Top Media Buyers Allege Networks Lied -- And Stole From Them -- In Last Year's Upfront

A panel discussion featuring some of Madison Avenue’s biggest network TV buyers Thursday morning accused the network TV industry of misrepresenting itself in the previous year’s negotiations, even to the point of explicit fraud.

“It’s robbery,” Mike Law, head of U.S. media investment at Dentsu Aegis Network, asserted during the opening session of MediaPost’s Outfront Conference in New York City, adding, “They actually lied to us.”

Law was speaking about promises made by some major networks to reduce their prime-time commercial loads on the premise that it would improve their viewers’ experience and boost ratings and attention to advertising.

“I firmly believe they lied to us,” Law added, declining to name which network he was referring to, but it is well known that Fox and NBC took the most aggressive positions on reduced ad clutter pitches coming into last year’s upfront.

He described going into some kind of post-delivery meeting with network executives and said, “I’m a pretty casual guy and I dropped f-bombs in that meeting, because it is ridiculous.”

While he didn’t use the word fraud, Law said, the network sales executives “sold us on a proposition that you thought was going to happen.

“You paid more for something they told you was going to happen and none of it happened.”

“We heard promises last year that we were going to see a reduction in commercialization and the fact of the matter, with that particular network, who is now my client -- I would prefer not to mention who it is -- their commercialization actually went up by 2%,” echoed John Muszynski, chief investment officer, Publicis Media Exchange.

While he did not name names either, it is well known that one of his agencies -- Spark Foundry -- won NBC Universal’s media services account earlier this year.

While that was an especially sore point for the big network buyers heading into this year’s upfront negotiations, they all concurred that there fundamentally are other problems with the ongoing supply-and-demand equilibrium of the marketplace that requires a massive correction.

Citing an analysis of upfront media buys for the major broadcast and cable networks over the past five years, their prime-time ad rates have risen 38%, said Muszynski, while their delivery of adult 18-49 viewers declined 39.%

“That’s having it both ways,” he said, adding that agencies and their clients also have been hit with a variety of ratings and format packages that do not necessarily benefit advertisers, but are intended to boost the “yield” of the networks’ sales organizations.

“What we all up here get hit with is C Flight, C7, Open AP, Jazz Pods, Prime Pods,” he charged, adding: “All of these things are designed to increase their yield and not address the problem that marketers are facing with this dynamic of increased costs, because of shrinking supply.”

Dentsu Aegis’ Law said his team did an analysis looking back to 2001 and said “the number is actually worse” -- noting that prime-time ratings have declined 78% while ad rates have increased 180%.

“It’s a model that is completely broken,” Law said, adding, “If we come back and everybody walks back to the table with the same amount of money for television, like, shame on us, because it’s just playing right into their hands.”

In fairness, no one from the supply-side was represented on the panel, but all of the buyers were in agreement that this year likely would be one of massive correction, including shifting as much of their ad budgets out of the upfront and putting as much of it as possible into other media.

14 comments about "Top Media Buyers Allege Networks Lied -- And Stole From Them -- In Last Year's Upfront".
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  1. Jon Swallen from Kantar Media, April 26, 2019 at 12:08 p.m.

    Kantar publishes trend data on prime-time commercial loads at:

    https://www.kantarmedia.com/us/thinking-and-resources/data-lab/kantar-media-ad-time-tracker

  2. Ed Papazian from Media Dynamics Inc, April 26, 2019 at 12:21 p.m.

    The reality is that even if the broadcast network involved---NBC---had reduced ite primetime ad clutter by 10%, as some think was" promised", this would have made no difference to the average viewer as it amounted to roughly a single "15" per break. It would take a much greater reduction---like 30-50%--- to have a noticeable effect and such a move was out of the question.

    Regarding the agency complaints about being" lied to" and the increasing CPMs of TV, let's be real. Virtually every one of the agency clients is charging consumers more for their products/services and giving the same or less due to cost-of doing business  inflation. Why should the TV networks be any different. Also, if you calculate the true CPM of TV, discounting the ratings by 50% due to people leaving the room or not paying attention, a typical TV advertiser is paying 3-4 cents to actually reach a viewer with an ad message. That's not a bad deal---even if the cost has risen sharply over the past few decades.

    Finally, the same agencies working for the same clients have no problem pouring tons of dollars into cable buys which feature much heavier doses---in some cases smothering doses---of commercial clutter---all in the name of lower CPMs. Why don't they complain about that?

  3. Jack Wakshlag from Media Strategy, Research & Analytics replied, April 26, 2019 at 1:10 p.m.

    Nobody likes paying more for less. These are very smart people who have been in the media business a long time.  They would move the money, like they have for print, if they found the eyeballs elsewhere. Let the negotiating begin!!!

  4. Bill Shane from Eastlan Ratings, April 26, 2019 at 1:47 p.m.

    NBC fooled this viewer.  The first spot break in their prime time shows are only 60 seconds which gives the impression that they're reducing the spot load.  If I'd paid attention, I bet I would have seen the missing 2-3 minutes of spots in the first break made up in other spot breaks later in the shows.

  5. Ed Papazian from Media Dynamics Inc, April 26, 2019 at 2:06 p.m.

    Jack, it's not the province of the national TV time buyers to reorder their client's media plans based on CPMs---which are rising for all media, not just TV. They know nothing about magazines, radio, etc. and, in any event, decisions about media mixes are far more complex than simply buying the lowest CPM option. That's what computers---not savvy media and marketing people--- would do.The time buyers' job is to try to pressure the TV time sellers to hold CPM increases in check---as much as is possible.

      It should be noted that the time buyers have not paid nearly as much attention to ad clutter ratios which have seen in-program primetime commercialization rise from 6 minutes per hour to 10-11 for the broadcast networks and considerably higher for many cable channels. To be fair,  advertisers have also paid little attention to the ad clutter issue, mainly because their CMOs just can't be bothered to learn what's really happening in media and what, realistically, can be done about it.

  6. Jack Wakshlag from Media Strategy, Research & Analytics replied, April 26, 2019 at 2:19 p.m.

    We don’t really have to live in silos, and isolating broadcast cpms from the rest of tv or anything else isn’t the best way to operate. These folks are well versed in the process and they represent some of the best minds in the business. This happens every spring. 

  7. Ed Papazian from Media Dynamics Inc, April 26, 2019 at 2:44 p.m.

    Jack, on this one---unlike many others---we will have to disagree. Buyers execute media plans, they don't make radical changes in them.

  8. Jack Wakshlag from Media Strategy, Research & Analytics replied, April 26, 2019 at 3 p.m.

    John is way more than a network tv buyer. He doesn’t just negotiate low prices with TV nets. 

  9. Craig Mcdaniel from Sweepstakes Today LLC, April 26, 2019 at 4:31 p.m.

    Unfortunately, online media buying might be worse by percentage.

  10. Nicholas Schiavone from Nicholas P. Schiavone, LLC, April 27, 2019 at 1:31 p.m.

    Dear Friends,

    This article and thread of comments is both hilarious and pathetic.

    As usual, I find Joe Mandese’s reporting in MediaPostcredible.

    Hence, I find the comments attributed to the Agency side of the business jejune.
    Really now, none of these “guys” has ever taken a Network pitch before 
    and addressed underdelivery in a post buy?

    As usual, the bestcommentary is from Ed Papazian.  There is no substitute
    for the facts, common sense and experience.  These appear to in evermore
    short supply.

    Finally, rounding out this circus is wishful thinking.  Sadly, Jack Wakshlag and I
    can’t seem to get on the same page for more than 2 minutes.  Jack is more than
    bright, but his ability to tolerate and to combine badly are unfathomable to me.

    At the end of the day, each side of the Upfront will get what it deserves and
    we shall say the same things next year at this time because we always have
    under these circumstances.  Truth is truth.  The inevitable is inevitable.

    Tut tut Cheerio Mr. Bingley, Have a good Upfront!
    Nick


  11. Jack Wakshlag from Media Strategy, Research & Analytics replied, April 27, 2019 at 2:33 p.m.

    This is the two minutes. Well said.

  12. Stuart Zuckerman from KCET, April 27, 2019 at 3:47 p.m.

    If advertisers are so upset about clutter, they should move more of their national primetime 
    budgets to PBS....where every sponsor gets category exclusivity in a low clutter environment

  13. Nicholas Schiavone from Nicholas P. Schiavone, LLC, April 27, 2019 at 11:34 p.m.


    Stuart Zuckerman is correct about the necessity for including PBS in Marketing & Media Plans.

    In my professional judgment, PBS holds Sponsorship Opportunites unparalleled in TV programming, except perhaps for the Olympics or the NCAA Finals        -And with virtually zero clutter in promos and sponsorship announcements based on category exclusivity.

    In terms of Marketing Science, there is a direct correlation between RPQ [Relative Perceived Quality] and ROI. Hence, those Corporations or Brands seekingprofitabilitymust do so not only throughquality performancebut also throughquality sponsorships.

    The integrity & trust engendered by National PBS Primetime Sponsorships, including the "PBS NewsHour" and "Washington Week," are unique in the realm of electronic media ... and are the keys to profitable, long-term customer relationships & loyalty.

    In sum, PBS provides the most effective and efficient Sponsorship & Co-Branding opportunities available for the 2019-2020 TV Season in the Advertising Upfront.


     

  14. David Scardino from TV & Film Content Development, April 29, 2019 at 7:06 p.m.

    My old boss at ABC, George Newi, used to say that if you entered a negotiation without knowing your "walking away point," you'd get taken to the cleaners every time. It's a market, folks, and markets go up and down all the time, hence the need to know at one point you'll take a walk. I am shedding no tears (and I spent half my broadcast advertising career buying network TV at BBDO and Y&R). 

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