Why Upfront Buying is a Bad Idea

A couple of weeks ago Dave Smith asked the question in his column, “what do we have to do to make upfront cross-media.” His suggestion was that if the timing for the upfront marketplace were changed to a time that matched the period when most advertisers and agencies are considering their cross-media, integrated, or multi-media budgets. A supplemental quarterly market could also emerge to accommodate other advertisers whose fiscals are at different times of the year.

I think changing the way the upfront marketplace works is an excellent idea. And if doing so would accommodate the inclusion of online media, which would also be of interest.

The real problem is, however, that the entire idea of the upfront marketplace is an antiquated one that needs to be not only changed, but likely dispensed with all together.

First, the issue with the upfront as it applies to Network and Cable Television. It is becoming commonplace for networks to debut new programming outside of the traditional mid-September calendar. New “seasons” are now almost a year-round phenomenon. For reality-TV ratings hits like “Joe Millionaire” or “The Bachelorette,” the time of year is immaterial for their broadcast. And given the low-cost and quick turn-around on producing this kind of programming, it is possible that the networks won’t even know when or if shows such as these are going to air.



Secondly, it is also becoming commonplace for network programming to come and go within a matter of weeks. So much of a network’s anticipated schedule is altered by half-way through their new “season,” that advertisers are left with buckets of makegoods to be run on programming other than what they’d originally purchased. What’s the point of saving a place in line if the event you are waiting in line for is likely to be cancelled?

It is true that last year’s upfront was better than expected, and yesterday AdAge reported Mel Karmazin predicting 12% to 15% jumps in upfront pricing. And it is also true that there is a limited amount of time and space and if more people want it than can have it, some process must be in place to deal with that reality. It seems that an upfront market place, however, is designed to prey on fear and laziness of the industry. Fear that someone else is going to get something you want and pay less for it, and laziness because if an organization can do 75% of it’s selling and another can do 75% of its buying within a two- to four-week period, then you’ve only got 25% of a year’s work to do over 11 months! And don’t forget, just because a lot of people do something stupid doesn’t mean that it makes sense.

And finally, why should online be a part of this, yet? Right now, there is still so much unused inventory; one could wait until the last minute and pay bargain-basement prices a week before a campaign was to run. There are exceptions, like rich media ad units or free-floating format assets that many first-tier sites restrict, limiting availability to the point of producing higher demand. And maybe properties like this can benefit from the kinds of thinking that drives the upfront marketplace. I’m all for borrowing tried and true practices from traditional media, but only good practices. Should this fine medium be saddled with something so altmodisch?

The real problem with upfront buying and selling is that it really stands in contrast to what market forces are supposed to accomplish, which is to ensure, albeit fluidly and often times soullessly, that an individual pays the "real" value for a particular product or service. Part of what informs value is spatio-temporal. That is to say, time and place are important variables in determining value. The upfront removes time and space from the equation for determining value. It takes the market and seals it off in a vacuum, letting value be set without influence by macroeconomic forces, quality of product (in this case, programming), and most importantly, the imp of the masses.

The frailties of the upfront practice only reveal themselves when times are tough, however. In recent years prices for most scatter inventory were below that of what was paid in the upfront. I guess the commodities futures market is similar, but has more rules and flexibility. If I lock in rates in the upfront for the Fall season, and I see over the summer that my business is suffering and I need to cut costs, I'm stuck.

Open markets need to be in flux because values are in flux dependent, in large part, on time and place. The upfront fixes these variables and, thus, creates static trade.

I just think it is a better idea to let prices be set by organic supply and demand rather than grandfather clauses and provenance.

I mean, if we really profess a free market, wouldn’t practicing one be a great place to start?

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