Complete Coverage: Upfronts 2016
As the top sales executives get ready to take the stage at this week’s upfront extravaganzas, you can almost hear them licking their lips.
After a couple of tough years, fighting eroding ratings and increased competition from digital media, this market figures to be extremely strong.
Last year, the broadcast networks took in $8.36 billion in commitments during the upfront, down 3.7% according to consulting firm Media Dynamics. Cable networks took in $9.45 billion. The total of $17.8 billion was down 3%. Prices for broadcast primetime rose just 4%.
This time around there’s talk of a return to double-digit price increases on a cost-per-thousand-viewers (CPM) basis for the broadcasters, ignited by CBS’ ever-optimistic CEO Leslie Moonves, who acknowledged the possibility during the company’s earnings call earlier this month.
“The market has been really strong all year long…both in dollar volume and CPM premiums,” said Geri Wang, president of ad sales at ABC. Some companies have been reporting getting prices 20%, 30%, even 40% above last year’s upfront in the scatter market.
“Clients that took a back seat last year and didn’t spend all their money and had money to spend throughout scatter are probably going to move some of that money upfront,” said Jo Ann Ross, president of ad sales at CBS. “We always do well with the key categories because of the broad reach of our audience. So we’re looking at some good numbers in our initial roll ups. We always come out on top so I’m optimistic about that.”
Dreaming of Monday
NBCUniversal will kick off the week with a Monday morning presentation that will highlight all of the company’s assets in broadcast and cable, English and Spanish.
“I don’t think anyone can look in a crystal ball and make a firm call on the market now, but I would say that there is every reason to be optimistic and actually enthusiastic about this year’s upfront, certainly in comparison with the last couple of upfronts,” said Linda Yaccarino, chairman of ad sales and client partnerships at NBCU.
“With the available inventory, the demand on scatter, the math would tell you that a double-digit increase is a logical outcome, or historically it would lead to that. But again, it remains to be seen once budgets get registered and we see what the demand is, the market will be determined at that point,” Yaccarino said.
Last year, Fox wound up cutting its prices during the upfront to get the volume it wanted. “This year the scatter market has been strong and prices are up. Our programming is in demand, and this marketplace is shaping up to be healthier than last year,” says Toby Byrne, president of ad sales for Fox Networks Group.
Feeding the market is the idea that some advertisers shifted too much money to digital in last year’s upfront. They are moving back to TV after not getting the return on investment they expected and encountering issues of fraudulent robot viewer traffic and view-ability issues in which they’re paying full price for ads that occupy only a tiny part of the consumer’s screen for only a second or two.
“We are sitting down and talking with clients that have put a lot more money into digital,” says CBS’ Ross. “You’re reading all these articles that the pendulum is swinging back. We’re hearing that.”
“Our environment is immersive, it attracts real attention, where the viewers are engaged and passionate. We have great entertainment and sports. It’s what separates us from non-premium subprime advertising options,” says Fox’s Byrne.
Playing the Numbers
NBCU has been among the early movers among the networks in trying to shift the conversation from falling Nielsen ratings—which most programmers will tell you don’t include all viewers watching their shows—to data. The data is being used to make TV advertising a better investment by improving its ability to target consumers and analyze the effect commercials had on viewer attitudes and purchase behavior.
Networks have been talking data for a couple of years, but this year, it could be a bigger factor.
“We believe pretty strongly data’s a thing,” says Yaccarino. “It has given us the information and the confidence to aggregate all these audiences and be able to confidently guarantee to our advertisers that we are able to sell more of their products than anyone else or sell more of their products and guarantee it in a way that the current currency or measurement system in the TV business does not allow. We believe it’s going to be a thing.”
Fox earlier this year unveiled its Audience Insights Manager, or AIM, a group of advanced advertising products including data-driven audience targeting and programmatic buying on its linear cable networks. “We’ve been having discussions about our new data-driven solutions with every agency, as there’s more emphasis on data to enhance investments,” Byrne says.
Both NBC and Fox have announced a willingness to sell and guarantee advertising based on data about reaching targeted consumers rather than broader demographics as measured by Nielsen.
“We have a linear tool as well as a digital data solution that provides the opportunity to partner with select advertisers to target new audience segments that go beyond age and gender,” says ABC’s Wang. “We are already in market with ad campaigns where data is the driving force.”
CBS’ Different Approach to Data
“We have data available to clients as they want to see it,” says CBS’ Ross. “We don’t just analyze a CBS-centric data platform, but instead give them a look at the whole landscape and what best meets their needs.
“ But she notes that “really, at the end of the day, when you sit down after the May announcements, it’s going to be about: What does the inventory look like, what’s the reach of your network against the target audiences—and obviously we have the best story at CBS in terms of total audience reach—and what is the rate of change.”
Negotiating that rate of change—or how much prices will go up on a percentage basis—will be a bit different as one of the big media agency holding companies, Publicis, has consolidated its upfront negotiations, making it the market’s biggest player. Instead of four individual Publicis agencies, each negotiating with the networks, many of the biggest deals will be handled by the estimable John Muszynski, a veteran of many upfronts.
Just having $18 billion to spend on TV won’t make Muszynksi’s job easy.
“There’s still a lot to be taken into consideration. They still have eight arms and legs like an octopus. Clients all have different mixes and needs. I don’t think all clients will want their dollars to be rolled up and leveraged by smaller clients,” says CBS’ Ross.
“There’s a lot of pressure on all of us,” adds NBC’s Yaccarino, noting that dozens of huge media accounts have switched agencies in the past year. “There’s tremendous pressure on the agency side, particularly with the big client switches from agency to agency that happened. Those demands remain unclear.”
What is clear is that these are salespeople and they’re good at putting their best foot forward.
“We are in an advantaged place because we don’t have a lot of holes to fill,” says Ross, who will welcome buyers to CBS’ presentation at Carnegie Hall. “We have good stories across the board with all of our dayparts.”
“We’ve expanded our content, particularly looking at broadcast, from Sunday Night Football to now being Sunday and Thursday night. We go into the market with all of our segments strong, with NBC News being back on top consistently the juggernaut of late-night dominance,” says Yaccarino, whose cable properties include the award-winning scripted show Mr. Robot on USA and the unscripted Kardashians on its lifestyle networks.
“I can’t forget to mention the inroads Telemundo has made on Univision. It’s quite spectacular,” she adds. “It makes us attract to our customers and puts us in a great position.”
Putting a New Face on ABC
Since last year’s upfront ABC has replaced its head of programming, Paul Lee, with Channing Dungey, but Wang remains upbeat: “Channing is an extremely talented executive and we are thrilled to partner with her for the 2017 upfront.” Last year, ABC and its Disney cousin ESPN said they planned to collaborate more closely. “It has worked great,” Wang says. “When clients require cross-divisional needs, we respond. We can deliver single-point-of-entry solutions or we can build from the bottom up.”
Ultimately, as always, the upfront will be determined by how much money advertisers bring to the market.
“We know there’s not enough premium content to go around—and different from digital, which seems to have a water hose of available audiences but not the content that marketers look for first. The limited availability and the perishable nature of [TV] inventory is what could make a quote-unquote rush for the upfront,” says Yaccarino.
And if there is a rush, Yaccarino can get to the beach a bit earlier than last year, when negotiations dragged out. “I can’t comment on when [the upfront will end] but I do look forward to having a better summer than last summer.”
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