05.22.2006 11:22 AM
Platform migration causes watershed change in TV sponsorship

NBC, with the least to lose in the ratings race, may be taking the greatest risk with new media this year. But it was clear at last week's upfronts in New York that the transition of television content to new media platforms is shaking up the advertising market.

The unexpectedly fast and furious embrace of new media by the big broadcast television networks, the New York Times reported, is drastically affecting the plans of advertisers and agencies to buy billions of dollars worth of commercial time.

“The networks are recognizing that the way people are consuming television is changing, and the money is going to follow that,” Joe Mandese, editor of MediaPost in New York, an online and print trade publication, told the Times. He called last week's upfront a watershed.

The annual rite is known as the upfront because the negotiations between the buyers and the network sellers take place in the spring, ahead of the fall TV season. After the unveiling of the schedules of each network, bargaining begins over how much the advertisers will pay as well as which shows they will sponsor or snub.

But, the Times reported, the rapid migration of TV shows onto Web sites, iPods, cellphones and other fledgling venues is shaking up the conventions of this year's advertising market and offering more choices.

Indeed, those choices caused one major television advertiser, Johnson & Johnson, to opt out of the upfront market this year. Reuters reported that the health products company will start buying its advertising in the fall, hoping to better integrate all its old and new media marketing plans.

The networks realize they cannot stand part in a rapidly changing media distribution environment, the Times said. Marketers have not been waiting for the upfront market to decide between traditional media and their new media rivals.

Rather, the newspaper said, they are turning over a significantly increasing portion of their ad budgets to new media specialists such as AOL, Comcast VOD, Google, MSN and Yahoo.

The industry is seeing ad dollars leaving the traditional media and going into the digital space, according to Bill Cella, chairman and chief executive at Magna Global in New York, part of Interpublic Media.

The trend “is becoming more pronounced,” Cella said, adding: “I look at it not as fragmentation, but as hyper-fragmentation. It's mind-boggling,” he said. “Just as our clients have to follow their customers into the new media,” Cella added, “the networks have to follow their viewers there. ”

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