Here’s a bet the big independent demand-side platform The Trade Desk is inching toward: The upfront advertising market could be down again, as it was last summer, for advertising placed in this current TV season.
While you might moan the pandemic had a lot to do with the 13% dip to $18 billion from $20 billion the year before, according to Media Dynamics, let's assess if major structural changes are coming.
In its fourth-quarter earnings phone call last week, Jeff Green, chairman-CEO of The Trade Desk, said: “According to our research, 60% of linear TV ad buyers are planning to spend less [emphasis added] at the upfront this year.”
Why? Because, he believes -- as do others -- that the traditional TV business is less flexible and more data-driven challenged than other new media. Green says one client told his company the upfront TV business is the most disconnected area of media and business today. “And it's not just advertisers that are thinking differently, the content providers are, too.”
All eyes now turn to connected TV networks. Green waxes that even Linda Yaccarino, chairman of global advertising and partnership of NBCUniversal, on a CES panel said CTV has freed the network of the "handcuffs of legacy stuff."
Well, we have a better idea what that might mean. In part, due to the needs of data-driven marketers, but it's also about pricing.
CTV deal-making can remove the shackles of the crucial legacy “base” of CPM pricing that brand advertisers use as a key metric when it comes to calculating new price hikes for coming upfront TV markets.
Network costs are involved as well. All this new CTV data-driven, performance-based TV stuff costs money to trend and track. The bigger question for networks such as NBCU: How fast can they transition to the CTV space to give faster room for this new business growth?
For its part, NBCU is all in when it comes to ad-supported streaming. That was a major part of its launch message for its premium streaming service Peacock. Its entry-level service focuses on being “free” to consumers, supported by advertising.
Peacock, of course, is hedging -- as any good media company would. Peacock options also include a modest per-month consumer subscriber fee.
As for the Trade Desk, it is all in when it comes to CTV. Green says $4.2 billion in advertising spending ran through its system over the past year. We can imagine that's not all CTV, but a big chunk.
Still, the entire CTV market is around $9.5 billion and forecast to hit $11 billion this year, according to eMarketer.
Now factor in what part of the CTV market -- advertising-wise -- will reside in the hands of a NBCU, WarnerMedia, ViacomCBS, or Disney’s Hulu. And what will be left in the hands of independent platforms, such as The Trade Desk -- or Roku or Amazon Fire TV, for that matter.
Whatever you envision, believe this: Lots of handcuffs will be loosened for traditionally based TV network companies free to roam all media streets.