Issue: Johnson & Johnson and Coca-Cola weaken the Upfront
Commentary by: David
Today Susan Vranica of the Wall Street Journal reported that Johnson & Johnson, one of the nation’s largest advertisers will skip the upfront and that Coca-Cola which will participate does not plan to make any upfront buys. The Upfront is the glitzy coming-out party for the new season of network television shows during which nearly 80% of advertising slots in primetime shows are traditionally sold. Johnson & Johnson is a significant player in the upfront, having spent nearly $500 million in television advertising last year alone.
The decision not to attend the upfront is a declaration of independence which has been a long time coming. The Wall Street Journal quotes Kim Kadlec, Johnson & Johnson’s chief media officer as saying”What we found is, if we can synchronize our business-planning cycle [with buying media time] it will benefit the brand and that is what this is all about.” In English that means that it was never helpful for large advertisers to have to buy advertising time in network television shows 5 – 11 months before the advertising actually was scheduled to run. The power of prime time television perpetuated this system for years and in spite of the J&J and Coca-Cola decisions it is likely that a significant volume of advertising will still be sold in the upfront.
Johnson & Johnson’s withdrawal, however, marks a decisive and permanent shift in the balance of power between content providers and advertisers that mirrors the power shift also taking place between consumers and advertisers and is no less significant. Sumner Redstone famously said ‘content is king.’ There are still destination shows and superpower-scale events (like the Superbowl), but there are now many, many options for content. Not only have the number and quality of television shows increased but they now compete directly with web-surfing, satellite radio, podcasts, blogs, and other forms of new media for eyes and ears. Beyond that the same content may be found in different distribution channels (watch Lost live, record it to your DVR, stream it from ABC.com or buy and download it from iTunes).
What does this mean? It means that content providers must think carefully of consumer needs, distribution channels and the revenue model for each and every piece of content they produce. It means that advertisers will increasingly be able to choose the platforms that they prefer to support and will get a say in how these function. And it mean that consumers will ultimately accept or reject each model that advertisers and content providers present to them. Where consumers rejected individual shows before they may now reject entire revenue models.
Television networks should take this as a good thing, in spite of the loss of early revenue for the television season. They are still the kings of content – very little of what is produced in the other distribution channels (save print media and the slickest of online) approaches the production value of network television. What the slow death of the upfront proves is not that television is going away but that expansion opportunities are opening up. If some of the myriad creativity that is put into developing programming goes into thinking how best content can be delivered through new media, consumers, advertisers and networks alike will benefit.