every way, and our communications strategy should speak to that," Klarman says. Klarman said the ROI is as simple as the performance in the current upfront. Bravo saw its 2006 revenues jump a scant 3% from the previous year--$223.4 million from $216.8, according to TNS Media Intelligence. The network, which was included in a large upfront deal two weeks ago covering many NBC Universal properties, has a new head of ad sales, Susan Malfa, who joined from Court TV in March. The network's prime-time ratings in its target 18-to-49 demo for the just-completed season were flat at a .2. Bravo parent NBC Universal also ran a New York trade campaign on phone kiosks this spring, pushing the company's belief that the media world is moving "Beyond the :30" and increasingly into new platforms. "Innovate, target, lead, measure, engagement," the creative encouraged media buyers. Bravo's programming includes "Project Runway," "Top Chef" and the inveterate "Inside the Actor's Studio." It now runs originals on a third night, Thursdays.
In a move that is symbolic of the mainstreaming of the U.S. Hispanic population, Nielsen late last week announced plans for integrating and reporting Hispanic households and individuals as part of a single, general market view of the U.S. television marketplace. The move is important because it marks an end to a bifurcated media marketplace in which Hispanic TV viewers were measured separately from the rest of the population, and the integration is expected to lead to more credible data and greater acceptance among U.S. media buyers and advertisers. The question now is whether Nielsen can perform adequate sample recruitment and management across the board," said a long-time Nielsen client, adding that a major issue will be how Nielsen "weights" its TV ratings sample to adjust for the under-representation of certain types of viewers--including English- and Spanish-speaking Hispanic households. As a result of the move, Nielsen will begin reporting various Hispanic and Spanish-language preference market breaks in its total sample, allowing all TV viewing sources to be analyzed on the basis of their Hispanic and Spanish-language audience composition, not just so-called Hispanic networks. Analysis of the data will still be somewhat subjective, Nielsen said, noting that interpretation of language preferences may require some assumptions. "Language is a personal characteristic," Nielsen said in a communication to clients late last week. "Reporting language only at the household level can be confusing." As a result, Nielsen said that effective with the 2007-08 TV season, it would begin reporting data based on the language spoken by individuals within a household, and not simply the language preferred by the head of the household.
Information and technology publisher Ziff Davis is continuing to divest itself of some titles, with the sale of its Enterprise Group. In addition to print properties eWeek, CIO and Baseline magazine, it also sold online ones: eweek.com, webbuyersguide.com, cioinsight.com, baselinemag.com, Microsoft-watch.com, channelinsider.com and deviceforge.com. Plus, it included a valuable database of 3.5 million business technology users in the sale. The Enterprise Group is being sold to an affiliate of Insight Venture Partners, a private-equity and venture-capital firm, for about $150 million. Ziff Davis CEO Robert Callahan observed: "Insight Venture Partners has exciting plans to continue to pursue growth opportunities in this rapidly transforming technology media environment." The sale of the division is, in part, a continuation of earlier sales and closures of print and online properties Ziff Davis deemed less profitable or peripheral to its mission. During the last five years, the company has cut costs and reformulated itself as a Web-focused publisher. In the last year, it has finally returned to profitability after enduring a several-year slump. The Internet's impact on publishing hit the company earlier than many consumer magazines because of its tech-savvy audience. In the first quarter of 2007, Ziff Davis saw a 15% increase in earnings to $3.1 million. Earnings increased despite a total revenue decline of 12%, or $4.3 million, as the company wrapped up a period when it shed a number of unprofitable print publications. This is the fourth quarter in which revenue fell, but profitability increased. The curious phenomenon of falling revenues paired with increasing earnings may be indicative of a general trend. Magazine companies that move aggressively to online-centered business models are likely to be smaller, but also more profitable, after the transition.
The speakers at Rep. Edward Markey's "Images Kids See on the Screen" hearing on Friday represented a range of issues as broad as the title. But everyone seemed to agree that the abundance of marketing messages aimed at kids - from smoking to snacks - needs some mopping up. Markey (D-Mass.) chairs the House Committee on Energy and Commerce subcommittee on Telecommunications and the Internet, under whose auspices the hearing was conducted. Witnesses were a mix of marketer and media lobbyists and health, media-freedom and childhood health advocates. It may be a preview of what to expect when the Federal Trade Commission holds its July 18 hearing on advertising aimed at kids. The FCC is also gearing up to run a survey of dozens of beverage and food packagers about how they market to children. The hearing included civil conversations about violence on TV; censorship of TV content, the ability for local stations and individuals to filter what they receive or broadcast; smoking; and whether the government should mandate what products packaged-goods companies make for the youth market and how they advertise them. Industry spokespeople spoke up for self-regulation, while advocates for legislative limits said the industry could not effectively police itself. Witnesses and committee members noted FTC Chair Deborah Platt Majoras' exhortation to industry to develop healthier marketing programs aimed at kids. The FTC is also expected to survey 44 food and drink companies in the coming months about their spending and methods used in advertising to children. Earlier this month, the Kellogg Co. agreed to adopt nutrition standards for the foods it markets to children, and to place limits on its use of licensed characters and product placements in marketing directed at children. Last week, Markey fired off letters to The Coca-Cola Co., General Mills, Kraft Foods, McDonald's and PepsiCo, asking each to voluntarily implement those same restrictions on marketing to children. Walt Disney Co. has already said it will limit marketers' use of its characters to market unhealthy food to kids, and Kraft also stopped advertising products high in fat and sugar to kids. It has launched a line of some 500 products it calls "Sensible Solution." At Friday's hearing, Jane Harman (D-Calif.) questioned whether advertising for unhealthy foods integrated with healthy messages would have any impact on children. "For example," she said, "When an ad features someone eating French fries and then riding a bike -- what is a child going to learn from that?" Donald Schifrin, MD, who chairs the committee on communications of the American Academy of Pediatrics, said the Academy recommends running a series of focus groups of advertising that pitches both products and healthy lifestyles. "Industry is devoting huge budgets to this project," he said. "Let's do it right." Rep. Baron Hill (D-Ind.) said the suggestion of such industry efforts as PSA's are ineffectual given the volume of ads pitched at kids. Hill noted that kids now drink twice as much soda as milk, vs, 20 years ago, when those statistics were reversed. "These kids are seeing 7,600 of these ads per year," Hill said, "and I think these PSAs are like having an umbrella during the London blitz. Shouldn't there be some limitation per manufacturer of how many ads you can bombard these kids with, particularly for under-8 kids -- about high calorie foods. Shouldn't it be illegal to target under-8 kids? What can we do to limit this?" Mary Sophos, senior vice president of the Grocery Manufactuers Association, said members of the Children's Food and Beverage Advertising Initiative would soon unveil "data showing companies' progress in shifting the mix toward advertising and marketing of healthier food and messages." To which Rep. Hill asked for numeric targets. Sophos said industry, voluntarily, would assure that a minimum of 50% of ads to kids "will be for healthier foods, and deliver healthy messages." Patti Miller, vice president of advocacy group Children Now, called for a 25% reduction in advertising of unhealthy products to kids starting next year. "Currently, no fruits and vegetables are being advertised to kids," she said. "It's frightening." Though Markey exhorted voluntary regulation in his letters to marketers last week, he closed the meeting with a threat. "The First Amendment is precious, but children are just as precious. We need a healthy balance to make sure our children aren't bombarded with these messages," he said. "Most parents are not in the position to control what kids see -- they are both working. While these kids have all these unhealthy choices presented to them in the media, if there is not a proper response from industry, I'm prepared to press the FCC to put on books rules to protect kids from unhealthy messages. FCC has the authority to do that, and I hope the industry responds. The FCC will fulfill the mandate of law."
TV just took another hit. In five years, Internet advertising will outpace traditional TV advertising growth by almost three to one. By 2011, Internet advertising will average 18.3% increases per year, climbing to $73 billion in five years. That's according to PricewaterhouseCoopers' just-released annual study, Global Entertainment and Media Outlook 2007-2011 forecast. Traditional TV advertising will be less rosy--only climbing around 6% per year, hitting $228 billion in 2012. The TV network market climbed at about the same rate, 6.2% in 2006; there were 6.3% gains in 2003 and 2005. Multichannel TV advertising will be the fastest-growing part of the TV business. High-definition television TV and new channels will also boost advertising on free-to-air channels. Worldwide TV advertising was $172 billion in 2006. Internet advertising rose 37.9% in 2006 for the Internet worldwide. U.S. spending on Internet advertising and access will surpass spending on newspaper publishing in 2009, says PricewaterhouseCoopers. Globally, PricewaterhouseCoopers says all advertising will increase at an average rate of 5.4% per year for the next five years--rising to $531 billion in 2011, from $407 billion in 2006. In five years, the Internet will comprise 14% of the worldwide advertising market, at some $73 billion. TV will comprise 43% of the worldwide advertising market. Out-of-home will be the second-fastest-growing advertising medium, with an average growth rate of 6.5% per year. The consultancy says the U.S. will be the largest market but the slowest-growing piece of the entertainment and media arena, only pegged to grow at a compound annual rate of 5.3%, reaching $754 billion in five years. Asia Pacific will continue to be the fastest-growing region, posting double-digit increases in Internet, TV distribution, casino and other regulated gaming and video games. Spending in Asia Pacific will average 9.6% annual growth--the fastest of any region--increasing from $297 billion in 2006 to $470 billion in 2011.
Computers are taking over. Nearly three-quarters of adults who use the Internet also use their home computers to listen to audio content, according to a study by the Consumer Electronics Association. With 72% of online adults using computers as audio consoles, and 82% of households now owning a PC, a new CEA study says there's a good chance computers will displace other consumer electronics--like CD players and stereo systems--as the primary means of consuming audio content. However, audio listening with home PCs doesn't spell good news for online radio stations. The vast majority of listening still depends on personal media, such as CDs and MP3 libraries, accumulated through paid services like iTunes. Online listening for AM/FM stations remains low, according to Arbitron's fall 2006 radio data. Such listening represents less than 1% of total quarter hours in the 30 markets where it was analyzed. The CEA survey, however, found that 86% of the three-quarters figure were generally satisfied with the audio experience delivered by a home PC. Fully one-third, however, said the sound quality delivered by computers needs to improve--an understandable complaint, given that only 9% have linked their computers to home stereos or entertainment systems. Music is still the No. 1 audio content that consumers listen to on computers.
A new site called Text4Deaf has launched with the aim of making communication via computers and mobile devices easier for deaf people and their hearing acquaintances. The Web-based service allows users to send messages back and forth between mobile devices, including phones, PDAs and desktop computers, addressed to individuals and groups. Beyond the usual complement of text-messaging features, Text4Deaf's added functions include mobile group chat (with all responses going to everyone in the group), group broadcast messages (with all responses going to the original sender), text reminders for daily tasks and schedule reminders for important dates, like birthdays and anniversaries. Although the program is not currently ad-supported, a spokesperson for the company said that if it proves popular, a free ad-supported version is a possibility. Text4Deaf also offers a free voice mail greeting, which lets callers know the subscriber prefers to receive text messages instead of phone calls. The service is divided into two tiers: a free, basic text-messaging service and a premium service that is currently subscription-supported. The free service gives users 10 texts per month, and the unlimited service costs $2.95 per month or $19.95 for a year's subscription.