In a series of presentations to the advertising industry this week, the major media companies are announcing plans for their linear and streaming platforms during the next year or so, which includes their respective fall TV schedules. This marks the start of the “upfront” season, when advertisers willmj,spend upward of $20 billion buying commercial time on national television shows scheduled to air during the 2022-23 broadcast year.
As I do every year, I will be reporting on each company’s presentation, and once I watch all the new series pilots, evaluating their upcoming broadcast network programming. But first I have a few pre-upfront thoughts.
Do the Upfronts Still Matter?
In today’s video world, the very idea of a fall TV season seems old fashioned. The broadcast networks might still adhere to fall- and mid-season schedules for debuting new shows but their competitors do not. Ad-supported and premium cable networks premiere many new shows during the summer months, while streaming services drop new series whenever they happen to be ready. In a television landscape of 10-13 episode cable shows, and 6-10 episode streaming series, when you can binge entire seasons at one time, most viewers don’t think in terms of TV seasons anymore. Their favorite non-broadcast shows premiere, go on hiatus, and return at different times during the year.
The broadcast networks, however, still hold onto a schedule that starts in the fall. They have traditionally been locked into weekly schedules of first-run programming coinciding with their local affiliates’ sweep months of November, February, and May (which dates back to a time when local ratings were measured via paper diaries four times a year). Current audience measurement technology makes sweep months increasingly irrelevant, although the “official” broadcast season continues to end in May. It’s also easier to sell commercial time upfront if buyers know when every show will premiere. And let’s not forget they still make the most money from selling advertising in their linear network programming.
The once highly anticipated “upfront week” has become a much more subdued affair of late. Because of the pandemic, the last two years were exclusively virtual presentations, which simply don’t have the same energy as live events at Radio City, Carnegie Hall, or Lincoln Center, and the subsequent celebrity-filled after-parties. This year’s upfront events will be live, but those who don’t yet feel comfortable returning to crowded settings will still be able to live-stream the presentations.
Until recently, there was also a fair amount of anticipation among the general public during this period. After the upfront schedule announcements, pundits would proliferate on syndicated entertainment shows, and in print magazines, and newspapers, throughout the summer talking about the new fall TV shows. Online chatter and buzz would ensue. There used to be little else happening in the television arena, and aside from the latest theatrical release or celebrity scandal, the upcoming fall TV season was the one of the only big entertainment news items. Today, with so many high-profile streaming services with new programming premiering year-round, the broadcast fall TV season is no longer the only game in town, and new broadcast network shows simply don’t generate as much pre-season buzz as they did just a few years ago.
The upfront season has traditionally benefited sellers more than buyers, and have been seen as big branding events for the broadcast networks and the top tier ad-supported cable networks.
- The upfronts have served as annual reminders to the ad industry and media press that the broadcast networks are still watched by significantly more viewers than any other video source and are still the best way to reach large chunks of viewers at one time. On this basis alone, the upfronts have been extremely valuable to the broadcast networks (as well as some of the larger ad-supported cable networks).
This will be the third consecutive year, when instead of individual events for broadcast and cable networks, we have presentations from competing media conglomerates, each of whom owns a broadcast network, ad-supported and premium cable networks, digital platforms, subscription and ad-supported streaming services, and sports and news operations.
The broadcast network schedule announcements have long been the foundation of these upfront presentations, but last year marked the first time they were not the main focus. The presentations were instead designed to tell us that these media companies are everywhere, can reach everyone, have high-tech analytic capabilities to optimize and better target any ad campaign, are diverse and inclusive, and are better equipped and have better scale to provide advertisers and viewers what they want than any other media company (they all made essentially the same claims). This year’s presentations are likely to be even more focused on the depth and breadth of scale, as well as streaming ads, and using alternate “currency” measurement to supplement (but not replace) Nielsen.
- The upfront system enables the networks to continually raise prices for a shrinking product. By traditionally having the broadcast upfront first, the networks have created an artificial demand for what is essentially an unlimited supply of rating points. It also allows the sellers to force the buyers to purchase advertising in less desirable programming so they can get the more desirable inventory.
Keep in mind that 30 years ago, the average broadcast network rating was more than 10 times higher than the average of the top-10 cable networks. Twenty years ago, it was roughly 7 times higher. Today, it’s barely 3 times higher. The advantage broadcast had over the top ad-supported cable networks is not nearly what it used to be. But if more cable networks shift away from original scripted series, the broadcast networks will again have an advantage.
- For advertisers, audience guarantees makes the process seem worthwhile. If the buy underperforms what a network promised (guaranteed), the network provides the advertiser with additional commercials to make up the shortfall. This was important at a time when there were wide disparities among network and individual program ratings, and future performance was less predictable.
As average ratings have declined, however, they have become easier to project from one season to the next. Blockbuster hits are few and far between – particularly in mid-season. It is much more likely you will under-estimate a show’s performance than over-estimate it, and far more likely you will not overestimate an entire buy. And if you’re not buying upfront, but rather going into the marketplace just a month or two before a show airs, if you can’t project the audience with a reasonable degree of accuracy, you should be doing something else.
- The upfronts are basically a futures market, allowing media companies to provide Wall Street with the confidence that they are financially healthy.
For advertisers, the upfront contains a fair amount of uncertainty. When you buy inventory for an entire year upfront, you know going in that much of what you think you’re getting won’t be there later in the year.
For the networks and studios, spending tons of money on new programming and pilots also remains a risky proposition – only about 21% of all the new series that debuted over the past five years will still be on the air next season. Increasingly, partnerships and back-end deals (often with streaming services) are necessary to help offset these high costs.
Are Ads on Streaming Platforms More Valuable Than Ads on Linear TV?
Ad-supported tiers on streaming services are important to their media company owners who are looking for additional revenue streams to help offset the high cost of programming, to advertisers who are searching for ways to reach consumers at a time of declining linear TV ratings, and to the general public, many of whom are looking for ways to reduce their own costs.
HBO Max introduced an advertising tier in 2021. Netflix has indicated it might start accepting ads in a lower-priced tier by the end of 2022. Disney+ will do so even sooner. This is not only a game changer, but it is the best thing to happen for advertisers in many years.
From an advertiser perspective, one key advantage of linear TV is that you know in advance when viewers will watch the show (more or less), and that the audience will be fairly predictable and stable on a weekly basis – which means they are better suited to time-sensitive advertising campaigns. That’s because network programming is locked into weekly schedule grids. Not so with streaming series, where viewership is more likely to come in spurts, depending both on the platform and on how many episodes of a series are dropped at one time.
Nevertheless, the advantages of streaming commercials to advertisers far outweigh any potential downside. When you are streaming something, it is, along with DVR playback, typically the highest level of appointment TV (on demand). There is no commercial avoidance through channel switching, and unlike DVR playback, you can’t fast-forward through commercials. Streaming services also contain fewer ads per hour and significantly less commercial clutter than linear networks.
A “confirmed” commercial impression on a streaming platform is therefore far more valuable than a commercial minute impression on linear networks. By confirmed, I mean certified by the streaming service (which has access to the actual data), not third-party measurement done by Nielsen, ComScore, or some other research company. Current C3 ratings do not accurately account for commercial viewers on linear TV, and Nielsen’s sample is not representative of the streaming universe, nor does it measure all streaming services or devices.
While most streamers don’t reach nearly as many viewers as a broadcast network, Netflix does. Even if only 20% of current Netflix users opt for the lower-priced ad-supported tier, it would probably place Netflix above any linear cable network in terms of audience size, particularly for its most popular series – and there’s no question that a lower-priced version will attract more subscribers. Advertisers will know exactly how many viewers they are reaching and for how long (if they don’t rely on third-party measurement for streaming).
Many people, particularly younger folks, do not really want ads interrupting their streaming. They’ve grown accustomed to ad-free viewing. So we seem headed toward another situation (that we’ve already seen to a degree with DVRs) where the most desirable viewers, those with more disposable income, will be the greatest ad-avoiders. The demographic differences between those who opt for ad-supported streaming and those who can easily afford not to, bears watching. Will some people want the ad-supported tier for the more expensive Netflix and HBO Max but not for the less expensive Disney+, Paramount+ or Peacock? This, of course, requires good research into streaming, including who subscribes to which form of which service and why. Research which is now sorely lacking (non-existent?).
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