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A Seventeener II television from the 1950s. With today’s economic climate, and the ability to be more agile with digital and other channels, advertisers are less willing to commit to television slots during the spring ‘upfronts.’ (DARRYL DYCK For The Globe and Mail)
A Seventeener II television from the 1950s. With today’s economic climate, and the ability to be more agile with digital and other channels, advertisers are less willing to commit to television slots during the spring ‘upfronts.’ (DARRYL DYCK For The Globe and Mail)

TELEVISION

Illusion of network ad time scarcity is starting to come apart Add to ...

Every culture engages in rituals that outsiders have difficulty understanding. Millions of Canadians prostrate themselves in front of their TVs every spring in vain hope of watching a silver chalice return to their country. Catholics elect their global leader through a secret vote whose details are never divulged. When a Wari of Brazil passes away, his fellow tribesmen wait for the body to putrefy, then roast its organs and consume them in a display of respect.

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Then there are the television ‘upfronts.’

Each May, the U.S. broadcast networks swarm New York City for a week-long song-and-dance, hyping their shows to the advertising community. Network executives and their stars walk the red carpets for paparazzi, take a spin across the stage (Radio City Music Hall, Carnegie Hall, etc.), and then grip and grin their way through the retail business of building TV success: posing for photos at boozy receptions with the folks who will buy ad time on their shows.

In the frenzy surrounding the U.S. upfronts, advertisers will commit about $10-billion (U.S.) out of the $62-billion or so that will be spent on TV ad time over the next year. (The Canadian upfronts will unfold in early June in a similar, albeit smaller-scale – that is, Canadian – fashion.) While that isn’t close to the percentage of the total that advertisers used to commit during the upfronts of decades past, when TV seasons were quaintly predictable, running from September to May, it still represents about 15 per cent of all spending. (Specialty cable networks will book another $10-billion or so.)

And yet the networks are still able to raise the advertising rates for their CPMs – or cost-per-thousand viewers – even as viewers are fleeing broadcast TV, at least in the U.S. (It is harder to get a fix on the Canadian TV landscape: early numbers for the current season, provided by the Television Bureau of Canada, suggest viewership is holding more or less steady across the entire TV universe, though it too is fracturing.) There are still few ways for advertisers to get their messages in front of millions. The upfronts capitalize on that, hitting advertisers hard with the threat that, if they don’t buy ad time now, they’ll never find their way in front of viewers. The networks that win the upfront, writing more contracts than others, take that momentum into the season.

But like an aging prime-time drama that casts Heather Locklear in desperation, that illusion of network ad time scarcity is starting to come apart.

“I think it’s like the lineup at the Apple store,” said Mark Sherman, the CEO of the Canadian media agency Media Experts, which claims about $300-million in annual media billings. The upfronts “are very useful to the sellers because they create demand and excitement, and they propagate the illusion of scarcity.”

The market is still severely opaque, with the details of deals struck in backrooms rarely coming to light. There have been attempts recently to create electronic ad exchanges – marketplaces for buying and selling of ad time, which is common for online advertising – but they’ve faltered because the networks have no good reason to participate. They recognize that an exchange would speed up the transformation of their premium ad space into a mere commodity.

Mr. Sherman confirmed that some of his large clients will be buying ad time during the Canadian upfronts; just not as many as used to do so. When he began in the business in the early 1980s, he recalled, “there were people sleeping in the office for days on end at this time of year, analyzing the opportunities, negotiating the space, and making sure they had their position.”

“There were guys who would work for three or four weeks, and spend the rest of their time in bars,” he chuckled.

Nowadays, the economic climate, and the ability to be more agile with digital and other channels, mean advertisers are less willing to commit eight or more months in advance. Instead, this time of year is spent, “looking at content integration opportunities” – that is, product placement – “in specific programs and channels, as opposed to a frenzy to buy inventory at a price.”

All of which is helping to blunt the persuasive power of the upfronts. Most observers believe those pressures eventually will be too much to bear, and that TV ad time will become more commoditized. Just not yet, or even any time soon. In fact, it turns out that the upfronts have a kind of gravitational pull: Last year, a number of digital content companies (including AOL, Google’s YouTube, Yahoo, and Hulu) staged a week-long showcase in New York for their own online video offerings. They called it the digital upfronts, or the NewFronts.

Which, noted Mr. Sherman wryly, “immediately legitimized the upfronts.”

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