Tag Archives: National TV upfronts

Client-Side CFOs Should Take Note… Your Ad Investment is Being Held Hostage

18 Dec

The news of this past week should be of concern to CFOs of companies that have invested in National TV over the course of the last two years.

On December 18th, MediaPost reported that “TV season-to-date” ratings declined between “20% to 30%,” which in turn created a “probable make-good inventory shortage and possible rare TV network cash-back payments to marketers.” Similarly, Digiday reported that “TV networks are overdue on their bills to advertisers” and that some advertisers “are still owed for ad buys placed one to two years ago.”

In short, TV viewing declines have resulted in guaranteed audience delivery shortfalls by the networks. Thus, the networks owe advertisers compensatory media weight or cash-back to make up for that underdelivery. Unfortunately, many of the networks don’t have inventory available to make good on their obligations to advertisers. Complicating matters is the fact that advertiser demand has driven up scatter market CPMs, which makes it less attractive for the networks to offer make-good weight, when they can sell their inventory at a premium, rather than honor upfront market commitments.

Okay. We understand. Audience delivery shortfalls are a fact of life. That said, we cannot think of a good reason why an advertiser would allow a network to take them out one to two years on their guarantees or why their media agency partners would not take a more aggressive stance with regard to securing ADUs (make-good weight) or cash-back.

A guarantee is a guarantee… period. If a media seller cannot deliver on its commitment within the contract parameters, then restitution should be tendered immediately.

So what’s the problem? The answer, and what should alarm CFOs, was the perspective shared by both publications that network and media agency personnel believe that advertisers weren’t “all that interested” in cash-back offers because they “have nowhere to put it.”

Too bad that advertiser CFOs weren’t interviewed by these publications for their point-of-view. From our experience, we have never met a CFO that would rather cede control of any portion of their organization’s ad investment to an agency or a media seller, rather than manage those funds themselves. Who would? If the networks can’t or won’t provide make-good inventory, most CFOs would prefer a check to cover the dollar value of the audience delivery guarantee shortfall. This scenario eliminates any uncertainty regarding the disposition of their funds and reduces the risks of leaving their organization’s pre-paid media funds in the hands of third-parties and perhaps losing track of them altogether.

Advertiser concerns should not be limited to the networks. Media agency National TV buyers have a responsibility to monitor audience delivery, while a campaign is running and to secure in-flight ADUs to cover rating shortfalls when possible. Daypart specific underdelivery is supposed to be tracked by quarter, with make-good weight secured and applied per the terms of the upfront guarantee, which they negotiated on the advertiser’s behalf. Given declining viewership trends, agencies should understand the importance of this aspect of their media stewardship responsibilities and take extra precautions to safeguard their clients’ National TV investments.

The irony… while waiting for their clients to be made whole on prior-year upfront guarantees, media agencies, more often than not, continue to invest additional advertiser funds with the same networks that owe those clients make-good weight and or cash-back refunds.

Our auditing experience repeatedly shows that few CFOs are aware of the important benefits that can be gained by meeting with their marketing team to undertake a formal review of their organization’s National TV media buying and performance monitoring controls including, but not limited to:

  • National TV Upfront Guarantee Letters/Terms
  • Media Authorization Form Language
  • National TV Media Buying Guidelines
  • Agency Weekly Audience Delivery Tracking Reports
  • Agency Quarterly Post-Buy Performance Reporting
  • Agency Quarterly ADU Tracking Reports

The situation described by MediaPost and Digiday poses financial risks for advertisers in general and specifically for those organizations that are not actively managing their National TV media investments.

The Missing Voice on C7

12 Jun

national TV upfront

By Matthew Reiss, Senior Vice President, Client Services – Advantage Media Inc.

The decibel level within the industry regarding a move from a C3 to C7 standard for buying and selling national TV is now at a fever pitch. The addition of time shifted viewership from 3 days after broadcast to now include an additional 4 days is at the heart of this debate. 

Recent articles proudly proclaim that agencies, such as Group M, and broadcast networks, such as CBS, FOX and NBC have already consummated some deals on the C7 metric, limited at the moment to Prime entertainment programming inventory. 

What’s missing is the voice of the advertiser 

So far, we’re only hearing about what’s best for others. No where do we hear about what’s best for the one paying the bills. So what’s at stake here? Though there are significant differences in the amount of time shifted viewership during these additional 4 days, on average it represents about 3% additional viewings.  

Up to this time, paying based on C3 means that the advertiser may be getting a 3% bump in viewership. Not huge, but good to have. By shifting to a C7 metric, these viewers will now be counted against your guaranteed delivery. In short, advertisers will begin to pay for viewers that up till now you’ve been getting as “added value”.  

What’s in it for the networks is pretty straight forward  

Even though such time shifted viewing has been delivering this added value since the invention of the VCR, they now want to be paid for it. But what it really delivers to them are additional rating points against their guaranteed deals without having to add any more commercial inventory.  

What’s in it for the agencies is also pretty straight forward  

By moving to the larger C7 audiences, they can show clients that they lowered CPMs by about 3%, at a time when network Prime CPMs continue to grow much faster than most advertiser’s budgets.  

There’s even something in this for Nielsen  

By selling multiple streams of data from its overall database, Nielsen should expect a bump in its revenue.

But what’s missing is what’s in it for advertisers 

In the view of Advantage Media, there’s not much in this for advertisers. Yes, in the first year CPMs will look lower, though this of course, is a shell game, since advertisers have had the benefit of these viewers all along. In year 2 and beyond, advertisers can expect to see the same steady year over year CPM increases, so no benefit there.  

For our retail clients, this move is even more unfriendly. Paying for viewers who see your commercials after a “limited time offer” has expired will be money wasted. As you may know, Advantage Media already directs agencies to obtain compensation for commercial units that air “out of flight.”  

Also, focusing on C7 (which someday could be pushed to C14 or beyond) takes the industry’s eye off those advances that could truly benefit the advertiser. Such areas include true commercial audience measurement, rather than the current C3 “average” of all commercials. Or how about pursuing expansion in the ratings sample to improve accuracy and discrimination within the data?  

It’s being said that the move to C7 is inevitable. But is it? We believe it’s not if advertisers take exception to it or at least minimally extract a significant “true” benefit from the change.  

Advantage Media strongly recommends that advertisers raise their voice on this issue before the networks and your agencies move to this new metric, especially if your involvement or agreement has not been sought.  

With deals being “discussed” based on C7 if not being seriously negotiated, all advertisers should contact their agencies on this issue now before the deal gets done. You’ll be glad you did!

Interested in learning more about the impact of a potential shift to C7?  Contact Matthew Reiss, SVP, Client Services for Advantage Media Inc. at (303) 763-8192 or via email at mfreiss@advantagemediainc.com.

 

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