Will Agency Buyers Put Up, Shut Up, Or Neither In This Year's Upfronts?

In a recent panel session at an annual national TV upfront preview forum (MediaPost’s Outfront), agency executives from GroupM, Havas, Dentsu Aegis and Publicis discussed the environment leading into the 2019-20 upfronts.  TV Networks sell the majority of their commercial inventory for the entire broadcast year during the upfronts,  just getting underway.

During the session, certain of the agency media-buying execs lamented falling TV ratings vs. rising prices, accused one or more broadcast TV networks of lying and stealing, and condemned the shiny-object selling tactics employed by the networks.

We weren’t at the forum, so our discussion centers on coverage of the panel penned by the editor of MediaPost, the forum’s sponsoring organization. As the write-up notes, no one from the sell side participated in the panel.



The recurring theme was that the buy side is being exploited:

  1. Ratings in decline, while cost-per-thousands for commercial time continue to rise

  2. Alleged bait-and-switch on lower commercial loads or shorter commercial pods in broadcast Prime Time in the 2017-18 broadcast year

  3. Various tactics employed by networks to increase their yield (aforementioned reduced commercial loads, time-shifted commercial ratings, new unit lengths, audience-based buying, etc.)

Are buyers (and by extension their clients) being had? If so, will they do anything about it?.

Prices Up, Ratings Down

The Chief Investment Officer of Publicis Media Exchange noted prime-time ad rates for broadcast networks have increased 38% in the past five years, while delivery of adults 18-49 has declined 39%. Although the specifics of the analysis were not shared, our own research directionally confirms these assertions.

  • According to industry resource Media Dynamics, adult 18-49 broadcast prime-time CPMs increased 36.2% from 2014-15 to 2018-19.

  • Similarly, per our analysis of Nielsen ratings, declines in prime for the “Big 4” broadcast networks during that same time period averaged 33%. Without knowing the currency or network mix used in the Publicis analysis, the 39% figure cited is directionally reasonable.

Fine.  Ratings are down, and CPMs are up. This isn’t new, and it isn’t news to anyone paying attention. “It’s a model that is completely broken. If we come back and everybody walks back to the table with the same amount of money for television, shame on us, because it’s just playing right into their hands,” one of the buying execs was quoted as observing.


Bait & Switch

With respect to reduced commercial loads or shorter pods, the agency execs had this to say:

  • “You paid more for something they told you was going to happen and none of it happened.” – Dentsu Aegis Head of US Media Investment

  • “We heard promises last year that we were going to see a reduction in commercialization and the fact of the matter, with that particular network … their commercialization actually went up by 2%.” – Publicis Media Exchange Chief Investment Officer

There’s no question that NBC and Fox both got a good deal of coverage leading in to last year’s upfronts for their Prime Pods and JAZ Pods, respectively. The underlying idea was shorter commercial pods, with fewer ads in them.  Less clutter is appealing to agencies and advertisers, because it’s generally accepted that this translates to higher recall and thus impact. 

The networks did, of course, charge a premium for ads in these pods, because they are more valuable to advertisers (and the network is presumably foregoing other revenue by running shorter pods). The accusations, however, suggest the networks weren’t entirely upfront at the upfronts about their overall commercial inventory.

Yes, they would run shorter pods. But they might run more pods, or longer pods elsewhere in the program, to make up the difference.

Our own analysis of Nielsen AdIntel data for October, 2018 - March, 2019 broadcast prime time compared with the same period for the year prior suggests this is exactly what occurred:

  • Not counting network promotional announcements, both Fox and NBC ran 1%-2% more commercial minutes in prime during the 2018-19 period than the 2017-18 period (counting promotional minutes, both networks had an increase in minutes of 3-4% vs. the prior year)

  • Fox had 22% more commercial pods vs. a year earlier, indicating that it ran the one-minute JAZ Pods but presumably made up for the ad time by simply running more pods

  • NBC only had 3% more commercial pods, suggesting that to compensate for the Prime Pods, it primarily increased the length of other commercial pods

So, yes, it appears that the networks in question might have run a select number of shorter pods (which they sold at a premium), but no fewer ads.  Did they lie? Depends what they said. Did they steal? What does it say in the agencies’ Order Letters to the networks?

This inventory (short pods) would have had to have its own order letters, because it sold at a different cost-per-thousand than the “normal” Prime Time inventory.  Did the order letters stipulate there would be fewer overall ads, or fewer total commercial pods? Were the expectations clearly and actionably documented? I’m betting not.

And if not, then the networks didn’t steal from anyone, in a legal sense. They might have duped the buy side, yes … but when will the national TV buying community begin treating these deals like business transactions, with legally binding documentation and explicit consequences for non-performance?  

We have written about this extensively, and speak to agencies and clients about it weekly, if not daily.

If you want something to be binding, you carefully outline it in a contract, and both parties sign it. “Oh, but the networks won’t work that way.” I wonder, though, if they might consider working that way if it was the only way they could sell ads or get pricing premiums. This would equire the buy side to (finally) recognize the importance of this level of discipline and to have the collective backbone to insist upon it as an imperative for writing business with the networks.

Other Shiny Objects

It’s also true the networks seem to employ “shiny object” selling tactics with increasing regularity.  Why? Perhaps because they are effective.

You don’t want to talk about declining audiences. That’s a loser when you are trying to maximize your yield, and you are selling audiences. So, what if you change the conversation? New, more effective units or commercial pods (that of course have a different rate structure).  Different measurement currencies. Audience-based buys. Quasi-digital, custom targeting.

What do all of these things have in common?  They render audience erosion under the “old” paradigm irrelevant.  

“You can’t look at it that way anymore. This is something completely different!” Gee, really? Neato. What’s that cost? This is not to say these initiatives have no value. But at their core, they are a blatant (and more-often-than-not successful) attempt by sellers to command increased yields for smaller and smaller audiences. They’re packaging.

“All of these things are designed to increase their yield and not address the problem that marketers are facing with this dynamic of increased costs, because of shrinking supply,” one of the agency media execs said during the forum. 


But agencies are often complicit when they take the ball and peddle these shiny objects to their clients. Again, these items may have value, but how much, and who is doing the math? The sellers?

When the networks cart out these exciting new approaches leading into the upfronts, let’s recognize them for what they are. Revenue retention. Yield maximization. Will buyers pay up anyway? We’ll know soon enough.

4 comments about "Will Agency Buyers Put Up, Shut Up, Or Neither In This Year's Upfronts?".
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  1. Michael Solomon from Media Management, Inc., May 13, 2019 at 3:19 p.m.

    For additional analysis of Prime Time commercial and pod loads in the 2017-18 broadcast year, see our post "Were TV Buyers 'Robbed' By Broadcast Networks In Last Year's Upfronts?"

  2. Darrin Stephens from McMann & Tate, May 14, 2019 at 9:18 a.m.

    The last time agency buyers "put up," as it were, was over ten years ago when they forced a switch to C3 ratings currency. They had a soft marketplace working in their favor then, and it appears that this not be the case for 19/20.

  3. Michael Solomon from Media Management, Inc. replied, May 14, 2019 at 10:49 a.m.

    And even that was somewhat of a grand compromise vs. an outright win for the buy side, with the focus on only the commercial minutes in the live broadcast weighted against the inclusion of DVR playback (which has since been extended from 3 days to 7 days for some deals), despite the fact that research indicates many viewers skip ads on their DVRs.

  4. Ed Papazian from Media Dynamics Inc, May 14, 2019 at 10:55 a.m.

    Correct, Michael. The buyers only got their "commercial minute ratings" when they allowed thesellers to count delayed audiences. Result: a virtual stand-off as the two shifts basically canceled out eachother.

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