The lines are being drawn in the annual battle for upfront advertising dollars.
With linear-TV viewing vying with a broad array of new video screens, the media companies that fight each year for billions of dollars in ad cash have trotted out new ideas they hope will catch the skeptical eye of Madison Avenue. There’s a need: In February, commercial ratings among viewers between 18 and 49 — the key numbers on which TV ad deals are based — were down high-single to low-double digits in primetime and total day, according to media-industry analyst Michael Nathanson. With that in mind, the new offers from big media companies are meant to entice buyers in different ways:
• CBS recently unveiled “total content ratings” that measure not only linear TV watching but also time-shifted viewing by DVR playback and via video-on-demand. The network intends to add viewing done through online and mobile streaming at a later date.
• Viacom, 21st Century Fox’s Fox Networks Group, and Time Warner’s Turner are standing behind a new system crafted with tech consultant Accenture that allows for ad purchases based on “big data” measurements of narrower consumer groups, such as first-time car buyers or expectant mothers.
• NBCUniversal says it hopes to sell $1 billion of its upfront inventory for similar big-data-based ads that can be aimed at specific audiences.
A king’s ransom is at stake. The nation’s five big English-language broadcast networks secured between $8.41 billion and $9.25 billion last year in advance ad commitments for primetime as part of the upfront, according to Variety estimates, compared with between $8.02 billion and $8.69 billion the previous year. Those totals don’t consider daytime and late-night broadcast inventory, let alone cable. NBCUniversal, for example, secured more than $6 billion in advance ad commitments across its entire portfolio last year.
Perhaps this latest outreach will unwrinkle advertisers’ furrowed brows. Ad buyers suggest their clients have sticker shock. As Procter & Gamble and other big consumer packaged-goods giants moved dollars back to TV from digital last year, the rates the networks charged increased. Buyers at the upfronts said the basic CPM measure (the cost of reaching 1,000 viewers), rose in the high-single-digit to low-double-digit percentage range. With viewership off this season, three buyers said, TV network expectations could be too high.
“I can’t see volume being up that dramatically,” said Jason Kanefsky, chief investment officer at Havas Media. “I’m not seeing category strength, other than in pharmaceutical, possibly auto.”
Other ad buyers, who have a financial interest in cooling the market, suggest it may be flat with 2016’s, or even down. “We’re hearing that people are looking for money on the sales side, and we’re not seeing the demand at the same levels we saw last year,” said an ad-buying exec.
TV enjoyed an uptick of ad spending in 2016, thanks to the Summer Olympics and political advertising associated with the recent election. This year’s activity may not match that, noted Brian Wieser, a media analyst with Pivotal Research, in a note posted earlier this month. “We expect growth to slow during 2017, generally flattening vs. 2016 and continuing a trend whereby the medium gradually loses a modest amount of share of spending,” he said.
TV has a strong hand in this fight. The media companies continue to deliver shows — NBC’s “This Is Us” or CBS’ “The Big Bang Theory” — that draw big crowds, most of them at a single moment in time. What’s more, digital media remains under intense scrutiny. Facebook in September disclosed that for two years it overestimated the average viewing time for video ads streaming on the social site, a revelation that left a sour taste in advertisers’ mouths. Combine that with ongoing pressure to determine how much web traffic is true and verifiable, and traditional TV looks more reliable.
“The thing that could keep [upfront sales] up is all the stuff going on with digital and transparency,” said the media-buying executive.
Scrutiny of online advertising continues. On March 17, the Assn. of National Advertisers, a trade group representing many blue-chip marketers, called for digital outlets including Snapchat, Twitter, Amazon, and Instagram to submit to independent audits by the Media Rating Council, a media-industry measurement watchdog. Facebook and YouTube have already agreed to do so.
With digital taking up so much industry bandwidth, so to speak, look for the networks to promote more than just TV. If consumers are watching “NCIS” on a smartphone, there’s still money to be wrung. CBS is “expecting a stronger upfront,” said Leslie Moonves, the chief executive of CBS Corp., at an investor event held by Deutsche Bank earlier this month. “We are expecting many more multiplatform deals,” he noted, because “people are watching television in very different ways. It’s important that we get paid for all of that.”