Upfront Preview: They're Mad as Hell—So Why Do They Keep Taking It?

Cable World,  March 21, 2005  

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As with all cable programming groups, Discovery relies on cross-platform deals, which comprise about 35% of its business. These deals are made year- round.

"We use all of our networks to sell as much inventory as we can to advertisers, so when we construct a deal with P&G, it's not really upfront," says Abruzzese. "We may talk about the price in the upfront, but we're working on the deal now."

Although advertisers and their agencies almost certainly will continue (grudgingly) paying higher broadcast CPMs this year--old habits die hard--they will continue to shift more money into a broader media mix that includes online, direct marketing, gaming and branded entertainment.

More Discovery advertisers are using a total communications planning strategy, Abruzzese says. Swiffer and Home Depot, for example, have cut product integration deals that tie them to shows like TLC's Trading Spaces and Town Haul--deals that take them beyond the 30-second commercial. "We've done research where consumers have said, 'I remember your Home Depot ads and I feel very good about Home Depot in that show,'" Abruzzese says. "That's all the advertiser really wants. It's not the [upfront] commoditization of 'what's the 30-second commercial worth?'"

A Good Start to 2005

At the ANA confab, upfront-avoider DaimlerChrysler will give a case study explaining how it has been shifting money away from TV and offering an alternative to the upfront model that is based on the stock market. This could inspire more advertisers to abandon the high-stakes crapshoot that is network TV--and abandon cable networks as well.

The stakes are high. Advertisers spent an estimated $67 billion on all television last year. Cable networks' ad revenue for 2004 grew almost 12% from 2003, according to Nielsen Monitor-Plus. Despite the knocks, broadcast grew 12.2%. It wasn't top dog of all media spending, however: That crown went to syndicated TV ad sales, which increased 13.7% after several years of slow growth.

CAB president and CEO Sean Cunningham, also among last year's cable NUDG- ers, estimates that cable networks' overall 2004 upfront tally rose 17% from the previous year's marketplace, from $5.3 to about $6.2 billion. But he's reluctant to make predictions.

"The underlying factors that caused that reordering [of cable and broadcast deals] have only been exaggerated from last year's upfront," Cunningham says. "The rating points continue to be up. That said, every marketplace's pacing, timing and order is unique."

Cunningham refers to a CAB analysis showing that ad-supported cable will continue its streak this year of capturing more than 50% of prime-time viewing, adding, "The broadcasters are down so far [this year], so that reordering of investment priorities in last year's upfront was smart for the advertisers and agencies that made that adjustment."

Cunningham also says the momentum of the first-quarter scatter market bodes well for cable. "That's coming after a lot of money was laid down in the upfront marketplace," he says. He offers another sign that attitudes toward cable are evolving: The CAB's EDI (electronic data interchange)--e-business invoicing and tracking software that eliminates paper-thick excuses for not buying cable--recently was pitched to, and approved by, the heads of the top 10 agencies. "[Cable] had sort of a lingering process and stewardship challenge that we wanted to fix in order to see the full fruit of a market correction," he says.