Commentary
The End Of The Upfront --- At Last!
- by Maarten Albarda , Featured Contributor, October 2, 2020
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.
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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.
For clarification, the TV upfronts began in the 1970's when ABC Television saw an opportunity to convince the auto makers to align their new model introductions in October to TV Programming.
They figured, lets create a futures market for TV media.
The rest is history.
i highly doubt that this marketplace (which has survived well in this COIVD environment) will disappear. Perhaps the shrimp cocktails wont - but the efficient exchange of electronic media buyers and sellers will continue to evolve and adjust to the times.
TV's "upfronts" were always with us---from the very beginning. After a few chaotic years in the early 1950s when shows debuted at various times as their sponsors got organized, the networks quickly adopted "seasons" which started in mid- to late September and ended roughly 12 months later. In the 1950s, with 70% of primetime shows controlled by sponsors, not the networks--- it was essential for each sponsor---or co-sponsor when more than one shared a show--- to reject or accept new timeslot positions offered by the networks for the upcoming 12- month season.--or stick to thier current spot. The only way to make such decisions was if the lead-in shows and those on opposing networks were established at the same time. Hence all of this was determined in the spring. As the networks took control of thier primetime shows everything changed. Now the networks decided exactly which programs were in each timeslot but, again, this had to be determined at the same time---in the spring, so each player knew what the competitors were planning and, also, to give the studios time to make the first batch of episodes for each series. This is when the "upfront" as we now know it began, not in the 1970s and not just as a ploy by one network to cater to the automotive market. For those who are interested in how all of this developed, its all explained in my book, "TV Now And Then"--Media Dynamics Inc. 2015.
As for the upfront ending I seriously doubt that, Maarten. Once we get control of the COVID-19 pandemic and life returns to" normal", it will still be vital to the broadcast TV networks to set up their primetime schedules up at a single point each year---or, maybe, several times a year--- as that's the only way each network knows what it's up against.They all understand that. They also need their ability to control the future pricing of time which the upfront now gives them---as opposed to going to a total scatter approach with its inherent unpredictability. What's needed is new approaches to the upfront by both sellers and buyers---but that's another story.
The upfront marketplace is not going away. It exists because clients, buyers, media planners and sellers ALL require a measure of predictability in their national, long-range marketing and media plans. Could it change? Perhaps. But only when clients can collectively agree on new group of trading rules. And the truth is, collective thinking runs counter our industry’s competitive and creative DNA.
Practically speaking, an assured level of video exposure is a marketing and sales necessity for most clients. The upfront marketplace, for all of its convolutions, has evolved in response to clients’ product exposure requirements. For clients and agencies that have spent years and fortunes preparing to launch a new product, achieving the required level of ad exposure and effectiveness to meet marketing and sales goals must be assured. Leaving a new product launch or an important sustaining advertising campaign to the vagaries of short-term market availabilities and price involves a level of risk that few clients-including P&G- are usually willing to assume.
It’s the job of clients and their agencies to buy the most effective media, at the lowest possible prices, with favorable terms and conditions, It’s up to sales teams to negotiate for the highest prices a market will bear, while still maintaining productive, healthy long-term relationships with everyone involved in the transaction.
When supply exceeds demand for a network, program or audience, prices moderate and few take issue with the upfront mechanism. At times likes these clients often re-deploy their budgets, reset their price points, capitalize on creative opportunities that enhance their advertising messages and improve their deals’ terms and conditions.
Yet when demand exceeds supply, buyers and clients are quick to yell foul.
Of course, no one wants to be on the wrong side of a supply/demand disequilibrium. But that’s why monetary shifts within media plans, governed by reliable and rational performance metrics, will continue to remain at the heart of a client or agency’s approach to marketplace management.
No foul here, simply the laws of supply and demand at work.
To think that changing the upfront market’s timing will materially affect the underlying supply/demand dynamic is an oversimplification of a highly evolved, creatively flexible, self-regulated mechanism that works fairly well for all involved.
Good to hear from you, Barry. Of course, I agree with you on this.
There are many reasons why the upfront has persisted for so long as it works in various ways for both sides---however it does need some adjusting to refelct current conditions and audience shifting patterns. I have proposed a two-upfront system---one for the low CPM, audience tonnage buyers: the other a brand-specific upfront with much better targeting capabilities, content linkage opportunities, etc---but, also, higher CPMs. That way, each brand can decide how important securing mass audience tonnage at lower costs is versus taking all, or a portion of its national TV spend and zeroing in on its prime prospects, benefitting by program content engagement effects, reduced ad clutter, etc. This is an approach that could be implemented now---if advertiser CEOs would make the effort to really dig in and push for change---instead of promoting highly simplistic "solutions" like moving to a calender year---which accomplishes nothing.
I've been doing the "check back with me in 5 years" bet about the upfront for 25 years now. Haven't lost yet