One challenge it faces is justifying advertiser spend for newer formats like in-app video. On average, A+E sees 50%-60% of traffic moving from desktop into mobile and over-the-top environments, which Shriver described as a huge monetization opportunity for networks.
However, in order to command the rates it wants, the industry needs stronger mobile, streaming and cross-platform measurement, in addition to first-party demographics, Shriver said.
The upfronts, when networks court advertisers for annual commitments around fall programming, have evolved as digital channels gain influence. On the agency side, the collapsing walls between digital video and TV buying groups are changing the negotiation process.
Chicago agency Spark SMG, for instance, is aligning TV and online video more closely.
Urgency is an upfront hallmark, as buyers scuffle to get the best placements at the lowest prices. Like booking a flight during the holidays, if you book ahead, you’re guaranteed to get a lower price and the seat of your choice.
While new distribution platforms like Snapchat, Vessel, YouTube and Facebook – promising lower costs, better targeting, greater efficiencies and a young and growing audience – disrupt that model, the networks have premium content.
This dichotomy creates some discrepancies in upfront negotiations. While advertisers can use a drop in network ratings to argue for reduced CPMs, sellers often counter with data and new channels, bringing out proprietary audience targeting and new opportunities on third-party channels and apps – like Snapchat’s Discover.
But many buyers claim these new digital opportunities don’t justify CPM hikes.
“I’d like to talk about … how despite the fact that you’re losing all this audience, you continue to look for CPM increase,” John Muszynski, head of investment for Spark SMG, told Broadcasting & Cable. “So I think I’m being very generous in giving you 2% less than last year when your numbers are down 20%.”
Networks, however, insist audiences aren’t gone – they’ve just shifted to mobile and video on demand – and that TV companies play a critical role in digital platform developments. Facebook, Snapchat and video streaming service Vessel, for instance, are all courting networks for premium content licensing and revenue sharing agreements.
Networks are being methodical about how they approach potential fluctuations in pricing due to new formats and automation.
“We run a very viable direct I/O business and although we have a traditional way of executing the deal, we also allow some line items on an I/O to be executed via DSP or programmatic tools,” said Jason DeMarco, director of yield optimization for A+E Networks.
In other words, A+E prioritizes direct-sold sponsorship deals, then addresses desktop, mobile in-app and connected TV inventory through private marketplaces. It’s using FreeWheel’s FourFronts programmatic reserve marketplace to set these pricing conditions, and to create a data escrow where marketers and sellers can perform anonymous matches against their unique data sets.
A+E’s private marketplace includes both biddable and fixed-rate CPMs. In programmatic guaranteed deals, buyers who commit to a set volume of impressions can buy on a fixed rate and achieve preferred access.
“We kind of separate that out as non-biddable inventory that’s fixed-rate, guaranteed and, to us, it’s premium because we’re truly taking a first look at all of our impressions and making sure we carve out the necessary inventory for that specific advertiser,” DeMarco said.
Whether data and technology ultimately upend the upfront is to be determined, but transacting on multiple currencies will remain a big challenge for both sides, at least for the interim, said Frans Vermeulen, VP of advanced ad strategy for Comcast.
“At the end of the day, you may have 100 units of supply across linear and digital, but a unit is still a unit of supply,” he said. “I might be trading some of those units in a data-enabled, impression-based purchase while the other would be a television GRP, so how do I map those together and reconcile those as a publisher in my yield?