Obviously when companies who advertise face tough times the CFO runs to the president and demands cuts in the ad budget. He runs into one of two types of CEOs....the I need quick bottom lines and the orders go to cut the ad budget as Mr. Shortsight will be out of that position and on to another pretty soon. Or the CFO runs into the other type of CEO who calmly asks the finance guy where does he expect to get the next customer.
Advertising cutbacks are like blood in the water to the opportunistic. So what does this have to do about advertising upfronts? Plenty and there is a wealth of information about the company that can just be gained by a look at the advertising position.
THIS ISN'T INVESTMENT ADVICE. GOD STRIKE ME DEAD IF IT IS.
The upfront is a time of year where agencies register budgets with the networks on behalf of clients. Negotiations ensue and this is the part of the advertising buying and selling time called the "up front" because it is for inventory booked "in front of"the upcoming season that launches usually in the last weeks of the third quarter. Inventory that isn't bought or sold during the upfront becomes "scatter" inventory and is sold on a "scatter shot" basis and usually at a significantly higher rate. Key word here is "usually"
It is the disconnect of understanding of the timing of the fallout of the "upfront" that maybe someone misses here. The article indicates a 9+% decrease in upfront buying. Although NO ONE KNOWS the real number, the 9% generally reported is, like all advertising, probably a bit optimistic.
So let's play a "let's suppose" here. Suppose I have a business in women's hats. I need to keep the family and my local bank happy so I propose a spring sale of next year's collection. I put on a dog and pony show, plenty of food and drink. A nice desk thing giveaway and I schmooze my customers to death. In the end, I find that I've sold almost all my good inventory of hats and my total sales are (gasp!) 10% less than last years which were down as well from the year before that.
My banker tells it to me flat out: You are going to have 10% less to spend in every catagory...from new hats to salaries for your best people. Everyone will have to work 10% harder just to keep your overheads from eating you alive. You'll spend 10% less on your suppliers who will have that much less to spend.
Of particular note your hat shop lives on new creations. You can't "take the chance" on a brilliant but new designer so a good idea goes begging and he/she goes back to work at Starbucks and the trail of havoc is nearly endless.
All this because someone thought that advertising was an overhead that had no effect but more on that next time. Right now the Viacoms of the world will see a pinch (yet again) and you'll see a pinch with bad and cheap programs flooding primetime but if you look closely, development studios who product the pilots will be hurt as will the script writers, costumers, etc., right down to the Foley artists who slam the door you hear.
Advertising cutbacks are like blood in the water to the opportunistic. So what does this have to do about advertising upfronts? Plenty and there is a wealth of information about the company that can just be gained by a look at the advertising position.
THIS ISN'T INVESTMENT ADVICE. GOD STRIKE ME DEAD IF IT IS.
The upfront is a time of year where agencies register budgets with the networks on behalf of clients. Negotiations ensue and this is the part of the advertising buying and selling time called the "up front" because it is for inventory booked "in front of"the upcoming season that launches usually in the last weeks of the third quarter. Inventory that isn't bought or sold during the upfront becomes "scatter" inventory and is sold on a "scatter shot" basis and usually at a significantly higher rate. Key word here is "usually"
It is the disconnect of understanding of the timing of the fallout of the "upfront" that maybe someone misses here. The article indicates a 9+% decrease in upfront buying. Although NO ONE KNOWS the real number, the 9% generally reported is, like all advertising, probably a bit optimistic.
So let's play a "let's suppose" here. Suppose I have a business in women's hats. I need to keep the family and my local bank happy so I propose a spring sale of next year's collection. I put on a dog and pony show, plenty of food and drink. A nice desk thing giveaway and I schmooze my customers to death. In the end, I find that I've sold almost all my good inventory of hats and my total sales are (gasp!) 10% less than last years which were down as well from the year before that.
My banker tells it to me flat out: You are going to have 10% less to spend in every catagory...from new hats to salaries for your best people. Everyone will have to work 10% harder just to keep your overheads from eating you alive. You'll spend 10% less on your suppliers who will have that much less to spend.
Of particular note your hat shop lives on new creations. You can't "take the chance" on a brilliant but new designer so a good idea goes begging and he/she goes back to work at Starbucks and the trail of havoc is nearly endless.
All this because someone thought that advertising was an overhead that had no effect but more on that next time. Right now the Viacoms of the world will see a pinch (yet again) and you'll see a pinch with bad and cheap programs flooding primetime but if you look closely, development studios who product the pilots will be hurt as will the script writers, costumers, etc., right down to the Foley artists who slam the door you hear.