WTF are the upfronts?
Each spring at the upfronts, TV buyers and sellers hammer out billions in marketing agreements. There are two parts to the upfronts: the lavish parties, with celebrities and trapeze artists, and the bare-knuckled, closed-door negotiations when, over the course of several weeks, billions of dollars of media commitments are made. That’s why TV is so efficient.
But in a world of real-time bidding algorithms and declining TV audiences, what’s the value of an upfront today? We break it down for you in plain English.
My friend said she’s going to an upfront today. WTF does that mean?
Broadcast and cable networks hold events throughout the spring where they unveil their slate of programming for the upcoming season. It’s a classic futures market, where the goal is to convince media buyers to commit to ad deals for shows months away — or even the following year. In other words, they buy the inventory up front. (Now just smush those words together.)
Who has an upfront?
Every big media company in television has at least one upfront event, from NBCUniversal and CBS to ESPN and Turner. All the major TV buyers from brands and agencies show up. Increasingly, the networks are setting up individual meetings with media buyers outside their core upfront presentations (and parties).
Wait, billions of dollars happens at parties?
Well, the upfront presentations are just the opening move in what become lengthy negotiations. The following discussions can take weeks, even months. In 2013, it took ABC 10 weeks to close out the last of its upfront negotiations, during which the network sold around 75 percent of its inventory for roughly $2.35 billion.
Billions, with a ‘b’?
Indeed. A huge amount of advertising inventory gets sold during the upfronts: Broadcast networks sell roughly 80 percent of their annual inventory during the upfront, while cable networks sell around 50 percent, said Peter Olsen, evp of ad sales at A+E Networks. Magna Global forecasts a slightly weaker 2015 upfront than last year, with around 10 percent fewer ad dollars for broadcast and 5 percent less for cable. But that still leaves the total marketer spend around $20 billion.
Why is the upfront spend declining?
A lot of that money is shifting to the digital space. Content made for TV plays an important role there — and increasingly upfront deals include a digital component — but online, network-produced shows have to compete with digital-native content, as well as user-generated video uploaded to media platforms like YouTube and Facebook.
How are the upfronts still relevant, then?
Digital media continues to grow as an ad medium, but television is still the most cost-effective ad medium for large-scale campaigns. And the competition for inventory on hit programs that reach huge audiences is only growing as broadcast, cable and digital players create new shows. “It’s ironic that at the moment TV is shrinking, it actually means that big TV is scarcer,” said Dave Morgan, CEO of Simulmedia, a television ad targeting company.
OK, but why would an advertiser commit to buying a show next fall, or next year?
Scarcity. The upfronts give advertisers first access to the most important programming. Say you’re Ford. You have $2 billion wrapped up in the launch of a new car, which is coming out in the fall. You want to make sure you have a large amount of high-impact, high-reach media for the month the car comes out — in other words, big TV programs. You’re not going to skip the upfront and hope you can buy that media later, which is known as the scatter market. “Sometimes we see the upfront as this archaic auction that people do because they’ve always done it, but there’s actually real business there that have to make billions spent on logistics and supply work,” said Morgan.
What are advertisers actually buying at the upfronts?
Marketer buy the networks’ prime-time inventory; for example, a certain number of 30-second ad slots on the final season of “Mad Men.” They arrive at a price based on gross-rating point guarantees, or a guaranteed number of impressions among a target demographic. But they’re also looking to other sources of data to determine their buys. NBCUniversal has a product for advertisers called NBCU+, which pairs Comcast’s customer footprint with credit card data from Experian and Acxiom to arrive at a more cohesive picture of the audience — and what they’re buying. “The basic philosophy was to give advertisers the data-driven opportunity on TV, and make it as close to real-time as we can,” said Linda Yaccarino, chairman of ad sales and partnerships at NBCU, at Simulmedia’s PeopleFront event last week.
This all sounds pretty dry.
The media companies do their best to spice things up, trotting out the stars of their shows during presentations and throwing extravagant parties. Even Disney’s shindig has plenty of alcohol. “Clearly the upfront is a balance of a media PR event and a business event. It has always been that way,” said A+E’s Olsen. “The spectacle does matter.”
‘Workcation Retreats’: Tourist destinations offer remote-working packages including personal assistants, to attract visitors
Tourist destinations like the Maldives and Seychelles are promoting remote-working, featuring ocean views, discounts, strong WiFi and personal assistants to help with work admin.
‘The ultimate schmoozer’: What advertisers and ad buyers think of Carolyn Everson’s departure from Facebook
Carolyn Everson’s relationships with major CEOs and CMOs, where she was known for listening and being an advocate for advertisers, helped build Facebook into the advertising juggernaut that it is today, according to advertisers, agency execs and ad buyers who say that losing Everson is a massive blow for the company.
Apartment Therapy’s Small/Cool Event meets buyers in-person and online
The hybrid commerce event will run June 11-13 and feature 250 shoppable products using QR codes and affiliate links.
Sponsored75% of people watch mobile videos on mute: What that means for advertisers
Dan Greenberg, president, Sharethrough Recent research into mobile video consumption behavior illustrates a change in human behavior that has implications for the shifting media landscape. Data shows that, unsurprisingly, rather than keep the sound on, 63% of people keep their phone on mute. What may be surprising is that 75% of people say they often […]
Marketers fret as Apple’s hardline stance on tracking gets firmer
Ultimately, Apple’s announcements give clarity for app marketers who have had to contend with plenty of uncertainty over its true intentions.
‘It can easily spin out of control’: Confessions of a freelance creative on the rise of scope creep
We hear from a freelance creative who has been dealing with scope creep about why it can be an issue and how to manage it.