Broadcast TV. Upfront is the week in May when broadcast TV networks pitch their next season's programming to advertisers, agencies and media services. Almost 75% of prime time commercial avails used to be sold in negotiations squeezed between elaborate dog-and-pony shows and Epicurean feasts. This year the hoopla and sybaritic goings-on were a lot less extravagant than they used to be. Because selling TV time isn't quite the party it once was.

Back in the 1960s, when upfront began, the then three broadcast networks were the only effective way to reach the entire U.S. market. Advertisers' choices were buy network TV or be invisible. Not true anymore. There are plenty of other ways to reach segments of the now-splintered mass audience. And some of those splinters can no longer be reached by TV.

Last year's upfront was tepid. This year, Unilever joined Johnson & Johnson and Coca-Cola as non-participants. And a lot of the advertisers and agency/media behemoths who were there held back a bit to see just what happened when the new Nielsen commercial ratings came out (see The Neilsen Nova in our archive).

There will still be an upfront next year, because political spots will soak up every available broadcast television commercial minute from Memorial Day until a few minutes before the polls close on Oahu at 6:00 P.M. Hawaii time on November 4th. But 2008's upfront may be the last one.

Why the change? Broadcast TV just isn't the be-all and end-all that it used to be. Audiences of the Big Four broadcast networks are down 10%. Money is moving to alternate screens. And advertisers are demanding more than eyeballs. Now they want interactive engagement. MediaVest's Eric Bader says "I'm being offered a digital environment that is an extension of the TV environment. Frankly, I have a lot of clients looking for deeper relationships."

The big news at upfront was CW's "cwickie" five-second spots. Nice, but not exactly an earth-shattering innovation. Broadcast still lags behind cable networks in the much more important innovation area of convergence of programming and interactive web content, but they're trying to catch up.

But feeble program/web convergence is just part of the broadcast networks' problem. Their wishful-thinking approach to data is another.

Live Plus Seven? Live Plus Three? The broadcast networks' answer to declining ratings is try to include time-shifted viewers in their totals. Live plus seven means they want to charge for viewers watching a show when it originally airs and those watching within the following seven days. Live plus three, on-air viewers and those watching within three days.

It is absolutely stunning that broadcast nets think advertisers, agencies and media services are that stupid.

The new Nielsen numbers were pretty clear: time-shifting viewers are skipping or fast-forwarding through commercials on their TiVos and other DVRs. As Mediahub's Steve Calder said, "The irony of the DVR situation is that often the most popular shows get DVR-ed, so you pay a premium to get on the best shows, and you're mostly getting skipped by the most desirable demographics."

Live Plus Right Now is the only meaningful number for two reasons. 

1.    It's the only number which gives any assurance that the commercials will actually run. (Not necessarily that they'll be watched. Just that they'll run in the show instead of being skipped or fast-forwarded.)

2.    A commercial may not be very useful three or seven days after it's scheduled to run. If the spot is for a new movie, the only time it counts is the Thursday night before the Friday opening, because the first weekend is everything in movie marketing. Someone watching the following Tuesday afternoon does the distributor no good at all. Same with any time-sensitive product category. And last we checked, most consumer categories have at least some variation in sales by time of day or day of the week.

Of course "Who, if anyone, is watching?" is an even more important question than when they are (or are not) watching. The new Nielsen commercial ratings will finally show the effect of the length of commercial pods and of an individual spot's position within a pod. Because spots in the fifth or sixth (or tenth in some cases) position in a pod may not be reaching many eyeballs. And so they won't be worth much to advertisers.

The audience delivery advertisers will focus on in the future won't be "How many people watched the show?" but "How many people watched my spot?" (Again, background is available in The Nielsen Nova).

Cable TV. The average American cable or satellite household watches 15.8 channels. Ever. But almost all of those 85,000,000+ cable or satellite households (and the 1,000,000 who inexplicably subscribe to both) have to take – and pay for – more than fifty channels to get the sixteen they want.

That's not likely to last. FCC Chairman Kevin Martin has asked Congress to force cable systems to unbundle their content. Martin and his minions are likely to get their way for three reasons:

1.    The Republicans don't like the fact that Jon Stewart sneaks "The Daily Show" into people's homes through the cable. And they're peeved at cable programming which offends their fundamentalist constituency.

2.    The Democrats don't like the fact that Bill O'Reilly weasels "The O'Reilly Factor" into America's living rooms via cable. And they don't much care for the possibility that major multinational media conglomerates profit from cable. (Thought they probably don't mind if their loyal Hollywood cadre makes a few bucks.)

3.    Both political parties realize that forcing cable operators to unbundle content is a lot easier than securing world peace. And it's probably about as popular with many American voters.

What will the almost inevitable unbundling mean for advertisers?

Some fringe channels will almost certainly disappear. The Spelling Bee Channel and the Sinus Health Channel may not get enough subscribers to pay for programming. The loss of fringe channels won't matter much to advertisers other than those offering highly-targeted products – spelling flash cards or sinus irrigators, for example – and direct marketers who sell Ginsu knives or Thighmasters on a percentage-of-sales basis on remaindered time.

The channels that are left – the ones that subscribers are willing to pay for in an unbundled universe -- will be more valuable. Just as paid newspaper or magazine circulation is reckoned to be many times more valuable than "controlled" (that is, free) circulation, just so viewers willing to pay for a specific channel are much more likely to be actively engaged by its programming.

So the few channels people are willing to pay for (and actually watch) will get more involved viewers. And unlike TiVo'd broadcast shows, cable networks' video-on-demand programming can imbed skip-proof commercials.

Change is coming to television, and it's going to be significant media realignment since the beginning of the television age in the early 1950s. Some networks will surf this tidal wave of change to new heights. Others will be swamped.

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