Some people have ruminated over this since the early 1990s with the growth of competitors and U.S. cable networks and as nationally distributed syndicated programming rose in prominence.
Good news: The national TV upfront market pulls in roughly $20 billion a year -- a healthy number. The not-so-good news: It hasn’t been growing all that much. Should the process then change?
As we know, the TV upfront market is a futures market: buy now at a low price (with perhaps a sizable budget) to get out of the way of expected price increases later in the year. That has steadily occurred, except for some rare periods -- over decades.
Although ratings continue to decline, the scarcity of high-rated TV shows (versus other premium TV/video) is something marketers need -- a wide reach for their brands.
But that’s not the whole story. There are other video platforms -- and they are growing. In two years, digital video advertising will be roughly more than twice this year’s upfront marketplace -- at some $50 billion by 2022, according to one estimate.
Analysts will then ask a key question from this projected data. What part of this will be “premium” video attracting big brand advertisers, the marketers that traditionally buy into the upfront? More importantly, will there be a continued scarcity of top TV shows?
Projections are premium video -- and advertising dollars -- will remain for legacy TV companies, either on traditional platforms or new OTT platforms.
Of the $70 billion pulled in from ad-supported TV platforms -- national TV took in around $50 billion in 2018 (flat versus 2017). Local TV pulls in around roughly $20 billion, depending on every-other-year spikes from Olympic and political advertising.
Scarcity controls the day -- even among lower near-term viewing -- live, same-day time-shifted viewing, or seven days worth of time-shifted viewing.
In this regard, Dave Morgan, in his column on the upfront in MediaPost, reasoned correctly: “As long as the demand/supply imbalance exists, buyers and sellers both will want to do upfront buying.”
So then, the billion-dollar question: How long is that time frame? What happens if the imbalance of that demand-supply paradigm moves to other media areas?