Watch a few hours of prime-time TV and try to avoid AT&T’s “It’s Not Complicated” campaign. Best of luck. The spots are everywhere.
By nature, an onslaught of this type brings inherent viewer fatigue. But the ads are pretty funny, which lightens the load, so to speak.
There's probably no need to summarize, but a “straight man” asks kids their thoughts on speed. Is faster better? Their responses are pleasantly baffling, leading up to a plug about AT&T service offering fleet download speeds.
AT&T has a considerable marketing budget and operates in an exceedingly competitive category. The fact that it has chosen to heavy up on broadcast TV is just one more example of the continued strength of the medium.
AT&T is promoting smartphone service and is yet to reach the digitally savvy (although smartphones are now mainstream). It has chosen to load up on network TV, just as it did three decades ago when it asked consumers to “Reach Out and Touch Someone.”
So the recent discussion about the ad market losing some pop -- and possibly having a runoff effect on the upfront market -- seems not just premature, but misguided. The demand will be there. Call AT&T.
Pricing may not increase as much as a year ago, but it is not going down. It’s possible that volume will be flat, but it’s hard to fathom a significant decline. There may be lingering effects of the recession, but this is not what could be termed a “recession upfront.”
A consumer confidence report this week did offer some dispiriting results for a media seller: after an improved February, the Conference Board index plummeted to 59.7, down from 68.0. But large marketers have to be feeling some sense of optimism. On the day the consumer confidence numbers came out, the Dow reached a record high.
The next round of earnings reports for the January-March period may bring some dour news. But deal-making won’t begin for several more months.
Nonetheless, there are multiple factors that should provide upfront watchers with confidence that CPMs will increase and volume levels should at least hold steady. Assuming that demand remains healthy, all these ratings drops can usher in higher pricing levels -- and less supply.
Networks can also opt to sell less inventory in order to hold the line on pricing, something that may be necessary in order to avoid scaring Wall Street with reports of declines.
The Olympics next winter should also help. NBC can leverage it to garner some pricing jumps in other areas. Other networks may be able to play off advertiser fears that if they aren’t going to buy the Olympics, they better have ample exposure leading up to the Games and then after it.
Ask some sellers and they will quietly suggest agencies may negotiate hard on price, but they’re still oriented to spending heavily in TV, helping keep the market flush. Agency TV buying infrastructure is well-established. So some sellers suggest it is easier for buyers to operate in the space than elsewhere.
Netflix and similar services are filling the coffers of network parent companies. A scenario could be envisioned where they might have a trickle-down effect on the upfront.
If Big Media companies are operating in a more integrated fashion with a network and studio more closely aligned, then Netflix-type alternate revenue streams could make a network more bold in holding out for more pricing. The same goes for carriage payments, which are an increasing part of a network's overall financials.
That’s not to say that sales executives won’t be under pressure to be as aggressive as usual. But when faced with decisions about potential pricing cutbacks, if the call is made at the highest levels, networks may have some newfound leverage.
If that's the case, how much further does Netflix move up on any list of the most influential media businesses?