Tag Archives: television upfront market

Is Your Marketing An Investment Or A Cost?

Never underestimate the importance of goal setting and strategy in media. While smart media buying will save you money, smart media strategy will make you money. Without a well thought out media plan you are not getting the most from your budget because you have not determined what you should buy and what you should not. While what you buy may be priced well relative to other options, buying the wrong media is wasteful no matter what the price is. And all too often advertisers and their agencies let buying lead the media process or are missing the connection between the plan strategy and the buy.

Would you use an investment strategy of buying only stocks that are less than $10 per share? And would you use the broker who charges the least per transaction because all he has to do is tell you how much of a given stock is available when you are ready to buy? Or does this sound crazy to you? It is crazy. But what’s crazier is that some companies handle their largest investment, advertising media, in this manner.

This approach is designed to limit your costs, but what you may not know is it also limits your return. Successful media buying, much like having success in the stock market, depends on good research and good timing because the basis of both is supply and demand. The biggest difference is that media buying is more negotiable than the stock market, an extra level of complexity that ultimately determines how much you will pay for your ad time/space.

And negotiating is something large media buying agencies on the whole don’t do as well as their smaller sized competitors. “How can this be?” you ask. “My agency buys gazillions of dollars of ad time, they have to get better prices than the agencies who buy less. It’s simple math. You buy more you get a better price.” Remember Lucy and Ethel in the chocolate factory in that classic “I Love Lucy” episode? That is what being a media buyer in a mega-media agency is like. You don’t have time to “wrap” the schedule properly because you have three more buys to get on the air that day.

Negotiating is about give and take, a certain back and forth. If you’re using one of these big guys chances are you’re not getting the best price because the buyer cares more about getting four buys on the air, and less about buying the right inventory. It’s easier for them to only buy the lowest priced stuff because they don’t have to worry about value. But you should because your media buy is your investment in your brand like your stock portfolio is your investment in your retirement, not an expense on your P&L.

Smart media planning let’s you know which media does and does not make sense for your efforts. It helps tell you which media to stay away from. Buying the wrong media because it’s cheap is as wasteful as buying premium priced media that isn’t right for you. Neither one will produce results.

An approach that recognizes the importance of strategy means targeting the right people at the right time, yielding a smarter use of your marketing resources. Make it easier for a buyer to buy effectively because they know the difference between price and value.

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Questionable Priorities

Yesterday it was announced that Group M is cutting deals with TV vendors to use C7 ratings instead of C3. For the uninitiated, this refers to Nielsen ratings guarantees for commercial ratings that includes live viewing and played back within seven days (C7) or three days (C3) from DVRs.

Back in 2007 when C3 ratings were first served up Group M quickly forced this new measure into their upfront deals before the industry was ready. There wasn’t much enthusiasm from other agencies at the time and most researchers felt it was premature but Group M’s Rino Scanzoni plowed ahead and C3 became the new currency. I think part of the rationale was that in most cases C3 ratings were fairly similar to Live program (not commercial) ratings—which were the norm to that point. Making the shift from Live to C3 meant no real change in economics for the vendors and an easier transition for the agency. I remember when peoplemeters were introduced to replace the old diary method. Many TV programs’ ratings took nosedives due to passive measurement. One of the challenges for agencies then was year-to-year comparison of different methodologies AND explaining to their clients why the ‘old’ numbers were so far off from reality, thus questioning the recommendations made by the agency. By using a measure (C3) that was similar, by happenstance, to the old measurement (Live) in 2007 the agencies avoided this controversy. Could that have been the reason C3 was forced on the industry?

Now with Group M pushing for C7 I am questioning why and for the benefit of whom? Obviously TV vendors are the biggest beneficiaries because they can monetize four more days of commercial playback. But why is an agency pushing a methodology that could harm their clients financially? Whose priorities are they concerning themselves with? Certainly not a client with time sensitive campaigns. What value is there in an ad promoting a sale that is over within the 7 day window? Of course that was the case—but lesser so—with 3 day playback.

Group M has a self-serving interest in TV ratings being high. It validates the largest part of their business model. It perpetuates their existence, as it does for all mega-media agencies with deeply entrenched TV buying units. But in doing this they may be in conflict with their client’s interests.

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Can I Be Upfront With You?

This week is the annual parade of network TV presentations and parties where the networks pre-screen their September TV schedules for the marketing and advertising community. As important as what their upcoming content may be it also signifies the beginning of one of the oddest behaviors from otherwise intelligent people; investing billions of dollars in schedules before marketing plans are developed.

Whose idea was this anyway? It’s no secret that this process favors the sellers more than the buyers for a number of reasons.

1)   Let’s start with the macro-economic look; creating demand for a diminishing supply of “goods” only leads to pricing increases. Think about this, who else can take a diminishing commodity—in this case TV GRP’s—and actually drive up the pricing? If TV rating points are decreasing why are CPM’s increasing? Because marketers are addicted to TV. Because many brand managers are evaluated on how well the brand does under their tenure vs. the prior period year ago. If a brand purchased 75 TV GRP’s same week last year they better have a good reason to not buy 75 GRP’s this year. So assuming they needed 25 units last year to achieve 75 GRP’s they need to buy more units this year. Even one more unit creates more demand because everyone needs to buy more units—and there is no incentive for the networks to add more commercial units. More demand for a diminishing supply means unit price increases.

2)   Agencies don’t negotiate pricing of units, they negotiate price increases. Ask any TV buyer what their thoughts are for the upcoming market and they will talk about how much of an increase there will be. What kind of market is framed from the beginning this way? One that is designed to favor the seller.

3)   Sellers walk away from this process with a certain amount of guaranteed sold inventory, even if every marketer exercises their options more than half their inventory for the year is committed to. Why does this hurt marketers? Because they cannot allocate resources to other marketing channels. Should a brand’s budget be cut how committed is the budget to radio? To digital? To print? To OOH? These media are the ones to get cut when budgets are reduced because the sellers don’t have a marketplace working to their advantage.

4)   It breeds mediocrity in programming and risk taking by marketers. Aside from a few great shows what incentive does a TV network have to create 100% truly groundbreaking programming? They are better off feeding the status quo. Marketers are forced to decide between promising mediocre, estimable results than pushing for innovation.

Why am I bothering. Nothing will change. Marketers will get caught up in the frenzy and this year’s upfront will take in over $9 billion dollars.

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