Future of TV Briefing: The upfront is overtaking streaming’s programmatic marketplace

The upfront and programmatic advertising marketplaces have become intertwined.

For Disney, 70 percent of advertiser demand for its biddable inventory comes from upfront advertisers, according to Disney svp of addressable sales Jamie Power. “The upfront shift into biddable, it started last year, and it’s accelerating into this year,” she said.

Warner Bros. Discovery is also seeing that acceleration. Nearly half of the company’s biddable demand comes from upfront advertisers, according to a company spokesperson. “It’s been a dramatic last year. This past cycle was the most dramatic shift to that,” said Jill Steinhauser, group svp of platform monetization and partnerships at WBD.

The intersection of programmatic and the upfront didn’t just happen last year, though. At least since the pandemic, major TV and streaming ad sellers have allowed advertisers’ programmatic spending to count toward their upfront commitments. So what is driving this dramatic shift of the upfront becoming so central to companies’ programmatic advertising businesses? Many things.

For starters, there’s the shift toward programmatic private marketplaces. As upfront ad sellers allowed programmatic spending to count toward upfront commitments, initially that money had been largely wrapped up in programmatic guaranteed deals, which are basically just an automation of traditional fixed transactions. More recently, though, there has been a shift toward PMPs, which allow advertisers to control spending by bidding on inventory.

Biddable is “the fastest growing part of our programmatic business,” said Disney’s Power. “We are transacting millions of dollars a day biddably. In the first half [of the company’s fiscal year], we were up 60% year over year; in the back half of our fiscal, we are pacing to be above 60% year-over-year growth.”

“The buyers are more interested in a PMP than PG most of the time, because they’re managing reach and frequency on their side. They need to be able to do that in real time, and using a private marketplace connection allows them to do that,” said Evan Adlman, evp of commercial sales and revenue operations at AMC Global Media.

“PG was the original infrastructure that was starting to grease the wheels for upfront mechanics moving into programmatic channels,” said Sarah Harms, vp of advertising marketing and measurement at Roku. “I think we’re getting to a point of maybe PMPs are more the norm because we’ve gotten to such a good place of operating them and knowing how to kind of manage our businesses.” 

The shift from PG to PMP deals can be risky for upfront ad sellers, though. As the name implies, programmatic guaranteed deals — like annual upfront commitments — are about assured revenue. By contrast, PMP deals allow advertisers to control spending, which means enabling advertisers to not spend. 

“There’s always a fear of the risk of that budget not delivering and constantly optimizing away from us,” Steinhauser said of PMP deals.

Live sports have mitigated much of that risk, though. As sports has almost entirely overtaken the upfront, companies including Disney, WBD and Paramount have made in-game streaming ad inventory available for programmatic purchase. Paramount, for example, has begun selling ads in UFC matches programmatically.

“One of the newer things is really bringing some of these capabilities into inventory that was previously not lit up, so to speak, with full programmatic capabilities,” said Leo O’Connor, evp of streaming at Paramount’s advertising division.

Beyond sports specifically, the growth of streaming overall has helped to create more inventory that is especially suited to the advanced targeting and delivery expected by programmatic advertisers. 

“The evolution of programmatic’s role [in the upfront] continues to increase because it’s more and more the transaction type of choice for the buyer. A result of that being the transaction choice for the buyer is because of the growth in supply and viewership on streaming and CTV,” AMC’s Adlman said, noting that “100% of our inventory [including traditional TV] is programmatically available.”

In addition to opening up more inventory to programmatic pipes, the upfront ad sellers have also been opening up to more demand paths. Case in point: Disney’s inventory is available via 35 different demand-side platforms, Power said. Similarly, Roku has pivoted away from operating its own demand-side platform. Last year it added Amazon’s DSP as a buying option and followed with Google’s DSP this year.

TV and streaming ad sellers aren’t only making it easier for upfront advertisers to spend their money programmatically. TelevisaUnivision, for example, is also using programmatic to get advertisers into the upfront. 

“We call it ‘zero-share,’” said TelevisaUnivision president of U.S. advertising sales and marketing John Kozack. He was referring to advertisers “that haven’t fully taken advantage of or realized the power of Hispanic culture and the growth trajectory of what it can do for a brand. So what we’re saying a lot is, ‘OK, why don’t you start programmatically with us in the upfront, Mr. Zero-Share? That’s a way we can transact, and then you can see the lift that you’re going to get with that.’”

What we’ve heard

“My budgets are all down, except for sports, and my sports budgets are not up like they [sellers with sports inventory to sell] think they’re up.”

—Agency holding company investment exec on this year’s upfront

Numbers to know

2 billion: Cumulative number of hours that people spend watching YouTube Shorts on TV screens each month.

$9 million: How much some advertisers are paying Disney for 30-second spots in next year’s Super Bowl.

250 million: Number of monthly active users for Netflix’s ad-supported tier.

What we’ve covered

What buyers expect out of this year’s upfront marketplace:

• With upfront season officially kicked off and in gear, outcomes are a major goal of the deals that will get struck over the coming weeks and possibly months.
• Ad categories that at this early point appear willing to up their upfront spending include pharmaceutical, finance, tech while retailers, QSR, travel, film studios and some CPG categories are more hesitant.

Read more about this year’s upfront marketplace here.

Why Amazon and YouTube pitched operating systems, not just TV inventory at this year’s upfront:

• Amazon’s and YouTube’s underlying sales pitches are less likely to generate headlines: authenticated identity, commerce data, AI-assisted buying, measurement, and programmatic infrastructure.
• A growing share of upfront dollars is now expected to be executed programmatically through private marketplaces and automated guaranteed pipes.

Read more about Amazon and YouTube’s upfront pitches here.

The case for and against clipping:

• Proponents argue that clipping is a highly successful marketing tactic.
• Critics say it rewards the most extreme, boundary-pushing behavior, nudging streamers to act out in hopes of going viral.

Read more about clipping here.

Influencer boost budgets are throwing gas on social video spending fire:

• Once an overlooked methodology that saw marketers use small budgets to top up reach on organic creator posts, amplification is now an essential element of influencer campaign planning.
• In some cases amplification is used as part of a test-and-learn strategy; in others it’s a defensive measure used to bolster poorly performing content.

Read more about influencer amplification budgets here.

Amazon bets creator video podcasts can be the next TV network – if it can fix measurement:

• Amazon wants to turn creator-led video podcasts into the next generation of TV networks.
• Lisa Herdman, chief enterprise integration officer at RPA, sees the rise of video podcasts less as a replacement for traditional TV and more of an expansion of social media platforms’ reach.

Read more about Amazon’s video podcast strategy here.

What we’re reading

The upfront’s creator spotlight:

Amazon, Fox, Netflix, Warner Bros. Discovery and naturally YouTube were among the companies touting creator content during their upfront presentations last week, according to CNBC.

OpenAP’s outcomes measurement pact:

Nine major TV companies have joined OpenAP to create a standardized means of tying ad exposures to business outcomes, according to Variety.

Netflix’s AI animation studio:

The streamer is building an in-house animation studio that will use generative AI to produce animated short-form videos, according to The Verge.