Tag Archive: upfronts

  1. The Upfronts: Is the old ship slowly changing course?

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    Our US Business Director Victoria Potter explores how the Upfronts format might finally be changing – and why that’s good for advertisers. 

    How did the pandemic affect the Upfronts format?

    A few months ago, I questioned in another of our ECI Thinks posts whether the pandemic would force through seismic changes in the Upfronts landscape. There has been a growing appetite for such changes in recent years, but it takes a lot to change the course of a huge, 60-year-old ship. Then the global coronavirus pandemic came along, and it seemed like the kind of storm that could expedite that change in directiontransforming consumers’ consumption priorities and their paths to purchase, and therefore affecting the media strategies of B2C brands. 

    But the change in direction didn’t happen as we anticipated. The Upfronts went ahead, and many advertisers bought their inventory. However, there are now indications emerging that some transformation is on the cards. Marketers are demanding changes to help them cope with the uncertain environment: 

    • Increased flexibility: Advertisers feel more comfortable committing to longer-term deals if there is greater flexibility and more options available to them 
    • More streaming: Many vendors managed to keep their revenue flat (rather than dropping) thanks to a shift in investment from linear to streaming. Streaming now accounts for one-third of ad dollars invested in TV. 

    Just a couple of weeks ago Marc Pritchard, Procter & Gamble’s Chief Brand Officer, declared that fundamental changes must happen, and must happen by next year. This is particularly important because P&G is such a key player in the Upfronts, and indeed has been a driver of the ‘FOMO’ (fear of missing out) that other advertisers experience, and which has been fundamental to the continued existence of the current format. Pritchard said the Upfronts are ‘inconvenient at best’ and that the system must change because ‘a level playing field means planning and negotiating when it fits the business – that’s calendar year for most.’ 

    So, what exactly is behind the desire for change – and the apparently increased willingness of the Upfronts system to accommodate that change? 

    Timing

    As Marc Pritchard observed, the Upfronts have long adhered to a schedule that suited the TV networks best, from October to September. Most advertisers work to a calendar-year agenda, so having to purchase TV inventory in a different schedule is disjointed. What’s more, the Upfronts format obliges advertisers to purchase inventory for almost a year away; as pandemic has laid bare, plans can change dramatically just a few months into the future. The old format was therefore driving inefficiency, with the purchase of too much inventory driving frequency and waste.  

    This year, however, was a buyers’ market, thanks to the deflation in media pricing (see our recent Inflation Report Update for more details) and a lack of content. Buyers could negotiate options that suited them more, forcing TV vendors to introduce more flexibility. Buyers were able to commit dollars by quarter, and to negotiate better conditions such as the ability to cancel a certain percentage in a larger window.  

    Traditionally, streaming and linear ads were sold in two separate packages, with the former offering more flexibility than the latter. However, vendors are increasingly selling the two as a combined package, again because of advertiser demand. This has resulted in less flexibility for streaming but more for linear – and that benefits most advertisers because the majority of investment is still in linear. It will be interesting to see if and how this changes in the coming years, as streaming becomes increasingly prominent.  

    Control

    Linear TV used to be the foundation of any media plan for the larger advertisers, but TV budgets are now divided across a number of areas, including linear, streaming, programmatic and addressable. Committing spend so far in advance, as per the ‘old’ Upfronts format, limits the opportunity for advertisers and their agencies to adjust to the rapidly changing landscape and optimize their buys. 

    It’s no secret that the media landscape is fragmenting, and that the most effective ad campaigns are optimized across all channels. Buying advertising separately, at the Upfronts, NewFronts and the podcast upfronts means that optimization is more difficult to achieve. Merging them, as 39% of media buyers favor, would help them to better understand measurement and research across screens, which would intern improve performance. The IAB’s new CEO, David Cohen, pushed for this ‘coming together’ to happen over the summer. 

    Optimization and measurement are key factors in the combined linear and streaming packages that vendors are increasingly offering at the Upfronts. Viewership is changing dramatically, particularly this year as more and more consumers have subscribed to streaming platforms during lockdown, and this is leading to an increase in streaming dollars at the Upfronts. However, recent Wall Street Journal article highlighted that measurement problems are holding back advertising in Connected TV. Keeping track of who is watching what, and where, as well as how many times they see the same ads, is becoming a source of frustration for advertisers seeking to move their dollars into the medium. Ad-supported streaming from the likes of Amazon.com and Roku is attracting more and more viewers, but a fragmented media-buying landscape can mean that viewers are hit repeatedly with the same ad. Ad inventory purchased from multiple sellers often shows up in the same ad break; the problem is exacerbated by the fact that there is a smaller pool of advertisers in streaming than in traditional TV. There is a lack of transparency on when and where ads run within streaming platforms and apps; while it is slowly improving, the situation is far from resolved and this is causing significant wastage for advertisers. We’ll be exploring this in more detail in an upcoming post on ECI Thinks. 

    So, what’s the bottom line?

    Advertisers are demanding transparency and that their media buys work together to drive maximum efficiency and effectiveness. The old Upfronts format is without doubt in need of an update so that it aligns more closely with the current media landscape. Furthermore, the vendors have work to do to ensure that measurement is unified and keeps up with the pace of change. The times they are a-changin’, and the Upfronts need to change accordingly. 

     

    Image: Andrey_Popov / Shutterstock

  2. Will the coronavirus pandemic drive seismic changes to the Upfront market?

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    Coronavirus is a catalyst for changes that have been years in the making. Nowhere is that truer than the advertising industry, which has seen the adoption of new habits which might previously have taken years happen in a matter of weeks.  

    When and how will the Upfronts occur this year?

    One key area of change for the US market is the TV Upfront ecosystem. With production grinding to a halt and much of the country still in lockdown when Upfronts were meant to kick off, the question is, when and how will the Upfronts occur this year? Many key industry players have long pushed for the Upfronts to switch to a calendar year model, rather than the broadcast year of October to September. At the end of May, the ANA Media Advisory Board recommended a sweeping transformation of the system, causing a huge shake up in the media world. But how will it all pan out? 

    TV has transformed dramatically

    Few would argue that TV’s OctobertoSeptember timeframe is outdated. It harks back to a time when TV was mainly appointment viewing, with a set year-round schedule of shows having first runs from October to May, with reruns over the summer. This in turn is rooted in historic business movements: car companies used to unveil new vehicle models in the fall, so TV launched its new season to tie in with thatBut the TV sector has transformed dramatically in recent years: the proliferation of channels and programming means new content is available throughout the year. What’s more, appointment viewing has dissolved with the growth of time-shifted viewing, on-demand, OTT and CTV platforms; Nielsen found that the streaming share of TV is now at 23%, up from 14% compared to the same period a year before, and is expected to continue its growth trajectory. 

    Allowing for a better understanding of budgets

    The suggested shift to a calendar-year model would allow advertisers until Q4 to get a good understanding of their budgets for the following year – especially important this year when all industries have experienced so much disruption. However, many of the large, traditional advertisers are set on signing upfront deals under the traditional broadcast-year model; even if the networks do choose to shift to the calendar year model, it would be easy to put aside the inventory that the big players normally go for, leaving newer advertisers with the ‘leftovers’ in the calendar-year marketplace or the more expensive scatter market. 

    The absence of live sports

    Another compelling reason to push back the Upfronts is the current absence of live sports, and how the ‘withdrawal’ that many viewers and advertisers have felt will affect viewership when they are finally allowed to play again. The fact that games will be played ‘behind closed doors’ means that TV audiences are likely to be through the roof; it will be very difficult to estimate prices for ad spots until networks have a better idea of what those audiences will look like. In that light, shifting the Upfronts to Q4 seems like the right thing to do.  

    A chance to align the Upfronts and Newfronts

    Shifting the Upfronts would present an opportunity to align them with the increasingly important Newfronts – a desirable outcome for both advertisers and media buyers. 72% of media buyers say that Newfronts are more important than ever, and nearly half want the Newfront presentations to merge with the Upfronts. A key factor in this is that 39% favor merging the two to help buyers better understand measurement and research across screens – which could in turn improve performance. There is a finite amount of reach available through linear TV and, in order to expand coverage or just reach the same number of consumers as before, advertisers need to diversify their media mix. 50% of marketers will increase their spend in CTV, OTT and Digital Video, while linear TV is likely to see a decrease. Advertisers will be looking to buy audiences agnostically across a network’s linear and digital assets: a compelling argument for merged Upfronts and Newfronts. 

    The time is now

    All in all, it seems that transforming the Upfronts timeframe to a calendar model makes a lot of sense. It will be uncomfortable for a while, but doing it in a year when the status quo has been disrupted so fundamentally and the landscape has transformed so dramatically anyway seems a good time to do it. Time will inevitably tell. 

    Advertisers should re-evaluate their media mix and KPIs

    Regardless of whether the Upfronts shift to a calendar-year format, or whether they merge with the Newfronts, this is a good time for advertisers to re-evaluate their media mix and KPIs, and to negotiate better deals with vendors.  

    • Buy flexibility: Flexibility has been an increasing priority for advertisers over the last few years, and the fact that so much new programming has been shelved as production is halted means that flexibility is more important than ever. Cognizant of the marketplace, vendors are likely to be more willing to provide more flexibility.  
    • Consider scatter opportunities: Marketplace uncertainty means that Upfront commitments are expected to be much lower than in previous years. This means that there will be more high-quality inventory left over for the scatter market – particularly as there is likely to be more certainty around programming and production as time progresses. 
    • Review your TV/digital mixWith 59% of media buyers expecting to increase their CTV/OTT budgets in the second half of 2020 compared to 2019, wise advertisers will consider where their audiences are, and the best touchpoints. 

    2020 has doubtless been a year of disruption and sleepless nights for advertisers and buyers in the US and worldwide, but with strategic thinking and agility, the transformation to the media landscape can be turned into an opportunity for the savvy advertiser. If you would like to discuss with one of our experts how you can identify and exploit the opportunities, please feel free to contact us on   

    Image: Vasyl Shulga / Shutterstock