The always smart and insightful Brian Wieser published an update this week on whether or not TV as we know it is dead or dying. Spoiler (from his article): It is not.
What has happened is that TV, like everything else, has evolved. I think we are witnessing the (slow) death of linear TV as we knew it. I include cable in this assessment as well. According to eMarketer, about 95 million Americans will have cut the cord in 2023. That is about one third of the total population, and an impressive statistic. That percentage goes up significantly if you look at a younger demographic in large population centers (with good internet).
According to the same eMarketer data, more households in the U.S. will NOT have a cable subscription this year, versus those that do (68.7 million households do not, while 62.8 million do). But these non-cable households are still watching TV. Or perhaps more accurately, “evolved TV” (let’s see if we can make ETV a thing!).
For advertisers, the combination of sound and vision is still the most powerful means to deliver a message. Of course the challenge is that buying eyeballs has become an incredibly fragmented “apples and oranges” process. There are bundled offerings across a combination of linear, cable, streaming, social media, etc. from just about everyone, while these bundles do not come with easily measured or easily comparable data to understand who you are reaching, and how often. Many offerings include walled gardens that make it even harder to compare. Many offer their own, unique (and not at all bad) metrics on top of standards like impressions or viewability.
Add to these factors the fact that many advertisers have eschewed annual plans and have switched to an always-on or continuous-plan strategy. The annual plan, with a beginning, middle and end throughout the calendar or fiscal year, was always an artificial marketing construct. It makes sense that budgets are set for a specific period as they are often determined by business results over an annual or fiscal year interval. But for consumers, their interest in milk, diapers or lip gloss is not magically reset at the end of the year, prepping their mind for a new campaign in the new year.
All this leads me to my (almost) annual declaration that although TV is not dead, we must end the annual ritual that is the upfront. ETV (I am sticking with it!!) content is no longer released in two seasons, as was the case in the olden days. And with campaigns less and less planned in annual determinations, the whole concept of upfronts, newfronts, mobile fronts or any other “fronts” is wholly out of touch with how marketing works in 2023.
Does it make sense for advertisers to negotiate deals with platforms? Of course it does. But these should no longer be associated with old-timey linear TV seasons. In my mind, the basis for these negotiations should be whatever the right time period is for the advertisers, and whatever the advertisers and platform wish to bundle. Volume, share and dollars will (continue) to play a role. Platforms can (continue) to bundle what the marketer really wants with some other stuff the platform wants to sell. And both must agree on metrics that will determine if what was bought delivered what both parties agreed to. Can we finally move on?
Interesting point of view, Maarten. But there are several reasons why the upfront is not only not going away but will remain a major factor in buying "TV" time and selling. One is the need of the "linear TV" sellers to control the total TV market---CPM price wise---as well as their desire to cover as much of their program costs with large amounts of bankable ad revenues. This is because they sign firm full season program production deals which are inherently risky on the assumption that they will have sufficient revenues to cover these costs. To ensure that, they offer what amount to volume discounts in the upfront futures market to advertisers who seek to buy their GRPs at the lowest cost possible.
Why do so many branding corporations play this game? The answer is fairly simple. First, they want to make sure---in advance---that their brands will have access to GRPs in the kinds of content they wish to be associated with---and I'm referring not only to prime time but to sports and the various dayparts--early AM, daytime, early news and late night.They are not willing to rely on pot luck buys at much higher CPMs which may deny them the orderly generation of GRPs their brands have planned on. Second, despite what they say at media gatherings, many CMOs are not convinced that paying asignificant CPM premiums for the priviledge of trying to obtain supposedly better targeted "linear TV" buys will pay out ROI-wise because so much linear viewing is concentrated among old adults and low brows. So they allow some brands to dabble in these kinds of deals when refined targeting---often geographic in nature---- really makes sense but deny this option to those brands that are trying for "mass" reach. Also, most if not all CMOs believe that "creative" is the primary impetus for successful ad campaigns---not TV time buying.
Still, there are ways that the upfront buying process can be improved and there is a chance that streaming's unique targeting capabilities may entice more advertisers to give their brands more freedom of action. So the upfront, as currently executed may, eventuallly evolve into something I have been championing for some time now---a two upfront scenario---one, for individual brands, with better targeting but higher CPMs followed by a second upfront for the big CPM-fixated corporate buys. The former will probably involve mainly streaming ad dollars while the latter will involve mostly "linear TV" ad dollars.
I've said it before and I'll say it again. The only people who call for (or predict) an end to the upfront are people who have never bought or sold a national TV spot in their lives.
They just don't understand how the dynamics work.
@Darrin - but that is where you are wrong. I have overseen the upfronts for The Coca-Cola Company, then AB-InBev and now in my capacity as consultant with clients who buy my time fractional. So I know in fact what I am talking about, understand the dynamics and believe they are no longer aligned with how the market works.
@Ed - I always appreciate your thoughtful and experience based answers. I think we are both landing (more or less) in the same thought space:
- it will continue to make sense for large advertisers and platforms to do longer-term deals. For the advertisers to get something they want, be it discounts or preferential treatment, etc. For the platforms to secure "upfront" income to help fund future content investments and cost.
- what no longer is needed is to align these upfront negotiations with an artificial, and for most streamers no longer relevant, tv season. Most streamers launch new content throughout the year, and not in line with what the traditional "seasons" were. I believe advertisers and platforms are better off negotiating on the premise of securing ads around "good" content, regardless of when it premiers. If the advertiser and the platform can agree on an 18 month window/deal that runs from June through next December, and contains commitments and access to ads around shows and/or time windows of XXX, then why not?
Thanks all for sharing your thoughts.
@Maarten. So you've never bought or sold a 30 second spot in your life.
How long have you been predicting or calling for an end to the upfront? Check back here in 5 years, 10 years, and we'll see how you did.