NY Times
A YEAR ago, as television executives prepared for the 2009-10 season, they suffered double-digit percentage losses in advertising revenue because the economy weakened demand among marketers for commercial time.
Now, as those executives get ready for the 2010-11 season, they are optimistic for a rebound in revenue, and higher rates, because demand has improved in recent months.
But as the stock market proved on Thursday, months of expectations can be undone in moments. The gyrations on Wall Street reminded everyone taking part in what is known as the upfront market — called that because the talks and deals occur before the TV season starts — that happy days are not quite here again.
“Going down 300 points, I say: whew,” Rob Master, North American media director for the giant marketer Unilever, said in a telephone interview on Thursday, referring to the decline of the Dow Jones industrial average, but “it’s not like we’re in an economic boom.”
“We were in a very different place 12 months ago, taking today out of the equation,” Mr. Master said, “so there’s more clarity. But it’s all relative.”
Unilever, which sells brands like Axe, Dove, Good Humor, Lipton and Ragú, will take part in the upfront market, he added, but is also looking at interactive media, social media and other places to spend its marketing dollars.
In fact, Mr. Master and other Unilever executives are in California this week, he said, to meet with Silicon Valley companies like Apple, Facebook and Google — all of which offer alternatives to traditional ways to advertise, like television commercials.
Although “TV remains an important part of our go-to-market strategy for our brands,” Mr. Master said, “we’re comfortable with continuing to move our dollars to other places.”
Steven Center, vice president for advertising and public relations at the American Honda Motor Company, agreed that “the predisposition now would be that things are getting better” compared with conditions during the upfront market last spring, “when the predisposition was that the end of the world is coming.”
Still, “we’re not seeing a lot of enormous underlying strength” in the economy, he added.
His colleague, Thomas J. Peyton, senior manager for national advertising at American Honda, said the company “intends to be active in the upfront this year. ” Because “ there are certainly more buyers in the market than there were last year,” Mr. Peyton said it would not be surprising if the broadcast networks and cable channels were able to put through “small increases” in rates.
Two brokerage firms that follow the media industry have forecast robust gains in ad revenue for the biggest broadcasters in the 2010-11 upfront market compared with the 2009-10 market. Barclays Capital predicted an increase of 20 percent, and Credit Suisse predicted an increase of 21 percent.
But as the trade publication Advertising Age pointed out, such results would leave the large broadcasters short of the ad revenue they took in during the 2008-9 upfront market, before the financial crisis sapped confidence among consumers and marketers.
That could mean that TV executives may need to do somewhat more promoting of the benefits of the upfront and television advertising to potential customers than is usual.
For instance, during an upfront presentation by the Oxygen cable channel, Lauren Zalaznick, president for the women and lifestyle entertainment networks at NBC Universal, told media agency employees in the audience, “You can look like a hero if you make a big, strategic deal in the upfront.”
And during a presentation by the CNN and HLN cable news channels, which are owned by Time Warner, Jim Walton, president for CNN Worldwide, began his remarks to the media agency audience members this way: “Thank you. Thank you in advance for your business this year.”
Those presentations precede the upfront market during which the television and marketing executives negotiate purchases and prices. The presentations are intended to offer previews of the shows being scheduled for the coming season.
The presentations range from simple to elaborate to over the top. Some analysts believe they can divine the health of the upfront market by how spartan or lavish the events are.
(Based on attendance at a half-dozen presentations, a reporter who noticed generous spreads on buffet tables, open bars galore and piles of napkins imprinted with the hosts’ logos is forecasting a bounce in the upfront market from last year.)
The cable channels typically present first, then the broadcast networks. This year, the cable presentations began somewhat earlier than usual, in early March. The broadcasters — ABC, CBS, CW, Fox and NBC — plan to follow their usual timetable and will make their presentations in mid-May; this year, the dates are May 17 to May 20.
Some cable channels, eager to compete with the broadcasters, have started scheduling their events during the broadcast upfront week. This year, ESPN, TBS and TNT will make presentations on days that broadcasters have scheduled events.
In years when demand lags for commercial time, the upfront market can last through the spring and into the summer. That was the case last year. In years when demand for spots is strong, the upfront market can wrap up in a couple of weeks or less; there have even been fiercely robust markets that concluded by Memorial Day.
Given the circumstances this year, it is unlikely to be a “two-week upfront,” said Steve Gigliotti, executive vice president for advertising sales at Scripps Networks Interactive, which operates cable channels like Food Network, HGTV and Travel Channel.
Still, “strong brands will do very well in this marketplace,” Mr. Gigliotti said, referring to channels that are enjoying growth in viewers and ratings, because of the rising prices in recent months for commercials that are bought shortly before they run rather than ahead of time in the upfront market. (Such short-term buying takes place in what is called the scatter market.)
“The scatter market has been incredibly strong,” Mr. Gigliotti said. “That’s going to push advertisers into thinking, ‘I have to make a decision for the long term’ ” and make deals in the upfront market.
Now, as those executives get ready for the 2010-11 season, they are optimistic for a rebound in revenue, and higher rates, because demand has improved in recent months.
But as the stock market proved on Thursday, months of expectations can be undone in moments. The gyrations on Wall Street reminded everyone taking part in what is known as the upfront market — called that because the talks and deals occur before the TV season starts — that happy days are not quite here again.
“Going down 300 points, I say: whew,” Rob Master, North American media director for the giant marketer Unilever, said in a telephone interview on Thursday, referring to the decline of the Dow Jones industrial average, but “it’s not like we’re in an economic boom.”
“We were in a very different place 12 months ago, taking today out of the equation,” Mr. Master said, “so there’s more clarity. But it’s all relative.”
Unilever, which sells brands like Axe, Dove, Good Humor, Lipton and Ragú, will take part in the upfront market, he added, but is also looking at interactive media, social media and other places to spend its marketing dollars.
In fact, Mr. Master and other Unilever executives are in California this week, he said, to meet with Silicon Valley companies like Apple, Facebook and Google — all of which offer alternatives to traditional ways to advertise, like television commercials.
Although “TV remains an important part of our go-to-market strategy for our brands,” Mr. Master said, “we’re comfortable with continuing to move our dollars to other places.”
Steven Center, vice president for advertising and public relations at the American Honda Motor Company, agreed that “the predisposition now would be that things are getting better” compared with conditions during the upfront market last spring, “when the predisposition was that the end of the world is coming.”
Still, “we’re not seeing a lot of enormous underlying strength” in the economy, he added.
His colleague, Thomas J. Peyton, senior manager for national advertising at American Honda, said the company “intends to be active in the upfront this year. ” Because “ there are certainly more buyers in the market than there were last year,” Mr. Peyton said it would not be surprising if the broadcast networks and cable channels were able to put through “small increases” in rates.
Two brokerage firms that follow the media industry have forecast robust gains in ad revenue for the biggest broadcasters in the 2010-11 upfront market compared with the 2009-10 market. Barclays Capital predicted an increase of 20 percent, and Credit Suisse predicted an increase of 21 percent.
But as the trade publication Advertising Age pointed out, such results would leave the large broadcasters short of the ad revenue they took in during the 2008-9 upfront market, before the financial crisis sapped confidence among consumers and marketers.
That could mean that TV executives may need to do somewhat more promoting of the benefits of the upfront and television advertising to potential customers than is usual.
For instance, during an upfront presentation by the Oxygen cable channel, Lauren Zalaznick, president for the women and lifestyle entertainment networks at NBC Universal, told media agency employees in the audience, “You can look like a hero if you make a big, strategic deal in the upfront.”
And during a presentation by the CNN and HLN cable news channels, which are owned by Time Warner, Jim Walton, president for CNN Worldwide, began his remarks to the media agency audience members this way: “Thank you. Thank you in advance for your business this year.”
Those presentations precede the upfront market during which the television and marketing executives negotiate purchases and prices. The presentations are intended to offer previews of the shows being scheduled for the coming season.
The presentations range from simple to elaborate to over the top. Some analysts believe they can divine the health of the upfront market by how spartan or lavish the events are.
(Based on attendance at a half-dozen presentations, a reporter who noticed generous spreads on buffet tables, open bars galore and piles of napkins imprinted with the hosts’ logos is forecasting a bounce in the upfront market from last year.)
The cable channels typically present first, then the broadcast networks. This year, the cable presentations began somewhat earlier than usual, in early March. The broadcasters — ABC, CBS, CW, Fox and NBC — plan to follow their usual timetable and will make their presentations in mid-May; this year, the dates are May 17 to May 20.
Some cable channels, eager to compete with the broadcasters, have started scheduling their events during the broadcast upfront week. This year, ESPN, TBS and TNT will make presentations on days that broadcasters have scheduled events.
In years when demand lags for commercial time, the upfront market can last through the spring and into the summer. That was the case last year. In years when demand for spots is strong, the upfront market can wrap up in a couple of weeks or less; there have even been fiercely robust markets that concluded by Memorial Day.
Given the circumstances this year, it is unlikely to be a “two-week upfront,” said Steve Gigliotti, executive vice president for advertising sales at Scripps Networks Interactive, which operates cable channels like Food Network, HGTV and Travel Channel.
Still, “strong brands will do very well in this marketplace,” Mr. Gigliotti said, referring to channels that are enjoying growth in viewers and ratings, because of the rising prices in recent months for commercials that are bought shortly before they run rather than ahead of time in the upfront market. (Such short-term buying takes place in what is called the scatter market.)
“The scatter market has been incredibly strong,” Mr. Gigliotti said. “That’s going to push advertisers into thinking, ‘I have to make a decision for the long term’ ” and make deals in the upfront market.
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