The Hollywood Reporter may say the positive upfront looks like yesterday's news, but the fact is all that is relative. What was positive about the 2005 upfront? Not that much. Talk to MTV, Turner Broadcasting and other cable networks.
Just weeks before the upfront in April/May, those networks were asking for 10% increases on cost per thousands. You know the result. It was the first time in years cable networks took it on the chin, coming in under projections. And it wasn't just cable, but networks, too, that fell short.
Not too positive, in my book. Though it's a sales executive's right to ask for the moon, what does that blather signal for your stockholders?
This year's scatter market will be a testy affair. (Of course last year's scatter market was testy, too, with prices for most of the year lower than upfront pricing -- except for the high-flying ABC.) High oil prices, possible $4 or $5 for a gallon of gas, and crushing financial problems from a number of Hurricanes, could have a domino effect on the advertising business.
Speaking with other senior media buying executives at an International Radio & TV Society breakfast in New York yesterday, Charlie Rutman, CEO of MPG North America, threw out a warning: "Money will be removed from marketing to fund the cost of manufacturing."
That's not a good sign.
At best, call it even: "Consumer confidence is on a roller coaster," said Donna Speciale, president of U.S. broadcast at MediaVest Worldwide. "One week they are spending, one week they are not."
Of course, no one is pulling the plug yet. Just recently, networks reported upfront holds have gone to orders in record numbers -- with little spillage. Some companies are actually adding to their upfront buys.
But you can't discount the economic signs. Interest rates are going up and could continue as $300 billion is spent on fixing the damage from Hurricane Katrina, and perhaps more billions caused from possible Hurricane Rita damage.
Then there's the $150 billion to $200 billion a year we're spending on that crazy DMA market, Iraq. With all that money spent, we can only hope Iraq will be Nielsen's next LPM market.
Any good news? Yes, some. Marketers didn't overspend in the upfront TV marketplace. But senior buyers say advertisers will be shifting 20% of their traditional media dollars to alternative media -- and we don't mean cable TV.
Call that positive, if you like.