Upfront Preview: Strong Scatter Market, But Worries About Ad Glut

Heading into the TV upfront selling season, ad and selling executives see firm -- if not stronger -- pricing in the second-quarter scatter market, a typical bellwether of how the upfront marketplace might perform.  

But questions remain, especially concerning upfront price inflation, messaging effectiveness, lower audiences and realistic commercial reduction of network schedules.

Speaking in an interview with Television News Daily just before NBC’s upfront presentation, Mark Marshall, president of advertising sales and client partnerships at NBCUniversal Media, said: “The second quarter is really strong, not just with NBCU but the marketplace as a whole.”

He added that scatter inventory selling -- the near-term quarter-by-quarter, and month-to-month selling of TV network media commercial time -- has also been good in the fourth quarter of 2018 and the first quarter of this year.

Marshall points to a general positive environment of the U.S. economy: “If you look at the macroeconomic factors -- unemployment is low and record corporate profits -- it's a great environment.”



Key new growing categories are strong for NBCU, including direct-to-consumer TV streaming platforms. Marshall also points to automotive, insurance, pharmaceuticals, and movie studio marketers who have been active in recent periods.

TV streaming platforms -- Netflix, Amazon, Hulu, Sling TV and others -- are especially key for NBC. Marshall says “with them, we get to talk about impact [of business] rather than talk about impressions.”

Media buyers admit that pricing is up, but not always because of overall economic conditions.

“The challenge of audience erosion and contraction is really driving the marketplace,” said Gibbs Haljin, managing director, media investment of GroupM, during the MediaPost Outfront conference, which was held in late April.

“That will impact the upfront,” he adds. “We are getting to a precarious point where television is getting less and less effective each year. There is only so much [price] inflation that clients are willing to take.”

Jason Kanesky, Chief Investment Officer, Havas Media, also at the same conference, said this year’s upfront will see some of his clients aggressively pursuing “zero-based” growth when it comes to their upfront media budgets: “The networks will be surprised some clients' budgets they expect will be less than in years prior.”

Some TV upfront marketers may be looking at this the wrong way.

Mike Law, head of U.S. media investment at Dentsu Aegis Network, says: “The challenge is diversifying the media mix in extending reach.” He adds that the definition of success shouldn’t be that clients got “a lower CPM, that I didn’t pay inflation. Those to me are legacy inertia that hurts us quite a bit.”

Responding to some criticism that not all TV networks have been clear about intentions with TV-buying executives when it comes to cutting advertising time -- reducing commercial clutter -- Marshall believes this is not focused on NBC.

“We didn’t feel it was addressed at us. We feel we said what we were going to do [was to] cut inventory across the 50 prime-time shows, and we cut it across eight different networks -- broadcast, cable, and our digital load.”

He adds: “We have literally reduced thousands of units across the year.” This resulted in a 10% reduction of commercial inventory in those shows that had “prime pods,” according to Marshall.

In those shows, NBC reduced the first and last advertising pods in to just two 30-second commercial units -- 60-second total pods. Typically, network commercial pods can run as long as two to three minutes.

Marshall says the results were strong: 28% viewers say they like those prime pod shows better, according to a survey. Additionally, NBC says commercials running in those slimmed-down pods drove an 11% increase in purchase intent versus those same commercials running in other similar programs.

Some agency TV/media executives say it wasn’t clear and/or accurate from some networks concerning a reduction in commercial glut --  which includes Fox, Turner and other networks groups.

“You paid more for something they told you was going to happen and none of it happened,” said Dentsu’ Law, at MediaPost event. Law didn’t name any networks.  

Also at the conference, John Muszynski, Chief Investment Officer, Publicis Media Exchange, said one network’s overall “commercialization actually went up by 2%.” One of Publicis agencies, Spark Foundry, won NBC Universal’s media services account earlier this year.

Looking to address reach and effectiveness concerns of marketers, Linda Yaccarino, chairman of advertising partnerships at NBCUniversal -- during NBC’s upfront presentation -- touted future streaming plans for a big ad-supported NBCU OTT platform to be launched next year.

“We are launching our own ad-supported streaming platform,” she says. “While other companies are pushing advertisers out, we're bringing you in, with inventory that's fully addressable [and] data that's fully transparent.”

5 comments about "Upfront Preview: Strong Scatter Market, But Worries About Ad Glut".
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  1. Ed Papazian from Media Dynamics Inc, May 14, 2019 at 8:56 a.m.

    What is laughable about this business of the networks "lying" regarding supposed plans by some to cut 10% of their overall primetime ad clutter is simply that even if they followed through on this---and raised CPMs on their remaining commercials  by 10% in addition to  normal CPM hikes to maintain their total ad revenue base---- viewers would never know the difference. Would viewers really notice the elimination of a single "15" per break? Studies have shown that a token reduction of this nature would have little or no impact on ad recall, sales motivation, etc. If that's what you want a 30-50% reduction is needed----but don't hold your breath waiting for that to happen.

  2. Darrin Stephens from McMann & Tate replied, May 14, 2019 at 10:19 a.m.

    I sat in a meeting when NBCU proposed the prime pod scenario. We questioned them very carefully about it. They said it would represent an overall ad reduction in primetime across the networks (excluding sports). They would *not* place additional ads in other programs to make up for the Prime Pod commercial displacement.

    They are now walking it back saying the reduction only applied only to the shows with "prime pods" (certain first-run entertainment shows). The displaced ads did indeed get moved to other prime programming. Perhaps the network salesmen didn't understand their own scheme.

    True, a 10% reduction wouldn't be a huge deal, but it would have been a start. At the time, NBC even said they would continue reducing ad clutter further in future years, but I'm not hearing too much about that so far this upfront

  3. Ed Papazian from Media Dynamics Inc, May 14, 2019 at 11:15 a.m.

    Interesting, Darrin. When NBC first started talking about the reduced clutter plan and "prime pods" it was widely reported that they were referring only to new primetime series and this would include those on the NBCU cable channels where most of the new shows were to be found. As the cable channels are not scrutinized very closely regarding ad/promoi clutter, this may be where the "lying" came in. I wonder what the data looks like for the NBC broadcast network's "new shows" from last fall? Did they carry less spots overall than the norm? Or, as you say, perhaps the sales people didn't really understand what the network's sales brass was proposing---it happens sometimes.

  4. Jon Swallen from Kantar Media, May 14, 2019 at 2:13 p.m.

    Ed - I've analyzed Kantar's commercial monitoring data for prime time NBC programming, compareing shows and telecasts with vs without the 'Prime Pod' format. The claim of 10% reduction in network ad time for telecasts with Prime Pods is borne out by our data. But in many cases some of the commercial time removed from the Prime Pod was added back to other pods in the telecast, making them longer and more cluttered than usual. 

  5. Ed Papazian from Media Dynamics Inc, May 14, 2019 at 2:21 p.m.

    Very interesting. Thanks Jon.

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