The whole thing may be a Madison Avenue myth, but upfront deals are no longer inked on napkins in wood-paneled establishments, where the negotiations were an unwelcome distraction from the flowing liquids. (At least, as far as we know.) More data and an emphasis on media planning have turned the annual upfront market into a far different operation.
But, by how much? On a MediaPost panel this week, a group of the industry’s smartest and most influential media buyers and sellers didn’t do much convincing that the upfront operates on some sort of cutting edge.
To be fair, they might argue the rhythm of the discussion left a mistaken impression. But several things stood out.
In past years, whether the upfront is still crucial to the business would have at least come up. It didn’t.
There would have been discussion about reforming the process or ushering in change. There was none.
The suggestion whether digital platforms would take big dollars out of the TV upfront would have been debated. But, both sides seemed to agree there was little chance of that happening.
Except for buyers’ complaints that they paid too much last year, both sides of the table seemed generally content with the marketplace architecture, more so than in a long time.
Contrast that steady state with efforts to revolutionize the research realm. The upfront market and Nielsen are cousins in the TV establishment. Both are here to stay. But, as Nielsen remains an industry standard, ambitious efforts are underway to help advertisers game the system (more on that later).
The upfront market brings advantages to both sides. Sellers gain revenue visibility over the next year-plus, while buyers get a chance to lock up coveted inventory and receive ratings guarantees. Plus, agencies can avoid the capriciousness of the scatter market that can leave them paying a premium for a walk-up buy.
“The upfront has lived and endured well beyond the time that it was declared dead … it basically satisfies a marketplace need,” said Mel Berning, who oversees sales at A&E Networks.
If DVRs were torpedoing the business, if taking over the Yahoo home page was widely considered a better opportunity than prime-time spots, the industry might have more of an impetus to explore change. Certainly, networks might look for a way to alter the market to make themselves more competitive.
Instead, TV has triumphed over any mid-2000s uncertainty. It is widely viewed as the most effective way to move product, as the strongest venue to catch-up or stay in front.
“In an economy that is sort of this new normal, people are looking to either regain, maintain or grow share and that means you’re going to spend more money in television,” said Dave Cassaro, who led cable sales at NBCUniversal and is now an industry consultant.
Networks are not just prospering with traditional inventory, but seem primed to use the upfront to muscle out digital competitors with package deals that include ads on their online platforms.
On the panel, there was wide agreement that the likes of YouTube, Yahoo, Hulu and AOL had little shot of establishing lucrative TV-style upfront markets even as they ramp up original programming.
“It’s going to take a while for there to be this dynamic where agencies and advertisers look at it and say, ‘Gee, I want to make a long-term commitment to an eight-minute program that’s going to run maybe over the course of a month or so,” said Chris Geraci, who leads national broadcast buying at OMD. “The whole upfront proposition doesn’t really make too much sense in that world yet.”
The TV upfront is propelled by scarcity, Cassaro said. There just doesn’t seem to be the same type of limits online that would lead to rapid-fire bidding. YouTube is launching a load of new channels. Is it going to run out of inventory, even for its busiest destinations?
With the upfront, if the front yard (the actual deal-making structure) doesn’t appear headed for much change, there is all kinds of movement in the backyard. Research firms like TRA, PrecisionDemand and Simulmedia are all looking to provide buyers and sellers with more long-sought tools for audience targeting.
Nielsen’s panel-based ratings, with age and sex demographics, should continue as the currency. But, the members of “The New Research Front" want to provide data on how ad exposure affects purchase behavior, giving rationale behind chasing Nielsen numbers.
Through tools like shopper-card data, Internet-like metrics and complex algorithms, the aim would be to identify specific shows that, for example, attract a large audience in the market for a minivan.
“You’re still going to have your Nielsen ratings," said Mark Lieberman, CEO of TRA, who was part of another Outfront panel. "You’re still going to have your GRPs and you’re still going to have your currency and your make goods, but it’s going to be the data from companies like (TRA, PrecisionDemand and Simulmedia) that is actually going to drive the CPMs, the allocations and the actual decisions on how much you’re going to buy."
Jon Mandel, CEO of PrecisionDemand, said his company has hired a slew of pocket-protector-types who find interpreting “big data” about as easy as eighth-grade math.
“They’re coming into the space, so we can avail ourselves of the new technology and the brain muscle that is now available to the TV business that just hasn’t been there before and I think we’d be foolish if we didn’t use it,” he said.
Sounds like a call for change -- the kind of which the upfront market doesn’t seem to be engendering much anymore.