Some see wave of morning-after regrets

By Dave Lindorff

      Is Citigroup’s recent decision to cancel up to $100 million in national television advertising a fluke, or is it the first sign of a pullback from the hot upfront ad sales of last spring that saw the networks book a record $7.2 billion in ad sales?
     Inquiring minds in the ad industry would like to know.
      At the height of the upfront sales, there were skeptics in the industry who suggested that many companies, anxious because of last year’s tight scatter market, were covering their bets by overbooking in the upfront, knowing that they could back out of those pledges later.
     When word leaked last week that Citigroup, the huge financial service conglomerate and parent of Citibank, was trimming its upfront commitments without any public explanation, there were echoes of "I told you so" through the ad buying community.
       "It’s entirely possible that this is the beginning of a wave of cancellations," says Larry Blasius, head of national broadcast media at FCB.
       Ron Frederick, head of the network department at J. Walter Thompson, agrees.
       "This is a pullback from the upfront," he says emphatically. Frederick says it is "quite common" for companies to have changes in their marketing strategies or in their dates.
     "They’ll come in to the networks and say they want some more day parts or maybe fewer day parts. It all gets negotiated. But what is unusual here is the size of the pullback."
      It is possible, Frederick suggests, that other companies are going in and cutting back a $50 million ad campaign by $10 million. "You wouldn’t hear about that, but this was so large you heard about it."
     A first indication about how solid the latest record upfront really was will come Sept 1, when orders for the next quarter are actually filed. But the real test of the upfront, ad buyers say, will come in late October and early November. Under most ad contract terms, advertisers have the right to cancel commitments up to 60 days ahead of a quarter, and that’s when decisions will have to be made about the first quarter of the year 2000.
      "If people were buying in the upfront as a hedge because of fears of a repeat of last year’s scatter market, that’s when you’ll find out about it," says Frederick.
    The word along Madison Avenue is that there are some angry people at the broadcast and some of the big cable networks.
     "People are saying that Citigroup cut some deals based on its big ad campaign," says one top buyer. "Now that they’ve pulled it all back there’s some anger about those other deals."
       There is also speculation that top executives at the giant banking concern pulled the plug because of the high rates negotiated in the upfronts. "This was Citigroup’s first time in the upfronts, so maybe there was some sticker shock in the executive suite," says one ad executive.
   Efforts to elicit a comment from Citigroup were unsuccessful. Efforts to speak with someone at Young & Rubicam, Citibank’s lead agency, were also unsuccessful. Y&R’s Citibank account executive, Tim Pollack, has apparently left the agency.
       But a spokesman at one major network that lost a fair piece of Citigroup’s ad budget because of the bank’s pullback denies that the move signaled a wave of other cancellations. "This was a drop in the bucket," he says. "Get me several other big companies doing this too and then we can call it a trend."
     He adds, "There’s always someone who says at the last minute, `Omigod, I want in!’ and there’s always someone else who says at the last minute, `Omigod, I want out!’ Life goes on."
      Perhaps so, counters J. Walter Thompson’s Frederick. But he adds, "One hundred million may be a small amount but it has a large psychological effect. All things considered, this kind of dropping of a hold is not good news for the networks."

-Dave Lindorff is a Philadelphia writer.