Discovery Hawked New Winfrey Network Early, But Should Launch Advertisers Really Pay An “Oprah Premium”?
Advertising Age December 13, 2010
by Brian Steinberg
NEW YORK (AdAge.com) — A little Oprah Winfrey apparently goes a long way.
Ms. Winfrey won’t star in every piece of programming that runs on her new cable network, but executives there have been seeking ad rates that make it seem like she will.
Oprah’s OWN is set to debut on Jan. 1.
The very fact that her name adorns the new Oprah Winfrey Network, set to replace the Discovery Health channel on Jan. 1, gave Discovery Communications the confidence to seek prices for reaching a thousand viewers — a typical metric in ad negotiations — above the rates charged by Discovery and TLC, two well-established siblings. It sought rates nearly on par, as a matter of fact, with the prices that broadcast networks get for daytime TV.
Cable can’t usually swing broadcast-sized rates, because broadcast is historically much better at attracting the bigger crowds that advertisers want. It should be even harder for a new cable channel without any established ratings.
But Ms. Winfrey’s name meant the network was no ordinary launch, executives figured. “We were in line with how other Oprah properties had positioned themselves — a premium-priced media platform that had the promise of an already built-in audience,” said Kathleen H. Kayse, executive VP for ad sales at the Oprah Winfrey Network, or OWN.
That’s not to say network executives just waited for their phones to ring. Ms. Kayse has been pitching OWN to marketers since the fall of 2009, when the recession had advertisers holding their budgets close. Ms. Winfrey’s imprimatur was even more crucial then. “I didn’t have programming to show,” Ms. Kayse recalled. All she had to stand on was the past performance of Ms. Winfrey’s media properties.
Raised the stakes
More than a year later, the stakes have grown, providing even more incentive to seek high ad rates. Last August, Discovery raised its funding commitment for OWN, a joint venture with Ms. Winfrey’s Harpo Inc., to $189 million from $100 million, according to a filing with the U.S. Securities and Exchange Commission. In return, Ms. Winfrey agreed to expand her on-air presence. Her programs will join others such as “Kidnapped by the Kids,” a series that serves up hard emotional realities to harried parents or “In the Bedroom with Dr. Laura Berman,” a program focused on having better sex.
Ms. Winfrey’s media power is legendary. Her talk show can turn obscure books into phenomenons or focus all eyes on a new car. As such, she’s been able to demand — and get — better terms from marketers who want to get involved with her content. When Ms. Winfrey and Hearst worked to introduce O: The Oprah Magazine in 1999, for example, the sales team held an “upfront,” in which marketers were asked to make “good faith” commitments ahead of time in exchange for winning better-than-usual placement in the magazine.
Her reputation has lured advertisers to the cable channel from the get-go. OWN isn’t like other cable-TV launches, said Todd Gordon, senior VP-director of broadcast at Interpublic Group’s Initiative. “It’s kind of like a new network launching as an established network,” he said. “I can’t recall a network launch that more clients have asked about without us taking it to them.”
MediaVest — the Publicis Groupe ad-buying firm that represents some of advertising’s most prominent practioners — moved to establish a relationship all the way back in 2008, the year plans for OWN were announced. A new channel focused on women would help clients reach an audience that was served less and less by broadcast’s daytime soaps, according to Donna Speciale, president of investment and activation at MediaVest. Ms. Winfrey’s experience with motivation and self-help would also prove attractive to a post-recession audience interested in finding more purpose in life, Ms. Speciale believed. It didn’t hurt than MediaVest already had a good relationship with Christina Norman, OWN’s chief executive, formed during Ms. Norman’s previous tenure at MTV.
From broadcast to cable
In years past, a jump from a broadcast roost to perch on cable would have been viewed as a demotion, and no one would have dared ask for rates approaching the broadcast networks’. These days, the media world is different. New digital technology has sent audiences splintering around dozens of entertainment options. That dynamic is weakening Big TV and bolstering smaller screens, platforms and channels.
TBS recently found some success when it went to market demanding ad prices for its new “Conan” late-night show that were close to those being charged for NBC’s “Tonight Show” and CBS’s “Late Show with David Letterman.”
Moving to cable, however, doesn’t always go smoothly. Martha Stewart’s move from syndicated daytime on broadcast TV to a range of Martha-related shows on Hallmark Channel’s daytime grid has missed badly so far. TNT got kudos for reviving critically acclaimed cop drama “Southland” after NBC cancelled it, but the show now runs just 10 or so episodes per season and has had to cut some of its cast to make its financials work.
Studying the Oxygen network
When OWN got started — amid a flurry of buzz but also a rash of executive turnover — it made sure to study the past. Ms. Kayse purposely examined the rocky start of Oxygen, a female-skewing cable network now owned by NBC Universal that launched as an independent with Ms. Winfrey’s involvement in 2000. Oxygen had primarily sold standard commercial time in the standard way, without chances for early advertisers to tailor their advertising, for example, to the programming. It hadn’t offered marketers much incentive jump in at launch.
To entice marketing’s heavy hitters to join OWN at the start, Ms. Kayse and her staff created multi-year “launch partnershps” valued at $10 million to $15 million per year. Advertisers willing to make such commitments would get better access to the shows in which Ms. Winfrey figured prominently, as well as the ability to create customized pieces of promotional content that play off specific OWN shows.
Their efforts have paid off for the most part. One advertiser, Procter & Gamble, agreed to a three-year deal reportedly valued at more than $100 million, giving the consumer-products giant a “first look” at nearly everything on OWN. The fledgling channel’s other launch partners now include General Motors, Nissan, Kellogg, Toyota, Walmart, Chase, Kohl’s, and Target.
OWN’s interest in trying new things may have been its most attractive asset, according to MediaVest’s Ms. Speciale. Ad deals established with the network “are not just based on buying 30-second spots,” she said. “A lot of it is based on trying different types of emerging units, doing a lot of testing.”
Not everyone’s on board
Some marketers have pushed back. “A lot of advertisers want to get a little look at what the network will look like, and see how it’s going to do,” said one senior media-buying executive. “There are a lot of clients where the price tag did scare us off. To reach women 18 to 49, we have a lot of places to go.”
And OWN won’t necessarily soar from the start, Ms. Speciale allowed. “They need time to find their voice. They need to have patience,” she said. “They’re going to need to zig and zag to come to what Oprah wants it to be,” she predicted.
So the selling won’t end any time soon for Ms. Kayse. One coming project: “The Rosie O’Donnell Show.” When Ms. O’Donnell used to play on the nation’s airwaves, she was known for taking products she liked and giving them a spotlight. Could that be on Ms. Kayse’s agenda? “That will be a very intriguing and a real opportunity, “said Ms. Kayse. “We’re looking forward to that next phase of selling.”
That’s when the focus moves from Ms. Winfrey’s halo to programs that she inspired but don’t necessarily feature her presence.