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Advertising execs expect moderate upfront sales market

With broadcast and cable networks reversing a two-year slide with last season's market, content providers hope to ring up more gains during the upfront selling for the 2017-18 TV campaign.

But executives at "The Media Buyers" panel at the IRTS breakfast on June 6 don't anticipate the upfront marketplace to be as strong this time around. IRTS, or International Radio and Television Society, is a charitable organization representing the electronic media industry to provide opportunities for those looking to enter media and entertainment.

Jack Myers, chairman and media ecologist at MyersBizNet, who served as the panel moderator, said that upfront negotiations are beginning and that the budgets that have been registered are flat versus last year. He also noted that scatter market has leveled off.

Still, Myers said, the networks are hopeful that digital budgets will return to linear TV outlets in the wake of brand-safety issues. He said there is some expectation that growth for linear CPMs will be in the mid- to high-single digits.

Dave Campanelli, executive vice president, managing partner, video investment at Horizon Media, doesn’t expect the CPM increases to reach the levels cited by Myers. He said viewing has shifted from linear to other assets on different platforms. "We need to do a better job of corralling and measuring these impressions and add that supply back to the market," he said.

Michael Nathanson, partner and senior research analyst at MoffettNathanson, said that new video bundles, like recent entries from Google Inc.'s YouTube and Hulu LLC, will lead to even greater media fragmentation. Looking at retail, automotive and consumer product goods sectors, he said there are concerns about demand from those verticals. Nathanson anticipates "a rather weak upfront" and remains cautious about the strength of the overall advertising economy.

With streaming players like Netflix Inc. helping to create an environment where viewers don’t expect to see commercials, companies like Turner Broadcasting System Inc. were praised for its efforts to reduce ad loads and push for more branded content. Catherine Sullivan, president of U.S. Investment at Omnicom Media Group, said the question is how to consistently integrate brand messaging into programming and story lines.

Horizon’s Campanelli said it is difficult to discuss branded content strategies during what can be the crush of upfront negotiations: "We should be spending more time on that, but branded content takes a lot of work."

With local media being integrated into national buying, David Cohen, president, North America at Magna, said the agency has been looking for more "holistic ways" to work with stations owned by ABC (US), CBS (US), FOX (US) and NBC (US). He noted, though, that conducting business is easier said than done because sales organizations are not necessarily structured that way.

Sullivan said Omnicom Media has had some success in that regard: "We’re willing to have those conversations. We’re interested in those channels."

Carl Fremont, global chief digital officer at MEC Global, said the industry needs measurement standardization as clients move away from buys based on traditional measures of age and gender from Nielsen Holdings and toward more audience- and engagement-based buys.

"It’s hard to compare one buy to another," he said, noting that Open AP, the consortium for audience-based consortium formed by Turner, Viacom Inc. and Fox Networks Group, is a good step forward. "We hope it gains widespread adoption. It’s brave. We need to be brave to break the model and come together on what the metrics should be."

In closing, panelists were asked to deliver a message to the industry, and Magna’s Cohen also gave thumbs up to the Open AP initiative. "United we stand, divided we fall," he said, adding that this is just a starting point toward great commitment to collaboration across the industry.

Sullivan emphasized that there has to be more enhanced measurement, noting the need to "break down the wall" and come together as an industry buying against linear and digital content.

Horizon’s Campanelli said parties on both sides of the negotiations need fresh approaches. "It’s the same thing year to year. We need to think differently," he said. "We need to think differently about the upfront."

Referencing the show he has been watching, HBO / Cinemax (US)'s top series franchise "Game of Thrones," Nathanson said, “Winter is coming.”

Myers sent attendees out into the rainy New York morning with a gloomy forecast as well, stating that the ad market in the next few months would encounter a "significant downturn."