• by Joe Mandese  @mp_joemandese, May 10, 2007

Over the next couple of weeks some of the biggest buyers of media will go through an annual spring rite, attending the big network upfront sales presentations, evaluating their new shows and schedules, calculating audience share estimates, and preparing to negotiate billions of dollars worth of advertising buys. It's an annual rite that hasn't changed much on a couple of scores, but it's about to change in a fundamental way this year, and not necessarily for some of the reasons you may think.

Sure, the harangue over time-shifted and commercial ratings will create some new haggling points that are likely to confuse matters, slow some deals down, and inspire some dire trade press headlines (maybe even in these electronic pages). Those discussions may even contribute to more of a buyer's market similar to the one we had last year, when some big marketers sat on the upfront sidelines and forced the networks into a longer term scatter play. Of course, the nets are talking up their scatter story, which has been relatively tight. Prices are up over upfront, which of course, is a good lever for them. The economy seems to be percolating along, and from all appearances, this could revert back to a typical seller's upfront. But I don't think so. I think the changes that are taking place below the surface are so fundamental that people are simply rethinking the role of television overall, and the network TV upfront within that.

That's my bet. And I'm probably wrong. I've been betting on these kinds of shifts for more than a decade now, but the network upfront continues to chug along. It's survived recessions, a dot-com crash, and even a gentle NUDG. The consensus is that for all the kvetching, advertisers actually like the upfront and see it as a practical way of conducting business. Agencies surely like it, because it allow them to manage an important part of their business -- procuring huge, relatively dependable chunks of advertising inventory -- at a time when the ad marketplace is growing increasingly fragmented and agency buying organizations incredibly lean and stretched. Of course the networks love it, for all the reasons we already know.

So I'm probably wrong -- again. But I've got a sneaking suspicion that things are about to change big time, that last year's upfront was simply an early glimmer of a new way of thinking about television, and that the bigger shifts are taking place in the way advertisers and agencies think about media overall.

You wouldn't know it to see some recent evidence. Despite the big changes in the past few years, especially the rapid growth of new media options like the Internet, and of new technologies giving consumers greater ability to avoid TV advertising messages, TV remains the base buy -- and by a wide margin. In his new book, co-authored with late industry journalist Bernice Kanner, Carat CEO David Verklin makes a very good case for why things have changed, and why the business hasn't really caught up with it yet. Indeed, Verklin's book, Watch This, Listen Up, Click Here, asserts that two-thirds of the advertising budgets of many of the world's largest brands are spent on television --despite all these changes.

Further evidence of this status quo comes from an insightful report released periodically by GroupM's Adam Smith that shows which media are contributing to the advertising spending growth. Worldwide, TV continues to be the big kahuna. In the U.S., though, it's a neck and neck race between TV and the Internet, with each contributing to slightly more than 40% of all ad spending growth.

The real reason all this is about to change, however, is because people on Madison Avenue are finally starting to think differently about media. This is the kind of cultural shift that will lead to the first real change in the media marketplace. For one thing, agencies and marketers are adopting a broader, more holistic approach to communications channel planning, one that is consumer-centric and less about media. For another thing, there are new kinds of people populating agencies these days, and they are coming in with less of an orientation toward traditional media and more of a focus on digital. In a quarterly earnings call with investors today, Interpublic CEO Michael Roth noted that since he took over the big agency holding company a few years ago, there has been a 60% turnover in the 125 most-senior members of Interpublic's management team -- and that for the most part, new hires are coming in with a new way of thinking about media. These are people like Bant Breen, Nick Brien, Richard Beaven and Alan Cohen, who don't necessarily think about media the way their predecessors did.

That's got to lead to change.

But the biggest reason why Madison Avenue is about to change the way it thinks about television is going to come from the consumer, and the fact that average people simply don't think about media the way the ad pros do. They don't give a hoot about "platforms." And they certainly don't care if their favorite video content comes to them via broadcast or broadband. They simply want their favorite content.

So I'm going to go out on a limb -- again -- and make a prediction that this year's upfront ad spending will be down. I'm going to guess total upfront ad volume on the major broadcast networks will be 10% to 15% lower than it was last year. The money won't disappear. Much of it will be rechanneled into other network assets -- some of it in scatter, some of it on network broadband outlets.

What do you think?