TV Upfronts: Fingers in the Digital Dyke - Charlie Warner

The broadcast and cable TV networks have wrapped up their spring narcissistic extravaganzas that try to seduce TV buyers to invest their ad dollars in programming that will appear next fallThe Upfronts are a buggywhiptechnologylike annual ritual that each year are variously predicted 1 To be the last upfront we39ll ever see 2 to be more over the top next year 3 to have lower CPMs 4 to have higher CPMs 5 to include online media and 6 to feature mud wrestling But when William Goldman wrote about Hollywood that quotno one knows anythingquot he could have been writing about the critics and pundits who write about the TV UpfrontsLogical rational thinking based on current industry trends would clearly indicate that the upfront buying season can39t last much longer because CPMs can39t continue to increase as broadcast and cable TV network audiences continue to decline amp8211 it39s an impossible situation that defies the economic laws of supply and demandFurthermore as digital trading and realtime bidding RTB increases it surely will be just a matter of several years until all broadcast radio and TV and cable TV inventory will be digitally traded It39s logical to believe that advertisers will demand a digital trading model in order to bring the CPMs of TV down to the level of online and mobile CPMs Certainly the digital flood of algorithmic trading is comingBut not so fast the TV networks are successfully keeping a finger in the digital dyke with the unspoken shadowy tacit support of the big agency conglomerates and massive advertisers who all want to keep TV network CPMs and prices highHere how the conspiracy works The TV networks require that the big agency buyers submit their advertisers39 budgets before the upfront season starts The TV networks then allocate how much inventory each advertiser will get and how much they will pay based on last year39s expenditures The agencies want to spend more because their compensation depends in part on how much they spend not necessarily how well they spend it and agencies want to spend as much as they can so they can gain bragging rights quotWPP spends 33 of all network TV dollars so we have more clout than anyonequot eg The huge advertisers like ATT PampampG Ford etc want to keep prices high and the upfront allocations of desirable inventory intact because it blocks out poorer competitors It39s the American Way amp8211 the rich get richer by keeping the poor in their placeSo with these three powerful players in the media advertising cabal serving all of their selfinterests don39t expect the TV networks to pull their fingers out of the dyke and allow their inventory to be traded digitally at an auctioned CPM That would be too democratic too reasonable and too catastrophicWe39ll see how long the networks can keep their fingers in the digital dyke and keep their inventory away from algorithmic trading and RTB But you have to look at how long it took other industries to address disruptive innovations amp8211 storage discs newspapers steel mills auto companies or ask Clayton Christensen even to have an opaque cloudy look at the answerCharlie Warner teaches sales media ethics and innovation in the graduate Media Management Program at The New School and is author of Media Selling 4th Edition From 19982002 he was Vice President of AOL39s Interactive Marketing division Before joining AOL he was the Goldenson Endowed Professor at the Missouri Journalism School and a highly soughtafter media sales and management consultant and trainer Charlie can be contacted at charleshwarnergmailcomRead all Charlieamp8217s MediaBizBloggers commentaries at The Media CurmudgeonCheck us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggerscom management or associated bloggers MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentaries

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TV Upfronts: Fingers in the Digital Dyke - Charlie Warner

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