No More Auto-Pilot Increase... Maybe?

Michael Bologna, Group M's emerging communications director, is one frustrated dude when the subject is Upfront TV activity. At last week's VideoNuze Online Video Advertising Summit here in New York, Bologna became the latest in a parade of people with something critical to say in public this year. The subject of this public discourse: the annual ritual of giving TV networks more sponsor dollars in advance of next season than the year before, regardless of their ratings or program quality.

"TV is the only scam around," Bologna declared in front of VideoNuze's attendees. "Ratings go down, prices go up."

With the exception of the financial crisis a few years ago, advertisers and their agencies appeared to lock into TV network Upfront rate hikes season after season, rewarding a channel's performance no matter how wonderful or awful it was. Nobody in the ad or TV world spoke a discouraging word about the hikes, and when journalists or commentators raised the subject in public on occasion, nobody in the ad or TV world offered a rationale behind the automatic increases. That’s a stark contrast to the stock market, where a company's stock price rises or falls based on how well or badly the company performs.

But things may be starting to change. People are finally igniting a long-overdue public hearing on Upfront price decisions. First we had Mel Berning, A&E's ad sales chief, labeling the idea of rewarding under- or badly-performing channels a "failure tax" during his venture's big-top event in early May at Lincoln Center. Then came his counterparts at Univision and Telemundo two weeks later with "why pay more for less" pitches at their respective mid-May ceremonies. Now comes Bologna making his "scam" case.

You can question what provokes individuals like Berning or Bologna. What you can't question is that this issue has exploded into the open, and maybe, just maybe, the ad community is willing to stop playing Upfront biz as usual. The competition for TV audiences is getting tighter as more networks develop more original programming than ever before, more networks enter the scripted TV arena, and smart TVs give viewers a new way to watch the Internet – not just Internet-streamed videos – plus original interactive applications. More Web destinations, such as Netflix and Vevo, acknowledge that people are catching their work on the TV set, instead of the PC.

Is the ad world ready to tell network X, Y or Z: "Your ratings and shows don't cut it. You get less money upfront, not more. We'll reverse our attitude when you reverse your performance." If Bologna had his way, you bet.

"It's still the advertisers' money," he answered when I asked the question at VideoNuze. "You have to be respectful to their budgets and their wishes. Part of the problem is culture, and part is advertisers still contented with the status quo."

However, almost a month after the end of Upfront event season, it appears as if advertisers and agencies are not willing to demand cutbacks, but they're also not willing to increase. Going into this week, The CW wrapped its Upfront sales with the same dollar result as last spring (about $400 million) and CBS, the top-ranked broadcast network, may end up the same way.

There's a lot more Upfront biz to get through. Unlike last year or previous years, however, an automatic hike for all is not in the cards – and that's progress.

Until the next time, stay well and stay tuned!

Simon Applebaum is producer/host of Tomorrow Will Be Televised, the radio program all about TV. Tomorrow runs live Mondays and Fridays at 3 p.m. Eastern time, noon Pacific Time onwww.blogtalkradio.com, with replays available atwww.blogtalkradio.com/simonapple04. A weekly TV series edition will soon premiere on the new UBC-TV network.

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