Advertisers return to producing shows

Remember when shows like “Texaco Star Theater” and the “Colgate Comedy Hour” were nothing but quaint relics from the so-called Golden Age of Television?

The networks managed to chase advertisers out of the TV production biz years ago, creating a healthy church-and-state relationship. Studios produced the shows, networks aired them and advertisers bought time inside them. And never the twain did meet.

But that wall — which held up well for 40 years — is about to come tumbling down.

In a deal that reveals the diminishing power of the broadcasting nets to run the game solo, ABC last week struck a programming partnership with media buyer Mindshare, giving the latter (and its ad clients) a say and a stake in new shows.

Under the pact, MindShare will pitch, develop and produce shows for the Alphabet, getting a chance to incorporate advertisers via cross-marketing and product placement from the get-go.

That’s not too far off from those early days of TV, when advertisers took an active role in producing shows – and not just variety showcases. Even classic laffer “I Love Lucy” was sponsored at one point by tobacco giant Phillip Morris — the show’s original opening had cartoon versions of stars Lucille Ball and Desi Arnaz dancing around a pack of cigarettes.

But by the 1960s, broadcasters had wrested complete control over ad sales. What evolved was a system where each May in the so-called upfront selling sesh the ad biz ponies up big bucks to promote its products on TV, and every year, the nets increase their ad rates.

Now, the nets are worried sick over audience fragmentation. With the troubling audience declines seen this fall, media buyers could well resist price hikes and threaten to take their money elsewhere.

“We can’t keep going down the road of media inflation, specifically television,” says Bob Flood, senior VP/director of national electronic media for Optimedia Intl.

“If the buying community continues to see prices climb unabated, this may cause a relocation of media spending toward other media — especially when it comes to more youthful audiences.”

Advertisershave been slowly making their way back into primetime (though some, like Hallmark and Procter & Gamble, never really left).

Coke sponsored the short-lived WB drama “Young Americans” and has more facetime than Ryan Seacrest on “American Idol.” Castaways munch Doritos on “Survivor” and there’s a strategically placed Ford in “24.”

But the ABC deal with MindShare isn’t just about product placement.

Once the programs air, MindShare and ABC will split the commercial time, with the former distributing spots directly to its clients, and ABC to its advertisers — similar in some ways to syndication’s barter advertising model.

“If it’s a successful program, then it gives advertisers a means to control some of the cost of the media buys going forward,” one media buyer says. “A portion of their budget isn’t going to be subject to the sizeable price increases of the network marketplace.”

MindShare, a division of Britain’s WWP Group, will share in any show’s backend profits.

What does ABC get?

Shared risk, a business strategy movie studios are well acquainted with.

The Alphabet isn’t the only broadcast outlet looking to make production partners out of their advertisers. Other nets have had their own informal chats with MindShare and other media buying agencies recently about such partnerships.

Two other top Madison Ave. agencies interested in pursuing similarly structured partnerships are Magna Global and OMD.Initiative exec VP and director of national broadcast Tim Spengler says every media buying agency is looking at new ways of doing business, versus just relying on 30-second spots.

“We are all looking for ways to integrate our brands into content,” Spengler says.

Despite their enthusiasm, iewers, creative types and Washington regulators may not be ready for advertisers to plant such a prominent stake in primetime.

Also, MindShare has a long way to go before getting a show on the air. Under the deal with ABC, the agency is free to work with any TV studio it wants in developing a show.

ABC TV Network prexy Alex Wallau says the Mindshare deal will not distort the creative process and that all product placement be organic. The pact also limits the number of products that can be introduced.

MindShare North American prexy-CEO Marc Goldstein says it would make no sense to develop shows cluttered by obvious product placement.

“Our primary focus is to develop compelling content and successful scripted series. If other things come along with it, that’s terrific. But the focus is successful programming,” Goldstein says.

No one on Madison Ave. is ready to declare network TV dead, but most admen are convinced the ad landscape is going to be revamped in the years ahead.

“TV is still the king of all media. The six broadcast nets control half of the audience,” Spengler says. “Five or seven or 10 years from now, all bets are off based on the trends we are seeing.”

Last May, the six broadcast nets racked up a record $9.2 billion during the upfront, a 12% jump from the year before. (Of the increase, advertisers say about 40% is not new money but rather cash moved over from scatter, the non-upfront purchasing market.)

“Advertisers won’t continue to pay for eroding audiences,” says Carat senior VP/director of national broadcast Andy Donchin. “This past year has been a tipping point. I really think advertisers will resist paying huge increases.”They’re also in favor of a new upfront model whereby nets do not launch new shows all at the same time.

“We want 52 weeks of original programming,” Donchin says. “We don’t want networks giving up on the summer.”

Flood agrees: “I think if there were a year-round development system, that would provide advertisers a better return in terms of their ability to truly integrate and develop marketing campaigns that can last year-round.”

The steep dropoff in young male viewers from the fall TV sked proves what Flood and numerous others have been saying: Tech-savvy young people have many other platforms from which to get their entertainment, including the Internet, DVDs, vidgames and even cell phones.

The common denominator shared by these platforms: None is driven by 30-second commercials.

“The advent of these other technologies is going to require a new mindset in terms of how advertisers communicate with audiences. I think it will usher in a new era in terms of thinking,” Flood says.

And, perhaps, more Hollywood-Madison Ave. marriages.

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