Media Buying: Negotiating Network Upfront. Buying media the communication plan Client Marketing Objectives Media Objectives & Strategies Media Mix Media.
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Buying media the communication plan
Client Marketing Objectives
Media Objectives & Strategies
Media Mix
Media Plan
Media Investment
• Network TV divided into dayparts– Early Morning– Daytime– Evening News– Primetime– Late Night– Kids– Sports
• All national commercial time is sold in packages by daypart
Network TV: Dayparts
Most Efficient
Least Efficient
Two Ways To Buy: Long-Term & Short-Term
UPFRONT (Q4 through Q3)• Long-term purchase, 3 to 4
quarters at a time
• Negotiated in May/June
• Inventory airs in upcoming broadcast year
• Typically best pricing
• Best program/network availability
• Audience delivery guarantees
• Cancellation options can be negotiated for outer quarters
SCATTER (as needed)• Short-term purchase, typically
done in quarterly increments
• Negotiated anytime prior to air date
• Inventory airs in upcoming weeks/days
• Typically more expensive than the upfront
• Risk of limited program/network availabilities
• No audience delivery guarantees
• Inventory is firm upon order
Frequent complaints
• Negotiations too far in advance– May ’04 purchases of September ’05 inventory
• Inventory purchased isn’t what runs– Program failures; reality programming
• Sellers have an advantage– Can stall, pool all inventory requests to gauge market– Agencies can’t do same thing
• Late nights lead to mistakes– Do you really want your agency spending your $200MM
budget at 2 a.m.?• CPMs and ratings going in opposite directions
Early Morning
Early Morning Share of Viewing
39
41
434444
35
33
36
40
41
30
35
40
45
50
98 99 00 01 02
3-Network
Basic Cable
$5.50
A25-54 CPM
$11.50 A25-54 CPM
Nielsen 2003
Daytime
Daytime Share of Viewing
42
4038
3635
4746
42
3939
30
35
40
45
50
98 99 00 01 02
3-Network
Basic Cable
$5.30 W18-49
CPM
$9.00 W18-49
CPM
Nielsen 2003
Primetime A18-49 CPM Comparison
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
90/91 92/93 94/95 96/97 98/99 00/01 02/03
3-Network
Broad Cable
Pricing Gap Growing
3.6x
2.2x
• Old client habits can be hard to break
Bulk of spending still goes to network
NetworkNetwork$12.1B$12.1B
Prime$9.3B
Late$710MMDay
$895MM
News$430MM
Early Morn$785MM
Cable$5.5B
Syndication$2.3B
03/04 Upfront Reported Spending
A true supply & demand marketplace
(Unlike print, cannot add more supply if demand increases)
• A few scenarios . . .
DemandAdvertiser Budgets
CommodityRating Points
SupplyVendor Avails
Supply Down Demand Up CPM Increases
Supply Up Demand Down CPM Decreases
Supply Up Demand Up CPM Flat-ish
Beating The Market
• No one has perfect knowledge– Agencies do not and cannot talk to each other– Networks not supposed to talk to each other– Everyone tells the side of the story that best suits them
• Good buyers collect as much info as possible– Draw upon all available resources for educated predictions
Supply Demand• Look at historical ratings performance • Review general economy
• Review new programs • Study how advertising typically reacts
• Determine potential winners/losers • Talk to investors about category predictions
• Develop projections for future • Extrapolate internal budgets
• Talk to vendors • Talk to vendors
Beating The Market• Everything is negotiable
– Typically judged on CPM premium vs year ago• And how that compares to results of other agencies
• Accurate knowledge of future supply and demand is important– Called “Reading the Market”– Supply typically does not fluctuate dramatically– Demand sometime does
• Timing is critical in securing best price– If spending up significantly, usually smartest to buy early– If down, we may wait until vendors get nervous
• Diversified scale also a driving force– Not just lots of money, but the right kinds of money
Upfront Timeline: Macro View
Mar Apr May Jun Jul Aug Mar Apr May Jun Jul Aug
Market Review
Final Budgets/
Preliminary BuyingStrategy
Negotiations
Go to “Hold
”
Place Orders
Upfront Process: Micro View
Gather client needs
Analyze supply/demand
Evaluate networks’ schedules, strengths
Form strategies
& plan investments
Submit needs & request
plans
Evaluate & request revisions
Place inventory on hold
Evaluate networks’ schedules, strengths
Form strategies
& plan investments
Evaluate & request revisions
Evaluating networks’ schedules• Overall ratings trends: leaders vs. laggards
• Which series are aging vs. growing? • How many holes must be filled?
Position of strength
Position of weakness
Neutral
Investment Strategies
• Seek out vendors’ “pulse points”:– Cross-daypart help
• FOX weakness– Corporate synergies
• NBC linkages– Weaker vs. stronger players
• Creating winners & losers– Client assets - partnerships
• Packaging, in-store, other real estate
• Determine approximate share of buy for each player– Subject to change throughout negotiation
Submit needs & request plans
• What you submit varies by network• Play your cards carefully
– Specify rating point needs OR total budget—not both!
– Submission to each network should be a FRACTION of total needs
• Give them enough info to do their jobs…but not enough to see the total picture– Knowledge is power
Evaluate plans and revisions
• Compare mix and pricing to year-ago benchmarks– Primetime the most labor-intensive analysis:
• Day of week• % of units/TRPs in movies/newsmagazines/reality• % in best, worst shows on each network• Quarterly presence in each show
– Avoid having all of best units in summer– Look at sweeps presence: first-run episodes are best
• Competitive counter-programming– Is your only unit in The Simpsons running against the Super Bowl?
• % new shows vs. returning shows– 70% failure rate, on average
You be the buyer: The Friday Night Dilemma
Show A:• Genre action-comedy• Proven male lead
– Cult following• Generous production
budget• All-family fun; likely male
skew• 7pm airtime (Central)
Show B:• Genre action-drama• Unknown talent in front of &
behind the camera• Reasonable production
budget• Adult, conspiracy-driven
plot; likely male skew• 8pm airtime (Central)
Which would you buy?
What I did
• The client: McDonald’s• The network: Fox• The year: 1992• Chose to heavy-up in show A, based on all-
family appeal and proven male lead– Split units roughly 70/30 between the two, hedging
bets in case show B proved the winner
Example #2
Show X• Sitcom• Concept derived from show
already proven successful• Thursday night time slot on
NBC• Six attractive NY singles
– No “name” talent in front of the camera
Show Y• Sitcom• Concept derived from show
already proven successful• Thursday night time slot on
NBC• Six attractive NY singles
– No “name” talent in front of the camera
Which would you buy?
Our overall goal: Invest the client’s dollars wisely
• Similar to a financial advisor• Identify opportunities
– Undervalued properties– “The next big thing”
• Manage risk• Maximize ROI• Build for the future
Getting what you need: Negotiation as life skill
• “You catch more flies with honey…”• Respect person on the other side of the desk• Discussions based on fact rather than emotion…
– …but recognizing the value of emotional “hot buttons”
• Always recognize the value of long-term relationships over short-term “victories”
Remember during a buyers’ market…that it will eventually be a sellers’ market!
Once you’re done…be ready to revise
• Approved plans go to “hold” pending client approval• Recommended purchases are presented to client
– Subject to input, revision
• Approved buys are then ordered– But still subject to cancellation options for quarters 1-3
(two to four quarters out from buy)– Allows client ongoing budget flexibility
• Additional needs can be purchased in short-term market - try to take advantage of opportunities
Serious Challenges
• Personal Video Recorders (PVRs)• Video on demand• Shifting of power to consumers• Lowest-common-denominator programming• My own viewing habits
The PVR• Personal Video Recorders (TiVo, RePlay) allow impressive
consumer control over TV viewing– Live pausing– Show title/performer searching– Commercial zapping
• Up to 77% of viewers zapped commercials during replay
• Networks’ once closely monitored schedules could soon become a thing of the past - Counter-programming?– Retrieve programs you want and view them when you want
• Now can do so easily at home with TiVo or Replay• Soon will be able to do so remotely on the internet
– Does not bode well for the “Suddenly Susan”s of the world• Protected time slots no longer relevant
The PVR
• PVR and similar technology will have a massive effect on how planners and buyers behave– Penetration currently very small
• But growing quickly– Solutions to combat this increased control
• Content integration• Program sponsorship• Vignettes• Video-on-demand (VOD) testing• Tickers• Interactive commercial creative
Interactive TV: Consumers in control
• No more couch potatoes– Idea that television is a passive medium is finally shifting
• Superbowl now fully interactive experience• ABC’s version of Who Wants to Be A Millionaire and its Internet
companion site early example• Viewers determined which contestant on CBS’ Big Brother walked out
with $500,000• Game Show Network leading pack in development• American Idol still dominating the ratings
– TV holds power to motivate viewers to crave more information - tremendous latent power
• Just the ability to put a website address on an advertiser’s television creative has resulted in immediate sales growth for some categories previously thought stagnant
Is the upfront still relevant?
• Entire network programming model is threatened– Syndication back-end disappearing as reality thrives– More difficult to launch new shows as time-shifting increases
• Year-round programming cycle increases uncertainty• …But consumers still connect passionately with their favorite
programs– Need to be smarter about tapping into that passion– Passionate followings aren’t just in primetime…or even exclusive
to TV - ex. Gawker Media Group• “Old-school” upfront less relevant, but still serves purpose of
mapping availabilities and market needs– Will converge with other media (e.g. online) in the near future
The bottom line
Upfront needs to evolve along with the industry– Take steps now to align buying for the future
• Discussions need to focus on the real issues– Arbitrary rules of engagement can and will be subverted by
cleaver buyers and sellers
• Ongoing client education is a must– Buyers are the expert advisors…but it’s their money
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