Upfront presentations are already underway,
and hopes are high that with a little more stability, the
2010-11 TV upfront market will make 2009’s troubled
upfront seem like just a bad dream. But whether a better
upfront does emerge this year is largely up to the
members of the first annual class of B&C Market Movers:
OMD’s Chris Geraci, Magna’s Elizabeth Herbst-
Brady, GroupM North America’s Rino Scanzoni and
MediaVest USA’s Donna Speciale.
B&C's Business Editor Claire Atkinson talked with this quartet of
industry leaders about what factors really matter in their decision-making
and how they expect the market to shake out. Edited transcripts
of the interviews follow. The 2010 class will also be saluted at a B&C
event on April 6 at the Roosevelt Hotel in New York.
Chris Geraci, Managing Director, National Broadcast Investment, OMDBillings: $4.5 billion
Chris Geraci took charge of all TV buying for OMD in March
2008, when colleague Debbie Richman left to join Lifetime. The
20-year veteran of the agency and its holding company, Omnicom,
now negotiates TV investment decisions for Apple, Mc-
Donald’s and Universal Pictures, among many other clients.
What do you consider when assessing the health of the
upfront marketplace?
CG Obviously, you start with the macro picture and isolate
certain aspects of that. We’re dealing with an economy that,
outside of the stock market and the Dow Jones and other indexes,
is really not that healthy. We’re seeing fairly dismal
consumer confidence and significant
unemployment.
Contrast that with ad demand for
TV; that’s been healthy since last
year’s upfront, and once that negotiating
window closed down, the dollars
began to come into the marketplace
from all categories. Advertiser demand
is something we assess category
by category.
So, your expectation is for a strong
upfront? Will we be in the positive
or negative column?
CG It will be a stronger marketplace
than last year. I don’t know whether it
will be positive or negative; it depends
on who you are and your positioning.
It’s natural that sellers would expect
price increases given the scatter, but
you have to look at scatter and upfront
as being two different animals.
Advertisers are cautious about long-term commitments, even if
they are spending month to month. A strong marketplace doesn’t
translate into strong upfront demand.
How did last year’s upfront change things?
CG There weren’t any fundamental changes, but we got things
built into deals that were reflective of other negotiating points
besides price. We partnered on research and we got things we
hadn’t had in the past. We built in flexibility and cancellation
options. Thankfully, we’ve got a client base that is very healthy
and we didn’t need those provisions.
What role do procurement people play in the upfront process?
CG It’s not different from the marketplace in general. They’re looking for more rigorous quantitative metrics in everything we
do. Most of them understand that it should be advantageous to
do long-term deals and there should be some advantages from
a price standpoint.
They are involved more; we have internal procurement people
here now [at the agency], and they help us look at things in
a different way. It’s a benefit because we have many procurement-
focused individuals on the client side, and that impacts
how our media clients deal. They are our
interface with clients, and they have worked
with me just in terms of ideas and different
approaches to negotiating. They offer a different
perspective and a more quantitativebased
approach.
What can TV executives do to stop TV ad
dollars moving to digital?
CG The death of TV is greatly exaggerated.
I don’t think anybody five years ago would
have thought there would still be this much
money in the marketplace. Look at what’s
happening with retrans. It might benefit TV
to have that different revenue stream; as long
as the TV-based media owners can put on excellent
programming, there will be advertiser
interest in it.
It’s very important to note that the average
consumer has a profoundly better TV viewing
experience than they did even just a few years
ago, with the penetration of better technology
[such as] HD programming. TV watching got
better as other things advanced. Sure, everybody’s
fighting for ratings, but you don’t see
a dramatic loss of TV usage because there’s
more stuff to watch.
The Internet is great, but look at the way
it’s being used to support TV viewership. If
you are a fan of Lost, chances are you enhance
it by reading the blogs about theories
on the show.
It’s really up to the media owners to decide
whether they want to invest in TV or not. It’s
very important to be involved in online, but
I think search is something completely different.
It’s two different ends of the marketing
spectrum. One won’t take the place of
the other.
What did last year’s broadcast network upfront number
finish on, around $8 billion?
CG That number would have been very high for just primetime.
We counted the primetime network [upfront] being down 20%.
What was your most memorable upfront?
CG One year, we jumped all over a show in its first year and
bought so much that the network complained the next year. I
remember that back in the day, when ER came on [NBC] and I
got my hands on so much of it, the network was trying their best
to get us out of it. But when you bet on the right show….
Then there was the year we converted to commercial ratings,
and there was more math involved than there ever should have
been. You had to have a negotiation before you could negotiate.
Elizabeth Herbst-Brady, President, MagnaBillings: $12 billion
Since September 2008, Elizabeth Herbst-Brady has been president
of Magna, a unit of Interpublic Group’s Mediabrands division
that aggregates and analyzes market intelligence
across the media business for the
company’s agencies and clients. She joined
Magna from News Corp.’s Twentieth Television
syndication unit, where she was general
sales manager and senior VP of syndication
ad sales. She was previously senior VP and
director of national broadcast at Starcom’s
Chicago headquarters, and spent almost a decade
at Barry Diller’s Universal Television.
As noted in this interview, Herbst-Brady
changed her approach to this year’s upfront
based on last year’s market.
What are the factors affecting the TV
upfront and the year-round marketplace?
EH-B The one thing everyone gets hyper-focused
on is the next three or four months,
and they forget that we all function in annual
cycles. Clients plan and budget for TV. They
have annual activity. Upfront is a moment,
or several extended moments, around a part
of the overall process; that’s really important
to remember.
One of the first things we try to understand
is what has happened in aggregate in
the upfront and scatter. In terms of the macro
picture, we’ve been able to determine that
industrial production and personal consumption,
from a regression perspective, tie most
closely to the ad economy. As opposed to
lagging and leading, it’s concurrent. As personal
consumption rises, so do advertising
expenditures. Is it perfect? No, but it’s a very
important factor.
Other factors in the economy that would
contribute: The overall emotional state of the
economy; how people are feeling in terms
of spending habits; confi dence; all of that
brings psychology that factors into demand. We do spend a fair
amount of time ascertaining short-term and long-term demand.
The most important factor is demand: what money shows up.
Given that you are looking at those things, what is the
verdict?
EH-B Compared to a year ago, it is better; that’s not a surprise.
As for the TV upfront, it’s too soon to tell. If I sat in a vendor’s
shoes, the scatter market is strong and there’s going to be a
big increase, but that’s not happening. What happened last year
cataclysmically changed how we approach things. We have a
very locked-down and measured approach, one that is really customized
to make sure what we are doing is in the best interests of the client—and they don’t get dragged into a frenzy. Every
client has a specific strategy regardless of what the marketplace
is dictating high and low. If it doesn’t make sense, we’ll walk
away from it. My expectation for the next six months is that it
will be measured and careful; nobody wants
the extreme swings.
Will there be rollbacks?
EH-B We want to make the marketplace simple.
Even the strongest platforms can compromise
pricing in the weakest years. There
are things you can do to create advantage,
but it is too soon to tell. Do I expect big rollbacks?
No, but individual clients will say this
doesn’t work as well for me, [but they will]
reward the media owners that are building
our strategic initiatives.
What do TV folks need to be doing to stop
money from moving to other media such
as paid search or online, or more ROI-oriented
media?
EH-B Growth online is coming from paid
search, and from small to medium-size endemic
advertisers. The traditional suppliers
have been willing to engage in a dialogue
about the impact of their TV schedule. Certainly,
the advent of the TiVo/Quantcast partnership
is helping to create a single-source
sample that looks at TV and online. Is that
the Holy Grail? Too soon to tell.
Some of the TV ad sales folks seem to
believe that losing money to digital outlets
is a real threat. Is it?
EH-B I can’t speak to the public posture;
“threat” isn’t the right word. It’s the first time
I’ve been in the business that I see a willingness
to engage in dialogue about introducing
non-traditional metrics. People have done a
lot of stuff with IAG; there’s TiVo/Quantcast.
I’ve talked to vendors trying to do something
with that data, and we did a lot of agreements
that included some special studies as part of
upfronts. We have more than 12 different research
studies going as part of our upfront. I
would love to know when a spot airs whether
I sold more.
What did the upfront end on last year? Was
it less than $8 billion, as some agencies
suggest?
EH-B It’s important to understand how relative
volume impacts the pricing, whether at
the end of the day, the networks ended up booking more than $8
billion or whether it showed up in July. It was probably less.
Which was your most memorable upfront?
EH-B What I love is that no two upfronts are ever the same. The
clients aren’t the same, and the businesses aren’t the same. That
doesn’t mean you can’t learn. There is an opportunity to do things
more effectively and efficiently; no marketplace is ever the same.
That is the beauty of the business; that’s what allows for change.
Last year, was it exceedingly challenging and difficult? Yes!
But again, I’ve sat on both sides of the fence,
and other upfronts were equally difficult and
strident, and not so fun.
Rino Scanzoni, Chief Investment Officer, GroupM North AmericaBillings: $25.8 billion
Rino Scanzoni is perhaps best known
around town as a “numbers guy.” He is a
consummate dealmaker who enjoys the science
behind the decision-making. Scanzoni
worked hard to coalesce the industry around
a gigantic currency change that shifted the
business off program ratings to trades made
on commercial ratings. He oversees all trading
for GroupM agencies, which include
Maxus, MediaCom, Mediaedge:cia and
Mindshare. Scanzoni joined the company
from MediaVest.
What’s your most memorable upfront?
RS It was probably the 1999-2000 upfront,
when I was still at MediaVest. It was memorable
because one network chose not to do
business with us and then four weeks later
they came back, cap in hand. It think the
statute of limitations may have run out on
this one since it was with ABC [then-head
of sales Marvin Goldsmith].
What was last year’s primetime broadcast
network upfront final figure?
RS It was probably a little under $6.2 billion.
It was down around 18%. The public figure
that comes out in the press, those numbers
generally can’t be relied on. We utilize them
as directional, not as a hard-and-fast, factbased
number. We spend a lot of time doing
our own estimations.
What is the overall health of the TV ad
marketplace?
RS The media marketplace this year has clearly
stabilized from the free fall we experienced
through 2008-2009. We still have, however,
underlying weakness in 2009-2010, and will
experience moderate revenue contraction versus
last year. In television, the broadcast networks
will still see mid-single-digit declines
while cable will see some minimal growth.
We expect this trend to continue into early next year.
The upfront television marketplace is never a good predictor
of overall marketplace potential. For 2009-2010, the upfront
market was down 18%, yet we will see only a total marketplace
contraction of about 4%. The reason it is a poor predictor is because
clients and agencies base their upfront investment on their market experience in the months leading up to it rather than its
total future potential. As with the financial markets, if you buy
on recent historical trends, you are pretty much guaranteed you
will miss the next buying opportunity. I would not be surprised
if you see growth in upfront TV spending for 2010-2011. To
that I say, so what?
What role is procurement playing in the upfront?
RS I can’t answer that except in a general way; it depends on
the company, and different companies operate differently. My
experience is as long as you can lay out the marketplace dynamics
and show them what is going to happen over the next three
months and the next 12 months and make
your case, they’ll look to invest in a way that
will save money. You have to approach them
in a scientific and analytical way to support
the position. Most clients have extended procurement
to cover their positions in media.
It’s beyond buying the raw materials.
Are TV’s return on investment metrics
adequate?
RS We can make a lot of modeling work that
agencies do as well as consulting fi rms. We
can model how different media can deliver
in terms of sales or a visibility index for the
campaign. Problem is, you have to look very
hard at any specific vendor and what that
vendor’s contribution is. You can model TV
for clients that have good sales data, and you
can do regression analysis; you can model
based on different gross ratings point levels
in terms of what that does to sales. The systems
have gotten better, but to sit there and
try to determine what a network or a daypart
or a show [can do] is difficult. You can model
it, and TV has proved to have a very strong
ROI metric.
You can always make the case for your
medium. Most sales executives argue for
their specific company, not the medium,
and that becomes much more emotional than
scientific.
Is the upfront a good indicator of the overall
health of the TV ad economy?
RS I’d love to hear a lot less about the upfront.
There is so much coverage on it; it’s a
very misleading barometer in history. There’s
way too much focus on it.
Many of the commitments are made with
options to cancel; 60% of the money can easily move off the
books very quickly. The upfront never really tells you the health
of the market.
Donna Speciale, President, Investment & Activation and Agency Ops, MediaVest USABillings: $7.8 billion
Donna Speciale is one of the most infl uential ad executives
around, not least because she makes decisions that see billions
of ad dollars allocated across the media business. As Speciale says
in this interview, she likes to “push the marketplace” and try new
things. At MediaVest, Speciale works on behalf of clients such as
Kraft, Procter & Gamble and Coca-Cola. She joined MediaVest
in 2003 to run the agency’s broadcast investment unit.
What are the factors affecting the upfront marketplace this
year? What do you look at to help you figure out the size and
strength of the market?
DS You’re looking at analyzing the different categories: automotive
and pharmaceuticals and all the regulations. Are there fastfood
wars happening? Are telecoms going against each other?
We look at different categories and all the
economic indicators. It’s all related. Obviously,
scatter is an indicator of how the marketplace
is shaping up; we knew scatter was
going to be big. There was too much money
that came out of the [upfront] market; it was
inevitable it would come back. We’d be in a
bad situation if it didn’t.
What are the expectations for this year’s
upfront? Do you think it’s going to be
stronger?
DS It’s still early. The past couple of years,
clients are taking a longer period of time to
determine budgets, and they’re [finalizing]
budgets a lot closer to when they need to release
them. The [agency] analysts’ work will
be a lot more delayed; that’s what changed
last year. Clients did like the opportunity of
determining how to spend their total upfront
budgets a lot later.
Might the market be delayed this year?
DS I don’t think it will be delayed. Everybody
will be going to play the market when
they feel it’s appropriate; last year was too
crazy. There will be more money in the upfront
than last year; how could there not be?
But everybody’s trying to figure out how
much. It won’t go back to where it was two
years ago. If our budgets are up versus last
year, then last year is not a great indicator.
Last year was known as the “Jay Leno”
upfront because of the wide effect the
new show was expected to have on overall
primetime ratings. What programming
change will define this year’s upfront?
DS I do think Oprah’s last year in syndication
will change things. [With] Jay Leno going back to late
night, there’s a little supply change that happens. We’ll have to
watch what happens in late night and in NBC primetime. We
have some new cable networks, with [Discovery and Harpo’s]
OWN in January. Scripps Networks is coming out with another
food channel [The Cooking Channel]. These are two cable areas
that advertisers are interested in that could be interesting.
The other thing I think, based on last year, people are taking
a much more holistic view. When people are talking upfront, they’re not just thinking
linear TV—we’re looking
at the holistic video marketplace,
and broadband
is looked on as part of that
analysis. Then there’s the
local market; we’re looking
at where national and local
are going. The upfront
is the trigger, but we have
to look at the entire landscape
of ad spending in all
categories. Even though
we are buying in linear and
video, we have to look at
what’s happening in print
and with the Apple iPad.
It has an effect on clients’
budgets; it’s not just about
the TV upfront.
What is your most memorable
upfront?
DS They all have a unique characteristic. There was the C3
[commercial ratings] story; then there was the double-digitdecline
story, and the procurement
story. The funny
one I remember is getting
mentored by Jon Mandel
[former MediaCom chief].
We used to sit around the
offi ce and listen to him do
his negotiations. He got so
mad once, he threw a pencil
and it hit someone.
As for memorable deals?
We did the first Viacom
Plus deal with Procter &
Gamble. We did the first
deal with The CW when
we bought a whole time
period for the year and
did some new messaging.
Each year, we try to
do something unique and
push the marketplace and
the industry. Last year,
we did some deals with [media measurement firm] TRA and
Discovery Communications, so we might try to push that a
little bit.
