The future of TV briefings: How a weaker-than-expected fragmented TV ad market tipped the balance of power in this year’s early talks

This week’s TV briefing on the future looks at how last year’s pre-negotiations and the past year’s fragmented markets have set the stage for a more balanced balance of power in this year’s pre-sessions than they have been in the past two years.

Decentralized Early Dynamics

Critical Hits:

  • TV network owners may want to lock in more linear inventory in upfront talks this year amid a weakening decentralized ad market.
  • After the TV network launched Linear Dollar early last year, buyers and sellers expected the result to be a tightly fragmented market that never materialized.
  • Supply chain issues along with rising inflation and interest rates led to lower-than-expected demand from fragmented advertisers.

A weaker-than-expected fragmented TV ad market over the past year is turning around this year’s pre-TV market. TV network owners may want to lock in more linear TV inventory in the pre-market this year to avoid leaving money on the table, which could serve to ease price increases and tighten the fragmented TV market in the fall, executives said. effect. in TV networks and agencies.

“The softness of the dispersion continues, which means we have Lost a little bit of confidence and swagger, and more care about filling the respective buckets – we only get one chance at this time of year,” said one TV network executive.

“I believe that these networks will sell more upfront knowing they are being burned in a fragmented market. So there will be more inventory available to buy,” said one institutional executive.

By pitching linear TV revenue early last year, TV network owners are betting on making up money — and then some — in a fragmented market. But that bet didn’t quite pay off. Network and agency executives say advertiser demand has not overwhelmed the supply of traditional TV inventory in the broadcast market as buyers and sellers had expected.

“Last year, you saw a lot of legacy internet groups push money away from linear up front thinking it would spread back. But it didn’t,” said another agency executive.

“There is no doubt that the fragmentation of the market is lighter than expected. The supply chain impact and related impacts have created a lot of difficulties,” said a third TV network executive.

Supply chain challenges and rising inflation and interest rates have coincided with advertisers exercising their upfront cancellation options, freeing up more inventory to sell in a still-weak fragmented market. “the third quater [cancelation] Options may be a bit heavier than normal,” said another TV network executive.

Fragmented markets “take a nosedive, and then affect your [direct-response] market and influence everything,” said the first TV network executive.

This amounts to resetting the dynamics between buyers and sellers in the up-front negotiations this year. “This year seems to be a contrarian [with the TV networks effectively saying to ad buyers] “We are willing to accept more [linear TV ad dollars] than what we did last year because the fragmented market didn’t materialize as we all expected last August,'” said the first acting executive.

In 2020, the upfront balance of power favors advertisers and their agencies. Buy-side companies are grappling with the impact of the pandemic on their businesses and are concerned about making one-year spending commitments with limited cancellation options, while television networks are facing disruptions to their programming pipelines due to the impact of COVID on production. In 2021, the situation turns to a seller’s market as advertisers return to the TV market, new advertisers enter, and TV networks replenish their programming pipelines and stand up to ad-supported streaming.

The balance of power is likely to be more neutral this year, as TV networks more urgently need to fill up their inventories ahead of time, rather than risk lower returns if the fragmented market remains weak.

“That’s probably what makes it more of a buyer and seller market than it felt a month ago,” said the first TV network executive.

“Wait and hope for a good fragmented marketplace, all it does is it might get you fired, not make you a hero,” said the second TV network executive.

what we heard

“What’s being negotiated right now is big money, and then it needs to be priced and planned on an account-by-account level. What’s negotiated now and what’s washed out in the fall can be two very different things. In theory you can do it for the next three weeks Preliminary work is being done in 2019, and the detail work in October looks like it will be a completely different outcome.”

TonV Network Executive

TV networks clear their ledgers

The soft-scatter TV market isn’t all bad news for TV networks.They have been able to use the excess ad slots to their debt to advertisers According to TV network and agency executives, when networks failed to provide audience guarantees to advertisers, they responded to past situations by offering so-called “under-audience units.”

“Everyone’s ADU is pretty healthy right now,” said a TV network executive.

However, as anyone with experience swiping credit card bills knows, the question now is to what extent the network remains debt-free, and to what extent advertisers and their agency executives will oppose the network’s audience in this upfront cycle to ensure they avoid liability The problem happened again. “It’s always something we’re going to push,” said one agency executive.

numbers to know

4.6: As of April 2022, the average number of streaming services subscribed to by U.S. households was down from 5.2 streaming services per household in October 2020.

38%: The share of digital video impressions played on connected TV screens in Q1 2022 was up from 31% in Q4 2021.

4.4 million: The number of streaming subscribers Lionsgate added to its streaming portfolio, which includes Starz, in the first quarter of 2022.

What we cover

Disney hired executives to base its business on audience-based advertising:

  • Disney has hired Jamie Power as its senior vice president of addressable sales, who previously served as chief data officer and platform head at Cadent, an advanced TV advertising agency.
  • The company also promoted Dana McGraw to senior vice president of audience modeling and data science, and expanded the remit of Danielle Brown’s senior vice president of data enablement and category strategy to include measurement and analytics.

Read more about Disney’s audience-based advertising business here.

Industry arbiter Ebiquity looks at growth amid TV measurement woes:

  • The management company saw an opportunity to expand its business to also act as a measurement provider.
  • Adding Ebiquity to the list of companies looking to take advantage of Nielsen could lose its dominance as the industry’s de facto measurement provider.

Read more about Ubiquity’s measurement goals here.

what we are reading

Netflix warms up to its ad sales pitch:
According to Insider, Netflix may not have officially started running ads, but the streamer has begun temperature checks on what ad buyers want from the service, and has teased some details of its plans, such as avoiding ad breaks.

Disney launches upfront deals:
Like last year, Disney has begun to clinch upfront commitments in this year’s market and has struck deals with at least one media outlet, Variety reported.

Paramount sticks to the solo route (for now):
After Discovery and WarnerMedia announced plans to merge last year, the big question was whether the pairing would push Paramount and NBCUniversal to merge. In January, a group of bankers even raised the possibility with Paramount’s board of directors, but the media conglomerate decided to remain silent for now, The New York Times reported.

The NFL prepares its own streaming service:
According to Sports Business Journal, the NFL plans to launch its own streaming service in July that will let people watch local-market games for $5 a month.