Multi-Platform Deals Increase Nets' Revenues, But Actual TV Spending Declines
Upfront spending analyses and projections should be recalibrated to reflect broadcasters' successes in optimizing growth opportunities.
Wenda Millard Out at Yahoo! as Display and Search Ad Units are Consolidated
Yahoo! Inc. yesterday announced the company "will combine its Search and Display advertising sales teams in the US, and has appointed David Karnstedt, currently senior vice president of Yahoo's Search sales business, to lead the unified organization as Head of North American Sales," reporting to Greg Coleman, Yahoo's EVP of Global Sales. As part of the
reorganization, Wenda Millard, Yahoo's Chief Sales Officer in the US will be leaving the company effective immediately. Coleman commented, "While Wenda was a big contributor to our success in the past, the industry has shifted and requires a different set of skills to take the business forward. We appreciate her dedication during her years of service and wish her well in the next chapter of her career." Sue Decker, Yahoo! president, added "This is one of
many important steps we're taking to re-invigorate our display business, further build on our industry-leading position in advertising, and drive thought-leadership in the online advertising marketplace."
Multi-Platform Deals Increase Nets' Revenues, But Actual TV Spending Declines
As usual, the network Upfront spin masters were hard at work last week convincing the market that spending is surprisingly robust and overall revenues would be up over last year's $9.08 billion five network total. The difficulty in accurately assessing this year's Upfront on an apples-to-apples basis is the incorporation of multiple assets within many of the agency Upfront deals. In order to push through their respective agendas on commercial ratings and
live-plus DVR viewing, networks and agencies have packaged broadcast, cable and online assets, plus integrated marketing events and initiatives. The challenge this year will be to assess the actual dollars being invested by marketers for broadcast network commercial inventory. While networks will assign revenues in ways that best serve their internal needs, agencies are unlikely to be assigning their spending in the same way.
Andy Donchin, senior network investment executive at media agency Carat. commented "This Upfront is about capacity, not demand." The networks have an estimated ten percent less inventory this year due to 18 to 49 ratings erosion. They are also losing audiences as a result of the new Nielsen commercial ratings, but gaining some of this inventory back due to
agency acceptance of live plus three day DVR viewing. Agencies, as we projected several weeks ago, are accepting average cost-per-thousand (CPM) increases in the mid-single digits, although ABC has been holding out for ten percent, according to selected buyers. However, buyers, even those whose clients tend to be at the bottom of the CPM spectrum, have been able to lock in their buys, suggesting there is less demand than suggested by press reports.
Networks have less inventory available due to erosion and commercial ratings;
they appear somewhat reluctant to sell-out at high levels because they're expecting a robust scatter market;
CPM increases do not fully compensate for ratings erosion.
In no world that I'm aware of does this translate into a growth market. We are retaining our original estimates of four to eight percent declines in total Upfront broadcast network revenues. However, we also believe the networks should be credited for
generating increased revenues for online and other assets, and believe spending analyses and projections should be recalibrated to reflect broadcasters' successes in optimizing growth opportunities. We applaud the spin.
David Lebow
AOL Vet David Lebow Named President of Internet Broadcasting (IBS)
In an exclusive interview with Jack Myers Media Business Report, new Internet Broadcasting Systems CEO David Lebow suggested the company plans to expand the suite of services it offers local television broadcasters, increase its emphasis on national advertising sales to better monetize its average 15 million monthly users, and potentially expand to
additional local media. IB was launched in the mid-1990s to produce and host local TV station websites and creates a national ad marketplace. With original investors Hearst Argyle, Post Newsweek, McGraw Hill and Split Rock Partners, IB has added CNN as an investor and now produces more than 70 station sites, including those of NBC-TV stations, Cox and Meredith. Lebow joins IBS after several years at AOL and a career in local radio.
"Interest in the ad community is high," Lebow believes, "because what advertisers want is relevance, relevance and relevance. There are many national brands, such as GM and Monster, that are national advertisers but their customers are local pools of
people. We offer a national media buy but advertisers can express their message locally. Advertisers want relevant opportunities, environment and performance."
Lebow is also exploring whether IB has "consumer facing" opportunities. "IB provides a service and we leverage the local TV station brand name. The question is how the ad network can best be presented and positioned. How do we support the sales and media
community effort? How we organize around the opportunity is a major point of focus. Is IB always going to be a b-to-b brand or is there a consumer touch point," Lebow asks. "Our strategy in the ad community will ultimately drive our consumer strategy. The Associated Press is a b-to-b business but consumers know AP produces credible content. It's an Intel inside kind of brand. IB does an awesome job serving the market and is a brand that makes other brands better."
Lebow says his first objective is "to understand partner needs and be sure we are fulfilling their objectives in their markets. Secondly, we'll review the advertising market and the needs of our advertising staff. What are our upside revenue opportunities? We have a
gigantic opportunity in mobile and we really need to understand how to tap into search, video, and user generated opportunities. We also want to explore what other forms of local media we might serve."
