Real Media Riffs - Monday, Aug 28, 2006

PRESS HERE TO RESET -- In case anyone hasn't noticed yet, we're into a new kind of buyer's market. This isn't one of those every decade-or-so, cyclical market corrections in which network CPMs simply roll back a point or two, allowing buyers to keep their faces safe with clients for another day. No, this appears to be a genuine reset of advertising marketplace leverage that is going well beyond price. It's a shift in power that is impacting the fundamental rules of the advertising game. And for a change, Madison Avenue appears to be winning.

The first glimmer of this reset occurred early in the upfront negotiating process. Instead of haggling over network CPMs, the ad industry went after something much more dear and longer term: the very definition of TV viewing. The speed with which the broadcast networks caved on digital video recorder ratings is like nothing we've ever witnessed before. We were prepared to watch a siege. The networks feigned a strong stance, proffered lines in the sand, but when push came to shove and it became evident that buyers weren't budging off their "live"-only ratings stance, the networks gave in - and gave away millions of time-shifted viewing exposures from DVR playback.



With that winning precedent in hand, Madison Avenue is pushing to reset other rules. The joint policy committee of the American Association of Advertising Agencies and the Association of National Advertisers recently got a concession from Hollywood's powerful talent unions for a two-year extension to their commercial production contracts, and was also granted a one-year waiver allowing the ad industry to experiment with a shorter cycle of use in the new media and Internet areas.

Now Omnicom's OMD unit is pushing to alter the legal liability the agency and its clients have with for paying the media. The language is subtle, and to us, inscrutable, but experts in credit and liability law tell us that recent language OMD has put into the insertion orders for buys placed for clients such as GE, Nissan and Dial, gives the agency greater say over when it and its clients are on the hook with the media. The Omnicom shop apparently is doing this of its own volition, but others on Madison Avenue are keeping a close eye on its outcome.

While it is as yet uncertain whether broadcasters and cable outlets will roll over on this one, OMD couldn't have picked a better time to try and rewrite the rules. Many stations are so frightened by the hype surrounding new media, and the exodus of client budgets to the Internet, that they may be inclined to look the other way just to stay on OMD's buy lists.

What's next? Could it be that Madison Avenue's historic kvetch over magazine bleed fees and network integration charges may soon be a thing of the past? Why not? The timing seems good. If not, Madison Avenue may wake up one day to find ABC, CBS and NBC tack the extraneous charges - worth millions in annual profits to the Big 3 networks - onto their new broadband platform buys.

And is it our imagination or did we detect a hint of cockiness in the AAAA's recent request to Nielsen CEO Susan Whiting that she remove VCR audience estimates from Nielsen's new commercial minute ratings, as well as its traditional program ratings? Well, Nielsen did rebuff that one, but that just goes to prove that Madison Avenue's newfound market leverage may influence the networks, but it has little if any effect on the networks' ratings supplier.

So it may be best to do as former AAAA Media Policy Committee chief Jean Pool already advised the industry during her swansong keynote at the association's media conference in Orlando earlier this year: Hold media suppliers accountable for the market currency data produced by their research suppliers.

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