Progress has created a sort of paralysis during the past two weeks at television’s so-called upfront market in New York.

The upfront market is the industry’s annual spree of ad buying and selling, during which the networks roll out their new programs and schedules for agencies, Wall Street and the media. It typically climaxes in a flurry of spending by advertisers who want to reserve ad space in the fall lineup. Last year’s session resulted in roughly $9 billion in early commitments for commercial time in the fall season.

But no one is expecting that level this year.

“It’s not going to happen for months,” said Teddy Hayes, vice president of media services for L.A.-based La Agencia de Orci. “I don’t think anyone’s in a rush.”

A handful of sea changes, some not fully realized but all seemingly inexorable, have put a chill on the early dealmaking. Specifically:

– The networks are including new ways of watching TV on the Web, via cell phones and Ipods in their sales pitches.The ratings, the bedrock data upon which advertising rates have traditionally been set, have been called into question due to the advent of TiVo and other digital video recorders.* The presence of new competitors The CW and MyNetworkTV and the inclusion of Spanish language networks Univision and Telemundo is splintering an already fragmented market.

– In response to the networks’ new strategy of making wholesale schedule shifts, more advertisers are holding off until fall’s “scatter market,” hoping to cash in with spot buys on unexpected hits and make cross-platform and integration deals.

Marc Goldstein, president and CEO of MindShare America, a hybrid media and advertising firm, sees the upheaval as positive.

“Do you think that the presentations and the market will take the same form as they have taken for the past umpteen years?” he asked at one of the market keynote forums. “We are in a period of substantial change in our industry, so why wouldn’t things change?”

No dough


Somewhat paradoxically, the new developments’ impact may be far greater strategically than financially.

Jon Swallen, senior vice president of research at TNS Media Intelligence, estimated that the money spent on digital platform advertising, for example, would be puny when compared with traditional broadcast ad dollars. The general consensus among analysts was that it was too early for networks’ cross-platform efforts to have much advertising impact.

“Right now, the amount of attention and ink devoted to all of these new platforms is inversely proportional to the amount of money that they will actually generate,” said Swallen. “But people are looking ahead rather than where they are right now.” The networks may well be banking that when alternative delivery systems do become real moneymakers, the firms that were out front with advertisers will be able to cash in.

David Miller, managing director for financial services firm Sanders Morris Harris in Los Angeles, said there will unlikely be any additional money spent on digital this year, just a small-scale reallocation of existing ad allowances, which he believes will be less than last year’s.

“That pie on a volume basis is probably going to be smaller than in the past,” Miller said, and the sales will come later. “Why would advertisers commit their money in upfront now when they can get the same prices later?”

Bienvenidos


This year, Spanish broadcasting powerhouse Univision Communications Inc. and NBC-owned rival debuted on the same ratings system that CBS, NBC, ABC and Fox have used for years, switching from the Nielsen Hispanic Television Index to the Nielsen Television Index. Azteca America, the fourth and smallest Spanish-language network that is also the second-largest provider of Spanish-language programming, announced at its upfront that the network would move to NTI this year also. The shift marks the official arrival of the Spanish broadcasters to the advertising industry, but their arrival could be somewhat underwhelming, at least initially.

“Advertiser and marketer commitment to Hispanic marketplace has been uneven, but the signs are there for that to change,” said Swallen.

“The question remains for the networks can I sell that to the advertisers? The challenge will be keeping the focus on value of Spanish market and Spanish consumer.”

Hayes said this market will grow faster than years past, but noted that truly penetrating the Hispanic market is going to take a lot of work on the part of the new advertisers.

“There’s going to be some companies that have been on the cusp of advertising (with Hispanic broadcasters), and now will have the push they need to get into that arena,” Hayes said. “It won’t be overnight; though it will begin the process of developing (advertising) growth from other companies hadn’t had the Hispanic market brought to their attention.”

And for advertisers, making a significant buy in the Hispanic broadcast world means a big commitment.

“A company that’s doing a big ad buy has to be prepared to talk with these people and has to make a strategic decision,” Hayes said. “It can’t just be a marketing thing. It’s not going to work for an advertiser if you don’t have employees that speak Spanish, operations in Spanish, outlets in Hispanic neighborhoods or collateral printed in Spanish.”

Amid all the change, there was still room for traditionalists like Les Moonves, the chairman and chief executive officer of CBS Corp., who made a pitch for quality content at his network’s presentation.

“Wireless,” said Moonves, “is useless if you’re hitless.”