Upfront Epilogue: TV Fans Should Thank Advertisers, Agencies and Networks

If you love television you owe a debt of gratitude to America39s advertisers their media agencies and most of all to the broadcast and cable networks themselves Against all the odds these groups agreed during the past weeks to sustain the multibillion dollar investment that is required to keep the television engine running Forecasters including me believed the fundamental underlying economics of network television would be challenged this year In advance of the annual Upfront season when networks present their Fall schedules and advertisers negotiate costs for an estimated 80 percent of the commercial inventory of the broadcast networks and as much as 60 percent of cable inventory it appeared to be a perfect storm The four leading broadcast networks had lost 10 percent of their 18 to 49 audiences compared to the previous season new Nielsen commercial ratings data provided evidence that actual audiences exposed to commercials were an average four to five percent less for the broadcasters and eight to ten percent less on average for cable networks DVR penetration is growing rapidly and time shifted viewing accompanied by commercial skipping is having an increased impact Advertisers were wary Although less supply often translates into increased demand and therefore higher costs marketers this year appeared to have alternatives Several emerging cable networks have dramatically increased their distribution in the past two to three years due to digital settop expansion giving advertisers more options Cable networks like TNT TBS USA FX AampampE Hallmark Sci Fi and others have introduced more competitive entertainment programming achieving ratings that look more and more like broadcastlevel ratings in key demographics Most importantly advertisers are investing billions on online advertising and several forecasters I wasn39t among this group believed these investments would be at the expense of network television But somehow these bullets all seem to have been successfully dodged through a collaboration of advertisers media agencies and network sales organizations Networks agreed to use commercial ratings but marketers and agencies agreed to use live plus three day viewing data so DVR activity would be incorporated into ratings data Most importantly marketers agreed that the value of network television is unequaled and paying increased costs to sustain the economic model is an acceptable cost of doing business According to network estimates challenged by some agencies overall broadcast costs increased in the seven to nine percent range and cable cost increases averaged three to five percent This represents a stunning turnabout for the industry For the past several years media agency executives have preached the mantra of cost reduction Their raison d39amp234tre has been cost containment and reduction but this year they appear to have reversed field and embraced the value equation of network television convincing their clients to join them For TV fans this is cause for celebration and thanks For several others however it sends a confusing and conflicting message For the past several years the market perception has been that new forms of effectiveness research would become increasingly important Commercial ratings and even new recall studies are at their core quantitative measures of performance rather than measures of sales effectiveness Others have preached the gospel of multimedia platform extensions that provide exposure on network39s websites mobile platforms and videoondemand channels Still others touted the growing importance of integrated marketing campaigns that incorporate advertising with promotion events cause related marketing and other communications techniques While these incremental options had a place in this year39s Upfront they were far less instrumental in the network Upfront decisionmaking process than most observers expected The networks and their agency colleagues can it appears take a collective deep breath and give thanks that America39s marketers still believe network television in its pure and basic form is still a powerful marketing weapon Until next year In the next 12months DVR penetration in multichannel homes cable and satellite will surpass 30 percent News Corp and NBC will launch their new online video service CBS is actively syndicating their content on multiple platforms Joost Veoh Revver and several other video content players will be delivering network content online New products from TiVo Slingbox cable operators satellite providers and others will provide easier access to time shifted viewing Telescoping technology will move toward reality and videoondemand will become far more compelling as content supply increases Commercial ratings data will progress toward secondbysecond rather than minutebyminute average commercial ratings New research suppliers will offer additional data that marketers will be compelled to analyze But we have learned a lesson No matter how compelling the alternatives may be network television remains the medium of choice for the largest national marketers The danger to the industry however is complacency Networks agencies and even marketers cannot scale back their commitment to developing advanced solutions for marketers They cannot scale back their commitments to integrated marketing accountability research or multiplatform extensions They cannot fall into a trap of believing the future has been delayed New economic models are still important Advertisers paid tribute this year to the value and importance of network television They will probably continue to pay tribute in the form of upward pricing adjustments for a few more years This gift to the networks should be returned through an acceleration of networks39 and agencies39 commitment to the development of improved marketing resources tools multiplatform extensions and research that marketers can turn to when the winds of change blow so strong that the perfect storm can no longer be ignored Post your comments and thoughts

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Upfront Epilogue: TV Fans Should Thank Advertisers, Agencies and Networks

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