December 31, 2007

In Memory of Steve Florio

Since attending the funeral service this morning at St. Ignatius Loyola church here in NYC, I cannot stop thinking of Steve.

Not that I knew him that well. A few business meetings, a weekend in Key Largo, maybe a few meals at the Four Seasons---but anyone who knew him at all will recall that it didn’t take long for Steve to make a big and lasting impression.

People are saying that he was “bigger than life” in many ways: his outgoing personality, his aggressive points of view, his competitiveness. But I think rather that he was as large as life, that he lived life as it should be lived, to the fullest. And I think this scared and scares a lot of people because many of us live our lives smaller than they could be, afraid perhaps to make those around us anxious or uncomfortable.

In business I think that Steve thought it was a major part of his role as a leader to make people around him uncomfortable with the status quo, to shake things up, to make us unwilling to settle for less than could be achieved.

Steve loved stories so here are a couple from my memory of Steve.

I remember a memorable night on Andy Berlin’s yacht, sitting on the top deck with Steve and his gang of usual suspects (Tom, Richard, Chuck, Ron) puffing on fine cigars and sipping fine cognacs under a cover of bright stars and listening to an endless series of tall tales and risque jokes for hours and hours. Steve’s energy kept us all at a high pitch whenever we were around him; what a blessing!

I also remember working with Ron and Tom on the launch of the BMW Z3 automobile, their first roadster in America. Our task was to pre-sell 9000 cars with a small budget. The solution: an ‘outsert’ to accompany certain Vogue subscriptions consisting of a tune-in ‘program’ for the VH1 Fashion Awards and a sponsorship of the awards. Steve and his folks introduced the BMW people to key contacts at stores such as Nieman Marcus and Nordstrom’s to get showcases for the car.

Not only did we sell out the entire year’s production run before a single car was available but we did it in a classy, high quality way and we had fun doing it. That was Steve’s genius: surrounding himself with great people, always being open to ideas and willing to mow down any obstacles that got in the way.

Rest in peace, Steve. Vaya con dios.

December 19, 2007

Network TV “CashBacks”Pull the Rug Out From Under Advertisers & Doom the Upfront

A new age of media discontinuity may be dawning as the television networks, in giving cash to advertisers in lieu of promised audience or ratings, have pulled the rug out from under the foundation of trust that underlies the selling and buying of TV ad time. In giving cash instead of advertising to buyers of ad time, the networks are taking back time sold at one price in the past and reselling it to higher paying advertisers today. It’s “bait and switch” without the switch; the marketer who needs the ad time to sell goods is left with a bag or cash and no ad support.

Pre-emptions of previously purchased ad positions have long been a bane and ethical conundrum for local spot television ad sellers. Neither the media buyer nor the advertiser has ever been able to count on local stations to honor their media sales contracts. The ‘custom of the country’ for local TV stations in the U.S. has simply been to sell each spot to the last highest priced offer, reselling the same spot over and over until the last, highest paying offer is executed in the form of a telecast.

In this process, each of the early buyers of the same ad unit for ever increasing amounts, is “pre-empted” by the seller and offered a replacement spot or makegood, often in an inferior time period. As a result, one of the most expensive components of spot buying is the scheduling and rescheduling of makegoods. However, even in this swamp of reneged promises and towers of paperwork, one has usually been able to count on some sort of ad schedule airing approximately during the desired time periods.

However, the new network cash-back formula makes it impossible to count on the seller to ever deliver the promised goods. Any time ad rates increase over time, a network can now pre-empt an early ad buyer for a higher-paying latecomer. This situation makes much of the discussion about the Writers’ strike’s possible effects on the Upfront moot. In the “Cash Back Age” there really is no basis for an upfront, which is after all supposed to be at core a guarantee of audience at some future date. Let the buyer beware. A new, more risky media age is dawning.

I predict that the next few months will represent the most tumultuous period ever in the history of television. It is time for our industry---media sellers, ad buyers and advertisers---to sit down and to address the need for a new and reliable basis for doing business in the future, nothing less than a new foundation for television advertising commerce.

December 4, 2007

Media Agency Profitability May Drive Media Selection

Media Buying Today

What Leads Media Agencies to Recommend the Various Major Media?

Although we are primarily a consulting company, we undertook to place about $50 million for an advertiser over the past 18 months or so (mid-2006 through 2007). We planned, negotiated and scheduled time and space in virtually all media: national and local television and radio, magazines, newspapers, out-of-home and the internet. We bought every imaginable unit and just about every time schedule possible, from broadcasts upfront, calendar upfront, scatter, opportunistic and “the night before” and “day of”.

Since I had not been directly involved in media buying for quite a few years, having functioned as an executive, manager and company salesperson, I thought it would be interesting to comment on my experiences and perception of the various media from a front row seat. My perspective is that of the manager of a media buying operation, particularly viewing media from the point of view of whether we can make media buys that are effective and efficient for our clients and profitable for us.

Ease of Buying characterizes national media

There’s nothing like broadcast network television for spending a lot of advertising money fast. The networks are set up to accommodate media buyers in every possible way; in fact, my experience was that they do virtually all of the work involving in buying network time. For example, they’ll provide historical ratings tracks, project ratings forward to telecast dates and then guarantee their projections. What’s left for the buyers to do? Very little as far as I could tell. Plus the network sales people are friendly, responsive and exude positive energy. It’s a pleasure to meet with them and work with them. I found we could manage effective and efficient network buying very profitably.

National magazines come in a close second in efficiency for the ad buyer. The extra challenge represented by magazines arises in planning print schedules, selecting specific publications from the huge array of print vehicles available. Added the to complexity of the selection process and dealing with a large number of sales people, with quite a bit of duplication from the big publishers, is the importance of securing the best ad position in each magazine. Unlike television, which still offers something akin to an “involuntary” ad exposure at least to non-DVR users (the preponderance of all viewers today and in the near future), individual magazine ads are often ‘seen’ by a minority of the readers of a magazine. This is because magazine audience is measured by someone’s ‘exposure’ to the magazine issue, not to specific ads or even an average readership score for all ads in a book. The bottom line: when buying ‘expensive’ magazines such as People and Parade, it is still pretty easy to handle print buying profitably for the media agency.

Local media may be unprofitable for media agencies

Local television and radio, OOH and newspapers are a disaster in terms of media agency profitability and operational efficiency. The spot sales system is fundamentally dishonest because the same ad time is sold over and over in a series of serial ‘pre-emptions’ that drop earlier buyers for buyers offering to pay more as the telecast date nears. Out-of-Home is site-specific and requires a great deal of time to find locations and verify postings. Achieving significant reach with newspapers requires the use of large numbers of individual publications, each with its own approach to pricing, positioning, contracting and scheduling of ads.

The Internet offers media agencies a special income opportunity because advertisers seem to be willing to pay internet-focused agencies on a completely different basis from media agencies. Moving advertisers into more and more internet-based advertising is therefore a highly profitable strategy for ad media holding companies.

Media agency profitability may drive media selection

The bottom line of my 18 months back in the media buying saddle: the networks and magazines should do just fine over the next few years because they make it very easy for media buyers to recommend them. The Internet should continue to outpace other media’s growth. And expensive to place local media need to find another way to get on media buyers’ screens; until then, their revenue will continue to be rerouted to easier to place media.