Years ago, I worked with a very well-known consumer goods company that manufactured staple food items. As I was getting my orientation on their ways of working, I learned that their fiscal year ran from August through July. This surprised me. When I asked why, the explanation was as simple as it was stunning.
The reason for their unusual fiscal year was that, before the era of preservatives and refrigeration, this company received an enormous amount of raw ingredients for their main product line in July. The raw ingredients grow on farms.
They needed to produce their product then and there and sell it in large quantities for the simple reason that they had a lot of it. So they wanted to start their business year with fresh budgets when they needed these budgets the most.
Obviously, in this day and age, they are no longer dependent on when the farm-produced ingredient is “in season,” as it is now “in season” year-round, either produced here or overseas. But to this date, their fiscal year is still what it was as dictated all those years ago.
This analogy works well for TV upfronts. The only reason the upfronts take place when they do is because of events that have been dated since the invention of VCRs and, especially, DVRs.
Historically, the summer months showed a viewing dip as people took their vacations, and/or spent more time outside versus during cold and dark winter months.
And in the era of live TV and nothing else, if you were not in front of your TV when your favorite show aired, you had missed it.
The TV advertising game is all about the ratings, and the TV networks realized that in order to maximize audiences in the appointment TV viewing era, you should schedule your most valuable assets when there was the best chance of catching the maximum-sized audience.
So: TV networks scheduled their most prized assets (highest-rated programs) between September and May.
The relative scarcity of their corresponding most-valued ad breaks brought us the upfronts, allowing the biggest advertisers to lock in the biggest audiences.
Agencies loved the upfronts, since they secured income (at that time 15% of each commercial agencies placed) for the whole of the TV season, barring unforeseen disasters.
The capo-di-tutti-capi of the upfront process was Procter & Gamble. But I'm sure you caught last week’s stunner that P&G is rethinking its upfront approach. P&G Chief Brand Officer Marc Pritchard talked at the ANA Media and Measurement Conference about the key reasons why, which included the increase of programmatic as a means to buy bulk audiences.
Programmatic buying is not governed by seasons or upfronts. It is a dynamic marketplace like the stock market, and buying happens when the need for an audience arises, not when the seller decides audiences are in season.
The untethering of buying from when it is in season to buying when you need it (and doing it in-house, as P&G does) is the proverbial bomb under the upfronts as we know them. It follows how TV programs are viewed today: You watch when you want to see them instead of when the networks want you to see them.
Let’s agree to assess the upfronts one or five years from today. My prediction is: They will be in the history books.