Future of TV Briefing: 5 takeaways from this year’s TV upfront market


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The Future of TV Briefing this week recaps the top trends from this year’s TV advertising upfront negotiations and what they portend for the next year.

  • The upfront review
  • TV networks’ advertiser debt dilemma
  • Hollywood’s updated product, TV’s programming pileup and more

The upfront review

The annual TV advertising upfront market is all but over, but its impact on the broader TV, streaming and digital video market remains to be seen. So as TV networks, streaming-only sellers, advertisers and agencies cross their final Ts, let’s look at the major questions left on the negotiating table.

The key hits: 

  • Linear’s scarce supply is even more in demand.
  • It’s all TV now.
  • The scatter market will be expensive.
  • Linear ad dollars are looking for new homes.
  • Next year’s negotiations will be heated.

Linear’s scarce supply is even more in demand

Traditional TV’s viewership declines have caught up to the upfront market, but they have yet to undercut traditional TV companies’ hold on the market. If anything, the lessening of available linear inventory has reinforced TV networks’ bargaining position.

In this year’s upfront market, TV networks pushed away ad dollars earmarked for their linear networks and pressed advertisers and agencies to pay higher prices for that inventory. The scarcity of their linear networks’ ad supply was a major factor, but another factor was the heightened demand for that inventory. This year saw an increase in DTC marketers joining the upfront market as well as the return of movie studios that had largely sat out last year’s cycle.

“It felt like a lot of the increased money in linear was from a lot of new sources. There weren’t a lot of traditional TV upfront advertisers adding more TV to their mix,” said one agency executive.

It’s all TV now

The pressure on the linear side of the upfront market positioned streaming as a release valve for both buyers and sellers.

With linear TV viewership eroding and streaming viewership growing, TV networks need to shift ad dollars to their streaming properties for two main reasons. First, they need to stop piling up advertiser debts for viewership guarantee shortcoming. Second, and more importantly, they need to start to offset the costs of their streaming properties in order to justifying paying for programming that audiences will pay to watch even with ads and even when ad-free Netflix is only an app away.

“The networks were really adamant about us spending on streaming in order to get linear. A lot of the share [of advertisers’ commitments] had to go to streaming if you wanted to be a linear player at all,” said a second agency executive.

Meanwhile, considering the double-digit price increases that TV networks demanded for the linear TV inventory, ad buyers sought out streaming-only players like Amazon, Roku and YouTube as supplementary options. However, advertisers are beginning to see these companies as more than alternates. With Amazon’s IMDb TV and Roku’s The Roku Channel loading up on TV-quality original programming and audiences increasingly watching YouTube on TV screens, advertisers adopted the perspective that these TV alternatives actually are actually TV as well. Even TV networks are seeing a similar picture.

“The competitive set we’re in is premium video,” said one TV network executive.

The scatter market will be expensive

TV networks were unwilling, among other reasons, to take advertisers’ linear dollars because they want to ensure they have some inventory to sell outside of the upfront in the so-called scatter market where they can reap even more revenue per impression.

Scatter advertisers already pay a premium over upfront advertisers, and they are likely to see rates skyrocket as a result of this year’s upfront. In addition to upfront advertisers being unable to secure as much linear inventory as they would have liked, there are advertisers that typically wait until the fall to negotiate upfront deals under the calendar-year model. Some executives at agencies and TV networks are unsure whether there will even be enough linear TV inventory for a calendar year upfront, meaning those advertisers may need to move to the scatter market.

As a result, some scatter ad buyers are looking to get ahead of the situation by locking up scatter inventory as many as nine months in advance. However, inventory may open up. A second agency executive said some upfront advertisers secured surplus linear inventory for fear of missing out on audiences and may opt to offload some of it. That may be even more likely to happen if they find non-linear options to be more favorable financially.

Linear ad dollars are looking for new homes

Traditional TV ad dollars are on the move. With advertisers being locked out of linear, marketers will need to find other means of replicating TV’s reach. This is also not a new trend, but it seems to have reached a tipping point this year.

In this year’s upfront, advertisers became more comfortable with the programming options across Amazon’s and Roku’s CTV platforms and on digital video platforms like YouTube. They need the likes of Amazon, Roku and YouTube to provide stronger competition to TV networks in order to give advertisers more buying options buoy their bargaining positions. This goes back to their embrace of the idea that, if something is being seen on TV, then it’s TV. 

One digital video publisher sees this new perspective as an opening to sell TV advertisers on the videos they post to social platforms. If an advertiser is comfortable with a publisher’s YouTube video when played on a TV screen, why shouldn’t they be interested in it when viewed on any screen?

Next year’s negotiations will be heated

Agency executives came out of this year’s negotiations feeling bullied. They felt like the networks pushed up the dealmaking cycle and strong-armed them into agreeing to price increases that exceeded the usual inflation. But they also didn’t feel like they had many other options as advertisers continue to see TV as their primary means of reaching a lot of people.

Next year may be different.

Upfront advertisers typically rely on the preceding year’s audience data to inform their upfront buying strategies. This year that data was thrown out of whack by the pandemic. So while streaming viewership has surged, the uncertainty around all things post-March 2020 led some advertisers clinging to the comfortable confines of traditional TV. 

Over the coming year, however, advertisers may accumulate the data necessary to shift where they spend their money. Between the leveling of the streaming playing field and advertisers being pressed to find non-linear options, advertisers may glean a better insight into how far a dollar may go beyond traditional TV. 

“Next year, if we can prove to clients this is the scale of streaming versus a linear buy, we can actually get the supply and demand balance back in order,” said a third agency executive.

What we’ve heard

“They can’t hold us to strict flexibility terms if the next minute they’re saying, ‘We can’t take your money.’”

Agency executive on TV networks’ rigid upfront cancelation terms

Stay tuned: TV networks’ advertiser debt dilemma

At the same time as TV networks sought to secure new revenue in this year’s upfront market, they also sought out ways to settle their existing debts.

The ongoing linear viewership declines have resulted in networks owing advertisers for falling short of reach guarantees. And with linear viewership continuing to erode and reducing the inventory available for networks to make up for the misses, the networks have had to present advertisers with different options to wipe their ledgers.

Networks’ primary new method of addressing the under-delivery issue in this year’s upfront was pushing advertisers to adjust their audience targets to be more reflective of the people most likely to actually be watching linear TV, a.k.a. the over-50 crowd.

“Certain networks were, for the most part, incentivizing advertisers to age up their demos to [the] 25 to 54 [years old age group] or 25 to 64 or 18+, so they can deliver those audiences because they don’t have younger audiences anymore. They will be able to deliver 18+ audiences with less make-goods,” said an agency executive.

Problem is, some advertisers are not interested in older audiences because they consider those people to either already be set in their ways with the products they use and the brands they buy, whereas younger audiences may be better long-term customer acquisition targets.

Beyond asking advertisers to age up their audience demos, TV networks offered to limit upfront ad price increases for advertisers willing to settle their debts. However, it didn’t really work out in the advertiser’s favor. “The math ended up being way off,” said the agency executive. “If you have $300,000 to $400,000 in liability and get $100,000 in negation value, you’re losing money on the deal.”

So in the end, what will likely be the most effective strategy that TV networks used this year’s upfront to deal with their debt dilemma was to get advertisers to agree to let the networks make up for linear shortfalls by offering streaming inventory. This is neither a new approach nor necessarily a panacea considering that the networks’ streaming inventory is also believed by ad buyers to be tight. All of that is to say, the issue of TV networks’ advertising debts has yet to be settled.

Numbers to know

-6.1%: Percentage decline year over year in TV ad impressions during the first half of 2021.

48.3%: Netflix’s global share of digital original audience demand.

What we’ve covered

How news publishers are using the Olympics and AR to flex their emerging tech storytelling

  • The Washington Post and USA Today are using augmented reality to spotlight the sports new to the Olympic Games in Tokyo this summer.
  • It’s a foray into a relatively new mode of storytelling made possible only at sizable publishers that have the funding and resources to experiment.

Read more about their emerging tech plans here.

How Yahoo is experimenting with platforms and partnerships to grow its audience

  • Yahoo wants to reach 900 million monthly, paying users by further enticing them with shoppable videos, online sports betting partnerships, and cross-brand content offerings.
  • Verizon will remain a partner on 5G projects, which has been a large focus for innovation.

Read more about Yahoo’s roadmap here.

The Financial Times plans to open 2 more U.S. bureaus to target ‘global Americans’

  • The UK-based publisher is opening new bureaus in Houston and Hollywood to reach more readers where American companies are dominant players on a global scale.
  • TheHouston bureau officially opens in September and is the FT’s first joint office with Nikkei, the Japanese financial news company that acquired FT in 2015 for $1.3 billion.

Read more about FT’s strategy here.

What we’re reading

Hollywood’s updated production safety protocols:
Entertainment industry groups have agreed to loosen the health and safety measures for productions that were instituted in the wake of the pandemic, according to The Hollywood Reporter. The changes include allowing studios to require everyone on set to be vaccinated and to allow people not to wear masks when outdoors.

TV programming pipeline backs up:
TV networks and streaming services put so many projects into development during last year’s production hiatus that a backlog has emerged, according to Variety. Writers and agents say that they’re having a hard time finding buyers for potential projects as a result.

States look to lure productions:
States including California are dangling incentives, like tax credits and cash rebates, to attract film and TV projects, according to The Wall Street Journal. More than 30 states already offer financial carrots to film studios, but behind the renewed effort to entice productions is states’ hope that the shoots will help their local economies to recover from the pandemic.


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