Last year’s upfront market broke in early June, so TV networks aren’t concerned yet as they watch ad buyers continue to kick the tires. But some industry execs and observers warn that this year’s sales process could drag out longer than usual for a variety of reasons — including an astonishing, and unexpected, recent spate of advertiser agency reviews.
The volume of reviews is “unprecedented,” Pivotal Research Group’s Brian Wieser says, as companies question whether they’ve been shortchanged in the often opaque dealmaking process. Over the last eight weeks, accounts worth a total of $13 billion a year in spending have come under review. They include blue chip names such as Procter & Gamble, General Mills, Fox, L’Oreal USA, Johnson & Johnson, Coca-Cola, Citibank, Sony, and Volkswagen.
It may be too late for many of them to change their upfront buying arrangements. If they switch agencies, then they could end up being represented by people who “don’t know the process, don’t know the brands, and don’t know the history,” says one ad exec who still anticipates that the reviews will slow the process.
But agencies dealing with TV networks might “negotiate extra aggressively to show that they’re being good stewards of their money,” Wieser says. Will that drag out the sales season? Hard to say: “It was going to be slow anyway.”
Advertisers have a lot to ponder this year as networks, in an effort to keep dollars from moving to digital platforms, offered new ways to buy spots, as well as gobs of data to help them target viewers on criteria beyond age and sex. Decision makers also must assess the growing number of original programs popping up across broadcast and cable TV, as well as digital platforms.
“It’s far more complicated than it was 10 years ago,” says Horizon Media’s Brad Adgate. As a result, “you may start to see some deals in dribs and drabs. But [sales] will probably stretch out into the summer.”
That seems to jibe with Discovery CEO David Zaslav’s observation this week that demand for ads in cable “will be less than it was 2-or-3 years ago” and “probably similar to last year: Pretty good, but not great.”
Still, some buyers may be motivated to move quickly. Wireless services are engaged in a price war to gain market share. Quick service and family restaurants including KFC want to refresh their images. Auto makers including Nissan, Mazda and Chrysler have new models to promote. And movie studios have a lot at stake with their upcoming barrage of big-budget sequels.
And if demand for TV ads is anemic, then a major network owner may try to preempt rivals by dropping its price. “Mark my words,” one exec tells me. “Someone is going to make a big play for [market] share.”