Nets Ask Advertisers To Move As Much As 30% Of Upfront Into CTV
- by Wayne Friedman , April 19, 2021
Major TV networks are pushing brand TV advertisers to shift a significant part of their linear, live TV upfront budgets -- 20% to 30% -- into media company-owned connected TV platforms, according to media-buying executives.
This comes a year after legacy TV-based media companies ramped up premium streaming CTV platforms, while recording sharply declining viewership on live, linear TV networks.
“It is where their inventory is,” explains one veteran media agency executive.
Last fall -- just before the start of the current TV season -- upfront TV networks' advertising revenues totaled $18.6 billion -- down from $21.9 billion for the previous season, according to Media Dynamics.
A 20% to 30% shift would result in an estimated $3.7 billion to $5.6 billion going to premium streaming platforms, which would dramatically change the national TV advertising marketplace.
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Still, media agency and marketing executives understand this is an initial salvo in network sales negotiations. “Everyone has an ask/demand,” says the media agency executive.
In addition, TV brand marketers that move money to CTV platforms would need
to abandon the legacy, low-base CPM prices that longtime loyal TV advertisers have maintained for years.
It is from this low level that annual upfront hikes are built,
according to executives.
At the same time, media agency executives are bracing for sharply higher double-digit percentage cost-per-thousand viewer (CPM) hikes for live, linear TV network inventory.
For the current TV season, networks are asking for more modest single-digit percentage price hikes during the upfront negotiations completed late summer and early fall, in light of the uncertainty surrounding the marketplace that began with the COVID-19 pandemic in March 2020.
Shifting to CTV would means sizable media cost hikes. Networks would say this is warranted, given premium streamers' lower advertising clutter per TV program hour, as well as overall growing high consumer-demand for CTV content.
Television News Daily reached out to the four major broadcast-based TV network groups. ViacomCBS and Fox Corp. had no comment, and NBCUniversal and Disney/ABC did not respond by press time.
OK, let's say that the advertisers agreed ---more or less acting in unison. Say they shifted 25% of their national TV primetime ad dollars into CTV---assuming that the "networks" have enough CTV GRPs to handle that huge shift----do they?. Since their CTV CPMs are going to be at least double the "linear TV" norm---maybe more---this would mean that only 10-15% of thire "linear TV" GRPs would go begging and if those GRPs were calculated based on anticipated continued rating attrition for next season---not last year's ratings, the number of "vacant" or "unsold" "linear TV" GRPs would be still lower.
But will the buyers accept much higher CTV CPMs? Have the networks sold this concept in at the client marketing level---or are they expecting the time buyers to do that---most unrealistic? And what new and meaningful evidence are the networks offering to show that paying a lot more per viewer via CTV is worth it in terms of ad awareness and sales? And, by the way, is my assumption that the networks' CTV ad clutter loasd is only about half their "linear TV" average valid---or will they increase their CTV ad clutter if many advertisers shift large amounts of dollars in that direction? Or is this merely a sales posturing ploy?