‘Fasten your seat belt’: What to watch for in this year’s TV and streaming advertising upfront market

There’s no official start to the TV and streaming advertising upfront marketplace (there’s not necessarily an end either). But this week’s presentations by major TV networks and streaming services serve as the unofficial kickoff to the annual haggling cycle.

And this year’s cycle is likely to be a long one – and potentially a bit of an adjustment to how buyers and sellers do business in the upfront.

“In general, we are much more behind this year in terms of just client readiness to commit dollars pretty much across the board,” said an executive at a major agency holding company last week. “By this time in previous years, we’ve had a pretty clear sense of what approved budgets will be. We’re probably at like maybe 50% of our budgets are pretty visible and understood at this time.”

That’s not necessarily a bad thing, or at least not as alarming as it may have been five years ago. Instead, it seems to be indicative of the upfront market being in a bit of a post-pandemic correction period. As streaming takes a larger share of the market and linear viewership continues to decline, the scarcity of ad inventory that effectively compelled upfront commitments is, well, scarcer. 

“There’s so much supply [of ad inventory] in streaming that, aside from sports, there isn’t that urgency there once was to secure [the ability to reach] audiences in the upfront,” said a second executive at a major agency holding company. 

Another factor is the TV and streaming ad market is recovering but remains somewhat on the softer side. Advertiser categories like tech, pharmaceutical and insurance are not fully back to spending at the level they were prior to the economic downturn of the past two years.

“Last year, there was less money invested in the upfront [from pharma advertisers]. That’s normalizing. That category will be fine,” said one TV network executive. This executive also said that tech advertisers’ spending is not down by as much as it was and so will likely be up year over year in this year’s upfront. 

Nonetheless, “clients are trying to become more realistic with their budgets. And I think that’s why in my mind the pace will be a little bit slower,” said a second TV network executive.

Upfront ad buyers are less willing to make commitments – also called “holds,” in industry parlance – in the spring and early summer timeframe that won’t take effect until fall. Meanwhile, upfront ad sellers are similarly less inclined to call for those commitments too soon only for advertisers to cut them back significantly in the “order” period later on, as happened two years ago.

“The later you go to hold, the more firm client budgets are. So we’re not in a rush to write a lot of business in the market that isn’t fully committed budgets,” said a third TV network executive.

Given the level of commitment – or lack thereof – how those commitments are made and who’s responsible for those commitments appears set for a bit of an update. 

Historically, upfront commitments have been primarily made at the brand level, with individual brands responsible for fulfilling the set spending thresholds. That has been a major factor in the gamophobia that has affected upfront deal volumes in recent years. 

But this year, both buyers and sellers are looking to secure agency-level commitments, which would hold agencies responsible for fulfilling the commitments and enable them to flex the spending across clients. This model had been adopted in the 2020-21 upfront cycle as many advertisers were wary of making outsized commitments in the wake of the pandemic, and now it seems set to become a more standardized part of the upfront.

“We’re leaning into the [agency] holdco partners. If Client A needs relief, what can Client B and C spend?” said a fourth TV network executive. They added, “agencies are more conscious of making sure they can deliver on agreements.”

“It’s still risky, and there’s a lot of maintenance and tracking involved with that,” said the agency executive. “But it allows a lot more flexibility on the advertiser side, and it still gives the [sell-side] partner enough foresight into what their potential revenue could be. And so as a result, they’re still willing to unlock better rates and added value.”

In other words, after all these years, the upfront market is changing. Not overwhelmingly, no. Traditional TV is still expected to receive the bulk of upfront budgets this year, and Nielsen’s legacy panel-based measurement is still poised to be the primary currency, according to the agency and TV network executives. 

But between the more pragmatic approach to the pace and structure of this year’s upfront deals – at least at this early stage – as well as the predilection toward performance-based pitches, this year’s upfront market may not see a seismic shift to the way ad buyers and sellers do business, but it does seem set to signal how the TV and streaming ad business is, in fact, being altered – and how ad buyers and sellers are adapting. 

“It’s just a super dynamic ad marketplace. We live in a world of just massive change all the time in media, and you better fasten your seat belt and deal with what’s coming towards you,” said the first TV network executive.

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