Advertisers Turn to ABC
In Talks Over Next Season
By BRIAN STEINBERG
Staff Reporter of THE WALL STREET JOURNAL
May 23, 2005
Walt Disney's ABC is attracting early notice at the start of the annual "upfront" ad-sales season, according to media-buying executives. One media buyer familiar with the situation says the network has even done some business already.
The news might surprise those who predicted Madison Avenue would hold out for a while before beginning drawn-out negotiations for ad time on broadcast television's coming prime-time schedules. Media buyers say advertisers are attracted to ABC despite the fact that it is asking for some of the higher percentage increases in the cost of reaching 1,000 viewers -- a standard measure in these sorts of negotiations -- in this year's market. Because the TV season now wrapping up represented a rebound for ABC from several years of low ratings, its ad time still doesn't cost as much as that on General Electric's NBC or Viacom's CBS, buyers say. ABC declined to comment.
The Walt Disney unit has unique momentum going into this year's marketplace, thanks to hits such as "Lost," "Desperate Housewives" and "Grey's Anatomy," media buyers say. But ABC's ability to attract advertisers early doesn't mean Madison Avenue isn't talking to its rivals. CBS also is in discussions with advertisers, for example.
Further, ABC's early activity doesn't mean the upfront will be robust overall. Many buyers continue to see this year's market as flat, with potential for a slight spike either down or up from the roughly $9.5 billion in upfront commitments that the six major broadcast networks secured last year.
The networks last week feted advertisers and media buyers at their annual upfront lollapaloozas, four days of celebrity-studded program presentations and lavish parties -- all to help secure those big-dollar commitments for the coming prime-time shows. But analysts and buyers point out that the nation's biggest ad spenders are increasingly enchanted with less-expensive, more-targeted media platforms, such as the Internet.
Advertisers also are experimenting more with promotional methods such as product placement and branded entertainment, as well as rising platforms such as digital cable and satellite radio.
Trying to maintain their edge against the growing competition, the TV networks tout the fact that they still command unrivaled audience sizes -- an advertiser looking to reach 10 million people at once has few other options. But acknowledging advertisers' desire for better measurement of how those big audiences respond to marketing messages, the networks gussied themselves up before launching last week's dog-and-pony shows.
CBS, NBC and News Corp.'s Fox, for example, have partnered with a firm that studies viewer attentiveness to programs, ads and product placements. Fox separately is offering the ability to tweak ads digitally. One could argue that programs such as "24" on Fox and "Lost" on ABC show the networks fighting back against edgier content available on cable.
Despite such efforts, advertisers see little distinctiveness in the marketplace, says one media buyer. "Going into this upfront, for virtually all clients, there are no must-buys," says Tim Spengler, executive vice president and director of national broadcast at Interpublic Group's Initiative, referring to the four leading networks. Nor does he see much change on the horizon: "The ratings race 12 months from now will be similar to today."
Whatever the upfront commitments end up totaling, the money is merely promised, not paid in advance. Advertisers still can shift dollars if programs don't work out, for example, and networks might have to give up ad time to clients if programs don't meet ratings guarantees. Michael Nathanson, a media and advertising analyst with Sanford C. Bernstein, likened the system in a recent research note to "making dinner reservations." Much about the process is shrouded in fog that clears only at the end of a network's fiscal year. So, make note of the eventual figures whispered by networks bragging of upfront success -- but wait for their parent companies' financial statements for a fuller picture.
Write to Brian Steinberg at brian.steinberg@wsj.com
In Talks Over Next Season
By BRIAN STEINBERG
Staff Reporter of THE WALL STREET JOURNAL
May 23, 2005
Walt Disney's ABC is attracting early notice at the start of the annual "upfront" ad-sales season, according to media-buying executives. One media buyer familiar with the situation says the network has even done some business already.
The news might surprise those who predicted Madison Avenue would hold out for a while before beginning drawn-out negotiations for ad time on broadcast television's coming prime-time schedules. Media buyers say advertisers are attracted to ABC despite the fact that it is asking for some of the higher percentage increases in the cost of reaching 1,000 viewers -- a standard measure in these sorts of negotiations -- in this year's market. Because the TV season now wrapping up represented a rebound for ABC from several years of low ratings, its ad time still doesn't cost as much as that on General Electric's NBC or Viacom's CBS, buyers say. ABC declined to comment.
The Walt Disney unit has unique momentum going into this year's marketplace, thanks to hits such as "Lost," "Desperate Housewives" and "Grey's Anatomy," media buyers say. But ABC's ability to attract advertisers early doesn't mean Madison Avenue isn't talking to its rivals. CBS also is in discussions with advertisers, for example.
Further, ABC's early activity doesn't mean the upfront will be robust overall. Many buyers continue to see this year's market as flat, with potential for a slight spike either down or up from the roughly $9.5 billion in upfront commitments that the six major broadcast networks secured last year.
The networks last week feted advertisers and media buyers at their annual upfront lollapaloozas, four days of celebrity-studded program presentations and lavish parties -- all to help secure those big-dollar commitments for the coming prime-time shows. But analysts and buyers point out that the nation's biggest ad spenders are increasingly enchanted with less-expensive, more-targeted media platforms, such as the Internet.
Advertisers also are experimenting more with promotional methods such as product placement and branded entertainment, as well as rising platforms such as digital cable and satellite radio.
Trying to maintain their edge against the growing competition, the TV networks tout the fact that they still command unrivaled audience sizes -- an advertiser looking to reach 10 million people at once has few other options. But acknowledging advertisers' desire for better measurement of how those big audiences respond to marketing messages, the networks gussied themselves up before launching last week's dog-and-pony shows.
CBS, NBC and News Corp.'s Fox, for example, have partnered with a firm that studies viewer attentiveness to programs, ads and product placements. Fox separately is offering the ability to tweak ads digitally. One could argue that programs such as "24" on Fox and "Lost" on ABC show the networks fighting back against edgier content available on cable.
Despite such efforts, advertisers see little distinctiveness in the marketplace, says one media buyer. "Going into this upfront, for virtually all clients, there are no must-buys," says Tim Spengler, executive vice president and director of national broadcast at Interpublic Group's Initiative, referring to the four leading networks. Nor does he see much change on the horizon: "The ratings race 12 months from now will be similar to today."
Whatever the upfront commitments end up totaling, the money is merely promised, not paid in advance. Advertisers still can shift dollars if programs don't work out, for example, and networks might have to give up ad time to clients if programs don't meet ratings guarantees. Michael Nathanson, a media and advertising analyst with Sanford C. Bernstein, likened the system in a recent research note to "making dinner reservations." Much about the process is shrouded in fog that clears only at the end of a network's fiscal year. So, make note of the eventual figures whispered by networks bragging of upfront success -- but wait for their parent companies' financial statements for a fuller picture.
Write to Brian Steinberg at brian.steinberg@wsj.com