TV Upfront: What You Need to Know About 2018’s Ad Haggle

JIMMY KIMMEL ABC Upfront Presentatiion
ABC/Heidi Gutman

Next week isn’t all about the unlimited sushi and seemingly ubiquitous TV-series reboots.

Come Monday, it will be easy to get lost in revivals of “Murphy Brown” and re-calibrated editions of “SportsCenter,” in celebrations of “This Is Us,” Jimmy Kimmel’s annual blistering stand-up routine and whatever DC superhero might fly on to the CW lineup. The unveiling of all kinds of flashy new content is, after all, at the heart of the industry’s annual “upfront,” where the TV networks pitch new programs and try to sell the bulk of their advertising ahead of the next programming season.

Behind all the glitz and glamour, however, is serious business: Comcast, Time Warner, Walt Disney, CBS, Univision and 21st Century Fox are all pushing to nab more than their fair share of at least $8.8 billion in advance ad commitments for primetime television (and Viacom, Discovery, AMC Networks and a bunch of others want some of that, too).

The pressure to win new money is huge. Discovery will want to show that it can use its acquisition of Scripps to drive home a larger haul. Time Warner will yearn to demonstrate the viability of its Turner networks, with or without AT&T. Disney and Fox could give the first peek at what each company’s content priorities might be in a world where they are able to complete their proposed $52.4 billion deal that will put the bulk of 21st Century Fox under Disney control.

If the networks are successful, they will add more advertising to their coffers for the third year in a row – a remarkable feat given the ever-increasing competition they face from nascent and veteran streaming-video providers ranging from Apple to Amazon.

But the task is daunting. Magna Global, the Interpublic Group media-research unit, believes TV’s power to woo new dollars from Madison Avenue has peaked. Magna believes national TV hit a high in 2016 when it captured $43.3 billion dollars from advertisers; it now expects national TV to lure $41 billion in 2018. Meanwhile, it’s calling for digital media this year to capture half of all ad dollars spent – he equivalent of $97 billion spent across search and display; digital video; and social.

Help yourself to the sushi at Fox. Try to get into Turner’s Killers concert (it’s the first time in many year the company has excluded the press from attending its annual mid-week music party). Maybe you can crash ABC’s private advertiser party at Tavern on the Green. Meantime, here’s a list of some of the major dynamics taking place behind the scenes of the 2018 upfront marketplace:

*TV executives think they have wind at their back…. Whenever prices for so-called “scatter” soar, it’s typically a sign Madison Avenue will put down more money in the upfront. And TV companies are seeing robust demand for scatter, or ad time purchased much closer to air date. “Primetime demand had been through the roof in the first and second quarter. Advertisers basically vote with their checkbook,and so far, when you look at this year, primetime has been through the roof,” noted Mark Marshall, NBCU’s executive vice president of entertainment ad sales, in a recent interview. “Ratings may be down, but [TV advertising] still makes a different for their business. Otherwise, they would not continue.” Disney recently said primetime scatter at ABC was running 27% above 2017 upfront levels, while CBS recently indicated scatter was more than 20% above its upfront benchmarks.

*….but media buyers urge caution… Spark Foundry, one of the nation’s biggest media-buying operations, recently convened a meeting of some of the industry’s top ad-sales executives. The heads of CBS and CBS Sports, NBC Sports, Discovery, A+E Networks, and Fox Sports all came to hear what John Muszysnki, Spark’s chief investment officer, had to say. “Clients are looking at their budgets, and not being able to take a 7, 8 or 9 percent increase,” he told them, noting that those who came up with creative ways to help boost sales and meet marketing goals would be rewarded, not those trying to jack up ad rates. “Be part of the solution rather than trying to increase your yield.”

UPFRONT VOLUME in primetime, among five English-speaking broadcast networks

2010: $8.1B to $8.7B

2011: $8.8B to $9.3B

2012: $8.8B to $9.3B

2013: $8.6B to $9.2B

2014: $8.17B to $8.94B

2015: $8.02B to $8.69B

2016: $8.41B to $9.25B

2017: $8.78B to $9.62B

Source: Variety estimates

*The market may be fueled by drugs….Ad buyers believe pharmaceutical manufacturers will be one of the few ad categories to spend significantly more in the upfront market. That’s usually good for news and daytime programming. Drug makers need to run longer-than-normal TV ads to meet laws about disclosure of side effects and other warning signals, and ad time in those areas is significantly cheaper than primetime. Network executives also anticipate continued robust demand for late-night programming, a trend that has been the norm for the past few upfront cycles.

*Get ready for more TV ads that try to get TV viewers to stop watching TV…. TV networks have thrived on ad spending from consumer-electronics manufactures like Apple and Samsung for years, but they are starting to see an influx of dollars from a different kind of gee-whiz category. Providers of alternative TV services are expected to flood the market at some point this year, potentially around holiday time. That will mean players like Hulu (and its live-TV offering), sure, but also AT&T’s DirectTV Now; Dish’s Sling; and Google’s YouTube. And don’t forget about Netflix and Amazon. An example of this sort of spending surfaced last year when  YouTube marketed its live-TV service aggressively during the 2017 World Series with a two-minute ad as well as a sign placed behind home plate that created the illusion of the service’s middle-of-the-screen “play button” was perched right at the center of Fox’s camera view of the game. The ad money from these companies is welcome, but what’s the effect of running commercial after commercial that tells a TV viewer to stop watching and start streaming?