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May.15

2:51 PM ET

Friday, 15 May 2009

TV Ad Sales: What's Up With The Upfront?

Posted By:Julia Boorstin

Topics:Print Media | Television | Technology | Media

Sectors:Media

Companies:Time Warner Inc | General Electric | CBS Corp

The broadcast networks host their annual Upfront ad sales period next week, hoping to nail down buyers for their ad inventory. But the usually festive time could be grim. The networks will, as usual, block off a morning or afternoon to roll out each of their lineups with big presentations at the likes of Carnegie Hall. And they'll still host star-studded cocktail parties. But this year they face the terrible impact of the weak economy.

Ad spending is down across the board and certain categories like autos have fallen off a cliff. The broadcast nets' 30-second spot used to be a panacea for advertisers, but now marketers are moving their dollars from broadcast to cable, which costs less and offers targeting. The networks usually secure commitments for about 85 percent of their ad inventory during the upfronts. But with the economic future hazy, marketers are wary of planning too far in advance. And the networks are hopeful the economy will improve and ad demand will return, so they're likely to hold firm on pricing, willing to hold back some inventory.

Upfront ad commitments are expected to fall between 10 and 20 percent. Last year the networks nailed down $9.23 billion in advertising commitments. This year the expectations are more like $8 billion. CBS [CBS Loading... () ] is going into the week with an advantage - it's the only broadcast network that increased ratings in key categories, including the crucial 18-49 age group. But on the other hand, it's audience is on average relatively old, which could work against it.

NBC [GE Loading... () ] has tried to break free of the constraints of the upfronts, this year hosting an "Infront" to have a dialog with ad buyers about how to construct its schedule. (My blog about NBC's "Infront"). Though NBC already announced its new shows, it couldn't escape the upfronts entirely; it's announcing the lineup of its schedule and hosting a party next week. Last year the network, which like CNBC is part of NBC Universal, a division of GE, hosted the "NBC Experience," an interactive event, followed by a party.

One thing's for sure: the cable networks will continue to gain ground. Last year Turner's TBS and TNT [TWX Loading... () ] hosted a dramatic presentation of their lineup that made it perfectly clear that they're taking on the networks. They're going after their ad dollars and viewers with content that should be as high quality and accessible as anything on the big four. NBC Universal's USA Network is so successful, there are nights it attracts more viewers than the broadcast nets.

Over the past couple years there have been rumbles that the upfront process is an endangered species. After all, the TV season was designed to start in the fall to accommodate ads for the launch of new car models. With auto ads no longer a major factor, to say the least, it seems more outdated than ever. TV series now launch year-round, why shouldn't ad sales be year round? There will still be $8 billion worth of reasons to keep an upfront ad sales week.

But we're definitely moving away from it.

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