By Jeanine Poggi BEHIND THE TV UPFRONT UPHEAVAL · 2020. 5. 11. · The one bright spot was stream-ing, with Disney+ hitting 54.5 million subscribers globally. That’s a gain of

BEHIND THE TV UPFRONT UPHEAVAL p. 18

The glitz is gone and productions halted, but sales execs are still game-planning for negotiationsBy Jeanine Poggi

p. 4

Spending dips during pandemic, but the tactic still works when done rightBy Jack Neff

INFLUENCER MARKETING UNDER SCRUTINY

AGENCY REPORT 2020 p. 9

Accenture passes IPG, digital revenue growth slows and holding companies streamline

May 11, 2020

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News

BLEAK OUTLOOK FOR TV IN SECOND QUARTERDearth of live sports and marketer spending cuts pressure ad revenue

By Jeanine Poggi

TV ad revenue prospects moving into next quarter are grim due to the coronavirus pandemic, according comments made by the top brass at media conglomerates during earnings reports last week.

The lack of live sports, coupled with a pullback in spending by some key advertising categories, will pres-sure ad revenue at TV network groups in the near term.

Roku said that it saw a greater number of ad cancellations than normal. Still, it said it did see more advertisers move to the platform from traditional TV, as it has benefitted from a surge in OTT usage while peo-

ple are social distancing. “Spending will come back, but it’s

likely in our view not going to come back in the way that it had been,” Roku CEO Anthony Wood said in a confer-ence call. “Even in the case of sports, we think that this disruption will force a reassessment broadly by marketers.”

ViacomCBS CEO Bob Bakish last week declined to predict how much domestic ad sales revenue would be impacted in the second quarter, but said “it’s not pretty.”

CBS’ ad revenue declined 19 percent in the first quarter to $2.48 billion, thanks in part to cancellation of the NCAA “March Madness” tour-

nament and the network not having the Super Bowl, as it did in the 2019 first quarter. Excluding this impact, ad revenue would have increased 2 per-cent. Profit tumbled to $516 million, or 84 cents a share, compared with $1.96 billion, or $3.20 a year ago. Still, adjusted earnings of $1.13 a share beat analysts’ estimates of 95 cents. Reve-nue declined 6 percent to $6.7 billion.

“It’s not as bad as what Fox said, that’s for sure, but it’s not pretty ei-ther,” Bakish said. But he does expect to see some improvement in the sec-ond half, with the PGA Tour expected to resume its season in June.

“At this point, we know there will

ViacomCBS CEO Bob Bakish said in an investor call last week that the prognosis for domestic ad sales revenue in the second quarter is “not pretty.”

Inside This Issue

FUTURE GLOOMY FOR AGENCY JOBS The depth of damage to staffing in the current downturn has yet to be determined. But the prognosis is grim.

Page 7

INTERVIEW WITH THE STREAMERQuibi’s users found “in-between” moments to consume its content—though not always when the founders expected, says CEO Meg Whitman.

Page 16

IN THE EYES OF THE LAWYERSHeed these 5 tips to make sure your adver-tising during the pan-demic does not create more challenges than it solves.

Page 25

WILL TV’S PICTURE GET CLEARER? The turmoil caused by COVID-19 is a chance to step back and make sense of the TV indus-try’s own, decades- long disruption.

Page 28

be a significant impact on ad sales in Q2. But based on what we’re seeing today … we believe there will be an improvement in advertising in the third and fourth quarters, assuming businesses begin to reopen at scale,” Bakish said.

Fox CEO Lachlan Murdoch told Wall Street that local TV station advertising was on pace to be 50 percent lower in the current quarter compared with last year. Local auto, local retail, local travel and local entertainment categories are leading this decline, Murdoch said.

Political advertising has also slowed down, but Murdoch said with six months to go before the election, he expects the category to intensify closer to November.

The outlook is stronger at Fox News, which has seen ratings growth, especially of younger audiences, help-ing to boost ad sales. And advertising that was originally earmarked for sports on other Fox networks is being moved to Fox News, which posted a 15 percent increase in ad revenue.

“This growth has not gone unnoticed by advertisers with new business coming to Fox News from clients looking to reach these younger demos or to transition dormant sports dollars to news or to present different marketing messages in light of the virus, thereby mitigating most of the

(Continued on page 2)

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News Blurry picture

BLEAK OUTLOOK FOR TV IN SECOND QUARTER(Continued from page 1)

pullback in the categories that you would expect, such as auto, entertain-ment and retail,” Murdoch said.

On the sports side, which accounts for 40 percent of Fox’s total ad rev-enue, Murdoch said very little of its revenue has been impacted thus far by the shutdowns. This is because most of the company’s sports revenue is concentrated in the fall with baseball postseason, college football and NFL.

For the first quarter, Fox saw a 25 percent increase in revenue to $3.4 billion, buoyed by the Super Bowl. Earnings were up 20 percent to $920 million.

Walt Disney’s ESPN, which has been scrambling to reprogram its channels in the absence of live sports, saw its ad revenue decline 8 percent in the quarter compared with last year.

Overall, ad sales are pacing “significantly” below last year at this time, Christine McCarthy, chief finan-cial officer at Disney, said during the company’s earnings call.

“The net impact in what we are seeing is a significant decline in ad sales, and we’ll see it more at ESPN than we will at the broadcast net-works,” McCarthy said. “There’s definitely more ad sales decline, year over year, hitting ESPN.”

Shutdowns due to the coronavirus had a $1.4 billion impact on income in the quarter, with much of that stemming from the closure of Disney theme parks.

The one bright spot was stream-ing, with Disney+ hitting 54.5 million

subscribers globally. That’s a gain of 4.5 million subscribers since April 8, when it announced it had surpassed 50 million users.

At Discovery, domestic ad sales were flat at $1 billion for the quarter, but the company said cancellations began to increase toward the end of March as the coronavirus crisis accel-erated. U.S. TV advertising was pacing down 20 percent in April.

On March 24, Discovery withdrew its 2020 financial guidance due to the pandemic.

Discovery CEO David Zaslav tout-ed ratings at its lifestyle networks, including HGTV and Food Network, as more people are at home exploring DIY projects and experimenting in the kitchen.

Discovery’s revenue for the quar-ter was flat at $2.7 billion, and earn-ings fell 2 percent to $377 million.

On the pay-TV side, Dish Network

said it lost 413,000 subscribers in the first three months of the year com-pared with 259,000 in the year-ago pe-riod. The company closed the quarter with 11.3 million subscribers, down 6 percent from the same time last year. This included a loss of 281,000 Sling TV subscribers. Sling TV, which has issued free offers during the pandem-ic, has 2.3 million subscribers.

“COVID-19 pandemic caused se-vere disruption in certain commercial segments served by Dish, including the hospitality and airline industries,” the company said in its statement.

On May 12 and 13, Ad Age will host TV Pivot, an online event in which sales leaders, media buyers and marketers will discuss the future of deal- making and the way forward amid the pandemic. Join us at AdAge.com/tvpivot2020.

Social network makes changes to Watch, where it promises advertisers more accuracy than TV

Facebook now allows advertisers to use the same targeting tools to plan campaigns in its Watch video channel as it does for its other ads. The move is an upgrade to its video ad product in order to better compete with TV.

The new features are part of an advertising pro-gram it launched last year called Facebook Reserve, which was established so brands could order com-mercials similar to how they do on TV. The brands choose what types of shows they want to sponsor, the amount they want to spend and the size of the audience they want to reach.

Facebook Watch streams shows from top media partners and stu-dios. For instance, Justin Bieber has a new show called “The Biebers.”

Targeting in Watch had been limited to slices of Nielsen demographics, which is how TV ad buyers are used to doing business. Erik Geisler, director of North American partner-ships at Facebook, says advertisers were asking, “You’re Facebook, you have myriad targeting options, how can we leverage that?”

The targeting options allow the brands to hit regions in the U.S. more granularly. Advertisers can apply custom audiences, which are lists of customers the brands bring into the social network to serve messages directly.

The upgrade comes as the digital video ad marketplace prepares for NewFronts, which is when digital platforms pitch ad-vertisers on their program-ming to lock in sponsors for the coming year. The Inter-active Advertising Bureau plans to stream NewFronts programs in June. At the same time, TV networks are making upfront pitches to advertisers.

Also, with traditional TV and cable audiences in decline, new over-the-top TV platforms have become more attractive to major sponsors that still need to reach consumers. Compa-nies like Roku and Amazon Fire TV are developing advertising platforms that introduce sophisticated ad targeting into connected TVs.

Ad buyers are looking at OTT products “to get that enrichment targeting, or they call it advanced tar-

geting,” Geisler says. “And so, [we are] coming to the table with all of that.”

Facebook says there are 130 million people watching videos that are part of the Reserve program every month in the U.S., up from 100 million people last year. And Facebook wants brands to compare that to TV: The viewership for Reserve is “more than half the size of the U.S. TV universe,” ac-cording to Facebook, which states it can hit 38 percent of 18- to 34-year-olds in the U.S. compared to 29 percent of that age group available on TV. So far, Facebook says it offers the new advanced targeting to only a select few advertisers, and won’t roll it out more broadly until next year. Anheus-er-Busch InBev, Intuit and toothpaste brand Pronamel will be among the first brands to try it.

This type of program is harder to run for Facebook, because it guarantees the ad will run alongside a specific set of shows and reach a select audience. That limits the availability of ad inventory. It’s also more expensive, according to advertisers.

FACEBOOK TARGETS TV MONEY WITH UPGRADE TO ITS VIDEO AD PROGRAM

By Garett Sloane

Facebook Watch is offering targeting options to allow brands to hit regions in the U.S. more granularly and to apply custom audiences.

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News Modeled behavior

By Jack Neff

HOW BRANDS ARE STAYING ‘INFLUENTIAL’ DURING THE PANDEMIC

Many marketers have put influencer campaigns on hold, but Procter & Gamble, L’Oreal, e.l.f. and Mount Gay are among those sticking with it and adapting

Even before the coronavirus out-break, there was talk of a looming “social recession” in which market-ers and consumers would get sick of the influencer marketing that’s been one of the industry’s hottest growth markets.

That time may have come, thanks largely to the pandemic, which has pro-duced an economic recession and made much of what influencers once did look tone-deaf now. Gwyneth Paltrow became the first celebrity influencer to pull a post in mid-March amid pandem-ic shaming in social media for pitching her high-priced G. Label sneakers.

The pandemic has essentially halted growth of influencer marketing since mid-March. Brand spending on influencers on Instagram for the full month of March fell 24 percent from February, according to tracking firm Instascreener. Spending still grew 79 percent for in the first quarter to $474 million. But preliminary data for April shows spending at about $120 million, which is down 17 percent from March and flat compared with April 2019. “Many brands have put influencer programs on hold,” says Instascreen-er CEO Sean Spielberg. Shareablee, which tracks all brand posts across most major platforms, finds spon-

sored influencer posts down 85 per-cent on Instagram and 57 percent on Facebook in April compared with the same month a year ago.

Still, influencer marketing is not on the verge of extinction—and, if done right, it can help brands stand apart from other pandemic-era advertising that has begun to look the same. Below, some tips on how to make it work.

This isn’t time to give upWhile many marketers have backed away, it’s actually a good time for influencer marketing in many ways, says Benjamin Spiegel, chief digital of-ficer of Procter & Gamble’s beauty di-vision. Influencer audiences are rising as people consume more content at home. Influencers, who are equipped with their own in-home studios, are one of the only ways for brands to cre-ate new content amid lockdowns that prohibit other commercial produc-tion. It’s also a particularly cost-effec-tive time to amplify influencer work with paid social media, Spiegel says, because costs to reach key audiences have declined as key industries such as travel have exited auctions.

Emerging from the sea of sadnessA lot of pandemic advertising uses a

middle of COVID-19, we wanted to bring a little bit of escapism and fun at a moment when consumers are looking for that,” says Yasmin Das-tmalchi, senior VP for U.S. market-ing and digital at NYX Professional Makeup. “I don’t think there’s a risk of being insensitive as long as you’re listening to what the community wants and reacting to that.”

TikTok made it easier than other platforms to take the positive route, says Movers+Shakers CEO Evan Horowitz. “When you look at Tik-Tok—the nature of the community, the energy, the vibe and the conversa-tions—it’s always been, and has been consistently throughout this pan-demic, a joyful, uplifting, fun place.”

Avoiding bad behaviorEven so, it’s not business as usual in influencer marketing, or marketing generally. P&G is trying not to burden influencers with too many guidelines, Spiegel says, but has some guardrails. “We want to avoid any content that sounds opportunistic,” he says. “We tell influencers not to overpromise or fuel panic or even promote unneces-sary use of our products, or tell people to buy more so you have enough stock.” P&G brands like Olay have kept up their

Unilever’s Clear hair care enlisted soccer star Cristiano Ronaldo to encourage followers to turn the lockdown into an opportunity for self-improvement.

somber tone—and is repetitive. The time span between originality, cliché and parody has been compressed into weeks or even days as ads featuring sad piano solos, scenes of empty public spaces and exhortations that “we’re all in this together” have proliferated—spawning parodies and cynicism. P&G instead has focused on accentuating the positive and giving practical tips in its influencer mar-keting, Spiegel says. And one key ad-vantage influencers offer now, when a lot of ads are looking alike, is safety in numbers, he says. They allow brands to tap a wide array of creative voices and messages.

One sign that influencer mar-keting is around to stay is a TikTok campaign for L’Oreal USA’s NYX Professional Makeup from creative studio Movers+Shakers. It launched in March and still generated more than 9 billion views and more than 3 million response videos from TikTok-ers. The brand worked with five paid influencers, including TikTok star Avani, who’s known for her makeup skills. It wasn’t a public service mes-sage, like most recent brand-spon-sored posts, but rather built around a #ButterGlossPop song to highlight the brand’s lip gloss. “Even in the

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AB InBev slashes spendAnheuser-Busch InBev CEO Carlos Brito last week said the brewer would “curb media spend” in the U.S. as it continues to battle sales headwinds caused by the closure of bars and restau-rants during the pandemic. “We are taking a hard look at sales and marketing,” he said during an earnings call. Brito did not specify by how much the brewer would slash U.S. marketing spending. “During times like this you look at everything that is discretion-ary,” he said. This includes a “phase out [of ] some new product introductions [and] innovations, because at this point it doesn’t make sense,” he said.

Peloton gets a free rideFitness brand Peloton, popular before COVID-19, has seen such a favorable sales response from word-of-mouth and existing brand awareness that it paused its cancelable advertising in the majority of markets in mid-March. “We’ve reduced media spend because of the organic demand that we’ve had, and we’re continuing to pause that media spend in most of our markets,” said Jill Woodworth, chief financial officer, noting that in the fourth quarter, the majority of the brand’s media spend is “turned off.” Also last week, Peloton said it is searching for a chief marketing officer as its top marketer, Carolyn Tisch Blodgett, plans to depart the brand later this year.

Horizon does data dealHorizon Media has partnered with TransUnion to build out its own in-house data hub for people-based and target-ed marketing capabilities.Under the partnership, the companies say TransUnion will help Horizon improve personalized execution for people-based marketing and clients’ advertising initiatives. It will lean on TransUnion’s identity and audience-attribute data sets to “help build Horizon’s iden-tity spine from the ground up, creating a common ID layer to power marketing decisions across all touchpoints,” according to an announce-ment of the partnership.

BBH cuts staff BBH implemented layoffs in New York and Los Angeles, cutting about 20 percent of its U.S. employee base. “COVID-19 has had a pro-found impact on the global business landscape,” Neil Munn, group CEO of BBH, said in a statement. “Regrettably, we will be restructuring our business in line with the new realities, to ensure we have the right set-up to meet future challenges and opportunities.” BBH employs 112 full-time employees in the U.S.

Briefings

social-media programs, despite debate in social media about whether it’s still right for brands to be paying influenc-ers under current circ*mstances, he says. “We see them as small businesses” that need the income, Spiegel says.

Usefulness in vogueOne of the best ways to guide influencer work is by monitoring what people are searching for, then address their ques-tions, Spiegel says. “It’s not necessarily what’s the new summer style, but what is some new job we have to do? What are the new consumer needs, especially working from home?” Do-it-yourself haircuts are a hot topic. The shift to use-fulness brings a shift in what platform works best. YouTube, because of its search function and wealth of how-to videos, has become more important during the pandemic, Spiegel says.

Pivot to public serviceOf course, one of the big shifts has been enlisting influencers for public service announcements. Shareablee CEO Tania Yuki says the “content that is still be-ing commissioned is a lot of big-name stuff, and it’s centered around ‘stay at home’ and ‘new normal’ themes.” Ex-amples include Adidas enlisting soccer star Lionel Messi for a workout video starring his young son. Unilever’s Clear hair care enlisted soccer star Cristia-no Ronaldo in a #ComeBackStronger exhortation to turn the lockdown into a self-improvement opportunity.

Some of these efforts are spawning huge audiences on TikTok. RB’s Dettol has 18 billion views and counting by enlisting Indian influencers for a #Hand-WashChallenge. P&G, at the request of Ohio Gov. Mike DeWine, enlisted Grey to

develop a #DistanceDance video chal-lenge featuring influencer Charli D’Ame-lio that has earned 14.6 billion views and more than 3.8 million response videos on TikTok. Cosmetics brand e.l.f. had one of the first big U.S. brand breakthroughs on TikTok last fall with its “Eyes.Lips.Face” song challenge, also developed with Movers+Shakers, which has generated 5.2 billion views to date. In March the brand modified the challenge to “Eyes.Lips.Face.Safe” and a hand-washing theme.

The original idea in October was to “put the Eyes Lips Face back in e.l.f.” since people had forgotten what the initials stand for, says Kory Marchisotto, chief marketing officer. “The key compo-nent here is to fuel it in flight. If you see something take off, give it the life that it needs to run further.” Repurposing the song for a hand-washing campaign did just that, to a different end. “It was ‘How do you have the biggest impact in the shortest period of time?’” she says.

Keeping the lights onColor cosmetics sales, even for mass brands, have tanked as people stay home and thus need less makeup. It might be tempting for cosmetics marketers to go dark. But Marchisotto says, “One thing you don’t want to do is just abandon your community and say, ‘OK, we’re all on lockdown. We’ll see you when the lights come back on.’”

The reality, however, is that many marketers are doing just that, having stepped back from influencer cam-paigns since March, says Gabe Gordon, co-founder and managing partner of Reach Agency. Many are still plan-ning programs for late 2020 or early 2021, he says, but he thinks the return

will be more like dipping toes in the water than cannonball plunges. He recommends many brands start with “micro-influencers”— individuals who have between 1,000 and 10,000 follow-ers—to test how people react before taking a campaign more broadly.

When more campaigns are ready lat-er this year or early next, Gordon says brands need to be aware that the prima-ry concerns may well have shifted from COVID-19 to the economic hardship of recession. But he says one advantage of influencer marketing will have even greater importance: It’s generally less expensive than hiring agencies.

Shifting to e-commerceFor some brands, influencers are al-ready part of their pandemic strategic shifts. Before the crisis, Mount Gay Rum was working with influencer com-munity Perlu, specifically its “pack” of whiskey enthusiasts, to set up tastings around the country aimed at switching whiskey drinkers to rum. Lockdowns made that plan impossible, so the brand has shifted to virtual events where furloughed bartenders demon-strate co*cktail recipes using Mount Gay Rum, with their events amplified by Perlu influencers. The effort also backs Mount Gay’s shift to e-com-merce, a move that also has other spir-its brands shifting toward influencer marketing, says Rich Ezzo, senior VP of sales and marketing for Perlu. “We developed the #MountGayMoments program to serve the bartending community that has always served us,” says Raphael Grisoni, managing director of Mount Gay Rum. “These are trying times, but social distancing doesn’t mean we can’t be social.”

From left: Avani on TikTok for L’Oreal USA’s NYX; bartender Amy Florez for Mount Gay Rum; Charli D’Amelio’s TikTok #DistanceDance for Procter & Gamble.

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A group of online retailers is spending more than $2 million on an ad campaign that promotes the United States Postal Service as it undergoes federal scrutiny and attacks by President Trump.

The Package Coalition, a two-year-old group formed in response to Trump’s criticism of the USPS, debuted “Four Times” last week on national TV and radio. The retail group includes prominent online retailers eBay and Amazon, as well as chains that mail pre-scription medicine, such as CVS, and sportswear brand Columbia. Industry

organizations like the National Retail Federation and the Retail Industry Leaders Association are also included.

A 30-second TV spot highlights the impor-tance of the USPS and the dangers of Washington’s proposed package rate increase.

“Americans rely on af-fordable, reliable package delivery from the United States Postal Service,” a voiceover says, noting that a proposed tax of 400 percent would take a toll on small businesses and the delivery of medication and household supplies. “Call Congress now; Stop

the package tax,” the voi-ceover says.

A 60-second radio ad will run for two weeks.

John McHugh, a former congressman and chairman of the Package Coalition, said that de-pendable package delivery is needed to help “fuel” the economy. “Imposing an arbitrary package tax would threaten the signif-icant engine of commerce that the U.S. Postal Service provides to Americans, es-pecially right now when it is one of our best defenses against this economic downturn,” he said.

A representative from the Package Coalition did

not immediately respond to an inquiry about any creative agency involve-ment in the campaign, which was first reported by The New York Times.

The USPS is airing its own spots. A 30-second commercial highlighting the organization’s depend-ability began running last month. “Every day, all across America, we deliver for you,” a voiceover says. “And we always will.”

The push to save the USPS comes at a time when online shopping is surging, a trend many con-sumer behavior experts expect to continue long after COVID-19.

News Burger breakdown

WHERE’S THE BEEF?

By Jessica Wohl

In a pandemic-induced twist of fate, the chain whose ’80s ads famously asked “Where’s the Beef?” in reference to competitors’ small burgers now has some of its own customers asking the same question. Wendy’s is running a bit short on the fresh beef used in all of its burgers due to the major disruptions in the U.S. meat supply chain stemming from slaughterhouse slowdowns and shutdowns as many of the workers in those facilities caught the coronavirus.

So Wendy’s is instead emphasizing items such as the sausage breakfast sandwich in marketing where some locations are short on fresh beef.

“Some of our menu items may be in short supply from time to time at some restaurants in this current envi-ronment,” CEO Todd Penegor said on Wendy’s first-quarter call on May 6. Later in the call, he said the supply “is tight out there today,” and that Wen-

dy’s expects the issue to be resolved over the next couple of weeks.

Wendy’s is still selling burgers, but in some places there may be little to no supply as restaurants wait for their shipments.

Even President Donald Trump weighed in on the issue. Last week, he signed an executive order saying meat and poultry processors were essential operations and should remain open. And, on May 6, hours after Wendy’s discussion with analysts, Bloomberg reported that when asked about the supply concerns at Wendy’s, Trump said he would call the company’s chair-man, Nelson Peltz, about the issue.

A priority for Trump“They’re going to be OK,” Trump said when asked about Wendy’s, Bloomberg reported. In the same meeting, U.S. Agriculture Secretary

Sonny Perdue said he expects U.S. meatpacking plants to fully resume operations within a week to 10 days.

Wendy’s is currently showcasing other products in its marketing. A Breakfast Baconator spot that’s been running since mid-April features the sandwich in front of a green screen, a nod to the way ad shoots have been altered during the pandemic.

Burgers are also vanishing from some Wendy’s menus. Restaurant operators have the option to remove beef items from their online menus so that people cannot order them ahead of time, even if they may still be able to do so at the drive-thru. Separately, the company also simplified its menu, removing less-popular items such as side salads and wraps.

For a week in late April, Wendy’s ran ads focused on its GroupNug promotion, which included giving free

four-piece orders of its chicken nug-gets to anyone in the drive-thru. That followed two weeks of ads featuring a Frosty with purchase offer.

McDonald’s in better shapeWendy’s had already acknowledged the beef supply issue in a May 5 state-ment, saying: “It is widely known that beef suppliers across North Amer-ica are currently facing production challenges. We continue to supply hamburgers to all of our restaurants, with deliveries two or three times a week, which is consistent with normal delivery schedules. However, some of our menu items may be temporarily limited at some restaurants in this current environment. We’re working diligently to minimize the impact to our customers and restaurants, and continue to work with our supplier partners to monitor this closely.”

Still, other major chains including McDonald’s—which uses only fresh beef in some of its products—have said in recent days that they aren’t experiencing such issues.

Positive financial signsThe issue didn’t slow down shares of Wendy’s, which shot up more than 7 percent on May 6 after the company’s updates on topics including a strong start to its national breakfast menu, as well as delayed plans to enter the U.K. and to launch a plant-based prod-uct. Breakfast accounted for 8 percent of sales in April, Wendy’s said, even after it pulled back on incremental marketing spending.

Wendy’s struggles with supply due to slaughterhouse slowdowns and shutdowns

Amazon, CVS, others promote the U.S. Postal Service in new campaign

RETAILER GROUP DELIVERS FOR USPS

By Adrianne Pasquarelli

Wen

dy’s

Classic Wendy’s ads from the ’80s featured actress Clara Peller (r.) demanding “Where’s the beef?”

Ad Age May 11, 20206

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Job cuts

By Bradley Johnson

AGENCY JOB OUTLOOK IS PRECARIOUSThe simple, brutal math of ad agency employment

Ad agency and overall U.S. employment and ad spending since 1990Agency staffing plateaued in recent years even as ad spending grew.

Source: Bureau of Labor Statistics (jobs). Publicis Groupe’s Zenith (ad spending for full year).

Ad agencies are cutting staff as they ratchet down into a COVID-induced recession, and history suggests it will be a long slog to bring agency employ-ment back to recent heights.

U.S. ad agency employment tends to peak earlier than the overall U.S. job market in the waning days of a business cycle’s economic expansion before a recession, according to Ad Age Datacenter’s analysis of jobs stats for the past 30 years. Agencies make deep job cuts during downturns. And agency jobs typically are late to recov-er as the economy rebounds.

The depth of damage to agency staffing in the current downturn is to be determined. But the outlook is dim.

Ad agency staffing in recent years plateaued even as ad spending—pro-pelled by digital—reached new heights.

Agencies, which face growing chal-

lenges from major consultancies such as Accenture Interactive and competi-tion from in-house agencies, enter this downturn in a weakened state.

The overall U.S. unemployment rate surged from 4.4 percent in March to 14.7 percent in April, the highest rate since 1939.

The nation last month lost a record 20.5 million jobs—more than one out of eight jobs —as the economy shut down amid the coronavirus pandemic, according to Bureau of Labor Statis-tics figures released May 8.

Ad agency staffing held at 207,100 in March, unchanged from February. U.S. ad agency employment reached an all-time high of 208,800 in August 2018, a year-and-a-half before this recession began. (It may be months before the recession is formally called by the National Bureau of Economic

Research, but it appears a contraction began in February or March 2020.)

We won’t know official ad agency April staffing for another month. But that number is likely to be bad—as foretold by an unending stream of recent layoff stories on AdAge.com.

The BLS tally of “advertising, public relations and related services” employment offers ominous clues.

That bucket includes ad agencies, PR agencies and related services such as media buying, media reps, outdoor advertising, direct mail and other services related to advertising.

Employment in advertising, public relations and related services tumbled 7.5 percent in April to 451,100 jobs, a stunning loss of 36,400 jobs.

Overall U.S. employment gen-erally peaks at or near the start of recessions.

Ad agency staffing, in contrast, typically peaks before recessions, making agencies something of a lead-ing indicator.

Labor is the biggest cost for agen-cies—salaries and related expenses last year were 64.6 percent of net revenue at Interpublic Group of Cos.—and agencies are quick to cut staffing when they lose business or when clients reduce spending. (Not coin-cidentally, cutting ad spending is an easy—if not always defensible—move for marketers when sales weaken and profits slump in a downturn.)

On the flip side, agencies are cau-tious about adding employees as the economy recovers, resulting in a lag in staffing growth post-recession.

The early peak/hard fall/late recovery pattern is evident in reces-sions, according to Ad Age’s analysis of BLS recession-period jobs figures back to 1990. (See table, p. 8.)

In the 1990-1991 recession, agency employment peaked five months before the start of the recession and didn’t hit bottom until 38 months after the economic recovery began. Agency employment fell 11.1 percent from that peak to bottom, vs. only a 1.5 percent drop for overall U.S. employ-ment from top to bottom.

In the 2001 downturn, agency staffing peaked (in the irrational ad exuberance of the dot-com bubble) seven months before the recession be-gan and bottomed out 26 months after the recession ended. Agency employ-ment plunged 20.8 percent from peak to bottom, vs. a 2.0 percent decline for U.S. employment.

In the Great Recession (2007-2009), agency employment peaked two months before the downturn began and reached its nadir seven months after the recession ended. In this case, agency jobs began to recover slightly ahead of the overall job market; overall U.S. employment bottomed out eight months after the recession. Agency employment skidded 15.3 percent from peak to bottom, vs. a 6.3 percent drop for U.S. employment.

It took 18 years—until 2018—for ad agency employment to climb back and then surpass the record set in dot-com era 2000. It could be years before ad agency employment passes the all-time high reached in 2018.

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News Job cuts

DowntimeEmployment and ad spending before, during and after recessions since 1990.

Beginning of recession July 1990 March 2001 December 2007 February 2020 or March 2020 (presumed)

End March 1991 November 2001 June 2009 TBD

Length Eight months Eight months 18 monthsLongest recession since Great Depression

TBD

U.S. ad agency employment

Beginning of recession 172,500 203,900 187,800 207,100February 2020

End 163,500 184,000 169,800

Job change (9,000) (19,900) (18,000)

Percent change -5.2% -9.8% -9.6%

High point near beginning of recession

172,600 February 1990. Five months before recession began

207,400 August 2000. Seven months before recession began

189,700 October 2007. Two months before recession began

208,800August 2018 (all-time high). 18 months before recession began (assuming recession started February 2020)

Low point in period after end of recession

153,500 May 1994.38 months after recession ended

164,200 January 2004.26 months after recession ended

160,600 January 2010.Seven months after recession ended

Job change (19,100) (43,200) (29,100)

Percent change -11.1% -20.8% -15.3%

Overall U.S. employment (millions)

Beginning of recession 109.8 132.7 138.4 152.4 February 2020 (all-time high)

End 108.6 131.1 131.0

Job change (1.3) (1.6) (7.4)

Sponsored by

“So many of [our partners] came to us literally between March 14 and April 6 saying we had to change out our creative, we cannot run what we did. So they had to scramble and redo advertising in that three-week time frame. Can you imagine?”Meg Whitman, Quibi

MASTER17Important to Important People

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Sales leaders discuss moving forward in the pandemic

TV’S PIVOT This week the TV industry would typically be gathered in New York City, braving the winding steps of the Beacon Theatre, munching on shrimp co*cktail at The Plaza and laughing despite them-selves at late-night hosts cracking jokes about ever-declining ratings.

The coronavirus lockdown means the glitzy upfront presentations, which kick off the annual ad haggle, when networks look to secure ad commit-ments for the next season, won’t go on as planned. At the same time, marketers are reassessing their ad budgets, social distancing has put productions on hold and there are still plenty of questions sur-rounding how and when live sports will resume.

The pandemic has certainly upended the TV marketplace. At stake is the $20 billion in commit-ments that are typically accounted for during the upfronts. While negotiations are expected to take place in some shape and form, what’s become increasingly clear is the starting gun won’t go off after Memorial Day and wrap by mid-July.

But the pandemic also represents a real opportu-nity to accelerate the change that’s been percolating in the space for several years. As marketers reevalu-ate their media needs and alter business strategies, what has been a slow plod in the adoption of new measurement metrics, audience targeting capabili-ties and ad formats could accelerate.

The one thing that’s certain: Flexibility will be the word of the year.

On the following pages, TV ad sales leaders shed light on the state of the marketplace, how upfront negotiations might progress and discuss the way forward for the industry.

How did you navigate the early days of the pandemic? Peter Olsen, exec VP, ad sales, A+E Networks: From March 16 to April 28 we’ve never seen a situa-tion where approximately 25 percent of our revenue base was shut down. You can go back and look at the legality of upfront contracts, but it kind of got thrown out the window. You have to do what you have to do to help the clients. This really put the concept of part-nership to the test. We want to help clients, but also need to be mindful of your company in terms of reve-nue and employees. It’s a tricky line to straddle. There was no win-win. It does feel like it started to transi-tion the last few weeks to more forward thinking.

Mark Marshall, president, advertising sales and client partnerships, NBCUniversal: The hardest part initially was advertisers were asking us was it

OK to be on air? Was it OK to be funny? Was it OK to run current creative? But then we started to see these great, positive stories emerge and spurred this creativity. Everyone took a breath and said ad-vertising can play a role, and advertising went from a distraction to being a unifying event for all of us.

Jon Steinlauf, chief U.S. ad sales officer, Discov-ery: It was triage week after week after week. The first three to four weeks it was buyers calling our sales people saying, ‘Get me off the air,’ no questions asked. It is a little more stable now, but we are coming on third-quarter cancellation time. Marianne Gambelli, president, ad sales, Fox: There was a sudden shift. We had all the plans in place as we would have for program development, sports road show, the Beacon Theatre in May. We had a whole road map and in the matter of four days had to flip. We had to determine what was worth saving, all the while dealing with making sure employees were safe, could work from home, and clients were putting plans on pause or taking money back. But everyone mobilized pretty quickly.

Kim Kelleher, president, ad sales and partner-ships, AMC Networks: I had been at AMC Net-works for six months in February before the world changed. We were just cementing our new relation-ships and pulling together our upfront strategy.

How do you expect upfront negotiations to progress? Jo Ann Ross, president and chief advertising revenue officer, ViacomCBS: It’s not going to be someone shoots a gun off and we all start collecting budgets. They won’t all be ready at the same time. The message we and others are putting out to agen-cies is we will be ready when they are. It’s not like we aren’t in the marketplace all the time. We do calendar deals. It will take on a different timing, but that’s not the most important thing. It’s not brain surgery.

Olsen: Whenever the customers are ready we will be ready. We expect to delay a month or so but it could be longer than that. I expect to see some mon-ey shift to scatter and calendar year. For us, I would say the broadcast year upfront and calendar upfront are normally a 10-to-1 ratio, this year I expect it to be 7-to-3 or 6-to-4 ratio. It is difficult to think we could do a proper upfront negotiation until we get an answer on the sports front.

By Jeanine PoggiIllustration by Tam Nguyen

Steinlauf: They might come sporadically; we might have a wave, then another wave, then another wave. We are going to see advertisers who have histori-cally bought in the spring buy in the fall. We might see a split upfront moving forward, with some doing business in the spring and others in the fall.

Rob Tuck, exec VP, national sales, The CW: There definitely will be a traditional upfront. It may slide back a few weeks. It could slide back a month. The key for this year, not only on our side, but also on the agency side, it won’t be a one-size-fits-all market. Typically, there is a start and stop and it happened fairly quickly. Some will be ready to go. Others we will need to give them time to figure out what they need. We will be ready to go at the traditional time.

Rita Ferro, president, advertising sales and part-nerships, Walt Disney: We are going to be ready when people are ready. We have clients that have already reached out to us to do some opportunities. We have done multi-year deals already. And then we have some clients who said they won’t be ready for a while. No one will be punished for moving later. It requires flexibility.

Gambelli: I expect the transactional time to shift to mid-summer. Things will be clearer when things open up again, when there are guidelines for opening up and when sports come back. We hear some may do a traditional upfront, their business is good and they want to commit. We could see money shift to more direct marketing versus brand building. I think brands will test new waters to get what they need.

Laura Molen, president, advertising sales and partnerships, NBCU: There’s no drop-dead date on when the upfront is going to happen. We are in an unprecedented time. Production season is currently halted. We are looking at the 2021 season evolv-ing right before our eyes. We were already in the marketplace talking to marketers about changing the way we do business and breaking the legacy platform. Those kinds of things are still available.

Joe Hogan, executive VP, sales and marketing, WarnerMedia: The usual time frame is something we both know is disrupted. I am sure we will see some advertisers pivot and/or shift how they work with us. We work in scatter market, broadcast and calendar market in a traditional year. Even year to year we see shifts. It does not matter to us whether

Ad Age May 11, 2020

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19Important to Important People

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they want to engage in a multiple of those cycles or one of those cycles in particular. We are most rooted in what works best for them.

How are you talking about programming when it’s not clear when productions will be able to resume? Tuck: We are going along the lines of consistency and stability for this coming year. We picked up 13 of our series in January and went straight-to-series with “Superman and Lois” and “Walker.” They know what they are going to get here and what to expect from us. We will be dependent on production, but there are lots of ways to do a deal. Schedules aren’t necessarily required. In this time, when people are watching more on demand, it’s doable.

Marshall: When people are buying Bravo, they know they are getting original, great content. They know when they are buying NBC what they are getting with [Jimmy] Fallon or “The Voice.” Programming does matter, the reason people participate in upfront is to buy programming. When you buy NBCU you know you are getting high quality, premium video.

Ferro: Production usually takes place after July 4, so we still have time. But we are having conversa-tions with the entertainment team about what the fall schedule will look like. We can create produc-tions in di� erent ways. Look at “American Idol,” the NFL draft, Jimmy Kimmel, “Live With Kelly and Ryan.” People have gotten very comfortable with people doing their shows remotely. We are very well planned on what the content cycle will be, but also need fl exibility. In the case of the Emmys, which would be on ABC, we are looking at what are remote virtual productions similar to the NFL draft and “Idol.” The audiences aren’t smaller, they are bigger. There are opportunities to push boundaries and test innovation on both the creative and tech side. It’s one of the biggest ahas of this moment.

Kelleher: We don’t have news; we don’t have sports. That gives us a little bit more predictability around our schedule and programming. There are shows that are contingent on the variables, but we don’t have as many large swings as someone who has college football. The potential for having huge holes in our schedule is a little bit less.

Ross: Keep in mind, CBS traditionally at the upfront talks about the stability of the programming and stability of the schedule. We have something every night of the week, Monday through Sunday, for every demographic. We will still be coming up with a very stable schedule. When you see new program-ming, it will be programming we totally believe in.

Will upfronts presentations take place next year?Steinlauf: I think we will be doing the presenta-tions next year. There may even be a set of onstage presentations in the fall. [They] are a celebration of the TV industry.

Tuck: From what we’ve heard over the years from buyers and clients, there are too many of them and a lot would like to see the week go away. It comes down to everyone’s own business and portfolio of networks. My guess is this likely will change things for some and for others they will continue with presentations next year.

Kelleher: Upfronts, the ceremony of them, what they really mean in my mind is a date we are work-ing really hard toward to get really organized to have our slate ready and programming and strat-egies that are bespoke to AMC Networks. As far as having a celebration and marking that moment, do I see us having these huge moments moving forward? No. The ceremonial part could start to fade.

Gambelli: It was surprising to me how many agency partners said, ‘Please don’t give up the upfront presentations.’ The way I interpreted it, it is a special week people still fl y in for. It gives everyone a chance to sample everyone’s goods across the landscape, mingle with clients, understand strategy. Charlie [Collier, Fox Entertainment CEO] made the comment that he liked to show the bigness that goes on behind the scenes. Whether or not we continue it, I don’t know, but I am sure it will be a discussion through the year and next year. Those formats probably need to be reinvented. One good thing is it gives us time to think about how to do it di� erently.

How are you navigating the absence of live sports? Ross: In terms of live sports, we just don’t know. That question gets asked more than any other question. We are negotiating as if it is happening; then there will be a contingency plan. One of the key terms we are working with is fl exibility. And the clients will need to be as fl exible as possible. We are acting as if there will be schedules ... We are talking about Super Bowl at this point.

Marshall: The Olympics are the soul of the compa-ny. You go on this year-and-a-half journey getting ready for the Olympics. We agree with the decision in terms of postponing. There were certain adver-tisers that bought the Olympics because it coincided with the back-to-school time period. So they had to move dollars into other areas or shift into 2021. We went to the marketplace for the summer with con-tent where you can reach sports audiences across

the portfolio. We are using our set-top box data. So, for example, we see that you can fi nd a golf viewer on CNBC, “Nightly News,” “The Voice.” We are able to provide other options. “Sunday Night Football” draws 21 million viewers. You don’t easily replace that in your schedule. The hope is by mid-September all systems are go with the NFL, but if it doesn’t happen, we can a� ord advertisers the option to fi nd those viewers. In the fourth quarter, whether or not the NFL is back, brands would need to reach those viewers somewhere. Of course it will take a few more units to get to that 21 million.

Hogan: We all miss our sports coverage. We are blessed with two widely successful entertainment networks with TNT and TBS. We are providing a lot of alternatives for traditional sports viewers: CNN, live news, is providing an alternative for live sports. We have been working with a number of advertisers using data and analytics of Xandr to fi nd live sports viewers across our portfolio. While not ideal, we are doing OK.

Ferro: We are counting on sports being back. By the fall I think you are going to see a pretty robust sports schedule coming back. That worries me less. The one question we are working through is what the format is. Having sports on the air, I don’t think that will be a question anymore based on what the leagues are saying.

Gambelli: We are working with the three leagues to hopefully understand guidelines and get games back either with or without crowds. I’m hopeful we will resume some sports in the fall. I think we have enough entertainment to fi ll the fall. We have our Sunday block of animation; those have been in pro-duction because they have always done their pro-duction remotely. We don’t assume our entertain-ment programming will be signifi cantly impacted.

Is working remotely sustainable long-term? Tuck: We have all gone from zero to 100 really quickly and we have been very successful doing it. Knowing that any clients, buyers or planners are reachable at any moment without taking a trip or sending someone on an airplane is really comforting. You don’t necessarily have to be in someone’s o� ce to convey your message or get your business points across. People are more engaged than ever before.

Steinlauf: The average commute time for my sta� in New York is two hours and 45-minutes door-to-door. Many of these departments have learned to be productive and eliminated the commute. We are heading to a period of time, especially in New York,

Discussing the way forward for the TV industry, from left: Peter Olsen, Mark Marshall, Jon Steinlauf, Marianne Gambelli, Kim Kelleher, Jo Ann Ross, Rob Tuck, Rita Ferro, Laura Molen and Joe Hogan. And be sure to join Ad Age on May 12 and 13 to hear how TV executives are rethinking o� erings—and how they believe the pandemic will impact the industry in the long term: AdAge.com/tvpivot2020

Ad Age May 11, 202020

P018_P021_AA_20200511.indd 20 5/7/20 5:49 PM

where it will be a combination of working remotely and in the o� ce. Teams will have to schedule social distancing as part of the workplace.

Molen: As someone who has worked from home a good part of my career and have had the fl exibility and given it to people who have asked for it, I know people can work from home and get the job done and now we have the technology to do it. I hope this empowers remote working for people who want to do that, who have a long commute, or want to be able to work from home to spend time with family in the o� -hours.

Gambelli: Six weeks ago if you said, ‘Can a sales organization work from home?’ I would have said ‘No,’ but now have a totally di� erent idea of what’s possible. People are more accessible through Zoom. It’s much easier to hold their attention. No one is can-celing. We have Charlie [Collier] on calls; he is in L.A. but can now be anywhere we need him to be. We can actually aggregate more people. Everyone is commit-ted to making it work. The technology is fantastic.

What will fl exibility mean as a deal pointmoving forward? Olsen: We are willing to change some of the terms, like how many days notice and percentage of fl exibili-ty in each quarter. What we really struggle with, if we are going to do an upfront that has a guarantee and not have a similar percentage fi rm, what’s the point? If you want that much fl exibility, buy it in scatter. I don’t see how it makes any sense from the publisher side of the desk. There should be a willingness to be more fl exible, but we need to defi ne what fl exibility is instead of just making a blanket statement. It is dif-fi cult to set precedent on something that could carry on for 15 or 20 years during a time like this.

Steinlauf: The 2020 upfront will have more negoti-ating deal points than we probably ever had before: Flexibility, cancellation, extension, rights to rates of change across windows. There will be a lot of asks coming from the buy side. There may also be asks from the other direction. This might be a year where we trade, where we ask for things like moving away from demos.

Marshall: Flexibility doesn’t just mean the ability to cancel, but also the ability to shift into other pro-grams. If an advertiser is focused on an adult target and wants to move into women, we can do that.

Hogan: Flexibility is just the agility to say we know what we know in any moment in time, and as those things change are we set up to be adaptable to work

with our partners?

Kelleher: Longer-term, what fl exibility means I think will be di� erent for every single client. It also goes both ways. We are going to have conversations about our programming schedule and conversations about fl exibility and understanding that if a show can’t be produced, it may not air.

Ferro: Flexibility has meant di� erent things to dif-ferent people even during this period. If live sports didn’t happen, how can we make this campaign come alive across the portfolio? Because of the size and reach of Disney’s ad portfolio, we have scale in a way we can move things around and be fl exible and agile. We are looking at di� erent ways for clients to look at fl uidity of budgets between platforms, measurement of audience, buying on P2+, fl exibility in quarters and shifting money across quarters. All those things are in play right now. Clients have been fl exible with us too. It goes both ways.

What are the potential long-term impacts? Olsen: The time of the day we premiere things could use a reassessment. What’s becoming an interesting trend is viewing usage outside of primetime like daytime and weekends. Without sports, it’s hard to say if it is a permanent trend, but we could look to premiering programming outside of the typical time slots.

Gambelli: As we come out of this, I think we are going to learn a lot about what’s necessary and not necessary. We will be more strategic. Clients are looking for more information and more custom-ized conversations. In terms of how the markets transact, I don’t see a big di� erence. Live will be even more important to bring people together. Clients are going to deploy lots of di� erent levers and be more open to di� erent ideas because their businesses have changed so much and their needs are going to be so di� erent. We just bought Tubi and this could be the day for that kind of platform, which combines TV with digital and data. Viewers are getting more comfortable with these platforms. But TV will still play a big role in this recovery. You won’t get that kind of scale other places.

Marshall: My hope is that this time period creates this great creative renaissance. We have seen over these past seven weeks this confl uence of purpose marketing and great creative. Advertising is part of the fabric of the show. It’s uplifting, it fi ts contextu-ally. This is also our chance as an industry to look at a path forward beyond traditional metrics and push to get beyond CPM discussions.

What won’t you miss about the upfront presentations? From standing in the rain to dizzying tra� c, the upfronts aren’t all glitz and glamour

To those on the outside, the upfront presentations might seem like lots of hobnobbing with celebrities and VIP access to some of the most buzzed-about content. And in part, it is. But the week is also � lled with lots of tra� c, standing in line, rushing to theaters with no Wi-Fi and more waiting.

Here’s a look at some of the things annual attendees won’t miss about the dog-and-pony shows.

Fighting for seats and the stress of getting in and out of the venues. —Michael Law,

President, Ampli�

Climbing up to the back row of Carnegie Hall on Wednesday afternoon. —David Campanelli,

Exec VP, chief investment o� cer, Horizon Media

Having to travel on Mother’s Day.—Carrie Drinkwater,

Exec director, investment activation, MediaHub Global

I won’t miss: all the con� icting ‘reviews’ of each presentation; putting on suits that are just ‘a bit’ tighter than last year; lines in the rain; hearing all the buzz-words [what would the winning phrase have been this year!?]; seeing all the ways the obvious is twisted into the complicated.

—Adam Gerber, President, global media,

Essence

It always rains during upfront week, so I wont miss waiting out in the rain and getting soaked (especially my shoes).

—Dani Benowiz, President, U.S., Magna Global

I will not miss my feet killing me and being swollen all week.

—Catherine Sullivan, chief in-vestment o� cer, North America,

Omnicom Media Group

What I won't miss is the constant FOMO—like Tad Allagash in ‘Bright Lights, Big City,’ certain that wherever I was at any time there was always some other place even more happening!

—Dave Morgan, CEO, Simulmedia

I will not miss the proverbial network manipulation of line graphs and bar charts so that X,Y, Z network executive can boast about being No. 1 based on some obscure time period, demo, or selective competitive set.

—Brad Feinberg, VP, media and consumer engagement, MillerCoors

By Jeanine Poggi

21Important to Important People

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Veteran TV buyer says a virtual upfront will shift the focus to strategy, and the unique positioning of a network’s assets

Few people know their way around the TV upfronts as well as Rino Scanzoni, who for more than 30 years led negotiations for agency powerhouse GroupM and the former MediaVest. So we asked him to weigh in on what changes the pandemic will bring—and which should last.

The upfront TV buying process has changed little over the last 50 years. Perhaps the pandemic can serve as a catalyst to disrupt that.

Initially, the upfronts provided the means for advertisers to make longer-term commitments to programs that met their audience criteria in order to secure sponsorship. Then it evolved to a futures market for national advertising commitments, man-aging the scarcity of desirable inventory for both buyer and seller.

Then came the consolidation of agencies into holding companies and the merging of TV assets into media conglomerates. A handful of players now exist on both sides driving the bulk of TV ad trans-actions in a world that is being altered by technolo-gy, content distribution and data availability.

Yet the transactional process has remained little changed. While scarcity is now driven by audience diminution rather than demand growth, it will continue to support an upfront TV market for the foreseeable future. But there are ways to improve the process.

From live to virtualI have participated in these presentations only vir-tually for some 15 years. Initially it was a time when the online feed was subject to technical glitches and buffering delays. It is now seamless, providing an excellent communication platform. It has allowed me to focus on the important aspects of the presen-tation, while multitasking when the subject matter was less relevant.

Upfronts can be efficient and effective if present-ed virtually—as they are this year due to the pan-demic—instead of as live presentations at landmark Manhattan venues.

The inaugural event for the upfront buying season was originally designed to allow advertisers to screen full new content offerings for the upcom-ing fall season. But it evolved into a heavily scripted sales pitch timed to get clients to the co*cktail recep-tion within 90 minutes.

The screening of full episodes of shows is no longer practical or necessary given the transition to an ongoing, full-year programming season and the focus on audience buying over program sponsor-ship. There is significant value in these presenta-tions if they can transition to a focus on strategy, innovation and the unique positioning of a net-work’s assets instead of hype and hard sell.

A permanent change to virtual presentations would highlight substance over sizzle and allow for the communication of a clear value proposition. While this will reduce the opportunity for publicity and the broader attendance that live events have provided, it will make the messaging more effective and reach the decision makers that count.

A new selling seasonThe upfront marketplace is not and should not be restricted to a June-July time frame for broadcast year commitments or to a November-December time frame for calendar year commitments. An upfront is a multi-quarter commitment that can and should be made when a client is comfortable in making a longer-term commitment and the marketplace can offer a pricing advantage to justify doing so. Clustering upfront spending in aggregate across clients and holding companies in

By Rino Scanzoni

traditional timing windows in a marketplace that is not directly volume discount-driven plays to the advantage of only the seller.

Counting the house and creating a herd mental-ity has been an effective seller’s strategy for years. Agencies should instead go to market with timing that meets a client’s needs, not that of the ven-dor. Spreading out commitments will provide the necessary flexibility for clients, while enhancing the buyer’s leverage position. Commitments should be a blend of upfront and scatter modeled to maximize pricing and value positions for a client relative to an overall marketplace picture.

Focus on clientsThe upfront negotiation should be focused on individual client pricing and requirements, and not a percentage rate of change for a portfolio of client budgets. Discussions on an aggregate CPM rate of change, while simple and convenient, does not address the significant disparity in pricing across clients, nor the optimization of their individual price/value position. This is critical as audience targeting moves to more sophisticated and cus-tomized consumer-driven data sets from generic demographic targets.

As the industry eventually moves negotiations to a programmatic platform, it will be necessary to transact on an individual client price basis over that of an aggregated portfolio with shorter lead times and increased frequency. This will need to be done in context to a forecasted estimate of overall market pricing potential to ensure client value is optimized.

This pandemic will obviously disrupt the media marketplace significantly as consumer behavior faces a new normal and companies are forced to adapt their marketing strategies accordingly. It will also give the TV marketplace the opportunity to rethink the buying process to better serve individu-al clients and compete more effectively.

Rino Scanzoni is former chief investment officer at GroupM North America

SUBSTANCE OVER SIZZLE

“Agencies should go to market with timing that meets a client’s needs, not that of the vendor.”Rino Scanzoni

“Saturday Night Live” cast members Alex Moffat, Kate McKinnon, Kenan Thompson and Melissa Villaseñor performed a “Family Feud” parody sketch at the 2019 NBC upfront. Many of this year’s upfronts will be virtual.

C U

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Ad Age May 11, 2020

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Lockdowns force Nielsen to accelerate new technology and use incentives to hang on to TV-ratings panelists

FAST FORWARD

By Jack NeffIllustration by Tam Nguyen

TV ratings have soared amid coronavirus quar-antines, but those same quarantines are making it harder for Nielsen to maintain the 40,000-person national panel behind those ratings. It raises ques-tions about how long Nielsen ratings can keep the accreditation from the Media Rating Council (MRC) that lets them serve as currency in most TV deals, but it’s also accelerating long-contemplated im-provements in how Nielsen measures TV viewing.

Historically, Nielsen has needed a constant stream of new panelists to replace people who quit, age out of demographics or are removed automat-ically after two years to maintain data quality. On-boarding new panelists traditionally has involved home visits to conduct surveys and install metering equipment—visits now largely forbidden by stay-at-home orders around the country.

For now, Nielsen’s TV ratings are in no immi-nent danger of losing accreditation, but MRC CEO George Ivie says the organization has shifted the focus of its auditors to the workarounds being employed by Nielsen and other research providers that historically relied on face-to-face visits as part of their methodologies.

‘It’s somewhat impressive’The MRC committee that oversees Nielsen ratings heard from executives for three hours in April and, Ivie says, evidence so far indicates that work-arounds Nielsen has put in place are working.

“Before I learned about all these measures they’ve taken, I would have said ‘If this thing goes

on until June we’re going to have a problem,’” Ivie says. “Now I’m not so sure. They appear to have put in measures that elongate their ability to keep some households up that otherwise would have fallen out of the process. It’s somewhat impressive what they’ve done.”

Those workarounds include temporarily sus-pending the two-year term limit for panelists, pro-viding increased financial incentives to retain par-ticipants, accelerating the rollout of newer “Nano” meters that can more readily be installed and fixed remotely, and otherwise reworking the onboarding process to allow remote surveys and self-service installation, according to Nielsen executives.

Ultimately, Nielsen might increase the mix of Portable People Meters (now used for radio and some local TV ratings) in its TV ratings collection and find more ways to incorporate passively collect-ed “return-path data” from set-top cable boxes into TV audience measurement.

Disaster drillNielsen began scenario planning around pandemic responses in late January, says Mainak Mazumdar, chief data and research officer of Nielsen. In some ways, it resembles the drill Nielsen does to maintain or restore validity of local ratings after hurricanes.

Nielsen call centers are “doing a good job of being creative about how we maintain the panel by troubleshooting any issues we may have in meter-ing in a remote manner,” says Scott Brown, general manager and head of TV and audio products for Nielsen. Panel size and participation are “outper-forming our most optimistic scenarios,” he says.

Part of being creative is getting people not to leave. One way is by temporarily waiving the rule that panelists get kicked out after two years—a rule intended to maintain data quality. But the far bigger source of attrition is people who just don’t want to keep participating, Ivie says.

Some of that comes from people moving, which has slowed, Mazumdar says. To keep other people from quitting, Nielsen is paying more to get them to stay. Not everyone gets the same incentives. Nielsen has an algorithm to measure what demographics it needs the most and pays accordingly, he says.

Nielsen already has been using return-path data from set-top cable boxes to gather or supplement data for TV and digital ratings, and might lean on that more heavily, Mazumdar says.

An end to house calls?One of the bigger changes might be accelerating the use of more modern meters. Since 2016, Nielsen has been rolling out its so-called Nano meters, which are smaller, cheaper, faster to install, easier for pan-elists to use and operate wirelessly on a cloud-based infrastructure. Now, it’s accelerating rollout of this and other technology, CEO David Kenny said on a May 1 earnings conference call, implementing plans, he said, “most of which were planned over the next three years, but many of which got implemented in the past two months.”

This is happening not just in the U.S. but also other countries such as Italy, Kenny said. “We are absolutely seeing that we can recruit a panelist digitally, mail them meters, get validation that all their devices are connected, and they’re up and going totally by self-start.”

While just maintaining current panel size is the immediate challenge, new metering technology also makes it easier and more cost-effective to build bigger panels in the future, Kenny said, which could allow for more precise measurement of the increas-ingly fragmented TV and streaming media market.

Meanwhile, not being able to visit homes doesn’t affect TV measurement by rival Comscore, since its methodology relies on passive collection of set-top box viewing data across millions of households. CEO Bill Livek sees the pandemic pointing out advantag-es of “contactless” data collection.

“Our feeling always was that someone who will write a survey out or allow someone into your house, you’re basically getting an unusual human being to respond, who either needs the money or wants to actively participate,” Livek says. “The point is that it doesn’t accurately reflect the market.”

Livek believes one lasting impact of COVID-19 is that “we as human beings are going to have a hard time allowing people into our houses for a while. We’re conscious of germs like we’ve never been before.”

Ad Age May 11, 2020

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5 tips for brands advertising in the COVID-19 era

Advertisers, facing numerous chal-lenges stemming from the COVID-19 pandemic, should heed these tips to ensure their advertising does not cre-ate more challenges than it solves.

Consider COVID-19 claims carefullyMore than ever, advertisers must scrutinize express and implied claims to make sure that they are truthful, not misleading and are adequately substantiated. The Federal Trade Commission has issued dozens of warnings, including to the provider of “sound healing” services who claimed it had “developed a set or programs with frequencies that target Coro-navirus/SARS viral infections” and a seller of a facial cleansing brush who claimed it could “fight off corona.”

The FTC will closely scrutinize claims that any product can cure, treat, or prevent COVID-19. Brands should also carefully consider any claims of improved or strengthened immunity and claims that cleaning products can kill COVID-19.

Be smart about user-generated contentShelter-in-place and social distanc-ing orders have impacted brands’ abilities to produce new content. It is difficult to shoot a new campaign when groups of people cannot con-gregate or are not “essential.”

User-generated content can be valuable, but best practices still apply during a pandemic. It is critical to obtain rights to all content used, particularly because COVID-19 has not put a damper on those asserting infringement claims. In fact, since the World Health Organization declared COVID-19 a global pandemic, more than 100 copyright infringement law-suits have been filed in the U.S. alone.

Because customers and employees are unlikely to consider the legali-ties of the content they provide and lack the financial resources to pay a rights holder, brands should consider

additional diligence to determine ownership—for example, whether the content contains certain unique “prompt” elements and thus must have been created by that person in response to the brand’s request.

Using unlicensed or improperly licensed content, including photo-graphs, music, clips, and other cre-ative works can result in infringement claims. A slip-up in this area can be costly, not just in terms of monetary penalties, but in diverted attention and negative PR.

Keep a closer eye on your influencersBrands should keep a close eye on influencers to ensure that they are not engaging in activities that create regulatory issues or tarnish the brand. Particularly for offerings susceptible to COVID-19-related health or well-ness claims, brands should consider providing influencers with pre- approved ad copy or requiring pre-publication review. This review process should include all hashtags the influencer will use, since even hashtags can create an implied claim.

Charity begins at the legal departmentIn the wake of the serious economic hardships caused by the pandemic, many brands are donating to charity. Many of these charitable endeavors are in the form of a “commercial co-ventures” where the brand com-bines the promotion of its for-profit endeavor with a charitable dona-tion. Commercial co-ventures are regulated on a state level, and state definitions vary, but in most cases the brand donates a portion of sales to a specific charity.

Many states have registration requirements for both the business donating and the charity. Some states have bond requirements and some have requirements regarding the content of advertisem*nts and disclosures. To avoid false advertising

claims, brands should avoid ambiguity as to the time period for the charita-ble promotion and whether there is a limit to the amount donated.

Social distance from new social until you talk to legal More than 80 percent of consumers want brands to connect people, help them stay emotionally close, facilitate a sense of community and issue public statements expressing empathy and support for those most impacted by the pandemic.

Brands have launched a variety of creative campaigns to meet these objectives, especially on social plat-forms where cost is generally lower and reach seems to be at an all-time high. For example, Steak-umms, everyone’s favorite frozen meat sheet peddler, ran a meta non-campaign encouraging Twitter users to rely on science-based evidence and reject anecdotal information about corona-virus. Other brands, like Coca-Cola, have turned over their social media platforms to charitable organizations, including Feeding America, to help amplify the reach of those entities.

As brands look for creative and low-cost ways to leverage social to both advertise and bring people together, keep in mind at least these three legal standards:

If employees are posting about their employer or its goods/services, their employment status must be disclosed. “#Employee” usually is not a sufficient disclosure, so employees should be provided with guidance on proper disclosure language.

Using testimonials and sharing social media posts by others does not allow a brand to abdicate its substan-tiation obligation to a third party.

Testimonials that claim a specif-ic result are taken to mean that the claimed result is “typical,” meaning the brand must be able to substantiate that claim or clearly and conspicuous-ly disclose the typical result.

Opinion

MEMO FROM LEGAL

Tiffany Ferris is an associate at Haynes and Boone in Dallas. Joseph Lawlor is an associate at Haynes and Boone in New York.

MASTER25Important to Important People

By Tiffany Ferris and Joe Lawlor

P025_AA_20200511.indd 25 5/8/20 2:15 PM

Ad Age May 11, 202026

Creativity Pick

HEINZ JUMPS ON JIGSAW TREND WITH A PUZZLE THAT

WILL FILL YOU WITH ANTICIPATION OR MAKE YOU SEE RED

Client Heinz ketchup Agency Rethink

Celebrating 90 years of Advertising Age

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An exclusive industry resource packed with business intelligence on agencies, networks and companies

Agency Report 2020

The Ad Age Agency Report 2020 is a proprietary ranking and analysis of agencies available from Ad Age Datacenter.An executive summary is available on pages 9-14 of this issue. Ad Age Datacenter subscribers have exclusive access to the complete online report, including:

• Agency Family Trees 2020, a database of the world’s 25 largest agency companies.

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For a limited time, subscribe to Ad Age Datacenter to receive a free Marketer Profile dossier featuring the top five food and beverage companies from the Ad Age World’s Largest Advertisers 2019 report—a $1,599 value—as our thanks.Learn more and subscribe at AdAge.com/getdatacenter

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90 years of Ad Age Pivot points

1974 1975 1976 1977 1978 1979 1980 1981 1982 December 19, 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992

WE INTERRUPT TV’S DISRUPTION FOR ... EVEN MORE DISRUPTION

Anyone who’s ever com-plained about the exhausting excess of upfronts week—and that includes pretty much everyone working in the TV business—is suddenly nostal-gic for the pretense of normal-cy and stability fostered by the now-canceled bazaar. It was maddening, it was illogical, it was an anachronism, but it was comforting to an industry whose core business model has been coming apart at the seams for years now.

At Ad Age, we’ve been thinking a lot about the trans-formation of TV as we’ve been prepping for Ad Age’s TV Pivot, a two-day (May 12-13) virtual event that will explore the state of the TV ad marketplace and how the in-dustry is navigating the pan-demic (details at AdAge.com/tvpivot2020). After all, this publication, born as Adver-tising Age in 1930, has been

around for the entire history of ad-supported television: Grainy, experimental TV broadcasts started crackling to life in the late 1920s, but the fi rst o� cial FCC-sanctioned TV commercial, from watchmaker Bulova, aired only on July 1, 1941 (on New York City’s WNBT, now known as WNBC).

In diving deep in our archives, what became clear is that the TV business—and the advertising ecosystem surrounding it—has always been something of a roller-coaster ride. Consider, for instance, the language in a series of stories we published in the ’80s and ’90s:

On Dec. 19, 1983, in a piece titled “Atari founder develops revolutionary tv,” Ad Age de-scribed a near-future world of, basically, addressable adver-tising, in which commercials “could be aimed at homes with

preselected demographics and psychographics” and “pres-ent measurement techniques could become obsolete” (sound familiar?).

In “NBC unit eyes home shopping,” published April 19, 1993, Advertising Age reported that “NBC is trying to develop some new revenue bases” (imagine that) and was causing some advertisers agita with its “plans to sell products directly to viewers, transform-ing itself from a media middle-man to a direct marketer.”

And then just weeks later, on May 24, we reported on Time Warner’s plans to “hit the streets in mid-June with the fi rst formal advertising presentation for its electronic superhighway” (the word “internet” was conspicuously missing from the story) as the conglomerate prepared to launch “the fi rst full-service interactive network early

next year in Orlando, where it plans to deliver interactive games and services, home shopping, movies on de-mand and telephone services through cable TV.”

The common thread of these and other TVland stories we surfaced in the 90-year rabbit hole of our archives: an industry always on the verge of some Next Big Thing (cable! color! satellite! interactive! streaming!).

In a way, the disruption caused by the COVID-19 pandemic is an opportuni-ty to step back and really try to make sense of the TV industry’s own continual, decades-long disruption.

This is a business that’s constantly swerving—er, pivoting—all over the place.

Where have the goal posts moved now? On May 12 and 13, we’re going to try to fi gure that out.

By Simon Dumenco

How to contact Ad Age: [emailprotected]. See our masthead on page 26 to contact specifi c editors and reporters. For subscription information and delivery concerns, please email [emailprotected] or call (877) 320-1721 (in the U.S. and Canada) or (313) 446-0450 (all other locations). Advertising: (212) 210-0139. Classifi ed: (800) 248-1299. Library services: (313) 446-6000. News o� ces: New York: (212) 210-0100, Chicago: (312) 649-5200, London: +44 (0) 794-123-7761. For reprints, email Laura Picariello at [emailprotected], or call (732) 723-0569.

Contents copyright 2020 by Crain Communications Inc. All rights reserved. Ad Age (ISSN 0001-8899) Vol 91, No. 10. Published bi-monthly, with 3 issues in May, June and October and one issue in August by Crain Communications Inc. at 150 N. Michigan Ave, Chicago, IL 60601-3806. Periodicals postage paid at Chicago and additional mailing o� ces. POSTMASTER: Send address changes to Ad Age, Audience Development Department, 1155 Gratiot Avenue, Detroit, Mich. 48207-2912. $4.99 a copy, $109 a year in the U.S. In Canada: $5.00 a copy, $239 per year, includes GST. Mexico $239, All other countries $429, includes a one-year subscription and expedited air delivery. ‘‘Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement No. 40012850’’ GST #136760444. Canadian return address: 4960-2 Walker Road, Windsor, ON N9A6J3. Printed in U.S.A. Four weeks’ notice required for change of address. Address all subscription correspondence to Audience Development Department, Ad Age, 1155 Gratiot Avenue, Detroit, Mich. 48207-2912 (1-877-320-1721). Microfi lm copies are available from ProQuest, 800-521-0600 or www.proquest.com. Ad Age is available for electronic retrieval on the NEXIS® Service (800-227-4908) and Dow Jones & Co. (800-522-3567).

From the December 19, 1983 issue of Ad Age: Michael Freeman, inventor of ACTV’s Interactive Television—which was funded as part of Atari founder Nolan Bushnell’s Catalyst Technologies Inc.—demonstrates the remote-controlled activator for the system.

MASTER

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By Jeanine Poggi BEHIND THE TV UPFRONT UPHEAVAL · 2020. 5. 11. · The one bright spot was stream-ing, with Disney+ hitting 54.5 million subscribers globally. That’s a gain of - [PDF Document] (2024)