1. New Study has good and Bad News for Television Advertising
Industry (9/26/2006) / Michael Bloxham
The good news for the advertising industry is that nearly a
third of television commercial breaks are watched from start
to finish during prime time, but the bad news is half are
watched for 60 seconds or less, says a new study by Ball State
University. top
The results are from "Remotely Interested: Exploring TV
Viewers Advertising-Related Behaviors," a behavioral
study that was unveiled Sept. 27 by Ball State's Center for
Media Design (CMD) research staff in New York at the Forecast
2007 Conference: Media on Internet Speed.
"The debate to define a commercial minute is currently
a major point of discussion for advertisers, media owners
and agencies," said Mike Bloxham, CMD's director of insight
and research. "This study has enabled us to provide insights
to what really happens during an average person's prime-time
viewing such as the percentage of commercial breaks we observed
where attention was compromised through channel-changing,
using another medium like a magazine, talking to someone else
in the room or leaving the room altogether.
"Watching television is not as simple as it seems at face
value," he said. "There are a number of choices
that viewers can make that compound the complexity of 'watching
television.' If advertisers and media owners want to keep
up with these changes, they need to understand complex human
behavior, which will only become more complex as we have more
options available to us on screen."
top
CMD researchers shadowed 49 Muncie and Indianapolis area residents
in their homes as they watched three to four hours of prime-time
television. The average observation was 3.7 hours, resulting
in 179.2 observed viewing hours.
Researchers gathered data via touch-screen devices that allowed
observers to record, in five-second increments, changes in
channel, television content types, use of the electronic programming
guide (EPG) and other behaviors.
The study found:
·The average ad break exposure was 2.2 minutes with 32.7 percent
of the study's ad breaks watched in their entirety...
·Nearly half of the ad breaks were watched for one minute or
less with 15.4 percent of commercial blocks viewed for 31
to 60 seconds before interruption; 12.1 percent lasted 16
to 30 seconds; 11.8 percent were between 6 to 10 seconds;
and 9.1 percent lasted 5 seconds or less
·About 45 percent of advertising breaks were interrupted by
scene-shifting behaviors, including channel changes (50.5
percent of scene shifts), EPG use (31 percent) and leaving
the room (18.5 percent)
"Obviously it's good news for advertisers that nearly
a third of the observed ad breaks were watched from start
to finish," he said. "On the other hand, it is not
so good where viewers are only watching part of a commercial
break. If their attention has been lost in less than a minute,
advertisers need that much more airtime to reach the kind
of numbers they want often enough to stand a chance of getting
their message through." top
More information about the study and other CMD research is
available at www.bsu.edu/cmd/insightresearch
By Marc Ransford, Media Relations Manager
2. MARKETERS LOSE CONFIDENCE
IN TV ADVERTISING
78% Say Effectiveness Is Diminishing; Clutter, DVRs to Blame
/ By Abbey Klaassen / Published: March 22, 2006
top
NEW YORK (AdAge.com) -- Major brand advertisers responsible
for $20 billion in ad spending are losing confidence in the
effectiveness of TV advertising. More than three out of four
advertisers -- 78% to be exact -- said they have less confidence
today in the effectiveness of TV advertising than they did
two years ago, according to a survey released at today's Association
of National Advertisers TV Ad Forum.
More than three out of four advertisers -- 78% to be exact
-- said they have less confidence today in the effectiveness
of TV advertising than they did two years ago.
The study asked 133 national advertisers representing more
than $20 billion in ad dollars about their attitudes toward
TV advertising and how new technologies such as digital video
recorders and video on demand will have on their TV ad budgets.
top
Almost 70% of advertisers believe DVRs and VOD will reduce
or destroy the effectiveness of traditional 30-second commercials.
Instead, they are looking at alternatives such as branded
entertainment within TV programs (61%), TV program sponsorships
(55%), interactive advertising during TV programs (48%), online
video ads (45%) and product placement (44%).
Web, search marketing
Additionally, 80% will spend more of their advertising budgets
on Web advertising and 68% are looking into search engine
marketing. top
Forrester
VP Josh Bernoff addressed the advertisers at the forum, explaining
that Forrester is very confident in pegging current DVR penetration
at 10%. The biggest news, however, is that it is poised for
a rapid growth spurt, thanks to cable and satellite operators'
pushing the set top boxes and reducing the prices. By 2010,
43 million households -- 40% of the U.S. -- will have DVRs.
top
He described agencies and advertisers as "hard-nosed"
and "focused on data" and said that while the advance
of DVRs doesn't spell the end of TV's 30-second spots, it
will incite a change.
Little real change
Yet for all of advertisers' blustering talk about DVRs and
the decreased efficacy of TV, there has been little real change.
Even today, when Mr. Bernoff asked advertisers via an instant
electronic polling system what they believed would be the
most promising video advertising vehicle of the future, 22%
thought it was regular TV, making it the second most popular
choice. Interactive TV was the leader, with 31%, and in third
place with 21% was Internet video. Cable VOD was fourth with
16%.
When instantly polled as to the biggest threat to TV, 48% of
advertisers resoundingly called commercial clutter the top
threat, followed by 17% who feared DVR ad skipping.
Prove viewers watch DVR ads
Other speakers at the forum echoed Mr. Bernoff's thoughts about
the impact of DVRs. Kia Motors Chief Marketing Officer Ian
Beavis, who famously struck network TV from Mitsubishi's media
mix when he was leading marketing at the struggling auto brand,
said he's yet to see proof that viewers watch time-shifted
ads.
"Prove to us they really are watching them and we'll pay
for it," he charged the TV network executives in attendance.
top
Mr. Beavis also defended his decision to pull Mistubishi's
TV advertising spending and blamed the automaker's subsequent
sales problems on the product. He held up the Mazda 5 as an
example of an auto marketer that achieved sales success without
using TV in the media mix.
He urged advertisers to not just talk the talk, but walk the
walk. "Don't get up and bitch and moan and then do the
same thing you've always done," he said. "Do the
right thing to do for that brand at that particular time."
Xxxx
3. Cable Upfront Moving
Slowly (by David Goetzl, Friday, Jun 23,
2006)
THE SLOW-MOVING CABLE UPFRONT HAS at least one major hurdle
to clear before it kicks into high gear: ABC. Until the broadcast
market wraps--and ABC is the principal reason for the hold-up--sources
said that cable is mostly engaged in a waiting game.
top
That's not to say top-tier cable entities aren't making deals--MTV
Networks, Turner, Discovery, and FX all have--but the going
is slow. Some highly-rated networks are said to have completed
20 percent of their business, although a deal with only one
major agency can account for the bulk of that. Middle- and
lower-tier cable networks are said to be barely out of the
starting gate.
Driving much of the early cable sales is the auto category--which
represents a significant portion of business for leading cable
networks, save those in the MTV family.
Both buyers and sellers have tossed about July 4 as a target
to complete the deal-making, but many acknowledge that may
be optimistic. Some say broadcast may not wrap until the holiday
weekend, although that apparently depends on ABC, which is
said to still be only half finished. CBS and Fox are believed
to be close to completion, with NBC having done the majority
of deals, but still with a ways to go.
Nonetheless, until broadcast closes, agencies may have difficulty
turning their full attention to cable.
top
The ebbing cable market mirrors broadcast, with a slower pace
than previous years. In response, Merrill Lynch analyst Jessica
Reif Cohen revised projections for the cable upfront downward
this week from a 5 percent volume gain to 3 percent ($7.31
billion). The market grew 8 percent last year, according to
Cohen.
XXXXX
4. Prognosis For TV's Upfront:
Not Dead, Just Lounging, In Semi-retirement (by Wayne Friedman, Friday, Apr 28, 2006)
IS THE UPFRONT DEAD? SOME would believe it took a fatal
shot this winter and spring with the coming new digital platforms.
But not according to John Muszynski, CEO of Starcom USA, who
spoke at Media magazine's 2006 Outfront Conference yesterday.
He believes there will always be an upfront--it's just that
the upfront will look different. Possibly there'll be more
upfront--perhaps one every day, he says.
top
An upfront will always exist somewhat in its current form,
he says, because they'll always be shows that are in high
demand by marketers--"CSI," "Desperate Housewives,"
"Lost," and "American Idol."
This isn't all good news for networks. Where does this leave
those middle-level performing shows, like CBS' "Out of
Practice" or "How I Met Your Mother," ABC's
"Supernanny," Fox's "Bones"--and just
about any on NBC? In the near future, those shows could be
relegated to whims of scatter matter. Marketers may be in
no rush to buy them.
But here's the rub: Network ad sales chiefs are in the business
of not just selling the top- rated shows, but all those middle-rated
shows as well. That's what brings down a marketer's average
prime-time CPM.
In the future, networks might replace that middle- level component
with some in the digital platform space. Five years from now,
the network upfront may look like this: a $6.5 billion dollar
traditional TV business with an additional $3 billion going
to networks' digital platform coffers.
top
The change is occurring because money will be placed in multimedia
extension projects --digital, branded entertainment, and otherwise--bought
in mid-season, or whenever. These deals take a long time to
negotiate and iron out, says Muszynski.
In addition, the scatter market may be a different advertising
buying vehicle as well--one where marketers may buy those
middle-rated shows closer to air date. For instance, Steve
Farella, president/CEO of Targetcast, said at the Outfront
conference that for the last several scatter markets, you
could have mostly any network show you wanted at, or near,
their upfront pricing.
On the same panel that Farella was speaking, non-TV executives
from Screenvision (in-theater advertising), Alloy.com (a teen
Internet site), National Geographic (magazine) and the Newspaper
National Network, debated the possibilities of being part
of an upfront market. top
All this is to say, don't carve the granite yet for the upfront's
headstone. It's just going into semi-retirement. You'll see
it on a chaise lounge, poolside, on the set of "CSI:
Miami."
Xxxxx
5.Omnicom Bigwig Hasn't
Forgotten Telly and Print /
September 21, 2006
The $40 billion man tells Paul McIntyre they're still the only
way to give brands mass impact.
Work it until the point of sale … in-store and field marketing
count, too, says Michael Birkin.
top
Advertisement
AdvertisementTELEVISION and print media owners have won resounding
support for bigger advertising allocations "for the foreseeable
future" from the vice-chairman of the world's biggest
advertising and marketing services conglomerate, the $US10
billion Omnicom Group.
With more than $US30 billion ($40 billion) of global advertising
buying power in his back pocket, Michael Birkin says TV, newspapers
and magazines will remain the most potent option for major
companies to build their brands because the type of content
needed to generate "mass impact" from the internet
and other digital options is "still not there".
Birkin, who also serves as the group's Asia-Pacific chief executive
operating from Tokyo, signalled a "continuing strengthening"
of Omnicom's global spending in traditional media sectors
on behalf of its blue chip advertising clients.
"It's a situation where I think TV and print are going
to remain for the foreseeable future absolutely key in brand
building and actually serve as the spark from which all sorts
of creative ideas can come that you then push through different
media," he told the Herald during a recent visit.
top
"We still believe for genuine brand building for 90-95
per cent of brands that TV and print offer the best chances
of getting the most eyeballs. It's quite difficult to go straight
into new media without a print or TV campaign."
Omnicom, which is based in New York, owns international ad
agencies such as DDB, TBWA and Clemenger/BBDO (47 per cent),
along with media buyer OMD and hundreds of public relations,
research, direct marketing, design and digital marketing firms
around the world.
And although the booming digital media sector is serving up
new revenues for Omnicom, Birkin says he has as much interest
in "old world" marketing disciplines such as in-store
and field marketing.
"At the end of the day it's not sexy and it's not what
journalists want to write about but there's still massive
growth for our traditional businesses," he says.
top
"There's still an old-fashioned need to make sure we're
helping our clients manage brand building [and also] the performance
of their products and services up to the point of sale. It's
a huge opportunity for us."
Birkin's sobering views on the internet and other digital platforms
follow Omnicom's decision last year to merge its key stand-alone
digital agencies with its big advertising networks.
Organic now resides within the BBDO group and Agency.com is
part of TBWA, while DDB has long supported its Tribal unit.
top
The mergers, Birkin says, were a recognition that digital media
and marketing was a "pervasive requirement and logical"
for ad agencies focused on brand building.
"I know I could be perceived as being a dinosaur in what
I'm saying but other people can judge that. Of course new
media is vital - of course there's much more time being spent
there - but brands are really only emotional bonds between
the brand owner and the consumer. They are pieces of intellectual
property.
"My support for the mediums of TV and print is about the
ability of those mediums to create an emotional bond from
which you can then apply a lot of different messages on a
much more targeted basis with a lot of incentives and different
activity."
Birkin's support for traditional media comes as the marketing
services company confirmed plans yesterday for an Australian
launch of its rapidly expanding international media buying
and planning network, PHD, within 12 months.
"All of our brands are growing very strongly at the moment
in Australia and we are structurally well set," he says.
"I don't see any change to our structures but we are
going to be very active here."
xxxxx
6. J&J To Upfront Market: Drop Dead / By Thom Forbes Monday, May 15, 2006
A major packaged goods marketer has decided to avoid the annual
TV network media buying frenzy known as the upfront in a move
that is representative of the shifting balance of power in
the advertising game. The company, Johnson & Johnson,
which markets popular brands such as Tylenol and Neutrogena,
says it wants to buy TV time on its own schedule, not that
of the TV networks, and will wait to purchase spots until
late summer when it fits the company's business-planning process.
"What we found is, if we can synchronize our business-planning
cycle [with buying media time] it will benefit the brand and
that is what this is all about," says Kim Kadlec, Johnson
& Johnson's chief media officer. The move is indicative
in a shift of power from media sellers to advertisers, who
have so many choices of where to spend their ad dollars they
no longer have to rely on network television as much as in
years past. In today's fast-growing digital communications
age, marketers are reaching consumers in new ways by advertising
on the Internet, on cell phones and on iPods. "It's a
supply-and-demand issue," says Bill McOwen, executive
vice president, director of broadcast at Havas' MPG. "With
the maturation of cable and the digital realm, there are absolutely
more choices today."
7. MARKETERS ARE UNHAPPY
WITH THE UPFRONT
At the ANA TV Forum, More Than Half Dissatisfied With Process
/ By Claire Atkinson /
Published: March 22, 2006 top
NEW YORK (AdAge.com) -- The Association of National Advertisers'
TV Ad Forum this morning revealed some lingering sourness
over the upfront buying process. More than half the estimated
350 attendees, from major marketing firms and agencies, said
they weren't happy with the upfront, where billions of ad
dollars are committed to TV in advance of the fall season.
Ian Beavis: "Don't get up and bitch and moan and then
do the same thing you've always done. Do the right thing to
do for that brand at that particular time."
Responding to an instant electronic poll -- "How satisfied
are you with the upfront?" -- 36% said they were "somewhat
dissatisfied" and 20% were "very dissatisfied."
Only 10% said they were "very satisfied"; 23% were
"somewhat satisfied."
Ian Beavis
The poll was orchestrated by Ian Beavis, VP-marketing at Kia
Motors America, who famously yanked his network TV spending
as marketing chief at Mitsubishi Motors North America in favor
of other media. Mr. Beavis also asked attendees whether they
would prefer the upfront to be conducted on a calendar year
rather than in May, when the broadcast networks decide their
shows for the TV season. A whopping 83% said opted for the
calendar year, while 10% said no.
Despite the negative sentiment, it's unlikely advertisers will
do much to change the game. When given the opportunity to
bring up their feelings at a meeting convened by the ANA in
2004, advertisers opted to stick with the status quo and the
Network Upfront Discussion Group (NUDG) was disbanded.
Mr. Beavis, as part of his presentation, defended his decision
to pull Mitsubishi's TV ad spending and blamed the automaker's
subsequent sales problems on the product. He held up the Mazda
5 as an example of an auto marketer that achieved sales success
without using TV in the media mix.
He urged advertisers to not just talk the talk, but walk the
walk. "Don't get up and bitch and moan and then do the
same thing you've always done," he said. "Do the
right thing to do for that brand at that particular time."
One positive came out of the polls for broadcasters. When asked
if other media such as online and cinema should be included
in the upfront, the majority of respondents, 59%, said no.
Only 37% wanted to hold negotiations with such alternative
media while their TV talks were taking place.
top
Spending plans
A poll on upfront spending plans, conducted by Pfizer's Scott
Grenz, senior director of media, U.S. and Canada, advertising
services, revealed that 32% of respondents were planning to
spend less on TV at this year's upfront, while 31% said they
planned to spend more; 32% said they planned to spend the
same amount.
Mr. Grenz's upfront spending poll kicked off the one-day event,
held in New York at the Grand Hyatt Hotel. The full day of
panels, titled "Life Beyond the :30," also saw some
participants extolling their partnerships with broadcast networks.
Perianne Grignon, VP-media services, Sears, said that after
an episode of ABC's "Extreme Makeover: Home Edition,"
29% of viewers surveyed expressed a greater likelihood of
visiting a Sears store. "Sears' sponsorship of Bravo's
'Top Chef' is also paying off," she added. Branded entertainment
vehicles and product integration shows no sign of waning in
popularity among marketers as a response to a more widespread
consumer usage of digital video recorders, which in theory
allow them to skip commercials on playback.
top
Defending traditional broadcasters
CBS' Exec VP-Chief Research Officer David Poltrack defended
traditional broadcasters and called for a reality check when
it comes to emerging digital media. "There have been
1.8 million iPods sold since October and 12 million downloads
of programming such as 'Lost' and 'Desperate Housewives.'
To put this in perspective, we introduced a new TV program,
'The Unit,' and 20 million people watched that program."
Mr. Poltrack urged those in attendance to spend their time
thinking about the ad environment of today rather than the
future. "How much time are you putting into changes happening
in 2010? How much time are you dedicating to opportunities
this fall?" The question was well-timed. Later in the
morning, ANA President Bob Liodice said that the average tenure
of a chief marketing officer was only 23 months.
top
CBS conducts research on how well its own promotions work to
get their own proof of the medium's effectiveness. Commenting
on the debate over commercial ratings -- which some advertisers
would prefer to use as the barometer of their pay rates vs.
program minutes -- Mr. Poltrack said that commercial ratings
are inherently unstable and cited research conducted by Magna
Global's Exec VP-Audience Analysis Steve Sternberg that backed
up those findings.
Streaming video
As for TV networks' Internet rivals, Mr. Poltrack said Web
giants such as Google were engaged in direct marketing and
not advertising: "There are limitations on search. It
can't continue to grow." He said streaming video on the
Internet was the big growth engine and that would most likely
be fuelled by broadcast network programming. CBS' coverage
online of this month's NCAA basketball tournament had attracted
14 million downloads, 4 million unique users and 268,000 live
streams, which had benefited its advertisers, such as Courtyard
by Marriott and Dell. / http://adage.com/mediaworks/article?article_id=107966
--------------------------------------------------------------------------------
8. McKinsey Study Predicts Continuing Decline in TV Selling
Power
Cites 50% Drop in Viewers, 40% Hike in Prime-Time Ad Spend
Over Last Decade (By Abbey Klaassen / August 06, 2006)
NEW YORK (AdAge.com) -- A study is about to give Madison Avenue
a fresh pummeling: McKinsey & Co. is telling a host of
major marketers that by 2010, traditional TV advertising will
be one-third as effective as it was in 1990.
top
Shocking statistic
That shocking statistic, delivered to the company's Fortune
100 clients in a report on media proliferation, assumes a
15% decrease in buying power driving by cost-per-thousand
rate increases; a 23% decline in ads viewed due to switching
off; a 9% loss of attention to ads due to increased multitasking
and a 37% decrease in message impact due to saturation.
"You've also got pronounced changes in consumer behavior
while they're consuming media," said Tom French, director
at McKinsey. "And ad spending is decreasingly reflecting
consumer behavior." top
According to the report, real ad spending on prime-time broadcast
TV has increased over last decade by about 40% even as viewers
have dropped almost 50%. Paying more for less translates into
a much higher cost-per-viewer-reached -- a trend also true
in radio and print.
Teens turn from TV
Thank a combination of older technologies such as cable, PC
computers, cellphones, CD players, VCRs, game consoles and
the internet, along with more recent ones -- PDAs, broadband
Internet, digital cable, home wireless networks, MP3 players,
DVRs and VOD-- for those changes. And teens foretell an even
more radical shift in future media consumption, the report
points out: They spend less than half as much time watching
TV as typical adults do. Teens also spend 600% more time online,
surfing the web.
According to Forrester Research's most recent North American
Consumer Technology Adoption Study, people ages 18 to 26 spend
more time online than watching TV and are adopting new technology
faster than any other generation. Because of that, they tend
to be more receptive to blog, podcast and mobile-web ads.
That leads one to wonder whether consumer marketing mixes should
change to reflect consumer behavior.
top
Catch-22
The answer is not quite -- yet, at least. The Catch-22 is a
"chaos scenario" that smart marketers have read
about in these pages: a dearth of online-ad supply and the
web's generally fragmented nature will keep TV in booming
business for the next several years.
"Should everybody shift 30% of their dollars to the web?"
asked Amy Guggenheim Shenkan, senior practice knowledge specialist
in McKinsey's San Francisco office. "No. There wouldn't
be room today if everybody wanted to shift online. Last year
[online media] was $12.5 billion, by end of 2007 digital advertising
will be $18 to $25 billion. ... So we're seeing a lot of growth,
but if you want to match up share of attention and share of
dollars it couldn't happen for that reason." The TV ad
industry is a $68 billion one.
So what's a marketer to do?
Mr. French said it's no longer good enough for an advertiser
to take standard reach metrics at face value. He advises them
to consider evaluating media on an "adjusted reach"
basis.
Not adjusting reach numbers
"What we don't find people doing is adjusting those reach
numbers for people who are actually tuned in," Mr. French
said. "Not just watching but actually paying attention."
He also suggests there's a great role for chief marketing officers
to play within their organizations, where they have influence
over all customer-interaction channels -- call centers, sales
forces, retail partners -- and can use those to supplement
a decreasingly effective media channel.
Consider the enterprise telecom company (not named by McKinsey).
Some 44% of the purchasing decision was influenced by interaction
with sales, topbuilding/installation and
service/maintenance teams.
"We see many, many leading organizations across industries
realizing they need to systematically improve their commercial
effectiveness," Mr. French said. "And the logical
candidate for driving that is the CMO."
Evolve marketing model
Emerging as some of the best examples are industries in which
marketing has long been relegated to a back-seat role but
is now becoming a major force in the front office -- major
broad-based industrial conglomerates, financial services and
telecom. In contrast, the companies people used to benchmark
what marketing excellence is -- major package-goods players,
for example -- are realizing they've got to dramatically evolve
their marketing model.
"CMOs have to step up to a larger role and question a
host of historical assumptions of how marketing works,"
Mr. French said. "They have to continue to build rich,
robust and proprietary customer insights, but they have to
do it from a bunch more sources."
top
Xxxxxxx / http://adage.com/article?article_id=110899
9. McKinsey Study
Predicts Continuing Decline in TV Selling Power
Cites 50% Drop in Viewers, 40%
Hike in Prime-Time Ad Spend Over Last Decade
NEW YORK
(AdAge.com) -- A study is about to give Madison Avenue a fresh
pummeling: McKinsey & Co. is telling a host of major marketers
that by 2010, traditional TV advertising will be only one-third
as effective as it was in 1990. According to the report, real
ad spending on prime-time broadcast TV has increased over
last decade by about 40% even as viewers have dropped almost
50%. Paying more for less translates into a much higher cost-per-viewer-reached.
XXXXXXXXXX
10. TV Affils: Exclusivity is Dead (By Michele
Greppi / April 17, 2006)
The land
rush for new ways to parlay network programming into new network
revenue streams has done to affiliates' exclusivity rights
what the Ice Age did to dinosaurs.
Many affiliates say any notion that they can leverage networks
into preserving vestiges of exclusivity is unrealistic.
top
Ask stations affiliated with Disney's ABC, which last year
became the first network to make prime-time programming assets
available on-demand to a new partner, Apple's iTunes. ABC
didn't tell its local stations at the time it was reviewing
its vows of exclusivity.
ABC's announcement last week that it is making ad-supported
current episodes of "Lost," "Desperate Housewives,"
"Commander in Chief" and the entire season of "Alias"
available for streaming on ABC.com in May and June didn't
catch affiliates by surprise. It did, however, catch them
in mid-conversation about how the network might compensate
the affiliates for the further loss of exclusivity.
Fox Broadcasting has just agreed to cut its affiliates in on
any revenues that result from on-demand extensions of its
programming. And CBS appears poised to make a similar arrangement
with affiliates.
But stations' participation in the profits from prime-time
shows being available on-demand does not change the undeniable
fact that by making shows available via any distribution means
other than affiliates, the local stations lose the clout that
comes with being able to offer viewers and advertisers something
no one else can.
NBC Enters Repurposing top
Limits on the networks' rights to repurpose prime-time programming
or distribute shows outside their traditional primary prime-time
runs have largely been negotiated as part of sports cost-sharing
agreements. The local stations agreed to help defray the cost
of the networks' major sports contracts in return for the
networks agreeing that the majority of its programming would
remain exclusive to affiliates in the programs' first runs.
top
NBC, the only one of the Big 4 broadcast networks that has
never had a written repurposing agreement with its affiliates,
announced in April 2000 that it would repurpose "NBC
Nightly News" after its network broadcast on Pax stations.
But NBC abandoned the plan after the affiliates howled that
such a move would siphon viewers away from "Nightly"
on their stations.
Now "Nightly News" and "Meet the Press With
Tim Russert" are available on-demand on MSNBC.com immediately
after their West Coast network broadcasts.
NBC recently opened new territory when it prepurposed midseason
drama "Conviction's" first episode for free on iTunes
before the Dick Wolf show premiered on NBC.
CBS put a spin on prepurposing with its deal with Yahoo to
create a "60 Minutes" microsite starting next fall
that will offer content related to stories on the newsmagazine.
Most news coverage of the "60 Minutes" deal said
the content would go up on the Web after the newsmagazine's
network broadcasts, but that was based on presumption. What
the network didn't announce was that the content goes up on
the Yahoo site before the conclusion of the East Coast broadcast
of "60 Minutes" and before the magazine is broadcast
in later time zones.
Whetting Appetites
CBS argues that the content does not duplicate the "60
Minutes" stories. In a preview two weeks ago "60
Minutes" broadcast an extended interview with Tiger Woods.
Yahoo offered myriad short clips: Mr. Woods bouncing the golf
ball off his club and hitting balls at a cameraman (both featured
in the interview), along with career highlights. The clips
started with a plug for Buick featuring Tiger Woods.
top
CBS regards the Yahoo deal as a way to whet viewers' (especially
young viewers') appetite for the "60 Minutes" broadcast,
not as a substitute for it.
But many affiliates see it as a disturbing twist that sets
a precedent they hope the CBS affiliates advisory board will
protest.
As for ABC, the network maintains that after testing the popularity
of its ABC.com broadband offerings, which include ads that
viewers cannot skip, it believes it will have a better sense
of the format's potential when it talks to affiliates.
ABC affiliates suggested that in addition to revenue sharing,
other promising options might include offering links to the
broadband offerings on the Web sites of the local stations,
which then might be able to attach locally sold ads.
"The key here is whether or not the networks are really
going to demonstrate they value what these stations do in
exposure of network programming," a station group executive
said. / http://www.tvweek.com/news.cms?newsId=9784
1. NBC Cuts Jobs Due To Weak TV Ad Performance (by Wayne Friedman, Friday, Oct 20, 2006) top
TWO YEARS AFTER NBC UNIVERSAL Television took an $800 million
ad revenue drop in the upfront, it will make $800 million
in cuts from staff reductions and production savings. Is there
a correlation between the advertising--especially in today's
environment--and the layoffs? Absolutely.
"It is a response to current advertising conditions,"
says Mark R. Fratrik, vice president of Chantilly, Va-based
BIA Financial. "With J&J not being in the upfront,
with automotive cutting back, it has been a long time in NBC's
thinking."
Analysts say NBC is concerned about being in fourth place among
all the networks. But the real issues are the increasingly
troubling equations of production costs versus advertising
sales, says Fratrik, especially when high-priced dramas yield
mediocre ratings.
For example, published reports claim that rookie NBC show that
"Heroes" costs a whopping $2.7 million an episode.
The good news is that "Heroes" is doing well, with
almost a 6.0 rating in adults 18-49--the highest among all
new network shows. But shows like "Studio 60" cost
about the same as "Heroes," yet deliver half the
18-49 rating that "Heroes" does.
During the upfront, according to Ad Age, "Heroes"
grabbed $171,000 for a 30-second spot; "Studio 60"
took in $210,000. The price tag for "Heroes" will
no doubt rise--perhaps in the $200,000 to $240,000 range.
top
With 20 national spots per hour, at $200,000, that would reap
a gross $4 million per episode. Of course, NBC also has re-run
availabilities, as well as consumer pay-per-play fees and
ad revenues from its many digital platforms.
In the old days, this formula would come out somewhat differently.
A network could negotiate a low license fee (versus the production
costs) from the producer. But the math doesn't really work
any more. "Heroes" is produced by NBC Universal
Television Studio, while "Studio 60," the exception
to the rule, is produced by Warner Bros. Television.
Which still leaves scores of other network shows out of the
money loop. That's why Jeff Zucker, chief executive of NBC
Universal Television Group, says there will be fewer scripted
shows in the future.
Fratrik surmises that Zucker's threat is targeted at the weaker
8 p.m. hour that kicks off the prime-time schedule. Networks
have mostly backed away from traditional half-hour sitcoms.
So Fratrik expects to see more reality shows, game shows and
new shows from NBC during that hour.
top
NBC stations are already on the right track, say analysts.
Its O&O stations have been praised for their ability to
sell more in the digital space than most other stations groups.
Analysts believe NBC stations are now getting 15% or more
of their ad revenues from the digital space. In the broader
picture, NBC expects to generate $1 billion in digital revenues
from subscription program fees and ad revenues by the year
2009.
"The reality of network television is that the model doesn't
work as well as it used to," says Fratrik. "They
are not going back." top
Xxxx
2.
NBC Universal to Retool, 700 Positions Axed
Money-Saving Moves Include Cutting Programming, News Costs
By Claire Atkinson / Published: October 19, 2006
NEW YORK (AdAge.com) -- NBC Universal plans to reduce overhead
by $750 million by the end of 2008 and intends to axe 700
positions, or about 5% of its global work force. The cuts
are part of a major corporate reorganization dubbed "NBCU
2.0," and will be most notably felt by the news operations
and the broadcast network, which will no longer program expensive
dramas or comedies at 8 p.m.
The aim of the cost-cutting initiative is to direct more of
the company's resources toward high-growth areas such as digital
operations, which are expected to reel in $200 million by
the end of the year, and Hispanic media.
top
Cost of scripted dramas
NBC Universal TV Group CEO Jeff Zucker told the Wall Street
Journal today that advertiser interest had not been high enough
to justify the continued level of spending by the network
to create scripted shows. Advertising Age's pricing chart
illustrates NBC's problem. The Tuesday 8 p.m. drama "Friday
Night Lights" reportedly costs the network more than
$2 million an episode and commands $116,000 for a 30-second
ad, while the game show "Deal or No Deal" costs
the network half as much to produce but brings in $141,000
per spot.
"Advertising investment is a reflection of audience interest,
so if NBC is able to aggregate an audience to the same degree
with 'Deal or No Deal' or reality shows, it needn't negatively
affect the network," said John Rash, senior VP-director
of media negotiations at Campbell Mithun, Minneapolis. "But
if they yield any scripted fare and are unable to begin their
night with strong lead-ins at 8 p.m., it could affect subsequent
hours."
Steve Sternberg, exec VP-audience analysis, Magna Global thinks
concentrating on game shows and reality shows in that hour
could work for NBC. "Here is why that could be positive.
We've done research with Nielsen data and 80% of homes have
one set during prime time. Families want to watch TV together
and too often they can't because there's a lot of kids around.
Reality shows have become the new family programming."
He cited research that shows 10 of the top 15 shows popular
with children, teens and adults are reality series.
No longer commands a premium
NBC has faced a tough ad climate this year and struggled in
the upfront ad sales period, despite broad support for its
new programming. The network has historically commanded a
premium for the 18- to 49-year-old demographic, but as its
ratings position has eroded, it has had to roll back pricing.
NBC brought in around $1.9 billion in ad commitments during
this year's upfront market, of which advertisers committed
around $500 million to the network's National Football League
coverage. (Sports programming isn't typically included in
the upfront entertainment tallies.) In 2004, NBC's upfront
netted $2.9 billion.
NBC Universal also had a tough third quarter, reporting a profit
drop of 10% from the same period last year, reflecting the
difficult ad-sales climate.
Part of the "NBCU 2.0" plan also involves NBC Universal
looking to develop "alternative advertising metrics."
The network was the first to have negotiated upfront deals
using agreed upon engagement metrics rather than relying simply
on ratings performance. top
The cost cutting follows a period of heavy investment across
NBC Universal. In May, NBC Universal agreed to pay around
$600 million for web community iVillage. In 2005, NBC Universal
agreed to pay the NFL $600 million annually for its "Sunday
Night Football" franchise. The network also pays around
$600 million for the Olympic Games, which are likely to be
expensive to cover from Beijing in 2008.
Thriving news operation, but ...
While NBC's news operation thrives, with the "Today"
morning show and "NBC Evening News With Brian Williams"
retaining their respective No. 1 positions, NBC's cost-saving
plan centers on the news division. MSNBC's headquarters in
Secaucus, N.J., will be shuttered and employees will move
to NBC headquarters at 30 Rockefeller Center and to CNBC's
offices in Englewood, N.J. The company is also beginning reviews
at NBC News bureaus in the U.S. and overseas. Part of NBC
Universal's plan is to reinvest savings in other areas. For
instance, CNBC.com brings visitors to a dull-loo
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