Commentary

TV Upfront Ad Market Is In Redux

by Wayne Friedman , Staff Writer, April 16, 2019

What is the future of the big TV upfront market? Still around. But questions remain. A major one is why does it continue -- especially when overall revenue results are virtually flat year-to-year?

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?

advertising, tv, upfront

2 comments about "TV Upfront Ad Market Is In Redux".

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Ed Papazian from Media Dynamics Inc, April 16, 2019 at 9:46 a.m.
Wayne, a few comments on this interesting piece. First, the upfront extends well beyond primetime and, hence, is much larger than $20 billion. As for why it remains in force, the sellers need the upfront to control the flow of business while advertisers who wish to promote their buys to their disrtibution channels and ensure that they can attain reach for any brand at any time in the year via broadcast TV need it for those reasons. The flaw in this system and one that has not been challenged is the lack of targeting capability in upfront corporate tonnage buys. The solution is two upfronts. First, one where individual brands can make their selections using superior targeting methods but at higher CPMs, followed by a second upfront for the corporate tonnage and low CPM buyers.This would allow each brand to go either way---or invest in both types of buys--- as its needs dictate while still allowing the sellers the control they desire.
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brian ring from ring digital llc replied, April 17, 2019 at 2:58 p.m.

Great stuff Ed, that is a clear-eyed and well-written solution to the whole kit-and-kaboodle.