Does the Network Television Upfront Still Matter in a Digital World?

The long-standing ritual of TV network television upfront presentations are now running for the 2019-2010 season, with the major networks wrapping up these showcases from Monday, May 14 through Thursday, May 17, 2019.

New programming is presented to affiliates and buyers, and a window is opened for buyers to secure high-demand inventory at guaranteed rates, locking in (with partial cancellation options) predictable, favorable pricing and high-demand programming environments.

The non-upfront or scatter marketplace usually ends up costing more than the upfront pricing with leftover programming, and delivery is not guaranteed. Both markets are driven by supply and demand for quality TV inventory.

This week will see celebrity-populated live introductions to slickly produced and very entertaining clips from the new network primetime programs, along with some bragging about ahead-of-the-pack statistics such as ratings against a “18-49” or “millennials.” Lavish parties allow buyers able to meet and take photos with the stars and stars-to-be, and gobble lots of shrimp and gourmet-class specialty foods with open bars.

TV cable network presentations started in mid-March, while IAB-organized Digital Content Newfronts ran in late April – early May, yet it is the network TV upfronts which still garner the most attention.

For What Purpose?

Upfront selling in the limited, post-presentation window was created by the four powerful broadcast television networks in 1962, long before IPTV and even cable TV arrived, and when broadcast signals were the only way to get ad-supported TV programming into homes.

With supply of inventory so limited, the networks seized the opportunity to create an auction-like  marketplace by carving out a subset of programming to sell to the biggest advertisers “while supplies last” (usually 4 to 10 weeks).

Big advertisers and their agencies avoided the embarrassment of being shut out of this premium contextual environment for their messages, at a predictable, favorable, guaranteed cost. Double-digit Cost-per-Point increases against demographic target audience ratings measured by Nielsen were the norm over the years, far surpassing general inflation. The history and current dynamics of supply and demand TV advertising, and why demand has increased with supply over the years, is found in this Videa MediaWave article (written by this article’s author).

Do Upfronts Still Matter?

TV (Television) has evolved into T/V (Television/Video) and is now distributed through many linear and VOD digital distribution platforms beyond broadcast. These include IPTV streaming services through Smart TVs; OTT aggregators like Roku, Apple TV and Fire TV; skinny bundle OTT providers like YouTube TV, Hulu or AT&T’s Sling; and more recently, as Forbes describes it, “FASTS,”, or free ad-supported streaming TV services, like Tubi, Xumo and Viacom’s Pluto. One would think there are now enough digital T/V options available to swing money away from traditional television options.

Yet MediaPost summarizes predictions for 2019 digital video upfront ad spending of only $4.39 billion (+20% vs. a year ago), while upfront TV ad spending will grow to $21.25 billion (+2.4% vs. year ago). Digiday reports that Hulu and YouTube TV are the only non-network players significantly benefiting from digital upfront buying.

Since digital solves a lot of the targeting, measurement and accountability limitations that Network TV ad buyers have endured for years, this seem counter-intuitive. Why does first-look and limited-time sale of traditional television advertising still attract such a large proportion of the $81 – $86 billion annual dollars spent on combined T/V  (Television/Video)?

Why Upfront TV Buying Continues to Attract the Billions it Does

No one ever got fired for buying network television. While digital T/V is making inroads, there is still a strong belief that traditional methods of buying TV from legacy content providers offer the best options for unduplicated mass reach, brand safety and pricing (based on historic pricing bases established through years of upfront buys). Though digital T/V spending is increasing at 20% a year, these beliefs keep advertiser CMOs and their agencies coming back year after year, according to MediaPost.

Upfront News Worth Watching in the Coming Weeks

Traditional TV Content providers are working hard to protect their franchises and upfront marketplaces. Many of the TV network upfronts will announce and tout the steps they are taking to make their buys more competitive with digital T/V, such as measurement, accountability and interactivity.

Here are key topics to track in the coming weeks as the results of the 2019 upfront T/V buying season become clearer:

  • Brand safety
  • Data management options
  • Addressable targeting capabilities
  • Improved attribution, ROI measurement capabilities
  • Viewability measurement
  • Multi-platform packaging / convergence of linear and digitally delivered (e.g. VOD) deals
  • Automated Content Recognition (ACR) and Dynamic Ad Insertion capabilities
  • Commercial ad loads / pod sizes / clutter
  • Ecommerce / interactivity developments
  • Artificial Intelligence (AI) / Machine Learning for targeting
  • New technology, retail or manufacturing partnerships / acquisitions, especially around streaming digital T/V distribution