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.
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.