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Another Tough Upfront For TV, Buyers Say

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It's a good time to be a media buyer, and that means this could be another rough upfront season for television networks.

After years of being forced to pay higher prices for smaller audiences, buyers say the TV market has softened as viewers seek out more programming from more outlets and watch when they want to on a growing variety of devices—creating new places for ads.

Clients always wanted lower prices, but now they are more flexible, often waiting till the last minute to make deals instead of being stampeded in the upfront rush each spring.

Broadcasting & Cable spoke with some of the industry’s most influential media buyers, those responsible for spending billions of advertising dollars.

The buyers are thrilled about the cornucopia of programming from which they get to pick. While hit shows will always be in demand, it seems like there will be fewer shortages of must-see TV, giving them options that reduce any individual programmer’s leverage.

They say data is helping them zero in on the best ways to target their clients’ customers and is helping media companies more efficiently craft packages that meet marketers’ needs. Both sides also have access to better information about the effectiveness of advertising, which may make TV more attractive vs. its growing digital competitors.

What follows are the questions we posed to top buyers, most of whom elected to respond and sent answers via email.

Upfront spending declined last year. Why did that happen, and will it be different this year?

Chris Geraci, president, national broadcast, OMD: A variety of factors combined to reduce overall commitments in the 2014-15 upfront. On a macro-economic level, conditions were indeed improving and healthy enough to support stability in ad spending vs. the prior year, but there was nothing particular in the economic backdrop, or among specific product categories, that would spur an increase in upfront marketplace demand. At the same time, other viable forms of ad-supported video content were gaining critical mass and beginning to attract more advertiser interest. The impact of digital-based content had been felt during the scatter markets of the 2013-14 broadcast year, siphoning off some demand and helping to create lackluster marketplace conditions and little scatter inflation. This, in turn, lessened the urgency to commit as much as possible in the following upfront and produced the reasonable expectation that more alternatives would be available through the ’14/’15 cycle. Another contributing factor to the lower ’14/’15 upfront demand came from within the TV landscape itself, and advertiser interest in the expanded coverage of NFL games on CBS. We saw this among our client portfolio, and it is a clear indication that advertiser demand for the high quality, often highly rated, and brand-safe environment of sports can draw dollars from other areas of television. In 2015-16, we see much of the same shaping up: a stable economic backdrop, but no single category able to significantly spike demand, and the continued growth of quality alternative options.

Todd Gordon, executive VP, U.S. director, Magna Global: The general trends from last year will continue. TV is taking a slightly lower share of overall media spend as digital increases, and clients are reserving budgets for scatter and other marketplaces. We don’t expect this year to be much different. The upfront is one of many ways to spend TV dollars, and often the upfront is a poor indicator of the overall spending trend for TV for the year. We expect overall media spending to be up in 2015-16, with TV ending up around flat, but with less money spent in the upfront vs. last year.

Michael Law, executive VP, U.S. managing director, video investment, Amplifi, Dentsu Aegis Network's investment unit: Upfront spending was down in the ’14/’15 upfront for several reasons. For one, there was an overall strategic shift of dollars to non-linear channels like digital video and cinema, as well as investments in broader media opportunities like social amplification and content production. In addition, clients were looking for more flexibility with their dollars throughout the year to take advantage of a rapidly evolving consumer landscape. We also believe that the marketplace was a bit overpriced—in the end, with more favorable pricing, there could have been an opportunity to drive more volume.

Amanda Richman, president, Starcom: The weakness in the TV market reflected marketers’ demand for greater flexibility, accountability and addressability. Specifically: flexibility in moving their dollars based on business needs and performance; accountability in understanding the impact of their investment beyond ad delivery; and addressability in connecting with the right consumers on the best available screen. Opportunities fueled by data that answer these three needs are where the money is flowing throughout the year. Traditional upfront players are acknowledging that expectations have changed. It’s not enough to talk about demos and schedules—how are you going to grow our shared audience, what insights are fueling your content bets, how will you organize your assets to help drive business. Flexibility and accountability have a place in that conversation—but starting off with “rate of change” without ratings and rationale is a non-starter.

Lia Silkworth, executive VP, managing director, Tapestry: Upfront spending contracted last year due to several factors: softer sales than expected in a post-recessionary economy in key categories; marketing budgets divested elsewhere to continue to follow consumer behavior; and a demand for greater flexibility. The reality is, advertisers want the option to make shorter-term, real-time decisions based on the health of their businesses and more [key performance indicator] data-driven metrics.

Can too much good programming be a problem? Does the increase in the amount of high-quality production on a larger assortment of networks reduce the urgency to buy in the upfront? Is there still must-buy programming?

Geraci: From the perspective of the advertiser and agency, there can never be “too much” good programming available in ad-supported models as long as our target consumers are engaging with it. For a variety of reasons, the current landscape gives us more high-quality environments in which to showcase our messages than ever before and has created more choice, especially with regard to original content. While the media owners may not be able to convince the buying community that the best product will all be gone after the upfront, there certainly still are some “must-buys” out there. The programming at the very top of the ratings spectrum does sell well enough in advance that severe premiums, or complete lack of availability, can be encountered if advance purchases are not secured.

Gordon: There is no such thing as too much good programming. Today, great content is coming from a much wider group of publishers than ever before, and it is still in high demand and relative scarcity. These shows tend to be in greater demand and are the kinds of programs that you would want to make an extended commitment to—be it in the traditional upfront or through other long-term partnership arrangements.

Law: Too much good programming is never an issue, and we are happy to see the increased level of production quality that viewers have to choose from. The increase in quality shows has created a fair amount of parity in the marketplace; we live in a world where there are no must-buys, and where our client’s ads can be surrounded by great content with solid viewership on more networks and on more platforms than ever before. There is a balance between the must-buy programming and finding the right audience. In a year where we have focused heavily on data, there is still a need to ensure brand equity is maintained by being associated with the best content available.

Richman: The amount of great content available across screens is unprecedented. But at what cost? The content economics of all of this great programming and promotion needs to make sense for everyone, including the viewer.

Investment in improved measurement and multi-touchpoint attribution will help all of us find the right balance between premium investments and broader, efficient reach—and that balance will need to be calibrated throughout the year, not just in quarterly windows.

We’ll continue to see a wide spectrum between highly produced hits and low-cost content that both find their audiences. It’s the massive middle of ‘just good enough’ that has the most to lose as it seeks an audience whose expectations of quality and access have changed in an on-demand, unbundled landscape.

Silkworth: Too much good programming can never be a problem because it gives viewers more quality choices and a reason to stay engaged. It also should increase supply (ratings, impressions) in the marketplace since great content will have longevity with viewers and retain audience, especially as it is made available across screens. We are now in an era where a program may be ‘must see,’ but that means on my time and my choice of screen. As this is the case, increasing supply of great programming across devices may suggest advertisers can buy with more flexibility vs less.

With traditional ratings down, where do you turn to reach consumers for your clients? To what degree can you buy a show’s viewers on TV, on-demand and online in a single buy?

Geraci: We have effectively demonstrated the ability to follow a television program’s audience to any platform with which the consumer is engaged. The continued growth of online viewership of TV-based content, as well as the improvement of VOD options makes this mission-critical in effectively engaging the viewer within select content. While the platform-agnostic approach is achievable within single-deal structures at the media owner level, we are also able to utilize multiple agreements to efficiently align our messages with the best programming.

Gordon: While ratings are down, TV still dominates media usage, even among younger viewers. The death of TV is greatly exaggerated, but TV is certainly showing its age. Viewing is shifting to different sources and devices, but in many cases TV-related content is still at the center of the ecosystem. We take a holistic approach to video across traditional TV, on-demand (cable VOD and OLV), programmatic TV and video, and cinema to ensure that we continue to deliver the broad reach that we need. In many cases we deliver video messaging with more precision and less waste, and in effect are actually able to get more out of our video buys than we could years ago without the benefit of data and technology.

Law: Consumers have more channel, platform and viewing choices today than ever before, and so we must look to reach consumers and invest across all screens. While measurement in some cases has failed to keep up with consumers’ viewing habits, there is enough data for us to know that in order to maintain reach, we must be investing across screens. We have been working closely with the networks and research companies to ensure we are progressing the measurement conversation as quickly as possible. For us, it is not just about buying a specific program’s audience across all screens, but identifying where our client’s most valuable consumer is, and targeting them across all screens and around the highest quality content.

Richman: As TV dollars blend with online and mobile video dollars—as search moves from desktop to mobile—and content investments assume social sharing is part of the distribution plan, channel definitions become less relevant. It’s tired but true—media buying starts with the consumer, not the channel, as more marketers invest in specific audiences and behaviors across screens, and as more sales organizations talk about solutions, not just shows.

Cross-screen buying has arrived—but cross-screen building has not. Our next push has to be in creative development, building experiences that bridge screens, and shifting from ads that interrupt to content that connects.

Silkworth: Our No. 1 objective is to understand the consumer and match our approach to their behavior. We are exploring reaching multicultural audiences wherever there is great culturally relevant content available across screens and platforms. Multicultural consumers are way ahead of others in tech adoption and video consumption across devices and screens. We will continue to buy video content on every screen with a keen eye to mobile video, which is on a rapid growth pace and is the first screen of choice for multicultural consumers. Additionally, digitally centric content studios especially are recognizing the need to produce original, transcendent content with an authentic cultural POV that ties in social interactivity, and we are exploring how to weave advertisers into the fold.

We can buy a show’s viewers on TV, on-demand and online as publishers with linear and digital capability are recognizing the need to provide programming across screens. With our data and technology solutions, we are able to identify people and find them across devices. Thus, as measurement advances, we will be able to optimize across all screens.

The hot topic this year is data. How will you apply data to your upfront planning and buying?

Geraci: The fact is, we have always used ‘data’ to influence our upfront planning and buying, although age and sex demography is still the basis for most of the targeting in TV purchases. We continue to use that, but have introduced client-specific, proprietary methods of refining it, and adding intention, purchase and consumption metrics. We are also carefully evaluating some of the media owner-based systems which will allow for buy optimization against certain metrics within each of their offerings.

Gordon: This is nothing new—we’ve been applying data to our upfront planning and buying process from the beginning. However, today, we now have more granular sources of viewing behavior using respondent level and set-top box data. We also have more precise definitions of our clients’ customers provided by our clients’ first-party data. All of this data informs planning strategy from the start and along with our media owner partners we are now able to take more direct action off of this data as we execute. The major TV players are now launching data-driven, audience-targeted buying opportunities that will all scale as the year progresses.

Law: While data is getting labeled as a hot topic this year, the reality is data has been a central figure in our upfront negotiations for years. It is about the evolution of how we are using data, and as both data and ad tech improve, we are better able to target consumers in the right place, at the right time, and with the right message. We will continue to look at all forms of data to maximize the efficiency of our clients’ ad spend and deliver true business results.

Richman: Data has always played a role in the upfronts, but the velocity and volume of data now leads the conversation, not just the process. We’re going beyond standard Nielsen age and gender metrics, pulling in information from providers like Acxiom, Catalina, Twitter, Rentrak and others to shape our consumer understanding and investment strategies. This year more marketers are eager to pivot from data being relegated to a digital tactic, to activating their DMP investment to deliver smarter audience strategies on every screen. As a result, data partners are now becoming as important as media partners in helping to dimensionalize targets, and connect with them at scale.

Silkworth: Data is indeed a hot topic and one we are leveraging to find ways to make more informed decisions in planning and buying. And because we understand the importance of this, we have invested in data and analytics expertise to help us sift through these troves of data to ensure we are leading and not following. We are also creating suites of proprietary tools driven by data that will answer age-old marketplace questions—one tool in particular will specifically measure the business impact of MC spend.

From a buying perspective we are using data to usher in the era of precision, mainly through addressable channels (i.e., addressable TV and programmatic). Given a combination of recent acquisitions like RUN and exclusive agency alliances like Acxiom we are able to leverage first-party deterministic data to make precision buys against marketable audience segments and measure the performance vs. market norms. The beauty is that irrespective of the type of activation (total market, Hispanic or African-American), we can build custom audience segments and activate against them.

The other buzzword this year is programmatic. Do clients see benefits in programmatic buying and is there a way to combine the precision of programmatic with the broad strokes of a market like the upfront?

Geraci: Programmatic TV buying can and will provide client benefit, especially with regard to cost efficiency against particular audiences. However, the current offerings are primarily works in progress and are limited by the commercial inventory available in each system. While some offer fairly sophisticated tools with which to optimize buys, these optimizations are hardly complete if only a fraction of the TV programming and content landscape is contained within the consideration set.

Gordon: The idea behind programmatic is to leverage data and technology to deliver our clients’ messages in a more precise, timely and relevant manner. For our clients, programmatic reduces waste and their paid media works harder. Publishers also benefit; they can increase yield by allocating inventory to the client that’s the best fit. And finally, consumers benefit by being served ads that are more relevant. All of these benefits apply to programmatic TV as well. The combination of the influence of TV with the precision of digital is incredibly powerful. As the capability of programmatic TV grows we anticipate that budgets that may have previously moved to digital will have the opportunity to remain in TV.

Law: First, we need to ensure that we are helping our clients defining programmatic. From there, we cannot think about programmatic in a silo; it is about combining technology and data to buy more efficiently and in a more targeted way. The upfront market is defined by a window of time where a portion of our investments are made, but this is the culmination of an ongoing dialogue that happens 365 days a year. Our negotiations have become more intricate and interwoven than ever before—with a focus on maximizing our ability to target the right consumers and eliminating waste.

Richman: Value creation through audience addressability is the future of our industry—not efficiencies, cost reduction and automation, which unfortunately is how programmatic is often defined.

We have to reframe the conversation on programmatic. It’s not about identifying the cheapest inventory to match to a client’s target. It’s not about speeding up the process and taking hours and people out of the system. Programmatic’s potential isn’t realized without people—without the human filter to glean insights from data, and the creativity to translate those insights into ideas. At Starcom, we now have programmatic capability embedded within our client teams. This self-service model dramatically enhances our ability to connect consumer-based data to decision making, both in terms of partnership strategies as well as how we optimize. Enabling our experts to apply the best available data to the best available inventory to target our client’s most valuable customers and prospects is the goal we all should be working toward—and yes, that conversation can take place at the upfront table.

Silkworth: Programmatic buying is growing and will continue to grow due to its efficiency and because it allows for smarter buying informed by data. Programmatic buying is really the how, not the what or the why. The automation of the process should build in efficiency, which clients can appreciate. Where the real benefit comes in, is in the management and application of data. We are working to build multicultural data solutions such that when we employ programmatic buying, we are really enabling precision marketing as we are able to reach specific consumer segments at scale and, thus, deliver upon KPIs more effectively than ever before. The promise of addressability is really the key here and one that makes programmatic very attractive in connecting with specific multicultural audience groups.

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.