AdWeek has a piece called Buyers Demand Flexibility Heading into Upfronts. I have seen this word, “demands” thrown around a lot with the advertising community and quite often it seems (and is) meaningless, but given the economy I doubt that it is completely meaningless this time around. But I don’t yet have my arms completely wrapped around the notion of how much leverage the ad buyers really have.
Typically, you can’t make demands if you don’t have any hostages and while it’s all fine to say “the ad buyers have money they can hold hostage!” (which is certainly true), this isn’t like the WGA or SGA where in a pinch, if negoatiations aren’t going the way they like, they can go on strike.
Ad buyers will be spending on national advertising regardless and there will be no walkouts, holdouts or strikes. That much you can count on. So it will be interesting to see how it all plays out. The cable companies seem to be hoping that the way it works out is that more dollars are thrown at cable networks. From the article:
Faced with the worst economy in a generation, and with ad budgets down amid predictions they will sink further as the year progresses, there is little disagreement among ad buyers that they have a lot of leverage heading into this year’s upfront television marketplace. And they will be seeking concessions including price rollbacks and significantly greater flexibility on terms and options to pull out of or reduce spending commitments made in the upfront, given the uncertainty of the economy.
The networks, of course, aren’t conceding much at this point. CBS CEO Leslie Moonves, however, is the only network executive so far this year to publicly predict that pricing—at least at his network—will be up this year. He also indicated last week that it is possible CBS will sell less inventory upfront this year.
One top-tier cable sales chief, who also spoke on condition of anonymity, believes cable networks might be in a slightly better position. “There will be flexibility, there will be some concessions, and ultimately there will be a lot more negotiation. But that’s not necessarily a bad thing,” said the exec. “The broadcast guys are getting pushed [to secure price increases], but the clients are getting pushed even harder, and from every direction. They’re going to say, ‘I need concessions if I’m going to survive.’ And if the broadcasters try to squeeze too hard, a lot of business will come our way.”