The upfront market is the period of high-stakes negotiations during which the major television networks sell commercial time to advertisers and agencies before the start of the fall season. That's how the name was derived, in that billions of dollars are placed on the table ahead of the premieres of the primetime programmes in which the commercials will appear. The broadcast networks typically go first, because they remain bellwethers, followed by the cable networks and the sellers of syndicated series.
The ritual doesn't make much sense anymore, particularly since after 11 September many marketers have adopted a cautious purchase pattern dubbed "just-in-time buying", after the practice among auto-makers to have parts delivered to the plants as needed in the assembly process rather than having them pile up as inventory. Lots of agencies prefer to buy commercial time as the season progresses, anyway, in what's termed the scatter market, betting they may get better deals before airtime than they would by committing weeks or months in advance.
But Madison Avenue is nothing if not tradition-minded so the upfront market gets under way each year in mid-to-late spring and lasts from mere days to many months. The variations mainly relate to the state of the economy more than the quality of the new series being paraded before agencies and advertisers in a series of elaborate presentations.
For instance, before the 2000-2001 season, advertisers rushed to buy a record $8 billion worth of spots in the broadcast upfront market, fuelled by the dotcom and stock market booms. The dealing was practically done after a ten-day frenzy that sent both sides off to the Memorial Day holiday in late May without having to phone the office.
A year later, the dotcom and stock market meltdowns pushed demand down a steep 15 per cent, to an estimated $7 billion, ahead of the 2001-2002 season in a broadcast upfront that lasted until Independence Day in early July. (Some years, the talks drag on until Labour Day in early September, which now gives you an idea of how the upfronts progress, not to mention a handy guide to when several major American holidays fall.)
Now, as the two sides are poised to start the upfront dickering ahead of the 2002-2003 season, there are indications of a slight upturn in the economy that may lead to prices rising by around 3 to 6 per cent, for a total broadcast market of $7.2 billion to $7.4 billion.
If that happens, it would be a crucial harbinger of the recovery in ad spending that many analysts have been predicting. But there's a delicious dilemma if the broadcast networks do take in more money.
On one hand, agencies are loath to pay more than they did last year, when for the first time in eons they had the upper hand and forced prices lower. But Wall Street would deem higher revenues for the networks to be good news, potentially pushing up prices of media stocks - and agency stocks, too.
It's the kind of quandary that people once mulled over while smoking a Winston.
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