The TV upfronts are a red-carpet event for programmers to show off their content, brag about how many viewers they have and, ideally, snag more ad commitments than the year prior.
But all the glitz and glam in the world can’t change the fact that economic pressures and unresolved measurement issues are restricting growth in upfront spending this year.
“Gone are the days where the upfronts are all about programming,” said David Campanelli, chief investment officer at Horizon Media.
Programmers are now fighting a two-front war. They must win ad budgets in a tough economy while also standing out in an ever-growing pool of competition. One way to differentiate is by offering advertisers more flexibility in terms of how they spend and measure.
“This year, buyers have the upper hand,” said Erin Firneno, VP of business intelligence at Advertiser Perceptions.
Money problems
The economic situation is setting the stage for a very different upfront season than last year, when spending was on a high as advertisers bounced back from the pandemic.
This year, spend will likely be softer, and buyers will be slower to make long-term commitments. Consider it a plateau.
Most advertisers say their media budgets are staying the same this year, including upfront budgets, according to research from Advertiser Perceptions. Only roughly one quarter plan to increase their upfront spending from last year, Firneno said.
“It’s in buyers’ best interests to not move so fast,” she said, noting that advertiser wariness will likely extend this year’s negotiation period beyond what is typical for an upfront season.
But you can’t blame the economy for everything.
A lack of standardized measurement is also a “detriment” holding back increases in TV ad spend this year, Firneno said, which is why programmers are upping the ante on alternative currencies.
Currency conniptions
The transition away from Nielsen has been slow – even slower than the industry initially anticipated.
Ahead of last year’s upfronts, programmers pledged that buyers would be able to use alt currencies to make transactions, but those promises didn’t really pan out. This year, the industry is setting more realistic expectations, Firneno said.
“Advertisers aren’t ready to [fully] wean themselves off of legacy currency yet,” she said. According to an Advertiser Perceptions survey last year, only 29% of advertisers said they’d transact upfront buys using alt currencies, including advertisers who planned to use Nielsen alongside those other options.
Still, there will be more transactions on Nielsen alternatives this year over last year, despite the fact that the transition away from Nielsen is still very much in its early innings.
Although alt currencies rely on big data, they still don’t have the same scale as Nielsen. This, in addition to the lack of standards, is why most of the industry is still using Nielsen, despite all the griping.
Forging ahead
This year, though, industrywide impatience with unreliable measurement is bubbling over.
There’s been a bum-rush to start using alt currencies as soon as possible, regardless of standards.
Agencies and programmers have spent the past year “pressure testing” alt currencies, and “this will be the upfront where advertisers start using them,” said Sean Cunningham, president and CEO of the Video Advertising Bureau (VAB).
And the new joint industry committee (JIC) that formed early this year to create video currency standards will also help turn the currency tables.
Still, this year’s transition to currency alternatives won’t be enough to dethrone Nielsen.
A measured approach
Programmers also have to win advertisers over with promises of flexibility, which include more measurement options, whether or not the measurement is used as a basis of transaction.
Compared with content slates, measurement has never been much of a “headliner” during TV upfronts, Firneno said. But this year, “advertisers are definitely going to want to hear about the opportunities programmers are offering them to measure their ad effectiveness.”
Specifically, advertisers are looking for media partners with a handle on KPIs that TV advertisers typically haven’t been able to measure before, such as outcomes and attention.
“Measurement is evolving and conversations around measurement now focus much more heavily on digital-like metrics, such as advanced audience targeting, engagement and attention, [which would] likely lead to better business outcomes,” said Hyun Lee-Miller, VP of media at indie media buying agency Good Apple.
Hence why some programmers are leaning into alternative measurement providers even if they’re not ready to serve as currencies. Disney, for example, is still transacting on Nielsen, even though its working with VideoAmp, Samba and outcomes-based measurement provider EDO as measurement partners for its upfront this year.
But beyond measurement, programmers will also lean into bundling as a competitive advantage for ad dollars, said Jenny Schauer, SVP and head of video at Publicis-owned Digitas.
Advertisers prefer bundling opportunities that allow them to spread the same amount of spend over a wider slate of inventory, whether that’s multiple streaming offerings (think the Disney+, Hulu and ESPN bundle) or streaming plus linear inventory, such as the recent combination of Paramount+ with Showtime.
Spending spree
Speaking of options, advertisers are also demanding more flexibility in spending commitments.
In a rough macroenvironment, advertisers are under intense pressure to justify every media dollar, which means they want the option to move their ad dollars around or pull back.
This level of flexibility has not been readily available during previous upfronts, Schauer said. But this year, programmers are being more lenient to keep buyers from shifting too many upfront dollars to programmatic or getting skittish about the economy.
One compromise is allowing advertisers to move around or even cancel some of their upfront budgets during the negotiation period. While this adds more uncertainty for programmers, it’s a necessary concession.
Better spending flexibility not only woos brands that were previously reticent about buying media plans so far in advance; it’s also “helpful for keeping ad dollars within the upfront marketplace,” Schauer said.
Because, without sweeteners, advertisers might hold back their budgets.
As these dynamics play out, Firneno said, it’s clear that, compared with previous years, this year’s upfront marketplace should be “more favorable for advertisers.”
