For those who are wondering why I am writing about the TV industry today, the annual TV upfronts is an important event that affects the entire media ecosystem, and ignoring the largest macro-economic event in the media industry is not a wise move.
For anyone who has worked for a major marketer, media agency or TV network, the month of May represents an interesting and eventually an evolutionarily outdated event – TV upfronts. The upfronts (for those that live under a rock) is the time of year that major advertisers and their agencies plan and buy a large share of their TV ads for the coming year. The networks package up their new series and existing hits and provide a dog and pony show that only the advertising industry can do.
Over the past few years we have witnessed some interesting changes in the upfronts. On the buy-side, in some instances major marketers pulled out, opting to plan and buy ad hoc throughout the year rather than commit to large scale upfront buying (but not to a degree that affected media sellers or the tradition itself). On the sell-side, we’ve seen a full on integration of digital channels in the packaging of ad programs, and there are small upfront events hosted by online only entities as well (mainly video), taking full advantage of the planning season. The upfront sessions have as much to do with major networks selling online inventory, particularly video, as they do television. Well … maybe not as much, but it’s become increasingly more important to the networks.
Hulu was just officially ranked the number two video site on the web after YouTube.com. For the advertising industry that is huge news. Unlike YouTube, which grew because of consumer generated content, Hulu grew because consumers embraced the high-value production type content you would expect from NBC and Fox. The consumer adoption is a boon for marketers. Rumor has it that Hulu is conducting ad hoc upfront presentations and I imagine that we’ll soon hear about a small bash during the formal upfronts in May. The only downside – the price tag. Ads on Hulu are sold at CPM’s that are exponentially higher than TV. That simply can’t last and the model will have to change.
Advertisers Pulling Out?
Apparently many big advertisers, like P&G for example, have been exercising their contractual rights to cancel a portion of what they purchased upfront last May, which will severly impact networks income between now and the 2009 upfront in May. I have to imagine this sets a somber tone for the upfronts and the potential from these same advertisers and categories. So it begs the question – in this economy, what will the 2009 upfronts be like? Oh yeah and the bigger question. .. does it really matter for anyone other than the networks?
Yes TV ratings are eroding as it is, yes low consumer confidence will affect budget for big box retailers and their budgets, yes the automotive & financial categories in an upheaval, and yes there is a general conservative and ROI-sensitive mindset amongst marketers. You’d think that this year’s upfronts will be going down in history as an evolutionary milestone of marketer hesitancy. We’ll see. Networks have begun selling at higher CPM’s as a way of adapting. One thing’s for sure – the trend continues to give digital a leg up, even amid our own identity crisis. The lack of standards, high CPM’s, and confusion over measurement hasn’t made it easy in the digital video world, but the growth rates and addressability cannot be ignored by advertisers.
Another interesting tidbit – Ad Age reported that Univision is scrapping plans for the traditional upfront presentation in New York (last year was a bash in Lincoln Center) and will be hosting several smaller events in key agency markets, bringing the presentation to agencies versus asking them to fly in to the upfronts in NY. Probably a wise move and definitely a sign of the times. CBS will be selling less inventory upfront and focus on continued sales during the scatter market (ie: the rest of the year). NBC has jockeyed for position and will begin their upfront presentations a bit earlier than the other networks, a move they made last year as well.
So, Why Does This Matter To Us Digital Folks?
The concept of the upfronts revolves around supply & demand, or at least the concept of it (often there are no real supply/demand issues). Digital media is rarely purchased upfront because buyers know that there is often an endless supply of inventory to reach our targets. In certain categories like pharma or automotive (even in today’s market), there is a real supply/demand issue and buys occur “upfront”, but the timeline of upfront is different for each advertiser. The concept of the industry getting together for a few weeks of the year to plan out a significant portion of the market is unheard of and will almost never (never say never) happen. The moral of the story is that marketers have a common currency (audience) that they understand, and a historical understanding of what media wieght (GRP’s) required to move their businesses. As an industry we (the digerati) have not been able to help marketers establish that same historical level of budget allocation confidence. Marketers understand that their consumers spend a significant percentage of their media time online, that they are addressable, that we can engage them, and that we can measure that engagement – but until we can establish more industry level data and case studies on specific digital budget allocations as part of a media miz affecting their businesses, we will be stuck in the holding pattern we are now in. It is no wonder the web is often pigeonholed into the direct response bucket by many. DR is very black and white. It’s a shame that the medium has come to this. There have been many calls for creativity, and for revised standards, but I also add to that the call for more research and testing at an industry level. Something the industry once embraced, but has fallen by the wayside. Digital media IS the most accountable media, we CAN engage consumers, it DOES move the needle. I ask the IAB and 4A’s – can we systematically formalize this data for the world to see?
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