It could be Groundhog day at the upfront.
As most parts of the television industry go through revolutionary change as technology gives viewers more choices, the main way advertising is bought — the annual upfront bazaar — stubbornly refuses to get canceled.
Despite all the talk about data, automation, programmatic, audience buying and precision targeting, TV networks will sell about $19 billion worth of advertising during a series of one-on-one negotiations usually sealed with handshakes between high-level executives. Indeed, the upfront has outlived the terms of many of the executives who’ve predicted its demise.
The 2018 Upfront: Top Broadcast Sales Executives | Buyers Want Better Measurement, But Will Use Old Metrics in Upfront | Levy Wants 5% of TV Ad Budgets Spent on Audiences | The CW Brings a New Night to the Market | Pitching Hispanic Buying Power | Broadcast Networks Take Center Stage
This year’s upfront is also expected to be a rerun of last year’s strong market, if you listen to top network sales executives. “Scatter in second quarter is extremely strong and that’s across the board,” Jo Ann Ross, president and chief revenue officer at CBS, said. “We are well-positioned going into upfront. It’s the same every year. You do the math. It’s supply and demand.”
“I think we continue to see broadcast being strong,” said Rita Ferro, president, advertising sales, at Disney/ABC Television, who conceded that “clients are concerned because ratings are down and they don’t want to pay double-digit increases. I totally get that.”
According to Bruce Lefkowitz, executive vice president for ad sales at Fox Networks Group, there are “two undeniable facts and you can’t argue them. And that is ratings supply continues to shrink and demand continues to be relatively consistent. Those things historically translate to a strong upfront.”
With media company ad-sales departments consolidated to sell larger portfolios, each network has its own priorities going into the upfront. “It’s all about deal-making,” Lefkowitz said. “It’s no longer just looking at the math. But I think you’d be hard-pressed to have anyone on either side of the desk not acknowledge that it’s a strong marketplace.”
“I think the idea that it will be a stronger market than last year is a pretty safe assumption,” concurred Mark Marshall, executive vice president of entertainment at NBCUniversal.
Shake It Up
NBCU has been trying to shake things up. Last year, NBCU said it was earmarking $1 billion of its inventory for campaigns based on data-driven audience segments.
Data has become a big buzzword in the TV advertising business. Some networks are hoping that by shifting from using shrinking Nielsen ratings based on broad demographics, such as women 18-49, to specific marketing targets, they can make TV ad campaigns more efficient and effective and TV inventory more valuable.
While NBCU didn’t hit the billion-dollar target, “we had growth across the board in it,” Marshall said. “More and more people want to test and be involved on that side of it.”
This year, NBCU has joined 21st Century Fox, Turner and Viacom in the OpenAP consortium, which aims to standardize data-driven targets and make audiences simpler to buy. Marshall expects audience buying to be a part of most of its upfront conversations.
NBCU also introduced a new metric called CFlight, which it will use to count all of the people viewing ads in its programs, whether they air on broadcast or are streamed on digital platforms. NBCU wants to use CFlight to monetize all of the eyeballs it attracts, while at the same time putting advertisers in front of as many consumers as possible.
Marshall said CFlight was getting a great reception from agencies as an excellent step toward the kind of cross-platform measurement the industry needs.
Disney/ABC’s Ferro noted that many networks have sold ads based on a combination of linear and digital viewership for years.
“We all want to get to a place where we have one currency across all screens and instances,” she said. “I don’t think it’s that easy to do. If not we would have done it already.”
Last year, Disney/ABC consolidated the ad sales units for its broadcast, cable and kids units under Ferro. This year, cable network Freeform will be getting some attention at the ABC upfront presentation, which will use the theme “Forward Together.”
This year, Disney put the ad sales teams for both Disney/ABC Television and ESPN in one division under Kevin Mayer, chairman of direct-to-consumer and international, clearing the way for clients to make deals that span all of the company’s assets.
This month, Disney launched Luminate, which is creating data-driven advertising products for ABC, ESPN, Freeform and Disney’s other TV networks.
“Now we have one boss, and it actually makes working together easier to do from a client perspective,” Ferro said. “We’ve done a bunch of client and agency pitches together [with ESPN] and there’s real opportunity that comes from those, and we think there’s going to be even more as this accelerates around the data and technology and product play to really drive that forward.”
Having Freeform at the upfront follows a joint development meeting between ABC and Freeform.
“We got amazing feedback from clients,” Ferro said. “They loved having them together because it really resonates when you have that content, you can actually see the difference in what the audience is that you’re delivering across those platforms.”
ABC News will also be a part of the presentation. “In the last 12 months, I think there is no content that has been more relevant than news content,” Ferro said.
CBS also realigned its ad sales organization, putting TV and digital under Ross.
“As an industry, we have to continue to look at technology and what it offers to us in a smarter way,” she said. “We were one of the first broadcast networks to stick a flag in the ground with our [over-the-top] product, and it’s gotten more robust. Clients say that they want to be on CBS All Access in a significant way with us going forward as we continue to develop new programming.”
Ross said CBS has also been successful in bundling CBS News with its streaming news network CBSN. “The same goes for our OTT sports offering CBSHQ,” she said. “And we will be going to market the same way when our Entertainment Tonight streaming service launches later this year.”
Advertisers who are interested in OTT are also asking about addressability, which is the ability to deliver commercials to an individual home.
“We are all innovating and working towards a future where these innovations will change the dynamics or the economics of the business,” she said.
Another form of innovation is the creation of new ad formats as many networks look to reduce the amount of commercial clutter in order to lure viewers back from noncommercial competitors, most notably Netflix.
Fox has talked about trying to get its ad load down to two minutes per hour by 2020. NBCU said it will cut ad loads by 10% across its networks and increase the amount of content in shows. NBCU’s Marshall said the company tested 17 different ad formats with 1,700 respondents before introducing its Prime Pod format, which will contain just two 30-second spots. The Prime Pods will be available in NBCU’s top 50 shows.
With a short pod running later than usual in a show a consumer can watch a show like This Is Us for 22 minutes and see only one minute of commercials. In addition to better engaging audiences, the format helps advertisers.
“The testing we did on these pods shows a 20% lift in brand recall, a 36% lift in brand affinity and most importantly, which often can get overlooked, is purchase intent,” Marshall said. “And the purchase intent grew by 9%.”
NBCU will be charging a lot more for spots in its Prime Pods than it did last year for spots in the same shows in traditional pods — and some media buyers are balking at paying that steep an increase. Marshall said spots in Prime Pods aren’t comparable to traditional spots. “It’s apple and oranges, so the idea of a premium versus last year is not the right conversation to have,” he said.
“If you can look at a show like The Voice and say you can improve the purchase intent by 9% for the 10 million people that are watching that show every week, that’s an $800 million business opportunity for an automaker if they can get that 9% conversion versus a traditional pod.”
Fox makes a similar argument for its one-minute Jazz Pods, which will be the only ad format airing in its Sunday-night comedy block next season. “When we made this announcement I think that people realized that we’re putting our money where our mouth is in terms of first improving the viewer experience and putting the viewer first,” Fox’s Lefkowitz said. “This is a new product. Pricing year-over-year is not relevant to the discussion. One out of two is clearly worth more than one out of eight.”
Buyers also aren’t thrilled with Fox’s price, or its decision not to guarantee how many viewers it will get.
Most commercial price negotiations center on the rate of change from last year, but Lefkowitz said it won’t have that conversation regarding the Jazz spots.
“The way you bought The Simpsons last year does not exist this year, so you can’t buy it at X-plus,” he said. “But you can buy a better pod environment.”
Ready for Some Football
Selling the Jazz Pods is one of Fox’s priorities in the upfront. The other is the National Football League. This season Fox will have 11 games of Thursday Night Football in primetime, having outbid CBS and NBC, which aired the Thursday games last year.
Last year, Fox emphasized sports in its upfront, saying it owned the fall, when it aired college football, NFL football on Sundays and baseball’s World Series. This year, with Thursday Night Football, Lefkowitz estimated that Fox has a 41% share of pro football gross ratings points. “Fox is football, therefore you should come to Fox first,” he said.
Last season, football ratings fell for a second straight year and for the first time ad revenue in NFL games dipped. NBC and CBS said they lost money on their Thursday-night games. How will Fox do better?
“We are more realistic in our audience estimates,” Lefkowitz said. “Our schedule clearly is better than any other Thursday-night schedule in history.”
He said the early football market has been very healthy. “We feel great where we are with football on Thursday night in particular right now,” Lefkowitz said.
In football and elsewhere, the Fox playbook starts with content and getting brands closer to it. In entertainment, that means the Jazz Pods, where each spot is adjacent to the show.
During NFL games, Fox is introducing a new commercial feature called “Closer to the Action.” When there’s a break in the action, an animated version of the advertiser’s logo or product appears and swipes straight from the field to the commercial.
“We’ve been out, pitching all of our ad innovation products, and whether it’s the six-second ads or all the sports innovations, we’ve been doing that prior to the upfront,” Lefkowitz said. “The upfront is really a culmination of those efforts.”
Lefkowitz said he expects the upfront to be orderly and to finish earlier than last year.
“The days of negotiating till four in the morning are long over,” Lefkowitz predicted. “I think because of the strength in the market, it will commence a little earlier. It will take the same amount to consummate deals, and it will end a little earlier than it usually does.”