July 28, 2004
Buyer Seller Beware
The “upfront” advertising session recently ended for the 2004-2005 season. For those readers unaware of its importance, the upfront advertising session is the time frame in May when the majority of national television commercial airtime is bought and sold for the year ahead. Big advertisers, represented by their advertising agencies, engage in a back-and-forth negotiation with TV stations, which is preceded by a lot of posturing by the sellers and warnings from the buyers.
Months ago, I read that the major auto manufacturers were fed up with rising advertising rates for diminishing audiences. “We’re going to move dollars to outdoor advertising,” was one comment. (To that I say, “Good Luck.” That’s just what’s going to get me to buy your $30,000 pile of metal. Unless your billboard shows a pink and purple polka dot-colored car with fireworks shooting out of the tailpipe, I’m not paying attention to it during my three seconds of exposure to it).
Years ago, during a kinder and gentler era, the upfront deals got done and an overall pricing summary was then leaked to the press. They’d then report on the vast sums of dollars that had just changed hands.
Nowadays, some have noted that it may be more important for the big shareholder-owned media companies to show their strength to Wall Street by boasting of major price hikes (no one wants to invest in a company whose revenue is declining, right?).
Last year’s broadcast TV upfront spending activity reportedly recorded 9% price hikes across the board...but a subsequent independent analysis of revenue gains during Q4 ‘03 provided a much smaller number. That’s why the reports that emerge from the upfront season need to be closely examined. The fact that the deals are done does not mean that the “spin” season is over, too.
At the local level, we hear concerns over rates as well. That’s why it’s more important than ever to differentiate your station and the services that you provide to your clients.
Think about it: You’re probably paying more this year for many items that are unchanged or even declining in quantity or quality. For example, my school taxes went up. My property taxes went up. Milk costs more; so does gasoline. Even ice cream costs more! Dry cleaning my shirts just went up 50 cents each. My morning yogurt used to come in an eight-ounce container; now it’s six ounces for the same price. My Internet broadband cost rose. The local newspaper raised its home delivery subscription price, too.
Beef prices are up. The cost of my haircut went up. Oil, propane, and electricity cost more. New York State even wanted me to volunteer to pay taxes on online purchases if I made any last year.
No one likes paying more for the same thing. Yet we sell in an environment where supply and demand affects pricing. I foresee high demand on the horizon during the last six months of 2004 for the most desired TV commercial airtime. Unless you want your product (commercial airtime) to fall into the grouping I just described above, it’s time to reinforce what else you and your station bring to the negotiating table. Otherwise, you’re just another item that costs more while providing the same—or less—that the buyer may decide to do without.