Commentary
As TV Landscape Shifts, Upfront Reflects Changing Clout
- by Wayne Friedman , Staff Writer, June 15, 2018
It wasn’t long ago a mere rumor about the upfront advertising markets could affect the stock of a big media company that owns TV networks.
Not so much these days.
Though media companies got bigger, TV networks’ clout over advertising has leveled off; some would say diminished. All that has shifted the upfront TV ad market into the background somewhat -- not that $20 billion is anything to casually dismiss.
Part of the reason is a more complicated process: TV networks now typically need more time to complete upfront deals, especially when it comes to advertisers' consumer data needs and expectations. Additionally, many now package in all their networks (broadcast and cable), as well as digital platforms.
This has occurred even with solid upfront TV marketplace performance -- which over the last two years, has meant single-digit percentage gains in volume.
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In the past few years, national TV networks groups’ upfront deals might take two months to complete -- well into late July -- after they make their programming presentations to marketers in mid-May.
So what spikes those traditional media companies stocks these days? The possibility of a big time merger.
This is something seen recently via the approval AT&T-Time Warner deal; a bidding war is now on for 21st Century Fox businesses from Comcast and Walt Disney. There are also possible deals for independent pure-play TV station groups.
For a long time, the upfront market has been a futures market for national TV advertising inventory. Nothing has changed here.
The bet is to make a deal now at a lower price, rather than a possible (and likely probable) high-priced deal for programming in the near-term, quarter-by-quarter scatter market.
The “scarcity” rule for top-rated programming is still in play -- but diminishing with so many growing options.
Everyone still follows where the upfront is headed -- especially with $20 billion on the line. But looking at nonstop growth of other competitors -- such as Google and Facebook, which together can rake in $60 billion a year in advertising -- the upfront as a TV indicator may be dimming.
All that begs the question: What can kick-start TV into more of a starring role? Addressable-deals? More data-driven deals? Get me a script doctor. Stat.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
Wayne, the five broadcast TV networks are substantially finished with their part of the primetime upfront within a matter of weeks, not months. The fact that a few small "advanced targeting" single seller deals may take longer or that some of the cable buys are executed at a more leisurely pace has very little to to with the importance of the upfront. It remains a vital part of the national time buying and selling business as it sets the pricing pace for most other dsyparts and is the benchmark for gambling on whether one can do better---or worse--in the scatter market. As for Face Book, most of its ad revenues would never be drawn from the same advertisers or marketing budgets that fuel the national TV buys.