Commentary

How Will TV Networks Handle Legacy Buyers?

by Wayne Friedman , Staff Writer, May 25, 2018

Upfront TV deal-making has its own momentum. One key factor is so-called “legacy”-based TV marketers. New sales efforts by TV networks might run into direct conflict with this effort.

“How the networks will handle legacy buyers is an issue that needs to be ironed out if the upfront is going to move into the 21st century,” says Brad Adgate, media consultant and veteran media agency executive, in speaking with TV Watch.

Legacy upfront advertisers typically have lower CPM bases than average -- from which TV networks tack on yearly increases. But resultant out-of-pocket media costs can be lower-than-average, too.

Now, look at this upfront season -- with fewer commercials expected on some networks. Less ad clutter means better viewed and consumed messaging.

NBC and Fox, among other TV networks, have plans to reduce commercial loads in specific programming. For Fox, advertising pods could consist of just two spots. That's to give those ads more marketing heft. The cost? Oh, there will be a cost. Some believe an additional 30% could be tacked on.

But longtime legacy marketers might be pushing back, big time.

“Those people with legacy deals want nothing to do with this,” Andy Sippel, executive vice president, client solutions of Advertiser Perceptions tells TV Watch. And agencies are linked to this. “Media agencies get measured, get new clients, based up how they control CPMs.”

Typically, new networks, cable networks in particular, will make long-term initial deals with big brand advertisers to garner significant scale for their advertising revenues. But as they grow, many TV networks want out to change their game plan.

Over the years, TV networks have continued to look for ways to find new revenue: moving to C7 metric from C3 and adding digital TV media requirements, for example.

For the upcoming TV season, NBC has proposed CFlight -- a single audience guarantee based on specific demographic impressions of TV advertising exposures within full episodes of shows across all screens.

Think there will be a premium for that?

From the TV networks' point-of-view, this will give marketers better results, better “business outcomes.” But which upfront advertisers and media agencies will buy in -- and what specific brands? More specifically, which “legacy” brand advertisers will sign up?

Can legacy TV advertisers keep their advantage with slowly changing legacy TV platforms? The answer has far-reaching consequences.

ad buys, advertising, media buying, tv, upfront

3 comments about "How Will TV Networks Handle Legacy Buyers?".

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Eric Fischer from HJA Strategic Consulting, May 25, 2018 at 12:44 p.m.
Do we know how much of this reduction in ad clutter, will come from actual TV commercials loads, and how much will be a reduction in network promos?
Reply

John Osborn from Turnstil™, June 1, 2018 at 3:18 p.m.

Great piece, Wayne and good question Eric.

The upfronts have thrived and commanded significant annual increases because in a supply and demand marketplace, reduced supply leads to higher annual CPMs. The networks are right to care about consumer experience, but may well be too late since they've already been trained to avoid commercials, regardless of pod length. It's time to make the further adjustment to second-by-second ratings, so the advertiser can know whether ads have actually been seen - live or in full time replay, and not via fast-forwarding. That would offset any increases demanded by the networks for fewer ads, by finally tying cost/value to actual viewing of an ad (not program, not average half hour of commercials, not just recorded and replayed). Automatic Content Recognition (ACR) technology in the soon to be 75% of TVs that are Smart TVs can provide this.

Ed Papazian from Media Dynamics Inc, June 1, 2018 at 5:21 p.m.

But John, smart TV's, even if they represented 75% of all viewing---which wouldn't be the case as the average home has three plus sets----can't tell you if anyone was really watching---eyes-on-screen---TV content. Nor can Nielsen's currrent system. You would have to use a methodology which employed "camera" techniques to monitor every set---not just smart sets--in a 50,000+ home panel to get at what you want. And there is little chance that the networks would fund such a panel, let alone advertisers and agencies.

I'm afraid that we may have to soldier on with the current, primitive but workable and cost efficient systems for a while longer. Though one might hope that the agencies would take a long, hard look at what TVision Insights is developing with its 2000 home panel's "eyes-on-screen" studies. We have written about this in "TV Dimensions" and our many "Alert" reports that now go to our subscribers every week. There is gold to mine there.