According to AdAge, Johnson & Johnson and Coca Cola have decided to withhold money from the television upfront. Both are significant spenders at roughly $300 million each. The article lists the following reasons why companies are becoming increasingly hesitant participants in the Upfront:

1) The Broadcast Calendar (September though August) is often inconsistent with companies’ fiscal year.
2) Softer scatter markets (non-upfront buys) have led marketers to re-think the strategic value of an upfront buy.
3) Marketers are increasingly shifting dollars to new forms of media that are more easily tracked and have the potential for greater reach and effect.

This news comes one week before the famed upfront negotiations take place. It is one more blow to the television networks who have dominated this lopsided-billion-dollar-game for over thirty years. While Advertisers have questioned the value of the Upfront for years, we are finally beginning to see marketers taking action.

The Television Upfront model has always significantly favored the broadcast and cable networks. From an advertiser’s standpoint, it can be hard to predict where and when all advertisements should be placed for the year – especially for companies with less financial leeway. The upfront allows the content providers financial security for the entire year and in order to do so, they make audience delivery promises on shows that are new and may fail. Perhaps one of the greatest concerns voiced by clients is commitment of money and time. For example, what if a brand couldn’t keep up with production but they were already previously committed to millions of dollars of air time?

Another blow to the Television Upfront: the development of an ebay for advertising space. The idea is gaining popularity from Advertisers, several agencies, the ANA, and most recently, Walmart. It’s $50 million dollar endowment may prove formidable however, it may be difficult to get content providers to commit. Regardless, it is yet another major sign that the Television Upfront must go.

Finally, technology will ultimately destroy the :30 commercial. While some shows will be supported by sponsors, the majority of viewing will be commercial free. Power is already shifting to the consumer. Madison Avenue and the major networks are often too quick to jump on cliches and the flavor of the day. For example, one might argue that the target soap opera viewer is less likely to watch “One Life to Live” via mobile phone, broadband, or iPod. There is still plently of time for some people to watch commercials. Eventually, DVR’s and free content will be ubiquitous. In a recent Micropursuasion post, Steve Rubel cleverly writes:

So what happens to all those advertising dollars? Good question. Stay tuned to find out, but not to your TV.

Related Links:

Television Upfront: Is The Futrure Finally Here?

2007 Television Upfront Cliche’s: Engagement & Emerging Media

Would you invest in the “Upfrontâ€? today?

[tags] upfront, ebay, steve rubel, micropursuation, marketing.fm, television advertising, tv, Adage, walmart, coca cola, johnson & johnson [/tags]