The World: Upfronts face shaky future as NBC plans rethink

NBC Universal's chief executive has hinted his network no longer needs to do the 'dog-and-pony show'.

The US advertising industry could find itself with one less appointment in its social diary this year. If Jeff Zucker, the chief executive of NBC Universal, has his way, media agencies and advertisers stand to miss out on the glitzy upfronts in New York this coming May.

Speaking to journalists last month, Zucker strongly hinted that NBC's own upfront, where the network unveils its new schedule to secure advanced sales for prime advertising spots, could soon be a thing of the past.

"Whether we still need to do the dog-and-pony show is completely under review here, and you can look for an announcement on that from us very soon," he said.

The upfronts held by NBC, CBS, ABC and Fox are undoubtedly glamorous affairs, with the networks traditionally bringing out the big guns from their schedules to impress the advertising community.

Last year, NBC wheeled out the comedian Jerry Seinfeld and the cast of its hit drama Heroes for its multimillion-dollar presentation. The Hollywood glamour, however, belies the hard business that goes on behind the scenes.

Over the course of one week in late May, around 50 per cent of the networks' ad inventory for the next season is pre-sold. Last year, NBC, ABC, CBS, Fox and the CW network signed deals for approximately $9 billion (£4.6 billion) of ad airtime. The cable channels, meanwhile, raked in a further $7 billion worth of spots.

The TV industry may find it difficult to repeat that performance this year. The screenwriters' strike has brought production on shows such as Desperate Housewives and Heroes to a grinding halt, leaving the networks with little or no fresh programming to present to advertisers.

Although a question-mark hangs over the upfronts for all the US networks, NBC is the only terrestrial broadcaster to admit that the event is due for a shake-up. In an industry braced for recession, this news will, however, come as no surprise.

"Upfronts are a useless $4 million to $5 million event," Jason Kanefsky, the senior vice-president of national broadcast and group account director at the New York media agency MPG, says. "There is not a real information exchange between advertisers and networks. It's become very important with middle-level clients and ad executives, but chief executives look at it and wonder what it's for."

The media community's push for less style and more substance during upfront season was already making waves last year.

"Advertisers said we need shorter, more condensed presentations, and no upfront went beyond one hour," Andrew Donchin, the director of national broadcast at Carat North America, said of the traditional three-hour event. "We don't need to see TV and football stars. Networks need to focus on what clients need."

Donchin believes the upfronts have to change to stay in step with a fast-moving market. "Our business is a lot more complicated," he says. "It's not about 30-second spots any more. Television is still the driver, but there are so many different platforms. It's not about new programmes any more. It's about the digital extensions and online integration."

With TV content now scattered across multiple platforms, ad sales teams could find themselves working to a different timetable. "It will be more of a 52-week marketplace," Donchin says. "You don't have to do it all in one week."

Lyle Schwartz, the managing partner of broadcast at Mediaedge:cia, agrees. "During the upfronts, a significant amount of money is committed to cable and network TV, but it doesn't all have to be committed on a certain day," he says. "An upfront can occur for each client. The networks might modify their big event and do more individual events with clients in holding groups."

Not all are convinced that the upfronts are an expensive waste of time. Edward Atorino, a media analyst and managing director of the New York stockbroker Benchmark, maintains that networks and advertisers benefit from the events. "If you can sell 50 to 60 per cent of your new series, then that's money in the bank," he says. "If McDonald's or Ford turn up wanting time to advertise a new product in September, then you get better pricing. It's an advantage."

For advertisers, closing inventory deals in May also has obvious rewards. "It allows you to pick your spot in line with your product," Atorino says. "McDonald's, for example, doesn't want to be advertising during Desperate Housewives with all those sexy women, or during reality shows. You want to be on a wholesome show. Advertisers also get guarantees on a top-rating show, and if they don't get that, they get additional time."

Antony Young, the president of Optimedia US, also sees upfronts as a vital part of the media calendar. "They bring a lot of attention, cachet and interest to the medium," he says. "They're the Super Bowl of the ad industry. They partially explain why the demand for TV advertising continues to increase and prices continue to rise despite falling ratings and a softening economy."

Upfronts are also crucial given the monies changing hands. "Clients put hundreds of millions of dollars down and they want to see what they are buying," Young says. Without them, it is debatable whether spots would continue to sell at such a high premium.

"Pricing has always been generated by demand," he adds. "But marketers have a lot more options of where to put their investment now, (such as) advertising, trade promotion, online and out of home."

To keep TV prices up, the show must go on, Young insists. "TV has continued to be strong because it is top of mind. Upfronts create a lot of showmanship, and engage senior clients with the media market. They feed the machine. Ultimately you can't say that good salesmanship doesn't get good pricing."