US national broadcast network NBC Universal is planning to mess with the structure of its May Upfront annual advertising sales pitch making two key changes. It will offer an annual plan of programming to buy adverts against, not just half a year, and it will begin selling those programs some 6 weeks prior to the Upfront meeting with a press briefing and follow up client meetings.
Usually in the US about $9 billion of broadcast advertising and $6 billion of cable channel advertising changes hands during two one week events in the Spring, where special promotions, some with discounts over sales rates for the rest of the year (Scatter sales) are offered in order for the networks to have that comfy feeling that much of their next 6 months of business is already tied up.
There are two reasons to expect changes to this year’s Upfront, the writer’s strike and the new blended approaches to placing advertising. Advertisers last year were offered potentially complex combinations of advertising on the TV and on the internet properties of the studios. Those combinations are getting more complex, taking in program sponsorship, extending that to the internet, with the result that time of day, and advertising demographics are making up a more and more effective picture for advertisers. Just sticking your advertising to a single popular program that might pull in 20 million viewers, is no longer the appeal that it was. Advertisers want the right viewers, not the most viewers, and want them in the right frame of mind to view their adverts.
For the last two years the Upfront has been dominated by the incursions of the digital video recorder in to the US market and its affect on broadcast advertising value. The response last year was to mix up TV advertising with web advertising and make sure that the total amount was roughly the same or better than the previous year. In this way big US TV has convinced itself that revenues have not gone down due to the DVR.
The Upfront will still continue but one of the problems with it is that advertising buyers have been encouraged to ‘party’ throughout the week, getting more and more friendly with network executives selling them advertising, and taking big decisions in a compressed time frame.
One of the core issues in Upfronts were the issue of the new season pilots and subsequent new TV series. The meeting was a way of pre-selling new supposedly ‘hit’ series which might just as easily be shut down three weeks after launch because they did not attract enough of an audience.
This whole thing was costly in every direction, any pre-sold advertising for pilot series that were not continued, had to be resold; the content businesses that had provisional contracts for the series would incur huge losses, and the effort of the Upront was wasted. But without the new season premiere’s there would be little reason left for the Upfront.
With the writer’s strike a lot of the material that would have been ready for that new season is either delayed or cancelled, and with the cancellations network executives have a chance to find out if so much new material really was necessary to keep their audiences. If ad sales go well, then the writer’s strike will have reduced the overall amount of work that there is in future for writers, and for studios.
CBS CEO Leslie Moonves was quoted in newspapers this week saying that ‘pilots are vastly overrated,’ and he sees it as an opportunity to save a lot of money, having saved $70 million in production costs in the last quarter due to the writer’s strike.
Finally NBC has chosen this week to unveil research about how much people remember adverts even when they are skipping through them on a DVR at speed. Whatever the results, the people have to know the adverts previously, and that means watching them on real time TV not delayed TV, and the research only points to recognition at 6 times fast forward, when most devices go at 30 times.
Our take is that this is a move by broadcasters to have a piece of evidence, with which to convince advertisers that they are not wasting their money on the Upfront.
But if the networks are ready for reluctant advertisers, we would expect that the advertisers are even more reluctant after another year of growth in internet spending, and whatever the network executives do, this will be yet another year of drops in US TV advertising revenue, which the networks will disguise as a success, citing the rate per thousand homes delivered, which will no doubt increase, but when you are delivering so many fewer homes with broadcast TV it is the 10K forms of the networks that will tell the tale a year from now.