TV ad sales find plenty of new outlets
on USA TODAY
by Laura Petrecca, March, 9th 2006
NEW YORK — The days when a TV show could be just a TV show may be history.
For the upcoming fall season, NBC Universal TV head Jeff Zucker has mandated that all new programs have an element to involve fans — through cellphones, computers or iPods.
The edict is sure to be felt by producers, but it also will have a major impact on TV's annual ad sales market — the so-called upfront period when networks sell ad time in advance for the fall season.
This year's broadcast network upfront period kicks off next week. With the bulked-up digital offerings from NBC and other networks, what was once a time of simply buying and selling 30-second commercials is morphing into a multimedia market involving everything from Web games to video downloads.
"There are more ingredients and components than ever before," says Brad Adgate, research director at ad-buying firm Horizon Media. "If I had to pick one word to sum up what this upfront is going to be, it's 'confusion.' "
There is one thing about which there is no confusion, however: No broadcaster wants to leave on the table their share of the extra revenue — $270 million this year as estimated by the trade magazine Television Week— that will come from ads on non-traditional platforms packaged into upfront deals.
To hedge their bets — and meet marketers' demands — networks will push an array of digital options. "There's a bit of a tipping point in the sense that advertisers want to experiment," says Randy Falco, NBC Universal Television Group president. "They want to reach consumers on as many platforms as possible."
The non-traditional add-ons will add just a sliver to the $9 billion networks are expected to reap in upfront TV ad sales, but they are the growth area in a market in which revenue increases from 30-second ads alone are not expected to be strong.
For the 2006-07 TV season, networks are seeking commercial price increases of 3% to 5% over last year. Yet Merrill Lynch analyst Lauren Rich Fine predicts that upfront sales will be "relatively tepid as dollars shift to online."
CBS will offer spots on its new ad-supported Internet TV site, Innertube, which will rerun TV shows as well as original content, as part of the network's upfront deals. "The idea here is to grow our revenue streams," says Jo Ann Ross, president of network TV sales.
While Disney CEO Bob Iger didn't give specifics of ABC's digital selling strategy, he said on a Tuesday earnings conference call that "there will be more deals cut in the upfront than in past years that do factor in new platforms."
ABC is now testing Internet streaming of four prime-time shows. Those shows, including Lost and Desperate Housewives, are ad-supported and free to viewers. The test is to wrap up at the end of June, yet Iger said, "it's safe to assume" that a similar model will continue.
Fox will offer TV ads bundled with ads on its Web assets, such as social site MySpace.com.
"This is a watershed year in that the major networks are approaching the upfront with a full portfolio of their assets," says Mike Rosen, chief investment officer at GM Planworks, the media planner and buyer for General Motors.
Rosen expects the new options will slow this year's dealing. "It'll take more time and a greater amount of analysis and creativity," he says.
Adgate predicts that the haggling, which sometimes has taken only a couple weeks, "won't be done by Memorial Day." Half joking, he adds that ad and network executives might even want to postpone vacation plans until fall.
by Laura Petrecca, March, 9th 2006
NEW YORK — The days when a TV show could be just a TV show may be history.
For the upcoming fall season, NBC Universal TV head Jeff Zucker has mandated that all new programs have an element to involve fans — through cellphones, computers or iPods.
The edict is sure to be felt by producers, but it also will have a major impact on TV's annual ad sales market — the so-called upfront period when networks sell ad time in advance for the fall season.
This year's broadcast network upfront period kicks off next week. With the bulked-up digital offerings from NBC and other networks, what was once a time of simply buying and selling 30-second commercials is morphing into a multimedia market involving everything from Web games to video downloads.
"There are more ingredients and components than ever before," says Brad Adgate, research director at ad-buying firm Horizon Media. "If I had to pick one word to sum up what this upfront is going to be, it's 'confusion.' "
There is one thing about which there is no confusion, however: No broadcaster wants to leave on the table their share of the extra revenue — $270 million this year as estimated by the trade magazine Television Week— that will come from ads on non-traditional platforms packaged into upfront deals.
To hedge their bets — and meet marketers' demands — networks will push an array of digital options. "There's a bit of a tipping point in the sense that advertisers want to experiment," says Randy Falco, NBC Universal Television Group president. "They want to reach consumers on as many platforms as possible."
The non-traditional add-ons will add just a sliver to the $9 billion networks are expected to reap in upfront TV ad sales, but they are the growth area in a market in which revenue increases from 30-second ads alone are not expected to be strong.
For the 2006-07 TV season, networks are seeking commercial price increases of 3% to 5% over last year. Yet Merrill Lynch analyst Lauren Rich Fine predicts that upfront sales will be "relatively tepid as dollars shift to online."
CBS will offer spots on its new ad-supported Internet TV site, Innertube, which will rerun TV shows as well as original content, as part of the network's upfront deals. "The idea here is to grow our revenue streams," says Jo Ann Ross, president of network TV sales.
While Disney CEO Bob Iger didn't give specifics of ABC's digital selling strategy, he said on a Tuesday earnings conference call that "there will be more deals cut in the upfront than in past years that do factor in new platforms."
ABC is now testing Internet streaming of four prime-time shows. Those shows, including Lost and Desperate Housewives, are ad-supported and free to viewers. The test is to wrap up at the end of June, yet Iger said, "it's safe to assume" that a similar model will continue.
Fox will offer TV ads bundled with ads on its Web assets, such as social site MySpace.com.
"This is a watershed year in that the major networks are approaching the upfront with a full portfolio of their assets," says Mike Rosen, chief investment officer at GM Planworks, the media planner and buyer for General Motors.
Rosen expects the new options will slow this year's dealing. "It'll take more time and a greater amount of analysis and creativity," he says.
Adgate predicts that the haggling, which sometimes has taken only a couple weeks, "won't be done by Memorial Day." Half joking, he adds that ad and network executives might even want to postpone vacation plans until fall.
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