ABC-TV Introduces New Advertising Value Index. Plus Our Annual Upfront Economic Forecast. JackMyers Think Tank

As radically different as this year's Upfront pre-season may be, and as permanently altered as the TV landscape is, we can anticipate a surprisingly normal and traditional Upfront buying and selling season as industry professionals who have worked together for years settle into the realities of conducting their business.

At today's scaled-back ABC-TV Upfront presentation, the network will announce ten new comedies and nine dramas for the Fall season. ABC Sales and Marketing president Mike Shaw will assure advertisers that commercials scheduled in specific genres of programming will air in like programs if the original series are cancelled or moved. However, advertiser and agency executives attending the presentation will not see pilots or clips, as they have in the past, nor will they be wined and dined following. Instead, The CW has taken over the tent outside Lincoln Center originally reserved for the traditional ABC party and will announce their programming plans, moving from their original Tuesday morning presentation at Madison Square Garden.

Tomorrow, CBS-TV will unveil 13 pilots, the only broadcast network other than Univision to deliver actual content at their Upfront presentation. But CBS has also cancelled its legendary annual shrimp-fest at Tavern on the Green. Yesterday, NBC hosted advertisers at 30 Rock for a "walk-through" Experience touting all the company's assets, followed by a traditional party at theRockCenter skating rink featuring more than 50 of the network's leading stars. Fox-TV will present only program concepts at its Thursday Upfront followed by its traditional major industry party. "We thought it was appropriate to thank the industry for its support," commented network sales chief Jon Nesvig at a recent industry event.

Both Turner Broadcasting and ESPN, along with Univision, have scheduled Upfront presentations this week, with advertising executives more receptive to network alternatives and increasing focus on marketing extensions and cross-platform opportunities. Last week, MTV focused almost exclusively on brand integration models being introduced across all its networks and programs. During the presentation, Stephen Colbert munched on Doritos, a major MTV sponsor, to reinforce the support the network is receiving from talent and producers.

So ubiquitous this year is the focus on cross-platform extensions, event marketing, promotional tie-ins, DVR-busting strategies, cause-related initiatives, and non-traditional opportunities that any network - cable or broadcast - not offering these capabilities will find itself fully commoditized and subjected to intensive cost negotiations. "If you're a content company that has seamlessly created content across platforms, you have a distinct advantage in this marketplace. Advertisers are buying brand connections with consumers, not just eyeball delivery," commented Greg D'Alba, chief revenue and operating officer for CNN.

Conversely, agency executives, who remain obligated to deliver optimum cost efficiencies to their clients, find themselves immersed in year-long ongoing creative and marketing conversations far outside their traditional scope of responsibility.

At today's Upfront event, ABC's Shaw will announce a new research capability that will enable agencies to identify the core metrics they define as most relevant for each individual client, from both syndicated and custom sources, and to then analyze all primetime network programs and develop an "advertising value index."

"Each brand uses multiple marketing and media factors ranging from reach to engagement," Shaw explained to JackMyers Media Business Report. "We're suggesting they can compare ABC programs to all other TV across their self-selected metrics." Shaw identified 20 factors including C-3 Nielsen ratings, primary and secondary demographics, psychographics, percent original programming in a schedule, pod length, high definition, household size and composition, IAG engagement data, and A/B/C/D county composition. The ABC-TV model, he suggested, "represents the evolution of optimizers," by incorporating each advertiser's most relevant media valuation standards on a weighted basis and enabling a program-by-program and even commercial-by-commercial evaluation across the TV landscape. "It's an opportunity for buyers to focus on their clients' key marketing goals," commented Shaw. Several years ago, Turner Broadcasting introduced its Media at the Millennium research, a spot-by-spot advertising optimization model.

ABC will join almost every other broadcast and cable property by committing to close collaboration with agencies and marketers to develop creative ways to integrate brands into programming content and to deliver enhanced commercial engagement. While the TV advertising landscape is clearly changing, the focus this year is dramatically altered. The changes to the Upfront presentations have not been precipitated solely as a result of the Writers Guild of America strike that sidelined program development during the critical pre-Upfront season. The networks have taken this time-out to reassess their focus and priorities, with agencies and marketers willing partners in the realignment.

Inevitably, the next generation of Upfront buying and selling relationships will incorporate network review of advertisers' creative strategies and an analysis of which advertising messages are most complementary to each network's program content, and which are most effective in holding audiences through commercial breaks.

JackMyers Upfront Economic Forecast

In past years, JackMyers Media Business Report has issued specific projections for Upfront spending. Both my forecasts and my post-Upfront analyses have provided insights on market conditions and network-by-network revenue, cost-per-thousand and sell-out performance. My own performance has generally been on-the-money, although last year I believed the market would be considerably softer than it, in fact, turned out to be. (At least this was according to published reports, although annual corporate revenue reports were more in line with my original expectations.).

This year, I am not offering predictions nor will I report after-the-fact on network Upfront revenues. The Upfront is no longer a representative indicator of network performance and the information released by the networks is, at best, questionable. If a network ever actually reports poor performance in the Upfront, then we can be assured it was a disaster.

Most industry leaders appear convinced the Upfront will closely follow last-year's pattern without the delays caused by the conversion to C-3 (live plus 3-day delayed commercial viewing) ratings. This suggests a reasonably quick process that should be completed ahead of the July 4 holiday. The earlier Memorial Day weekend will also contribute to a speedier Upfront process. While agency executives are less than eager to accept another round of CPM increases, the fact is demand should be strong and networks are increasing value through multiple marketing and cross-platform initiatives. While broadcast networks' CPM increases will not fully compensate them for erosion suffered during and after the writers' strike, they should have healthy gains as well as incremental revenues from alternative distribution models.

Because the higher-demand networks can re-allocate their inventory, reducing the share of lower paying categories and increasing the share of revenues from higher paying advertisers, overall per-network CPMs can increase while individual advertisers and agencies can hold the line with minimal real CPM increases. Automotive and pharmaceutical, which are negatively impacted by current market conditions, are traditionally lower-CPM advertisers, and declines in overall category spending will be replaced by higher paying categories. "Advertisers who are constantly looking for efficiencies are the ones who fall out of the medium for cost reasons," explained a senior industry executive. "Through attrition, networks are losing the lower cost advertisers and increasing sales to higher value advertisers. The base of TV advertisers is still growing, so the medium is healthy."

It appears that once again the stronger networks will get stronger and the weaker networks will also do just fine. But media companies that are slow to invest in value-based media and marketing extensions will find themselves forced into a media commodity pool designed to drive costs toward free.