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Procter & Gamble Starts to Strike Deals in TV’s Upfront Market - Variety

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Procter & Gamble has been one of the leading voices pushing to get the TV industry to change its decades-old “upfront” marketplace. But that hasn’t kept the consumer-products giant from doing business with the networks using the regular system.

The company behind Pampers diapers, Crest toothpaste and Old Spice men’s grooming products has begun striking deals with certain TV networks as part of the upfront, according to a person familiar with the matter. A spokeswoman for Procter & Gamble declined to comment on the company’s advertising activity. Spokespersons for ViacomCBS and NBCUniversal, two of the company’s most likely partners, declined to comment. A third, Walt Disney Co., could not be reached for immediate comment.

A horde of big advertisers have pressed the networks to change the upfront, which typically starts in late May and ends after negotiations take place over the first half of the summer. These marketers, in concert with the Association of National Advertisers, an industry trade group, pushed in June for the upfront to move to a calendar year, citing the effects of the coronavirus pandemic on long-term planning in 2020. As part of that push, Marc Pritchard, P&G’s chief brand officer, said the upfront “remains an antiquated business system that needs reform.”

But not so much reform that P&G didn’t move forward on its own.

Pritchard “continues to call for overall media transformation,” the P&G spokeswoman said, and is likely to do so again at an industry conference in September.

A bevy of ad categories – movie studios, and travel marketers and some retailers among them –  have cut spending significantly, realizing that the pandemic has hurt their operations. Demand for consumer staples like toilet paper, toothpaste and dish-washing soap, however, has remained steady and in some cases increased as more people stay at home. That puts companies like Procter & Gamble, Unliever, pharmaceutical marketers and others in a position to strike ad deals now, which helps them lock in lower prices for the important holiday season at the end of the year.

Variety reported in June that P&G and Unilever were continuing to negotiate with the TV networks even as they called for changes to the TV-ad buying process. Advertising Age reported Tuesday that Procter had begun to strike deals without necessarily waiting for its media-buying agency to do so.

The TV networks no doubt welcome the chance to do business with a large advertiser. At the same time, longtime TV sponsors like Procter often have years-old deals that guarantee them narrower rate increases each year than some newer TV sponsors. As such, TV networks really want to do more business with e-commerce and direct-to-consumer upstarts like Wayfair, Peloton and others like them.

Billions of dollars are at stake. The five English-language broadcast networks secured between $9.6 billion and $10.8 billion in advance ad commitments for primetime inventory in the 2019-2020 seasonj, according to Variety estimates, compared with $9.1 billion and $10.06 billion in the previouis year’s haggle. It marked the fourth consecutive year that the networks have seen increasing volume for their primetime schedules.

That dynamic is not expected to be at play in 2020. Michael Nathanson, an independent media analyst, believes advertising fell 32% in the second quarter, with broadcast network advertising off by 37% and cable advertising down by 34%. “We expect this to be the bottom and are currently forecasting national TV advertising improving through the back half of the year,” Nathanson said in a research note Tuesday morning. That is not likely to be enough to help the networks increase overall ad revenue this year.

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July 29, 2020 at 04:26AM
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Procter & Gamble Starts to Strike Deals in TV’s Upfront Market - Variety
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