With a new broadcast television network season this fall and the dust settled on a surprisingly robust upfront market in May, it’s a good time to reflect on the current state and future of what is still the single most dominant mass-reach vehicle for advertisers.
The six broadcast networks in prime time, as an aggregate, showed a 19.6% increase in dollars written, from nearly $6.9 billion from the 2001-02 upfront to the roughly $8.2 billion reeled in this past May for the 2002-03 prime-time schedule. NBC and CBS showed the most strength with estimated tallies of $2.7 billion and $1.9 billion, respectively, huge increases compared to last year’s receipts of $1.96 billion and $1.4 billion. ABC and Fox were virtually flat, registering $1.5 billion and $1.3 billion.
So what did the recent upfront teach us, if anything?
Do the double-digit CPM increases the networks claim mean the recession is on its way out? Or does it signify a too-little-too-late rally for a medium whose relevance has been questioned by both the marketplace and the media?
As for the factors driving the surprising robustness of the upfront market, most experts point to a combination of developments. Back in May, advertisers seemed buoyed by the improving economic news. “People felt the economy was turning, [figuring things would improve] certainly by Q4 when things kick in,” says Jim Geoghegan, SVP/group media director for Universal McCann New York.
That was before the summer skid in the stock market, stoked by revelations of accounting scandals. And with the unemployment rate still sluggish, the most bearish hint at a double-dip recession, with fears of a second downturn even worse than the first.
The idiosyncrasies of the TV advertising marketplace also played a significant role in this year’s increases. Cingular Wireless media director Charlie Payne attributes the influx of dollars in no small part to last year’s relatively anemic go-around.
“We did see a decrease in premium programming in last year’s scatter market because the choice programming went fast in the upfront last year. We didn’t want to be caught in that situation again, so we went harder this year [in the upfront] than last,” she explains.
Another dynamic at play is the secrecy that has cloaked the process for years.
“The network TV marketplace as currently structured is an inefficient market with a lack of information on both sides. Nobody knows what anybody else is paying,” says Geoghegan. “In a pure marketplace, there is an abundance of info on both sides so buyers and sellers know they’re getting the best price.” The upfront is a holdover from the days when three major networks and a handful of buyers dominated, but with the proliferation of players over the years on both the buy and sell sides, players like Geoghegan would love to see the system updated. They aren’t holding out hope of that happening, though. The system works, but not as well as it could.
“Who’s gonna give up what to make it better? Are networks going to divulge pricing to show what value spots actually have?” asks Geoghegan. “No one is going to give up that kind of control.”
MasterCard’s Caryl Hahn, VP of global media, new channels, concurs. “It’s all so cyclical,” she says. “Sometimes it works for buyers and sometimes for sellers. I don’t think any one would offer up an alternative.”
Another complaint about the upfront is that it moves earlier and earlier from year to year, sometimes creating budgeting challenges when an advertiser’s fiscal year doesn’t match the upfront year. “Asking advertisers to take a leap of faith on programs in May is asking a lot,” says Cingular’s Payne. “Because shows often are different in September [when they bow] than in [the upfront presentation in] May.”
So like Major League Baseball, it may not be a perfect system, but it’s the only game in town, although we don’t anticipate media buyers’ going on strike anytime soon. Clearly NBC went in with the strongest track record, thus needing only to unveil a handful of new shows. Cingular’s Payne warns NBC programming chief Jeff Zucker not to get complacent, however, especially since perennial hit and moneymaker Friends may go off the air next season. Perhaps new entries like American Dreams and Boomtown will help keep the momentum.
If Zucker needs a reminder about the importance of vigilance when it comes to developing programming, he needn’t look any further Disney’s ABC. After the success of Who Wants to Be a Millionaire, ABC found it led to viewer fatigue followed by the inevitable ratings nosedive without any promising new replacements on tap. This led to programming chief Stu Bloomberg’s being shown the door, and now it’s on the shoulders of Susan Lyne to turn around the network. Unfortunately, media buyers gave the ABC lineup a tepid reaction.
Lyne can at least pin some hope on the prospects for 8 Simple Rules, the new family sitcom starring John Ritter, which was underwritten by the Family Friendly Programming Forum, a consortium of advertisers who give money to launch more wholesome programming opportunities to reach their target audiences.
According to Payne, CBS had the strongest lineup in terms of a potent mix of returning shows and new shows. Network chief Leslie Moonves and his team deserve a great measure of credit for having transformed the “Geritol network,” with its older demographics, into a younger, hipper and more energetic platform for appointment viewing. It has had an impressive string of successes, including Survivor and CSI: Crime Scene Investigation. Critics have singled out CSI’s spin-off CSI: Miami as well as Still Standing and Without a Trace as promising new entries. “I had expected Fox to come out with a strong lineup; they have a lot of new shows, but I don’t think they hit a home run,” says Payne. Critics don’t hold out too much promise for new Fox entries like The Grubbs, Fastlane, and 30 Seconds to Fame. But Cedric the Entertainer Presents looks as if it could click for Fox.
The pressure on network programmers to unlock new hits is greater than ever in this age of media fragmentation, marked by cable TV’s steady encroachment on the broadcast networks’ market share. Both on the basic tier — with the FX show The Shield as a prime example — as well as in the premium arena with HBO hits like The Sopranos and Six Feet Under, most of the buzz is about cable.
New challenges are also posed by emerging technologies like TiVo and video-on-demand. But while the pre-eminent role that network TV has perennially played in the advertising and marketing communications strategies of advertisers may be diminished, it is far from marginalized. So to refer to this latest upfront as a harbinger of the renaissance of network TV from its predicted death is for now overheated rhetoric. (Although if the pundits are correct and personal video recorders like TiVo and others achieve 50% household penetration by 2010, network TV would face serious peril.)
Cingular’s Payne acknowledges that PVRs are problematic and advertisers need to seek solutions. In fact, she implies that PVRs could actually act as a positive force in inspiring advertisers and their agencies to become more innovative and creative by looking beyond the traditional 30- and 60-second TV spots, looking more closely at integrated content and other ideas. At the same time, she cautions the industry not to go overboard as it did with the dotcom frenzy.
Beyond PVRs like TiVo, threats to the traditional advertising models are also on the horizon in the form of interactive TV, and video-on-demand. “We’ve set up a group within Universal — including planning, interactive, buying, direct, and our UM Futures, which are technology decoders — which has set up test scenarios with clients. But we’re not sitting here saying these technologies are the demise of advertising,” maintains Geoghegan.
Because at the end of the day, not even the feared interloper, cable television — let alone new digital technologies — can yet deliver the audience levels of the broadcast networks. “It’s challenging for the networks because they are losing viewers year over year, many of them to cable, but you still can’t find one cable network that can capture as large an audience,” points out Payne.
Or as Jim Geoghegan puts it, “Bottom line is it’s still good to be in network TV.”