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Unwieldy Upfront: TV Market Gets More Complex Thanks to Demands for Data

Any veteran of tv ad sales can regale you with a story of how he or she took a client over to a table at a party, called for a few glasses of wine and drew up an entire upfront plan on a napkin.

These days, the two would need at least a tablecloth — if not several more pieces of linen.

TV’s annual “upfront” market, when U.S. networks try to sell the bulk of their advertising inventory for the coming programming season, has never been more intricate and convoluted. Yes, advertisers continue to invest most of their dollars based on Nielsen measures of how many people are watching at any given time. But as more viewers have migrated to on-demand streaming and mobile screens, Madison Avenue is growing more interested in using data to pinpoint new niches: first-time car buyers, expectant mothers, orange-soda drinkers and much more.

The networks have to help marketers in their quest. Billions of dollars are at stake. The nation’s five English-language broadcast networks secured between $8.69 billion and $9.55 billion in advance ad commitments for their primetime schedules last year, compared with $8.41 billion to $9.25 billion in 2016 — possibly marking the most they’ve gleaned since six broadcast networks — the WB and UPN were still around, in place of CW — secured about $9.5 billion in 2004.

The views on 2018’s haggle are mixed: Magna Global, the Interpublic Group media-buying and research unit, has predicted a 1% drop in ad spending on broadcast and cable this year. Some TV sales executives are more sanguine, and feel the medium can keep even with the volume it secured last year. Executives for a number of media companies, including CBS and Walt Disney have taken pains during recent earnings calls to point out robust rates for “scatter,” or ad time bought closer to time of air. When scatter is high, that’s typically an indicator advertisers will put more money in the upfront, in hopes of locking down good rates.

To keep the money flowing, the TV folks keep changing their ways. Many advertisers are increasingly interested in “audience buying,” and that’s creating new wrinkles in the upfront, a buying process that has been around since the early 1960s, when ABC decided to launch all of its new shows in the fall, after Labor Day. The original thought behind the event was to debut programs at a time when advertisers were eager to hawk new wares; the fall let Madison Avenue target back-to-school season and seed interest in the end-of-year holidays.

Transactions then were relatively easy. TV had no video rival, and marketers didn’t have the option of using social media or mobile devices to reach their customers. If you ran an ad on TV, chances are it was going to stick. So even though audience measures were blunt, advertisers had few worries.

Now they are working furiously to use TV in smarter fashion. “Clients currently need to pull in data from multiple disparate sources to get a full view of their audiences,” says Manish Bhatia, CEO, North America, of Kantar Media, the WPP unit that measures ad spending and effectiveness. “Research providers are moving to provide more comprehensive metrics, but we are still in a transition phase as an industry. We will likely stay in transition for a while.”

Among the new ad-buying twists:

» A consortium of big media hitters — Viacom, 21st Century Fox’s Fox Networks Group, Time Warner’s Turner and NBCUniversal — are involved in OpenAP, a technology that helps advertisers define narrower groupings of audience segments across the various companies’ TV networks. The alliance gives marketers the ability to use the same consumer segments no matter which company’s networks they are studying.

» A+E Networks this year expects to do a small number of deals with advertisers that guarantee certain business outcomes as the result of running commercials. A+E Networks, says Peter Olsen, executive vice president of ad sales for the company, is comfortable backing promises of how much foot traffic in stores or how many web visits will be spurred by exposure to TV ads. NBCUniversal has made a similar offer.

» The process will be further bogged down by efforts by NBCU and Fox Broadcasting to cut back on commercials in some parts of their primetime schedule. The aim is to make linear TV more welcoming to a generation of viewers who regularly see fewer ads when they watch their favorite video offerings on venues like Netflix and Hulu. NBCU and Fox are selling new commercial formats they believe are worth more than typical ads.

Marketers know they can get granular data about the kinds of consumers their ads attract online. Now they want that same information from TV networks. TV was once a medium where advertisers would “pay and spray” the same commercial across a primetime lineup and sit back and relax, knowing full well the spots would reach their intended audience again and again. Now, with dozens of Apple, Amazon, Google and Samsung screens and other interfaces vying for the TV viewer’s attention, they want to place ads with more precision.

What’s wrong with adopting new measures in a world that yearns for more transparency? The industry has its collective hands on too many yardsticks. Many companies have begun to cobble together their own methods of measuring audience segments beyond age and gender breakdowns to track linear, digital and VOD viewing. “Right now, we’re aggregating things that are apples and oranges and bananas,” says David Cohen, president of North American operations at Magna, the Interpublic Group media-buying and research unit.

In recent upfronts, buyers and network executives have joked that they hoped all the haggling would be over by July 4. In many years, that hasn’t been the case.

But sometimes, demand spurs activity. In 2013, for example, the CW wrapped its sales by June 5. In 2005, Walt Disney’s ABC had nearly completed its upfront sales before the end of May, buoyed by hits like “Lost,” “Desperate Housewives” and “Grey’s Anatomy.” In 2017, advertisers and networks executed their last deals in mid-July.

The call for better measurement “makes upfront negotiations a little more complicated, clearly,” says Olsen. “There’s complexity, but I feel like it’s complexity moving in the direction of trying to solve a problem, versus complexity for complexity’s sake.”

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