Networks may struggle to meet upfront expectations

The women of Desperate Housewives had it tough when a tornado tore through their town. Now, the show's parent network — ABC — and its broadcast brethren face harsh winds of change as they enter TV's upfront selling period.

This week, the networks are presenting their upcoming roster of TV programs in hopes of securing billions of dollars in early ad deals. During upfront sales, networks traditionally sell about three-fourths of their prime-time fall season inventory.

But there are signs of a difficult selling climate. Already in 2007, spending on network TV ads dropped 2% to $22.4 billion, says TNS Media Intelligence. Going into this upfront, overall broadcast ratings are down.

Among other challenges:

•There's less glitz to sell. The three-months-long Writers Guild of America strike hampered development on new shows. That means fewer TV pilots to showcase to ad buyers. Also, a potential Screen Actors Guild strike now looms, with the contract for TV and movie actors up on June 30.

•There are fewer eyeballs. Consumers are watching ad-free shows on video on demand and using digital video recorders to save and view shows while skipping through ads.

•There's less money to spend. Faced with a sputtering economy, marketers are keeping a tight grip on ad budgets.

"A material decline (in upfront sales) is probable, given ratings declines, the disruption in the development cycle due to the recent writers' strike and economic woes," Merrill Lynch analyst Jessica Reif Cohen said in a recent report.

In the best-case scenario, broadcast networks would reap $8.79 billion in upfront sales, down 2% from 2007, she says. In the worst case, spending would drop 14% to $7.73 billion.

The networks also face competition from cable rivals, which weren't as affected by the strike because many of them air movies, unscripted shows and reruns. Cable is also getting creative with its ad units. For instance, Turner Broadcasting System's TNT and TBS are selling two-minute sponsored "ad breaks," in which marketers can incorporate their products. These long-form commercials center on entertainment-focused storylines such as a new "microseries" about an undercover Drug Enforcement Administration agent who drives a Dodge Challenger.

Yet, like the women of Wisteria Lane now fighting to get back on track, broadcast networks are trying to rebound with fresh sales strategies. NBC Universal has revamped its upfront selling approach this year.

Instead of solely hosting a glitzy, 5,000-person presentation of its programs during the May upfront week, it set up a series of smaller, 100-person meetings with marketers and media buyers that began in April. It also showcased a 65-week schedule.

Getting a head start gave NBC and its advertisers "more time to design and activate much more complex marketing campaigns," says Mike Pilot, president of NBC Universal sales and marketing.

Andy Donchin, national broadcast director at media-buying agency Carat, is in favor of NBC's new format. "We don't need the big dog and pony show. We need more one-on-one conversations."

More details on sales strategies:

•Earlier talks in smaller settings. CBS has also put an emphasis on early meetings with advertisers. While it still hosted a big presentation Wednesday, its sales force began to meet with "key clients and ad agencies" in March to discuss ideas, says Jo Ann Ross, president of network and interactive sales.

•More measurement options. Ad prices have been based on metrics such as live audience ratings that report how many people watch a show, commercial ratings that tally how many people watch the ads, and a measurement of viewers who watch the show, or just how many watch the ads, on DVR playback.

This week, ABC added another tool to the mix. It will now offer an advertising value index that lets marketers weigh various metrics — such as income, education or engagement level — of those viewing its shows. Marketers will be able to home in on attributes that are most important to their brands.

•Many advertising platforms. While TV sales remain the major focus of the upfront, networks are increasingly pushing their other ad platforms, such as the Web, mobile phones, even old-fashioned billboards. "The cross-platform element is absolutely critical," says Steve Calder, chief media officer for ad-buying company MediaHub from Mullen. "Virtually every brand that we're negotiating on behalf of is doing more than just the linear TV."

•More product placement. To get around the DVR threat, many networks are offering expansive deals for brands to integrate their products into the TV shows. NBC, for instance, will incorporate two General Motors cars into the new drama My Own Worst Enemy, which stars Christian Slater.

Contributing: Theresa Howard