Q2 option-taking to impact upfront


A major media agency CEO recently confirmed what the market is starting to hear—advertisers are pulling back on upfront commitments and Q2 option taking is bigger than many had thought. Cuts are being made across the board—network, broadcast, cable, you name it.

Said the CEO: “Can anyone be surprised? The market was in for a correction and here it is. It will be the first favorable scatter market in almost a decade. The media market is changing before our eyes.”

Indeed, the dynamic is changing, just like radio. Advertisers, knowing inventory will be available, are focusing more and more on scatter—this has been going on in radio for years.

With clients reportedly taking double digit options and some taking their right to have up to 50% of their ad budgets, we are looking at some mighty interesting times for the rest of the year. We asked another media agency CEO:
With so much option-taking now, and therefore scatter on fire for the rest of the year, how might all of this change the dynamic of the upfront?
There will be much lower upfront commitments. This does not necessarily mean that overall spending will be down at the end of 12 months, but advertisers need a reason to commit early.

Now that the DTV changeover day has been moved to June 12—right after the next upfront. Will potential viewing—and therefore ratings—problems with broadcast affiliates affect negotiations and pricing?
Minimal. In truth, we are talking about a very small percentage of TV homes. Further, this represents the least important consumer segment for most advertisers.
Could dollars be spent elsewhere (like radio) because of the uncertainty?
Not really. If TV prices stay steady or go down they represent a better value. Radio, magazines and newspapers are in trouble.