Buyers have leverage at TV upfronts

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Faced with the worst economy in a generation and with ad budgets down and predicted to sink further, there is little disagreement among ad buyers that they have a lot of leverage entering this year's upfronts.

They will be seeking concessions including price rollbacks and greater flexibility on terms and options to pull out of or reduce spending commitments made in the upfront.

The networks aren't conceding much at this point. CBS chief Leslie Moonves, however, is the only network exec to publicly predict that pricing — at least at his place — will be up this year. He also has indicated that it is possible CBS will sell less inventory upfront this year.

Sellers at other networks say it's anybody's guess how pricing will shape up in the upfront, which still is at least three months away — and maybe longer if buyers come to the table with unrealistic expectations.

"We're not going to give it away," the president of one network sales organization said. The exec added that the market could turn into a long waiting game if buyers make unreasonable demands.

Some advertisers, year in and year out, need to know ahead of time that they will have a certain number of impressions in place on certain nights throughout the year. "I don't think agencies can play a 365-day game," the executive said.

Moonves said essentially the same thing to analysts and investors last week at a Deutsche Bank conference in Palm Beach, Fla. "We're never afraid to play the scatter game," he said.

One top-tier cable sales chief thinks cable networks might be in a slightly better position.

"There will be flexibility, there will be some concessions, and ultimately there will be a lot more negotiation. But that's not necessarily a bad thing," the exec said. "The broadcast guys are getting pushed (to secure price increases), but the clients are getting pushed even harder — and from every direction.

"They're going to say, 'I need concessions if I'm going to survive.' And if the broadcasters try to squeeze too hard, a lot of business will come our way."

The corridor chatter at last week's American Association of Advertising Agencies' Media Conference in New Orleans was focused almost exclusively on the chaos and uncertainty playing itself out in the ad marketplace and the impact that the recession — the worst in at least 30 years — will have on the upfront.

Michael Mendenhall, senior vp corporate marketing and chief marketing officer at Hewlett-Packard, noted at the conference that 40% of CMOs in a recent survey think their budgets will be reduced this year, and they expect a healthy chunk of that reduction to come out of advertising and marketing. (Speaking of 40% dropoffs, attendance at the annual gathering of media buyers and sellers was down by that much as well, to 650 people.)

Some categories are more uncertain than others, said Bob Bernstein, managing director of MC Media and former chief media officer at Interpublic Group's Draftfcb. The travel, financial and auto categories, he said, are very much in flux. And overall, he said, "Demand will be down."

"Flexibility is top of mind in discussions with vendors," he said. Draftfcb clients spend about $1 billion on ads, and the agency is positioning those dollars as "stable" — money that won't evaporate from the marketplace, Bernstein said. The question is what sorts of concessions will networks grant for a share of those dollars.

Clearly, digital elements will help drive some transactions, or at least, that's what some buyers expect.

Most TV networks' digital platforms will come into play as vital bargaining chips in this buyer's market. More than a few buyers and planners brought up digital as one area networks will want to accommodate advertisers if they plan to hold firm on the pricing of their traditional inventory.

Broadcast and cable networks will need to make their deals more attractive through "deeper integrations and digital extensions," said Antony Young, CEO of Optimedia U.S., which developed its own Content Power Ratings currency for measuring the residual influence TV shows can have in online platforms. "This is the first year where online will be a much bigger part of the negotiation," he said.

Steve McClellan is media editor at Adweek. Michael Burgi and Anthony Crupi of Mediaweek contributed to this report.
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