• by Wayne Friedman , May 16, 2006

Big TV advertiser Johnson & Johnson will be sitting out of the upfront. But the company will still be spending massive amounts of its TV dollars months ahead of time for huge pieces of the broadcast season.

The big pharmaceutical and consumer product company will buy the networks on a calendar-year basis. It won't participate in the formal upfront process that starts this week. J&J says it wants to begin its TV network buying process in August.

This isn't a new tack for marketers. About 30 percent of cable network deals are done with marketers on a calendar-year basis--including some with Johnson & Johnson.

J&J's decision is not necessarily bad news for the networks. Typically, in August, many deals are still in the "hold" stage for many advertisers' upfront buys and haven't gone to "order." That process sometimes isn't completed until mid-September--or even October--depending on the advertiser.

Senior network executives aren't worried about J&J's move. NBC Universal Television Group President-COO Randy Falco said: "They told us they wanted to wait until August to start, to see about other opportunities. We can do that as well." Falco said J&J wanted to hold back money for new digital platforms, product integration, and other opportunities.

Throughout this upfront season, media agency executives and advertisers have made it a high-level discussion point of holding back TV media money--possibly as much as 3 percent of their traditional TV media budgets for digital and online opportunities.

A J&J spokesman said the company wants to align its business planning cycle with its media planning and buying cycle. All that starts as part of a calendar-year process, beginning in January. For years, marketers have talked about this--especially doing more calendar-year deals. Many are loath to do this--not wanting to miss out on buying the big-rated TV shows.

But now the TV ad marketplace may be ready to move to this alignment--and some advertisers may take advantage of this.

"What's happened is--there has been a soft scatter market three years in a row," said Steve Grubbs, CEO of PHD USA. "Maybe people don't think it's necessary to buy upfront. There is not the urgency, not the penalty, as in the past. Maybe there are other business reasons [for J&J's move]. Maybe not all that money is there."

According to TNS Media Intelligence, J&J spends about $500 million in national TV advertising.

Privately, media executives are scratching their heads as to why J&J would play out this story in the press. Typically, this week, most marketers--as well as TV networks--play their respective upfront playing cards close to the vest.

Marketers have always been concerned about missing the upfront because they would miss buying the big popular shows--such as ABC's "Grey's Anatomy" and "Lost" or CBS' "CSI" or Fox's "American Idol." Those market conditions have changed somewhat.

"You have been able to buy these shows in scatter," says Grubbs. Still, he says, there could be a need for some marketers. "In some categories, there are still competitive concerns."

Said Brad Adgate, senior vice president and corporate research director of Horizon Media: "It's a crap shoot; you may be shut out of the top shows."