Upfront Central: 2014 Market Movers
As television's upfront season warms up, the industry’s most influential media buyers see a lukewarm market and more choices than ever for spending their clients’ video dollars.
If networks want bigger budgets, they’re going to have to earn them because the buyers will be armed with more data about their customers and what makes the cash registers ring. In other words, an open bar and colossal shrimp—while still quite welcome—won’t seal the deal anymore.
And don’t even think about just selling spots. Buyers say their clients want TV to be part of a complete marketing program, with their message integrated into programming and distributed via the multiple platforms being used by viewers.
That said, some things never change: In May, the broadcast networks will roll out a shiny batch of new programming. Once again, ratings for the current season are down, but networks will want advertisers to pay higher prices.
They might wind up paying those prices, but not before digital alternatives get weighed, measurement problems get addressed and high-tech ways to turbocharge commercials—from social media to dynamic insertion—become more prevalent.
To see how some of the issues being discussed in ad circles will affect this year’s upfront, B&C business editor Jon Lafayette posed questions to media agency leaders responsible for billions in spending. An edited version of their responses follows.
Will marketers put more or less of their marketing budgets into the upfront this year? Is scatter a realistic alternative for marketers who want additional flexibility?
Chris Geraci, president of national broadcast, OMD: While this year’s upfront is sure to provide participants with the traditional advantages of availability of the most in-demand programming, audience guarantees and sponsorship opportunities, there is no doubt that the current broadcast year has proven to be not as disadvantageous to scatter market buyers as years’ past. With mild CPM inflation in scatter, advertisers have had the opportunity thus far in 2013-14 to enjoy the flexibility of scatter, in exchange for moderate price premiums. There needs to be relative confidence in that dynamic remaining in place for a noticeable shift toward scatter to occur.
Todd Gordon, executive VP, U.S. director, MagnaGlobal: The upfront is just one part of the many options out there for marketers. We continue to utilize the upfront as an effective tool to secure scarce inventory, build custom partnerships and manage media inflation, but we are increasingly looking at the marketplace across video channels, and across varying marketplace cycles to ladder up to a comprehensive and holistic media plan. Broadcast upfront, calendar upfront, scatter, video, mobile, cinema, programmatic…there are many options and alternatives that we deploy on behalf of our clients.
Michael Law, executive VP, managing director, video investment, Dentsu Aegis Network:We will be active in the upfront marketplace but the decision of how we invest our dollars will be predicated on many marketplace factors. As fragmentation continues within the linear marketplace and video consumption habits evolve, advertisers have many options to consider. We can no longer depend solely on the upfront marketplace and need to engage across all video screens. Although the upfront is typically where we negotiate most of our linear television needs, we will also be active in the scatter marketplace if additional budget flexibility is a key priority for our clients.
Christine Merrifield, President, investment MediaVest: It is no longer about upfront vs. scatter. It’s about fewer, bigger, better partnerships. Today we’re in a 365-day-a-year marketplace where big deals can be signed at any point in the calendar. Part of this is driven by a shift in what we’re looking for. Old deals were simply about inventory and price. Price, of course, is still a key pillar, but our focus today is always inventory—plus innovation. What data is included, what content opportunities, what long-term alliances for our clients? These are necessary parts of any deal equation and driving a different type of marketplace.
John Nitti, president, activation, Zenith:We don’t expect a reduction of the share of budgets allocated to the upfront. Scatter pricing has softened over the past couple years, but has remained at a premium over upfront. We are seeing less activity in the scatter market, as well as fewer dollars being canceled over the course of the year, both indicators that advertisers are being more realistic with their upfront investments.
Within an upfront framework, advertisers who are looking for flexibility with their inventory can take advantage of deals that allow them to shift their presence across a media company’s assets. A good example is a client who has various campaigns over the course of the year, each targeted towards a different demo. A deal with a large media company who has assets that target these various demos could be struck in a way that allows us to shift inventory across these assets to make sure a client’s message is reaching the appropriate consumer target, even as their needs change over the course of the year.
With regard to upfront vs. scatter, there will always be a large group of advertisers who need to lock up inventory in specific windows of time, as well as in specific high-profile inventory. For them, the upfront will continue to be the only option that guarantees they get what they need, when they need it. Large-scale marketing partnerships are still vital to many of our clients, and for the most part, these need to be locked up with a larger upfront investment.
Amanda Richman, president, Starcom USA: The need for flexibility, expectations around accountability, and desire for more engaging ad experiences is driving a more [choice-driven] upfront investment this year. Marketers are placing more value on the sum of the parts vs. the whole of TV, and that means TV upfront investment is no longer a given.
Lia Silkworth, executive VP, managing director, Tapestry:All the expected historical TV variables come in play when determining when and how to invest in the upfront: demand, supply, scatter pricing and marketing goals. There is, however, a continued shift attributed to social media and technology that has changed how we watch TV so it makes sense that it will impact how we have historically bought it. The upfront as is will continue to make sense to a lot of marketers and will hinder others. We have a good handle on most of the historical variables outlined, but the power of data & analytics, emerging technologies and the continued impact of social media are still potential game changers.
When will programmatic buying affect the upfront? What data are you using to help select the networks and shows you buy?
Geraci:That really depends on your definition of “programmatic.” The manner in which we transact some traditional TV business already is automated, if not programmatic, but the bulk of desirable national television commercial inventory has not been commoditized, and therefore, is not being offered for sale in this way.
Gordon:We have much more compelling and granular data that we are deploying across the media planning and buying process. We know more about who our true customers are and what media is best to influence them, we know more about the audiences available from media owners, and how to leverage them to effectively deliver improved business result for our clients. We are using Nielsen data, set-top box data from Rentrak, client first party data, past buy performance data, past purchase data….all of these are informing our buying decisions, both within programmatic channels and without. Programmatic platforms enable us to more easily apply our data to available audiences, and we will be using programmatic TV and video solutions as a complement to our upfront buys this year.
Law: Programmatic buying is already impacting all of our buying decisions, including the upfront. The principles of programmatic—automation, audience targeting and real time bidding—will affect how and where we invest our clients’ dollars. It is inevitable that dollars will be shifting to programmatic platforms. Through the use of these platforms, we will apply relevant data to reach a more valuable audience. We also believe that it is important that we do not lose sight of true scale by becoming too over-targeted with our video buys.
Merrifield:Programmatic has arrived and is something to embrace rather than run from. If you are not participating, you are behind. MediaVest is a data-driven company. Our proprietary tools and strategic data partnerships allow us to make both short-term and long-term decisions. This upfront, everyone’s data partners will be as critical as their broadcast partners.
Nitti: Programmatic has gotten a lot of press recently, but realistically there will continue to be a lag until we have better systems to manage the inventory. We do, however, see more and more data-informed inventory becoming available and since clients want their media investment to be governed by intelligence and relevant data, over time we will continue to see a shift in this direction. That said, the most important pieces of many marketers’ video buys will still be the top tier inventory and marketing partnerships, which would still operate under the traditional set of rules. The future of TV buying will incorporate both of these.
We are looking at a number of different data sources to help optimize our buys. These can be syndicated sources, client-owned data, proprietary agency data, or really any other source that makes sense for a client. We are creating systems that allow us to import the most relevant data for a specific client and provide an output that allows us to make better informed buying decisions.
Richman:Programmatic buying is already impacting the upfront. Programmatic is shifting dollars from longer-term planning to real-time decision making based on best available data. Yes, ratings still matter, but we also want to understand networks’ audiences—their social behavior, video viewership across platforms, purchase habits—to refine our mix and reach our audiences. If we expand the definition of programmatic to include planning/buying automation, addressable media and auction, programmatic is not a threat but an opportunity for networks to simplify how they do business and develop a deeper understanding of their audiences that can inform cross-platform experiences.
Silkworth:Programmatic buying will continue to become a more prominent approach to buying. The impact on the upfront, however, will depend on the balance marketers want to strike between longer term bets with upfront buys vs. a shorter term, data-driven market. From a multicultural standpoint, we are looking to a whole host of data options including first, second and third party data in an effort to advance programmatic for multicultural audiences.
Some networks will push for C7. What will your response be? Are there other measurement issues that will affect upfront deals?
Geraci: C7 [live-plus-seven-days] ratings guarantees will be considered, with an appropriate price advantage, wherever they are offered. However, there is little chance that there will be universal adoption of the metric due to specific concerns within certain advertiser categories. With regard to measurement, there is no doubt we are interested in a more robust and consistent multiplatform metric, but we are also looking for an improvement and increase in size of the existing Nielsen sample for national television.
Gordon:What our clients really want are more accurate and accountable metrics on who is truly seeing their video creative, both on TV and across platform, and what impact that media exposure ultimately has on their business goals. C7 may be an option for some clients whose creative and business needs allow for it, but it’s not a long-term solution to our measurement and accountability concerns. As outlined above, we are looking at a multitude of ways to apply data to improve our clients’ investments this upfronts season.
Law:For the right clients and at the right price, we will consider C7. The bigger challenge is to identify a cross-screen measurement platform to help level and set the playing field—this includes online video, VOD, out of home and mobile video. We cannot increase the marketplace supply of rating points by evaluating each screen in a silo. Great content is driving more viewership across all video screens and mandating the aggressive push for improved measurement.
Merrifield:In a real-time marketing environment, we need more real-time metrics, whether it be staying closer to airtime with C3 or moving to commercial ratings.
Nitti: Our position on C7 has remained consistent. For advertisers with a less-time sensitive message, and for whom an impression has the same value four to seven days after it originally airs, we are open to the discussion. We have not seen a significant shift in viewership from C3 into days 4 through 7, so we would not expect the discussion on this topic to vary much from years past.
With regard to other measurement issues, the marketplace continues to struggle with the lack of a single source methodology that accounts for linear, OLV [Open LiveView], VOD, mobile, tablet, and all other digital consumption. As an agency, we have been successful in creating a system that accounts for viewership across all screens, but the industry still needs a comprehensive single-source solution.
Richman:When the currency shifted from Live to C3, the business was in a different place. This was Nielsen’s first step in getting a more accurate gauge of commercial viewership, albeit an imprecise one. However digital has built our expectations for more precise measurement, to the point where a shift from C3 to C7 isn’t meaningful enough. We need to leapfrog to commercial ratings and be more precise than just adding in days 4-7.
Silkworth: In the Multicultural market I do not anticipate this being as much of a factor given the percentage of live viewing.
How important are branded entertainment and multiplatform campaigns in deciding where you’ll put your money? Have the broadcast networks become as cooperative as the cable networks in developing marketing plans that go beyond spot buys? Where does advance advertising, such as dynamic ad insertion, and social media fit during the upfront?
Geraci:Multiplatform offerings are now a basic expectation of most large sponsorships, especially around events, so I would say that these are vitally important considerations and there really is no difference between cable and broadcast in that regard. Social media has become part of the TV ecosystem now, so whether it is part of the upfront or not isn’t really the point. It’s a significant part of the media landscape. While the technology for dynamic ad insertion has been lacking in the television marketplace, advances in the commercialization of VOD offer the best promise of this on a broader coverage basis that we’ve seen thus far.
Gordon:At IPG Mediabrands we are on a mission to automate the media buying process. We are doing this because we want our people to spend less time on low value tasks that can be better done by technology, and thus can spend more of their time on building custom created content and multiplatform opportunities that really drive business results. So these bespoke solutions are a major priority for us and our clients and our partners that deliver those solutions are rewarded with increased spend. Opportunities exist for marketing campaigns that go beyond 30-second spots across broadcast, cable, video, etc. We consider advanced solutions, like programmatic, on-demand, interactive, companion devices and experiences, and social part of an effective holistic video strategy.
Law:This year’s upfront will continue the trend where we work to drive incremental value beyond our 30-second spots. Media partners who bring solutions that help achieve brand goals will benefit when we allocate budgets. We are working closely with cable and broadcast networks, as well as non-traditional vendors, to have stronger branded content and synergistic custom integrations. We are also working with social channels, like Twitter and Shazam, to increase consumer engagement beyond the first screen. In addition, enhanced targeting through addressable solutions provide an opportunity to drive deeper messaging against the most engaged customer. And, to say we are happy to see more [dynamic ad insertion] would be an understatement.
Merrifield: Every deal needs to work harder than in the past. We are in a multi-dimensional marketplace. We are constantly having macro conversations that go beyond “we need content” or “we need social” or any other specific components. It’s about solving the business challenge with smart, integrated programs co-created from the onset.
Nitti:Branded entertainment and cross-media marketing partnerships are still important to many of our clients. Especially in this time of media multitasking when it is increasingly difficult to reach consumers with traditional ad messages, executions that allow us to be a part of program content are effective ways to break through and be seen. For some clients, these types of activations drive budgets to certain vendors, and for others they are treated as nice-to-haves. As clients and agencies are both being stretched thinner and thinner from both manpower and budget standpoints, we have typically looked to consolidate our marketing partnerships to a smaller number of higher impact activations. With regard to broadcast versus cable, we don’t really silo things that way. Our bigger concern is the size and reach of the larger media company and how they can execute and promote a marketing partnership across all their assets.
One of the key benefits to VOD is that it allows branded entertainment activations to live on over the life span of the content. Recently, VOD has seen growth, which is exciting for both content providers and advertisers, as control of the ad experience is once shifted away from the viewer and to the content provider (contrary to the DVR). DAI is helpful in allowing VOD to be more useful to our clients by making it easier to buy and sell. Once again, we are limited by the lack of a holistic measurement capability but the increased proliferation of DAI is taking VOD in the right direction.
With regard to social media, our agency has done a lot of research this year on how concurrent usage of TV and social platforms, as well as all second-screen usage, impacts the effectiveness of our clients’ ad messages. The social activity that surrounds TV content is something that tends to be difficult for advertisers to participate in organically, though we do have some good examples of executions that marry large on-air executions with robust and relevant social promotions. Kohl’s multipart custom J-Lo creative in ABC’s airing of the AMA’s was decided based on viewers’ tweets. These types of interactive social elements add a level of interactivity with the brand—and specifically, the brand’s creative—and in this case, reinforced Kohl’s sponsorship position in the show.
Richman:Branded entertainment and cross-screen experiences are more important than ever in a cluttered, fragmented, attention-deficit world. Marketers are looking for opportunities to tell their stories, and content that crosses all screens provides that. We’re seeing real commitments from broadcast, cable and digital players to bring those stories to life – and that includes social amplification, dynamic and sequential messaging, and an understanding that audiences can be participants, not just passive viewers.
Silkworth:The power of multiplatform campaigns and how they work together are critically important. The people have voted and social media and TV have forged a symbiotic relationship that has helped make each one better. Social media provides real-time, personal conversations while TV provides fodder. Right now, for the most part, though marketers want them to work together, they are handled separately from the upfront. In the multicultural market, broadcast networks have become more cooperative and importantly creative in developing marketing plans. The networks, especially the larger ones, have also aligned to the new normal, which is inclusive of unique digital offerings and embedded social approaches.
Agencies have been announcing upfront deals with digital media companies like Google and Facebook. Is that money coming from TV budgets? Are TV companies getting bigger shares of your digital spending?
Geraci:We have been making use of the digital platforms of the TV-based media owners for quite some time now. Inherent in that is our belief that we should be utilizing the right content for our client’s messages, regardless of the platform on which it is being viewed. While the non-TV digital companies are certainly growing their video businesses, it is too much of a generalization to say it is entirely at the expense of linear TV.
Gordon:The environment is increasingly fluid and competitive. TV networks compete for digital dollars. Digital companies compete for TV money. Everyone is competing for a share of a slow-growing media pie. The right amount of digital or other TV alternatives is going to vary by client and campaign. TV retains the dominant share of our overall video investment, but alternative vehicles, both owned by TV dominant players and those owned by digitally led companies are taking an increased share throughout the year.
Law:It seems that every digital vendor wants a part of our TV budget. We do not classify our spending as a TV or digital dollar, but rather a media investment to reach potential consumers. Every dollar we spend is to drive business results for our clients. These business needs dictate how we allocate our spending and all media solutions are given full consideration. We continue to challenge all of our partners, including traditional TV vendors, to build out stronger multiplatform offerings in an effort to retain, or even increase their spending.
Merrifield:Our agency and our clients have long moved past the “television budget” and the “digital video budget.” We simply approach it as video regardless of whether the opportunities are on-air or online. Our decisions are based on where the consumer is heading and this approach allows us to be immensely fluid with dollars.
Nitti:We are seeing more and more that clients are looking at their media budgets holistically, funneling dollars to the best opportunities and associating themselves with the best content, regardless of the platform. It is no secret that marketers are trying to do more with every dollar they invest and it is our job to make sure that we are maximizing the [return on investment] for each of these dollars. If an opportunity with a particular vendor can help us achieve that for them, then there is no reason why we wouldn’t recommend that option.
“TV” companies are not necessarily getting bigger shares of our digital spending, though they are uniquely positioned to deliver scalable audiences across all screens. We look at their audience delivery holistically, and as ratings erosion continues in TV, the networks’ non-linear platforms offer an opportunity to recapture some of that audience and therefore preserve some of their budgets.
Richman:Our goal is to most effectively allocate clients’ marketing budgets in order to fund experiences that matter on any and every screen. This requires marketers to be more fluid in how budgets, dayparts and audiences are defined and invested. On the flip side, it also requires broadcast, cable and digital media companies to package their audiences and assets in ways that redefine “share.” As money moves to data partners, ad tech and content production, the competition for budgets is fierce. Everyone—including agencies—has to prove their value now and into the future.
Silkworth:Dollars follow the best ideas and partners that can align with our objectives. In recent years, given the shift in the way we consume media, there are now more partners to choose from with scale. Overall, we are designing experiences vs. assessing TV vs. digital specifically. Especially as multicultural consumers lead in tech adoption and video consumption across devices, we are looking to maximize a variety of metrics in an omni channel video universe.
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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.