Woe The Digital Sale: What About Those Upfronts?

Question from a digital seller: So since the TV upfronts are about to be in season, are clients really doing yearly planning and are they doing upfront planning for online video only? How do I get in on this action?

Jason says: Ah, leprechaun envy. I'm familiar. Such a big pot of gold and so unfair that television networks get to hog it all. Year after year, we hear technology advocates say, "This is the year for mobile." Similarly, we hear an equal group of media executives proclaim, "This is the last year of the upfront." I do believe this is the fifth anniversary for each of these proclamations. The development of the mobile world is a saga all its own, so let's talk about the upfront.


For the digital naif, who may not be familiar with the term, let me offer a few handy definitions. Feel free to choose all that apply to you. An upfront is:

· Something that allows advertisers to spend more money on 30-second commercials than they did in the year prior, albeit to reach fewer people.



· A 3-hour media bacchanal hosted by TV executives to dazzle media buyers with gourmet pigs-in-blankets and visits from celebrities.

· The much-appreciated revenue that comes to large theaters in NYC who rent out their normally unoccupied daytime space.

· A chance for ad buyers to see their favorite comedians do a few minutes of daytime stand-up.

· When advertisers watch a few random clips of the upcoming lineup of TV shows and try to guess whether each will be a funny/engaging show AND just how many millions of Americans will think that it is a funny/engaging TV show

· A figurative crap shoot where advertisers hope they win the lottery by picking a decent show that turns into a great show, unanticipated by the seller.

· A 2-week period where agencies commit to spending over $10 billion dollars of their advertisers' money.

This is an incredibly unique (read "wacko") system for spending billions of advertising dollars. As far as I know, it is the only industry that partakes in such an extravaganza. This process is based on largely historical data with little consequence for being wrong. A seller may promise, "This show will reach 10 million people each Wednesday at 9 p.m." Thus, the advertiser buys it. When the show only gets 7 million viewers, the buyer says, "You owe me 3 million people." The seller replies, "You got it. I'll make it up to you."

On the other hand, if that TV show gets 12 million viewers, the buyer feels extremely proud for guessing correctly, "I just got 2 million people to see my commercial for free! I'm a genius." The seller, in turn, thinks, "Enjoy it now because I'll make it up on a giant rate increase next year."

Will the digital video world replicate this highly efficient and advanced marketplace phenomenon anytime soon? No. However, it is anyone's guess that the format will change anytime soon. As such, my advice is to keep trying to get in on the action and accept whatever gold doubloons roll your way as the revelers spill out of Radio City.

Amy says: I, too, am astonished every year that the upfront season in TV still exists with the fervor it does. So much money, so short a time. But without it, no prime-time networks shows would ever be produced -- and some people still think that is a bad thing.

In my recent experience, it looks like agencies are still buying both ways: upfronts and throughout the year. Advertisers that regularly devote double-digit percentages of their total media budgets tend to plan on a yearly basis just because they have so much to spend; they have to plan in advance. Also, it is the best way to make sure digital gets an equal seat at the table with the channels.

Other categories that don't spend a lot in digital may still plan in an upfront manner just to coordinate with the traditional planning cycle which is typically yearly. CPG and Auto more often than others do plan in advance, and I think more categories will have to do at least some planning on a yearly cycle just to get certain coveted opportunities before their competition, like homepages on specific dates or key content sponsorships.

Now is the time to get with buyers and see what their next year plans are shaping up to be. A lot does get decided for advertisers this time of year because of the amount of money that goes into TV. Then, channel planning may actually happen during the summer -- and if you are lucky to start something during the TV upfront season you may be able to close the deal for the coming year by July.


And I'm talking about all digital budgets, not just for video online, which historically has been part of the upfronts. There was a time when many networks would require at least a nominal investment with the sister online properties of TV networks. This media usually doesn't perform as well as digital media that is bought directly for digital purposes -- but at least the broadcast networks are trying. Even though the upfront is about "video" (aka :30 spots) the platform-agnostic video upfront is still a while off for most advertisers.


My advice is to take advantage of the time period to at least discuss what's going on and get ahead of the next planning curve. You never know, when you dial those numbers or send that email, if an RFP is just around the corner.

1 comment about "Woe The Digital Sale: What About Those Upfronts?".
Check to receive email when comments are posted.
  1. Rick Monihan from None, April 29, 2011 at 1:50 p.m.

    Many of Jason's comments regarding the upfront bear the hallmark of truth. And complaints about it, and how "crazy" it is to do business this way seem to resound when you don't pay attention to the benefits of the Upfront.

    Let's consider the value an Upfront brings to ANY business. When I was at AOL years ago, even THEY hoped to create an Upfront fashioned around their online "stores" prime selling season (which happened to coordinate well with TV).

    The fact is, the Upfront is a great idea and here's why:
    All businesses try to, and need to, lock down a good portion of business so they have visibility going into the year. I can provide a long list of industries that have massive contracts, signed early each year, to assure that their bottom line needs are met regardless of market conditions.
    The Upfront fulfills this, both for Networks and Agencies. AND it gives the agencies the ability to get out of a good portion should the market turn against them.
    The Upfront provides a chance to lock in lower prices prior to the open market. Does it always work in their favor? Often enough that it continues to make sense doing business this way. As a business owner, it is a practical solution to meeting market needs - lock in a good portion of business early at a low price, then meet your margins on the remaining inventory. It is a model that is successful for everyone 90% of the time, making it a worthwhile practice.

    The Upfront offers the chance to roll the dice a little. Jason called it a figurative crap shoot. Perhaps to some degree. But this crap shoot can have massive payoffs, if done well AND the loss on the downside is limited. If your show doesn't become a big hit, or is canceled, you can shift into another show that is likely to meet the needs you expected anyway.

    All in all the most astounding thing to me isn't that the Upfront continues to exist, it's that the Online world hasn't adopted it yet. In the 1800's when steamboats and railroads were still in massive competitive situations, they all realized they wouldn't survive in the long run without large contracts written before these firms hit the market. So they went out and found them - transporting mail, moving freight and cattle. Often these were done at cost or below cost - but these contracts provided a solid baseline to grow the remaining business in a wild market.

Next story loading loading..