REICH COMMUNICATIONS

The Upfronts: Paying More for Less

 

It’s a ritual of late spring…the upfront TV marketplace.

Every year, the networks (and in recent years, major ad-supported cable channels) present their fall programming to major advertisers and ad agencies here in New York.  They’re usually glitzy productions at major venues – this year at Radio City Music Hall, Lincoln Center, the Beacon Theater – with lots of star-power from the networks.

There’s a lot at stake.  It’s a chance for advertisers to buy ad time at better rates than if they waited until later in the year, when prices could be anywhere from 10 to 40 percent higher in what’s called the scatter market.

During the upfront period, the networks usually sell as much as 90 percent of their prime time ad availability. 

The numbers are big.  The major networks rake in around $9 billion as advertisers rush to grab up ad time.  When you add in the dozens of cable networks, from A+E to National Geographic Channel, the total take is close to $20 billion.  And it’s almost always a sellers’ market, since the ad buyers don’t want to get locked out.

For major advertisers, TV still offers something other media can’t – a big audience seeing ad messages pretty much at the same time, or in “real time” as the network ad salespeople say.  So even as the total TV audience continues to dip, ad rates appear to be going up again this year. 

Marketers are paying more for less, but FOMO (fear of missing out) still drives the upfront market.

What We Do: The Impact of PR

 

 

Publicity these days takes on many formats and utilizes the whole array of media, from traditional to social.

It used to be all about exposure in newspapers and broadcast, and even when online news and information sites began surfacing, many marketers put little or no value on an online placement.   Back then, it was “Get me in The Times,” then morphing to “Get me on Donahue” and “Get me on Oprah.”

Now it’s more like “Get me trending on Twitter.”

Marketers, especially those with big budgets, continue to put their dollars into advertising.  Buy ads and you know when and where they’ll appear, with a good idea of how many eyeballs (or ears) it will reach.    

But, as many of us in PR have been saying for years (decades, actually), it’s not only about having your message be seen, but more about having it be believed and then creating consumer action – buying the product or service.

A new survey, reported in this week’s ADWEEK, looks at what type of content influences consumers to try a new product or service.  The biggest single influencer, the report shows, is articles and blog posts.  A good chunk of that content is initiated by PR outreach.   More than 28 percent say articles and blogs are what causes them to try to product.

Social media is close behind, at 22.6 percent.

Other things that impact consumers are in-person events, at 15 percent, and celebrity and influencer endorsements, at 9 percent.

Online ads are at 17 percent, and print and other traditional advertising is cited by 3.8 percent of respondents.  Ironic, since the numbers spent by marketers are just about the opposite.  Hmmm.

And the winner is... ABC

 

Big events like the Super Bowl, the Grammy’s and the Oscars traditionally were must-watch TV, pulling in giant audiences for the nationwide live broadcasts.  But for the last several years, these events have not been a guarantee for a huge audience, which has been troubling for both the network carrying the event and for the advertisers spending in the millions per 30-second spot. 

The Academy Awards last Sunday proved to be a winner – not only for Green Book, Bohemian Rhapsody and Roma, but for ABC as well.

The ratings were up by 11.5 percent over last year’s Oscars telecast, drawing in 29.6 viewers.  And the event was profitable for ABC, which sold out all its available time in the telecast.  The network earned about $120 million during the program, with 30-second spots going for more than $2.8 million.

For comparison, the Grammy’s brought in about $95 million for CBS.  Approximately 30 million tuned in for the broadcast.  Super Bowl, which was the least-watched Super Bowl in ten years, still drew a super audience of 98.2 million – dwarfing the Grammy’s and Oscars combined.  Ad revenues for CBS were down five percent from a year ago, but still came to a hefty total of more than $385 million. The typical spot cost between $4.6 and $5.2 million.  

Pfft… a bundle, gone in 30 seconds.

Super Bowl = Super Ad Showcase

 

CBS says ads for Super Bowl LIII are more than 90 percent sold out, with just over two weeks to go.  And title sponsorships have been sold for each hour of pre-game and post-game shows.

Marketers are shelling out more than $5.2 million for a 30-second spot.

CBS expects the extravaganza in Atlanta to bring in $500 million, topping the $414 million that NBC earned for last year's Super Bowl.

Understandably, CBS will milk the event for all they can get.  Starting at 11:30 a.m. eastern, with seven hours of pre-game shows.  They'll be covering the game with 115 cameras, including four with live augmented reality graphics.  CBS Sports chairman Sean McManus says the broadcast "will look as innovative as any broadcast in history."

For many people, Super Bowl is as much about the ads as it's about the football.  Top advertisers this year are automotive, beer and beverage, movie studios and technology companies.  Returningf advertisers include Anheuser-Busch, Pepsi, Doritos, Avocados from Mexico (even with tariffs), and WeatherTech.

 

 

Who's Listening?

 

Americans spend nearly four hours a day listening to some form of audio, according to a study reported recently in The Wall Street Journal.

The bulk of audio time – 50 percent -- comes from traditional broadcast radio stations, both AM and FM.  Nearly tied as the second and third most popular sources are streaming (16 percent) and personally-owned music (14 percent), from CDs, downloaded music and even records. 

Following distantly is satellite radio – SiriusXM – at eight percent despite the fact that virtually every new car these days comes with a 3-month free trial.  SiriusXM is costly, so they probably lose many listeners once the free trial period expires.

And then there’s podcasts, today accounting for about four percent of listening.   But the relatively small portion of total listening time doesn’t give the full podcast picture.  About 26 percent of Americans listen to a podcast at least once a month – twice what it was only five years ago.  That’s about 73 million people ages 12 and up. 

What I find interesting is which podcast publishers today have the biggest audience.  Not the networks.  Not Spotify or Pandora.  NPR (National Public Radio) has the biggest podcast audience, with almost 19 million unique listeners every month.  iHeart Radio is second, with 14 million monthly listeners.  Two public radio programmers -  This American Life and PRX – have 9.9 and 7.2 million listeners.

The New York Times is at #6, with 7 million listeners for its daily news and analysis podcasts, followed by New York’s public radio station WNYC, with 6.6 million.

Podcasts often are supported, in part at least, by ads.  Podcast ad revenue this year is expected to hit $400 million, up from about $260 million last year.   Analysts expect it to exceed $600 million by 2020.

The big streamers Spotify and Pandora do carry podcasts, but they haven’t yet been a significant revenue stream for them.  Spotify carries about 150,000 podcasts and Pandora has a few hundred.  They say listening time for podcasts on their platforms represents less than one percent of their total listening time.

But that will likely change in the next few years, as the big streaming services see the potential and want a big piece of the anticipated growth in podcast ad revenues.  Their goal, says The Wall Street Journal, is to take more listeners – and more revenues – from broadcast radio.  The radio broadcasters don’t want to lose any share, but with total annual ad revenues of $14 billion, they’re hardly panicking.   

 

Going to Pot

TV news this morning showed long lines of people in the rain as they waited for the first legal recreational marijuana shops to open in Massachusetts, the latest state to make recreational pot legal.  It's the first state east of the Mississippi that's gone legal, although several more are expected to follow in the coming years.

As a child of the '60s, I sometimes wonder why it's taken so long.  Back in the day, it seemed like the majority of young people smoked pot.  Many of us thought as our generation became adults and took the reigns of power in business and in politics, pot would eventually become legal.  We knew it wouldn't be overnight, but nearly 50 years?

In grad school, I wrote a paper on how the big tobacco companies would market pot once it became legal, and I recall some research that showed Big Tobacco already had taken copyrights on brand names like Acapulco Gold.  Back then, experts were saying pot would be legal in about ten years.

Two years ago, while in Seattle on business, I walked past a pot store.  Curious, I went inside, expecting to walk into a dark and smoky den.  Instead, it was brightly lit with beautiful displays and counter and after counter of cannabis products and related paraphernalia.  The saleswoman, nicely dressed, could tell I was overwhelmed and asked what kind of high I was looking for.

What kind of high?  Huh?

She explained there were products that would relax me, make me feel wide awake, give me the munchies and lots of other types of effects.  I bought a chocolate bar that was supposed to make me feel mellow.  I ate it and... nothing.

But that shopping experience was a far cry from the days when your retailer was a friend of a friend, and you never knew what to expect when you took a toke.

Adweek recently devoted an entire issue to what it called "Flower Power."  The cannabis industry is expected to grow to some $200 billion.  I'm not sure if R.J. Reynolds or whatever else remains of the big tobacco companies have any holdings in cannabis companies, but Constellation Brands, which has Corona and Modello among the beer brands it imports, recently offered $4 billion to buy Canopy Growth, a Canadian cannabis producer that is the world's largest, producing mainly medical marijuana at this point. Clearly, Constellation sees some real potential in the marketplace. 

I did some publicity about two years ago for a guy who wrote a book called Pot Luck that explained and extolled the benefits of medical marijuana.  It was a good read and did a good job explaining how herbal alternatives including cannabis often -- but not always -- offered relief or cures where traditional medicine didn't.

As someone who works in the traffic safety field, I am also seeing evidence of more crashes in states where pot has become legal.  Unlike when you're drunk, you can be high and still manage -- or think you're managing -- to drive safely.  But reaction time is slowed and if something happens quickly on the road, a high driver -- an impaired driver -- may have a problem.

So I think that, along with legalization, should come a public education campaign to make drivers aware of the dangers of driving while high.  We've done it for alcohol over he years, so why not help people understand the risks of driving while high.  It can help those who want to indulge do it safely, without putting everyone else on the road at risk.

 

 

Shorter is Better - For TV Ads

Shorter TV ads get more viewer attention than longer ones.  That's what research recently reported by Television News Daily says.

Ten-second ads get about ten percent more attention than 30-second spots, and 20 percent more than 60-second ads.

This doesn't seem like earth-shaking news.  To me, it sort of stands to reason.  A shorter ad is less of an intrusion. 

The challenge, though, for a shorter ad is you have less time to draw and hold the viewer's attention, and less time to get across a convincing marketing message.  Shorter ads might be used in combination with the more traditional 30s or 60s, which have the time to get across the marketing pitch, while the short 10-second spots can serve to keep the brand name out there and possibly remind viewers of the longer ads that have the full marketing info.

We've been seeing short ads -- some even less than 10 seconds -- on the internet for years as pre-roll for online content.  But for those online ads to be seen, marketers need to hook the viewer in the first few seconds so he or she will want to keep watching, rather than click on "Skip Ad."  That's where real creativity comes in... or not.

 

Ads We Like and Those We Hate

 

My wife is participating in a focus group and as a prep question she was asked to list some ads she likes and some she doesn't like. 

We talked about it and we both agreed we love the "Dog Tested" campaign Subaru is running, showing dogs in various situations.  I could watch those ads over and over and, in fact, I've stopped the fast-forward on our DVR so I could watch one of those ads for perhaps the 20th time.

The other question was: what ads do we hate?

Two insurance ads topped out list.  Aflac, for the annoying Aflac duck.  At least they don't use Gilbert Gotfried's grating voice any more, but the voice is still annoying. 

The other ads are the seemingly non-stop pitches from Geico.  Some are funny the first time and maybe even the second time.  But Geico, which is by far TV's biggest advertiser, has them running all the time and everywhere, it seems.  So we hate them because of overexposure.

Now to the key question... Would I buy a Subaru because of the ads, and would I not buy coverage from Geico or Aflac for the same reason?  Hard to say, since many other factors would be in play.  For a car, it would be things like price range, style and comfort, reputation.  For insurance, it would be price and reputation -- reputation not based on the ads but on word-of-mouth regarding how they respond when you have a claim.  But, all other things being equal, I would avoid a company whose ads I hate.  I've done it before with banks.

 

 

 

Swoosh

Most brands work hard to avoid controversy, which means they often come off as plain vanilla -- staying quietly in a safe space.

Nike, though, has plunged right into a red-hot polarizing issue, and I think they'll come out ahead long-term.

 

The iconic footwear/athleticwear company, which had maintained its endorsement relationship with controversial football star/pariah Colin Kaepernick, has gone a big step further -- featuring the embattled player in its new ad campaign that celebrates 30 years of the "Just Do It" ad slogan.  The new ad with a close-up of Kaepernick, has the headline "Believe in something, even if it means sacrificing everything."

The tweeter-in-chief could not, of course, sit quietly on the sidelines for this, and his divisive comments have brought even more attention to the new campaign.  Ad experts estimate Nike has so far received $43 million worth of publicity -- nearly half of it positive, about 20 percent neutral and a quarter negative. 

Among the brand's key demographic -- 18 to 34-year olds -- 56 percent felt on-field protests like what Kaepernick was fired for are appropriate.

Not surprisingly, social media is ablaze with calls to boycott Nike products.  But many online and in surveys are praising the company and say they will buy more Nike products to support its bravery and its standing on principles they agree with.

In the face of the presidential bluster on Twitter, the NFL issued a statement in support of Nike and Kaepernick.  "The NFL believes in dialogue, understanding and unity.  We embrace the role and responsibility of everyone involved with this game to promote meaningful, positive change in our communities.  The social justice issues that Colin and other professional athletes have raised deserve our attention and action," the statement said.

Calling attention to the troubling and complex issue of alleged police brutality, especially in minority communities, is a good thing.  It is not an act of disrespect to our flag, our national anthem or our military, as some would have us think as a way to confuse the issue. It is simply a quiet and peaceful way to call attention to a real issue that we as a society need to deal with.

 

 

 

Upfront Week

 

It’s probably TV’s biggest week, and it’s not even on the air.

Upfront Week, happening now here in New York, brings execs from ad agencies, media buying firms and advertisers together to hear from the networks (over-the-air and cable) about their planned fall schedules and their new and returning shows.  The Upfront presentations are giant dog & pony shows in high-profile spots like Radio City, Lincoln Center and Carnegie Hall, and the nets trot out their stars, putting their late-night hosts Jimmy Kimmel, Steven Colbert and Jimmy Fallon to work as emcees.

There’s big money at stake – upwards of $16 billion in advance commitments by advertisers to buy time in the nets’ primetime schedules next season.  Advertisers scramble over each other to buy positions in what they are betting will be the big hits next fall.   They’re afraid if they wait, they could get locked out of a hit show, or if they can buy spots in the fall, the prices will be quite a bit higher.  That’s been the traditional thinking that’s enabled the networks to keep raising prices for ad time, even as their audience continues to shrink.

Years ago when the late media buying guru Gene Dewitt was a client, I’d line up interviews for him with ad biz reporters at The N.Y. Times, USA Today, The L.A. Times, CNN and the ad trades, where he’d make his prognostications on which new shows would be hits and which would fail.  He also would decry the whole upfront process, claiming it pits advertisers against each other in a feeding frenzy that really only serves the networks -- pushing their ad prices higher.  For years, Gene used to predict the end of the upfront marketplace, encouraging advertisers to forego the hyped feeding frenzy and push back, demanding better programming, more audience data and an orderly structure for pricing and buying ad time.

And here we are, a dozen or more years later as the Upfront is again underway.

Stories in The Times (New York and Los Angeles) are reporting that this year’s Upfront could see only a small increase in sales – maybe 3% -- or even a decline of 2 or 3%.   

There are a number of factors converging to bring a change, not only in Upfront spending, but in ad spending on TV overall throughout the year.  One analyst quoted in the L.A. Times says it will go down by 2% this year.

What’s happening?

*  TV viewership is down.  Except for major sports and news events, TV doesn’t draw in the huge number of viewers that it used to.  The nation no longer tunes in, almost as a whole, to see Ed Sullivan on a Sunday night.  Primetime viewership over the past three years is down from 10% (FOX) to as much as 24% (ABC.)  Only NBC has seen an increase of 7%, thanks only to a bump last year fueled by its mega-hit “This is Us.”

*  We can watch what we want when we want.  And we can go to so many more places for news – 24/7 and even reflecting our own political biases, if we choose.  The amount of programming is mind-boggling.  Where we used to have perhaps 100 choices of scripted programs between the 3 or 4 major networks, we can now choose from more than 600 scripted programs on the networks, on cable and now on streaming platforms like Netflix, Hulu and Amazon, ready to play whenever we choose.

*  Add to the networks’ woes the fact that coveted younger viewers (the 18-49 demo) are watching less and less of anything on regular TV.  Many don’t even own a TV or they are not hooked to an antenna or cable.  They stream bits and pieces on their laptops, tables or phones... or their unconnected big-screen TVs.

So as the TV audience disappears and fragments, the networks hope to raise their ad prices yet again.  This year, the average $134,000 cost for 30 seconds on primetime was 6% higher than it was the previous season.  Even if it does go up again for next season, how many more years will advertisers keep paying higher prices for fewer eyeballs?

It’s not totally bleak for the networks.  The shows they produce bring in money for them when they are shown on other platforms.  And some shows that eventually go into syndication can be a golden goose for the producing network and/or the producing studio, often owned by the network or the network’s parent company.

And meanwhile, we’re in the midst of another Upfront Week.  With lavish over-the-top presentations and parties, it’s good for New York’s economy, if nothing else.