With the glitzy TV-network “upfront” presentations in the rear-view mirror, advertisers and TV executives are about to head to the negotiating table. Rino Scanzoni’s actions will be under scrutiny by all sides.
As chief investment officer for the massive GroupM consortium of ad-buying agencies owned by WPP, Scanzoni has a large say in the deployment of nearly one-third of the media spend taking place around the globe. His thoughts about the viability of media can affect how important advertisers including AT&T, Subway, Unilever and American Express invest in TV, print, digital and more.
In a Q&A with Variety senior TV editor Brian Steinberg, Scanzoni assesses this year’s upfront market and the debate over time-shifted ratings standards.
What is your take on the strength of this year’s upfront marketplace, and what factors are behind it?
From an overall advertising perspective, we are probably looking at growth rates that are going to be in the 3.5% to 4% range, close with nominal GDP. When you drill down on that and want to look at national television, we are probably going to fall below that growth rate. It’s going to be in the 2% to 3% range overall, but there’s a difference: Cable will be north of that, probably in the 4% to 5% range, and network broadcast will probably be flattish overall. Primetime will probably continue to lose revenue, probably in the low single digits. Primetime is still the biggest piece of it, probably representing half of national broadcast revenue. But I think that’s the piece where money is shifting, continuing to shift to cable, and is also the place where, if there is money coming out of TV to fund online video, that’s probably the likely place.
I don’t think there’s going to be overall strength in the upfront market. We’re seeing a really soft “scatter” market. I don’t see that people are going to feel they need to shift more into the upfront to protect themselves from upward price pressure.
What demand do you think the networks will see from some of the more important ad categories?
Financial services have been one of the biggest starting four or five years ago, but that seems to be driven primarily by insurance advertising. If you sit for any length of time for any given day, you get inundated by different insurance ads. Automotive spending has been relatively robust in the fourth quarter, and they are starting to come into some sales levels of 16 million units, which is the high-water mark. I don’t know if that is going to start seeing some headwinds….You have money that is coming back from the Winter Olympics and Sochi — that will come back and be spent in regular advertising, so I think big categories might feel a little bit of an uptick, but as long as the economy is looking at 2% to 3% real GDP and a little over 4% nominal GDP, we don’t believe we are going to see advertising break beyond those barriers.
What do CBS’ plans to air Thursday-night NFL games do to primetime?
Having CBS do that puts more inventory into place on the NFL, and the NFL, if we look back at last fourth quarter, there have been some declines. I don’t know if they are going to be able to continue to maintain the kind of growth that it was getting in the last three or four seasons. There is no doubt: It will probably reduce the inflation in the national market, because clearly there is going to be more inventory.
The networks continue to push for an extension of the commercial ratings measure from the current three-day standard to seven days. Where do you think this debate is headed?
Advertisers are already getting three-plus and not paying for it. Now you are asking them to pay for it. That’s something of a challenge, and probably requires an economic incentive to do it….Plus, the only area that benefits — and it’s small — from going from C3 to C7 is really broadcast primetime. The other dayparts really have no uptick, and cable is probably less than half a percent.
The market is very different now. If you look at total upfront spending, broadcast primetime represents probably less than half of it. Total national TV is probably in the $33 billion to $34 billion range, maybe $35 billion, but broadcast primetime from the five networks is probably $8 billion. It’s not the driving factor that it was 10 years ago, 15 years ago. Cable clearly has become the larger piece…. Most advertisers are getting 70-plus percent of their gross ratings points from cable, and I don’t think the cable players, outside of some original series, get any kind of real benefit going from C3 to C7. It’s very, very small.
You were one of the architects of commercial ratings in 2007. Do you see a day coming when a new benchmark has to be established to accommodate all the different kinds of viewing?
We still have quite a bit of work that has to be done. You can measure an audience — I think they are able now to do it on computers even though it doesn’t factor in all of the computer viewing that takes place in offices. Now you have the mobile landscape, where people now have the opportunity to consume video and not necessarily be committed to a home or office. I think that’s really where the growth is, and that part of it has to be measured. I do think there has to be this coverage of measured viewing beyond just linear viewing and delayed watching through DVR and video-on-demand. We have to be able to measure the full spectrum of content that is now online and be able to put it all together and have a measurement that can identify one audience.