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Date
April,2012
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POV - National TV Buying for Pharma

Date:April 3, 2012
Analyst: Beth Haufler, Broadcast Media Supervisor, Communications Media Inc.
Subject:National TV Buying: Upfront, Scatter or Opportunistic Markets and Recommendations for Client Action

Background:
TV buyers usually employ one of three types of buying strategies, and a variety of factors can help determine which strategy is best suited for a client’s needs. Buyers can purchase inventory in either an upfront, scatter or opportunistic basis.

Definitions:
-Upfront: long-term buys typically negotiated in the May-July timeframe for the programs in the upcoming broadcast year
-Scatter: short-term buys negotiated anywhere from four months to one week prior to the first air date of a client’s flight
-Opportunistic: buying “opportunistic” or “distressed” inventory that is still available for sale on a last minute basis

Industry Implications:
The pharmaceutical vertical has other considerations to note that do not affect non-Rx advertisers, which warrants being more cautious when executing an upfront versus a scatter buy.

Upfront Market
The broadcast year (9/17/12-9/15/13) begins with the introduction of the new fall shows in mid-to-late September and runs for 52 weeks.
Pros:
-Advantageous pricing
-Availability of desired programming including specials or sponsorships
-Achieving broadcast goals for campaign as planned
-Audience guarantees
-Flexibility to cancel part of the dollars committed during a buy via options
–Q4 – 100% firm. Non-cancelable
–Q1-3 – usually 25-50% cancelable depending on quarter
-Ability to negotiate increased added-value components

Cons:
-Accelerated planning process
-Process for creative to go live is further extended after FDA approval has been received as individual networks have their own regulatory reviews
-Requires firm budget commitments depending upon the quarter
-These agreements are binding contracts that obligate advertisers to pay for inventory purchased

Scatter Market
The marketplace dynamics of supply and demand can produce diverse situations. Attacking the marketplace at the most favorable time will help to maximize discounts and/or minimize inflation.
Pros:
-Financial flexibility of client’s budget
-Price discounting during a softer marketplace
-Negotiation of multiple quarters should include
–Options for cancellation
–Audience delivery guarantees
Cons:
-Pricing typically more expensive
-Reduced choice of programming/inventory
-Limited flighting opportunities
-No cancellation options or audience guarantees if purchasing on individual quarters
-Diminished added-value opportunities

Opportunistic Market
The majority of these deals is completed day-of-air or on the Friday prior to a weekend, termed as “Fire-Sale.” Sports inventory is most often discounted at the last minute enabling buyers to purchase high-profile events at a reduced price.

Pros:
-Discounted rates/pricing
-Ability to air in high-profile programming or a sporting event that was previously priced unaffordably
-Allows for purchasing with very short lead time

Cons:
-Cannot rely on inventory being available
-Limited flighting opportunities and/or delivering significant impression levels to overall plan
-CPMs rarely guaranteed
-Available programming is frequently considered content-sensitive to the viewer so the advertiser must be willing to assume the risk of backlash

Recommendation:
Pharmaceutical and healthcare companies that may be launching a new product and/or expect delays in budget approval should buy national TV advertising in a scatter market.

Clients need to develop a level of comfort with the process and penalties that can be incurred when there is instability with regard to budgeting or decision making. In the FDA regulatory process, a pharmaceutical advertiser must be confident that the creative messaging will be completed in sufficient time for all networks to approve prior to airing. Networks should have access to storyboards for internal review prior to going to final production (2-3 weeks in advance). Once inventory has been secured the advertiser is locked in to the programming and is liable for payment to the supplier.

If clients have only a single brand, it would be considered a high risk to participate in an upfront market if FDA approval or creative issues arise and inventory cannot be shifted to an alternate brand. However, once familiarity and stability is established, participating in an upfront market would then be advantageous.