Madison Avenue Calls for Seismic Changes to TV’s Upfront Market

Network TV Upfronts Standup
Courtesy of NBC/ABC/Turner

Madison Avenue is calling for a different route for the billions of dollars it sends to TV networks every year.

A group representing the nation’s biggest advertisers has called for massive changes to TV’s “upfront” market, an annual ad-sales process in which U.S. TV networks try to sell the bulk of their commercial inventory for the next programming cycle. For decades, the networks have kicked off negotiations in mid-May, and tried to wrap them by summer’s end. The haggling has deep ties to historic business movements: car companies used to unveil their new vehicle models in the fall, and so TV began to launch its new season at that time.

Regular cycles, however, have been upset by the spread of the coronavirus pandemic. And the Association of National Advertisers, an industry organization that represents 1600 companies that spend more than $400 billion each year on advertising and marketing, has begun to push for a new system.

“As we navigate uncertain times on a global and unprecedented scale, all of us are having to re-engineer every aspect of how we go to market,” said Meredith Verdone, chief marketing officer, Bank of America, in a statement.  “The upfronts, a long-serving and valuable marketplace, are no exception.”

Many advertisers have in recent weeks clawed back previous TV advertising commitments and told TV networks they intend to delay new purchases until the fall. Movie studios, retailers, travel advertisers and automotive marketers are among those who have been affected.  In a new paper, the ANA has called for a delay in 2020’s upfront “until greater marketplace information and clarity becomes available.” And the organization is pressing for the “upfront” to start a new “calendar year” process “with the typical negotiation window occurring in the fall or early winter timeframe.”

Some advertisers have pressed for a new upfront market to start in the fall that would allow the greatest number of advertisers to get a better sense of how their business has been affected by the pandemic and would give the TV networks more time to firm up a programming schedule after many series were forced to cease production. “I think that there needs to be some type of certainty that a marketplace will take place in the fall,” says Bob Liodice, CEO of the ANA, in an interview. “There’s been no announcement to suggest that it will and that’s what marketers are craving.”

Some of the biggest owners of TV networks – ViacomCBS, WarnerMedia, NBCUniversal, Walt Disney and Fox Corp. – declined to offer immediate comment.

Behind the scenes, according to people familiar with the matter, advertisers and media buyers have tried for weeks to devise a new market, sensing that some chunk of TV’s advertising base could not take part as it might in normal times. But those talks have grown contentious, according to some of those people, with various parties making demands for a large number of business processes to change quickly, and in some discussions the number of items up for consideration has grown overwhelming, these people said. Some of the TV networks have made clear to their agency and advertisers counterparts that they already accommodate sponsors who have different buying needs.

The ANA’s move has taken some TV networks by surprise and angered some top media-buying executives, according to one executive familiar with recent discussions. In recent weeks, top sales executive from ViacomCBS, NBCUniversal, Walt Disney and Univision have emphasized a willingness to do business at whatever time a potential client feels comfortable. “The discussions have been had and the topics have been discussed. There is no difference between buyer and seller,” this executive said, suggesting the trade organization’s decision to try to move the upfront while several media agencies are holding early discussions with networks is “really disingenuous.”

The commercial-buying contretemps erupts as marketers have tried to seize the current economic climate to press the networks for significant rate cuts. Thanks to an influx of new direct-to-consumer advertising from companies like Wayfair and Warby Parker, demand for TV advertising rose last year, prompting marketers to agree to pay some of the highest CPM increases in recent memory. CPMs represent the cost of reaching a thousand viewers, a measure that is central to the industry’s annual “upfront” talks. NBC, CBS, ABC, Fox and the CW pushed for hikes of 13% or more in 2019.

The networks, however, have been holding firm. With the NHL, NBA and NFL articulating plans for a return to play, TV will be airing dozens of the big-crowd sports matches advertisers need to get their pitches before a broad audience. During the pandemic, programs focused on sports – ESPN’s coverage of the NFL Draft or its “Last Dance” documentary on the Chicago Bulls – have won intense ad support. WarnerMedia was able to sell out commercial inventory for a celebrity-golf match between Phil Mickelson, Tiger Woods, Peyton Manning and Tom Brady.

Some advertisers, however, are leery of working over the next few months as if they represent a new type of normal. The potential for an explosion of live TV sports, specials and, if TV production can resume, new original TV shows should be seen as an “aberration,” says Ben Jankowski, senior vice president of global media at Mastercard, in an interview. “This will be a fourth quarter like no other fourth quarter in our working lifetimes,” he says. “We have no idea what that’s going to do to media behavior.”

Advertisers, who often rely on media buyers and creative agencies to help them navigate the marketing landscape, are prepared to get more vocal about their needs at a time when so many ways of doing business are in flux, says Jankowski.  Marketers want to rework many “legacy” interactions with media outlets, he says, including devising better definitions of business outcomes, measuring effectiveness of the reach of commercials and more. “We have been more active and aggressive about leading, rather than waiting for others to do it,” he says.

TV’s upfront has long been in critics’ cross-hairs. Some media buyers and advertisers charge that the process is in dire need of modernization and doesn’t help facilitate the purchase of other kinds of popular commercial inventory, such as digital ads or commercials placed alongside streaming video favorites. Others believe the process gives the TV networks too much of an advantage in negotiations.

Coming up with a new model, however, has been difficult. In 2004, for example, the ANA and another trade organization, the 4As, formed a committee – known as the Network Upfront Discussion Group-or “NUDG”- to explore alternatives to current practices at the time. Not much of significance was accomplished. In 2007, TV networks and advertisers agreed to change the way TV viewership is measured, allowing for audiences watching TV programs days after they aired to be counted as a nod to the new ways people were consuming video content. But the process to getting there took over a year, with executives from WPP’s large GroupM buying agency, Nielsen and NBCUniversal joining forces to accomplish the task.

The ANA intends to try and get TV networks to consider changes more seriously, says Liodice, “We are going to continue to push for it.”