• by David Kaplan , July 5, 2005

Since March, Julie Roehm, the Chrysler Group's director of marketing communications, has been leading a campaign to change the structure of the television upfront marketplace, proposing a model that would be based on the stock market's fundamentals of "anonymity, liquidity, transparency, and arbitrage." Although those elements do not appear to have come into play during 2005-06 upfront negotiations, which are now nearing completion, Roehm tells MediaDailyNews she is resolute, and believes the upfront TV sales process is poised for change.

MDN: So, what do you think of the upfront so far?

Julie Roehm: This was an interesting year to watch. We did see a lot if the CPMs come down for some networks, and a minimal increase for others. Everybody was bullish on cable's prospects this year, and it does seem as if they've come in a bit high--as a result, people held back from buying. In general, it looks as though the upfront is down slightly, and the TV people are arguing that that means a lot of people are holding out for scatter.

I don't know if that'll be true, but I do think that, at least as discouraging as I think the upfront process is, I am encouraged by the more conscientious actions by many advertisers this year in not accepting the huge rate hikes and holding back and not putting forth as much money. I think it augurs well for the future, which is going to have a better balance in terms of the overall marketing mix--meaning that ad dollars won't be so heavily weighted towards television.

MDN: Could you explain the Nasdaq model that you've been promoting as a replacement for the upfront? What inspired that idea?

Roehm: A year ago, last June, I was traveling with a colleague of mine, Jeff Bell, vice president for the Chrysler and Jeep brands. I had been complaining about the upfront process. Jeff has a quite a bit of experience in his current job with the marketing and communications world, so naturally, he was very familiar with that process as well. In addition, he has a Master's in economics. And so we were talking about the stock market and the economics of supply and demand, as we were discussing the problems of the upfront. As a result of that conversation, we kind of ferreted out this alternative upfront model, which led to us co-authoring an article in Advertising Age later that month, outlining how this might work.

A lot of what influenced the idea was where I saw television going, and especially how broadband was going to revolutionize the medium with "content on demand."

So those were the ideas about what I felt should be a shift in the upfront, essentially that it doesn't serve any of us to be thinking about any one medium in and of itself. We're all going to be much more successful when we think about each medium and how it works individually, and how it can then be integrated with everything else. And the reason is that today, consumers split their time more heavily among a greater variety of media. But they're also multitasking.

MDN: So how does all that affect the way you negotiate with those on the seller side of the advertising equation?

Roehm: Think of the reps that come to us as marketers. They come to us individually, selling this page in this magazine, this parcel of time on this channel, this ad banner on this Web site. Marketers are thinking about how all those things work together, how they work to convey a single promise, but with varying levels of entertainment and detail.

And we're the only ones really thinking that way, and it's a big frustration. You see, when it comes to things like the upfront, or any of these marketing programs, our challenge to our media partners has always been: think about us; understand our brands, and what we stand for and what our goals are. Understand what your unique promise is to the marketplace--and not just saying that you deliver a different kind of person, because that's what we hear a lot.

Specifically, we want to know what you stand for as a brand and how that in turn complements our brands. Think about what programs we can do together--and not simply inserting a page or 30-decond commercial, but how can we help to make our advertising dollars into the content that you and your medium deliver to your customers more relevant, more interesting, more interactive. It's been tough to get a response to that. At the end of the day, people are just beholden to the singular goal of selling more 30-second spots, selling more pages.

MDN: So how does yours and Jeff's vision of the upfront address that?

Roehm: This idea of the upfront is not only a ploy to get what I think is a more economically driven market, but to achieve something more flexible, more anonymous, so that we can all participate without having to share any of our individual plans. Right now, the process is all behind doors, and nobody really knows what these spots are really worth and what the costs and the benefits are.

So by making it into an online exchange--similar to the Nasdaq, in a sense--we would get these media partners to spend more time with us, because they'll be freed from the primary scope of their jobs, which calls for them to focus solely on selling x-number of pages or spots, to then thinking about unique programming, unique integration. And within that, there's probably a lot of advertising time that's bought and sold as well, but it's all done through making the programming development more interesting, more relevant to the consumer. So, for me, it's a win-win: It frees up our reps to use their relationships, to use their expertise to build content, and not just to hawk time.

MDN: In speaking with some network executives, they didn't seem to feel it was a win-win. It seemed the model you were calling for would cause them to lose a considerable degree of power, and they saw no reason to entertain any such change. Do you feel their concerns are overblown?

Roehm: I think what you're hearing is valid. If I were sitting on their side of the fence, I wouldn't love the idea either, because they have all the control right now. And naturally, any change in the upfront structure would reduce that control. They can control what we can get a 30-second spot for; they can control the amount of information that we have. In the world I'm talking about, which is essentially the economic principles this country was founded upon, that the entrepreneurial spirit this country is known for, those principles are simply not applied in the upfront system. If they were, it would be like the stock market, where you have complete information. That doesn't exist in the current upfront marketplace, and therefore, by virtue of that fact, you don't have a true market system.

In the past, it was something that we simply had to do--there were no other options. The fundamental difference today is that marketers have more options than ever before. As a result, television has an opportunity as well. I don't think this should be looked upon as a threat. That's unfortunate if some feel that way. You hear excuses like: "Well, this would commoditize the time." I would urge people to ask themselves: What is more commodotizing of time--putting it out on an online exchange where people have complete information and decide that "Desperate Housewives" is worth more than what they're selling it for during the upfront?

Or is it that time is being commoditized because the reps right now are spending all their time only selling time--they don't really care what advertisement you run on "Desperate Housewives," as an example--they just care that time is bought and sold.

MDN: So what's the answer? Would an online exchange end up commoditizing time, or is it already commoditized?

Roehm: For me, the answer is neither. If it were true that creating this exchange would make time more of a commodity, then every technology stock, every auto stock out there, would trade for the same price. The fact is, stocks aren't treated as commodities; there is a variance of value placed on each stock based on information that is complete and transparent in the marketplace. I don't believe that that's a valid fear.

I would be afraid of this change if I felt that I didn't have viable content that would command top dollar. But I don't think that any of the networks should feel that way. Everybody goes through the cycle: ABC is on top of the world right now, and they were the dogs a couple of years ago. Everybody goes through that, and everybody has the ability to develop really great content. And this process, if embraced appropriately, is an opportunity rather than a threat--and could create a huge crossover advantage for them. Integrated content is commanding top dollar right now, and this would shift the focus to doing more. And plus, it could reduce the amount of commercial time out there, which people are fundamentally rejecting--which is why TiVo's and DVRs are on the rise, and cable companies are incorporating them as standard equipment. The idea that this is just going to go away and the upfront will be around in its current form in the next 10 years is living in denial of reality.