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iconsThe television marketplace known as "The Upfront" will start heating up  by the end of March, and although internet inventory isn't on the table, expect it to be in the back room.

Far from the celeb and buffet-filled galas they used to be, the upfront is expected to be a pressure-packed process this year. Internet media companies have to be concerned that as they are trying to hold the line on CPMs, a media conglomerate trying to sell its slate of 30 second spots just might throw that pricing under the bus. The internet divisions are trying to establish new rates for online video and hold the line on display, but their TV divisions are facing a year in which rate increases will be impossible. Rate cuts for TV are on the table.

New shows, which are launched to woo the media buyers at the upfront, always have high expectations. But this year market conditions are the real attraction. Inventory is plentiful, but advertisers have taken wholesale category dives. Automotive, once the leading TV spending category, might be down more than 30 percent this year. No other category is rushing to take its place.

The most concerning scenario is this one. Suppose a media company that owns several cable channels, a TV network, newspapers, and major internet properties is meeting with a major CPG company. The CPG company needs to cut costs at least, and gain more impressions at best. The media company is desperate to fill its network and newspapers. Cable is expected to do well because of its relatively low cost. The internet has been growing but is stalled. There's not a lot to stop that media company from channeling dollars toward network and cable with an overall rate decrease. And there's not a lot to stop it from making newspapers a value-add for that deal. And in the back room, the internet can become a discounted promotional vehicle for the advertiser's alliance with that property. The internet could lose its stand alone media value.

That is a short-sighted business plan, but right now it's a short-sighted business world. Media companies have found out the hard way that once you discount a media (or charge nothing for it) it is very difficult to reinstall that revenue. The internet has a chance to become its own revenue engine, complete with separate rates for online video, display, search, contextual ads, and more. When the economy turns around media companies will insist on the full payment for it.

The internet is not a media hedge fund. Smart companies will price its audience according to its value to advertisers, not value to TV.


Published 10 March, 2009 by John Gaffney

John Gaffney is US Editor at Econsultancy. Follow him on Twitter

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