Upfront Preview: Economy, Streaming, Measurement Make This Year’s Market Unique

Get ready for a different kind of upfront.

Sure, the foggy economy and the writers strike will affect the willingness of the buyers to engage and exactly what the network will put on their schedule.

But while the economy is likely to be cyclical, turning up at some point, and the strike by the Writers Guild of America will event be settled, returning fresh scripted shows to network schedules that already count reality and competition series like The Masked Singer and The voice among their top performers, deeper changes are taking place in the TV advertising business.

Also Read: Writers Strike Dims Star Power As Networks Take Upfront Stage

With cord cutting, traditional TV viewing is shrinking faster than anticipated. The result is that while the revealing of primetime schedules is becoming less and less relevant to the buyers who’ll see fewer stars and hear more about digital, streaming and data. More emphasis is being place on other parts of media companies’ portfolios.

Here are some things the networks are likely to be talking about this week as they try to convince marketers to commit advertising dollars to them during the 2023-24 season.

It’s the economy stupid: While some network executives claim that they’ve already seen improvement in the ad market, others concede that the market is likely to move slowly this year because the economy provides little visibility in the future–and the upfront is essentially a futures market for TV and video advertising.

Just like during the pandemic, flexibility is a watchword, with clients wanting assurances that if they make commitments today, they’ll be able to move their spending to later in the year, focus on different brands, switch platforms, or even, if necessary, cancel.

“I don’t have to tell you it has not been as robust as it previously has been, “ said Rita Ferro, president of Disney Advertising Sales. 

“I think that’s going to continue for a little while longer,” Ferro said. “As we think of this upfront, we want to make sure that we’re coming to partners with the value of being with Disney and the flexibility that we’ve been able to offer advertisers “

Ferro said that in marketplaces where less dollars are available, “people are going to do fewer bigger deals with fewer partners to make sure that every dollar the spending gets return on ad spend.”

Also Read: NBCUniversal Sees Upfront Market Gathering Strength

Fragmentation is also an issue for marketers trying to reach consumers. “I think they’re trying to evaluate where CTV fits in and where live fits in,” said Marianne Gambeilli, president of ad sales at Fox.  “On top of the economic issues that I think are very real that they’re dealing with, I think that has put a lot of stress on how they’re coming to market this year.”

TV is finally going digital: in Last year’s upfront, Disney and Paramount claimed that about 40% of their upfront business was digital or addressable. This shift came slowly and then all at once.

“What amazes me is how quickly the business has migrated to digital, how fluidly advertisers have just extended into digital media over the course of the last five years or so,” said John Halley, president of ad sales ast Paramount.

On Disney’s earning call last year, CEO Bob Iger rhapsodised over the company’s digital capabilities.

“Our streaming services are driving momentum,” said Rita Ferro, president of ad sales at Disney. “You’re seeing more and more advertisers wanting to be in these environments, so we built a strategy round our tech and data enablement for them to plan, buy and measure all they want within our ecosystem.”

The ad supported version of Disney Plus is growing. Launched last year,  Disney Plus had over 100 advertisers and that number has increased in the scatter market, Ferro said.  “It’s really starting to pick up in terms of audience. It takes a while when you launch a new product for it to be discovered and scale.”

Disney is rolling out new targeting capabilities for Disney Plus advertisers this quarter.

Warner Bros. Discovery has started selling title sponsorships in HBO Original shows. Fifteen advertisers including Mercedes have signed up to run messages that say the upcoming episode of Succession is brought to you commercial free by Mercedes. And that’s on the ad-supported tier of what will become Max on May 23,” said John Steinlauf, president of ad sales U.S. for WBD. WBD will be adding a similar capability around recently released movies on Max. “We’re trying to create the cinema experience, he said.

Data’s a big deal: Like several other media companies, Disney has developed an identity graph, Disney Select,  that tells advertisers who–in an anonymized way–Disney’s viewers are and what they’re interested in. 

“We believe identity will be the new currency, which i why we’re investing so much in our Disney ID graphs and our first party data,” Ferro said.

“I’m a believer that targeted advertising is going to be a big part of the future of our business,” said Steinlauf. “It may still be a little early to talk about addressable linear, but it is possible. We have a product we can offer in 50 million homes if you want to just buy on first-party data or targeted audiences in linear.”

Content might still be king but scale matters too: Eventually, scripted shows will return, and for the most part, the big guys are big for a reason.

“The reason Disney matters is because we have such scale in the number one,broadcast network in entertainment. We have the best in sports in ESPN across not only linear buy streaming, social and everything else,” Ferro said. 

“And it’s all premium, regardless of whether you’re buying linear or addressable. Broadcast continues, to be extraordinarily important and our stations, and our local business continue to be extraordinarily important,” Ferro said.  

Live news and sports drive linear and this upfront:  “Sports and streaming will be the areas of highest demand for this upfront. Targeted advertising, Advanced advertising, new currencies, diversity, equity and inclusion,” said Steinlauf. “We’re working aggressively in  those areas to be well positioned for the upfront.” 

“Even CMOS that have more of a female-skewed portfolio have said we really need the reach, the power, the impact, the ratings of sports,” Stainlauf said. Women’s sports are becoming a big deal, he noted, pointing to the sky-high ratings for the women’s college basketball finals between LSU and Iowa.

“You’re watching big blue chip adult advertisers migrating to sports,” added Marianne Gambelli, president of sales at Fox. “L’Oreal’s in sports,  so you are seeing the shift. It’s very interesting.”

Reality Is no longer a dirty word: While reality shows were one seen as cheap filler programming for the networks, Shows like The Masked Singer, the Voice and Dancing with the Stars are big draws for audiences and advertisers. That’s going to be especially important if the Hollywood labor situation keeps scripted shows on the bench.

“You look at Masked Singer, you look at Gordon Ramsay, They’re more valuable because they bring in a larger audience, they bring in a family audience, so they’re actually more valuable” than some scripted shows, said Fox’s Gambelli.

“It used to be the reverse, but advertisers are paying for the size of that audience and quality of that viewer. they’re actually more valuable,” she said.

As cord-cutting erodes cable viewership, “it’s our job now to manage that transition but the good news is we’re still making four thousand hours of lifestyle content for our entertainment and lifestyle cable networks,” said WBD’s Steinlauf. “We haven’t slowed down the amount of original programming and that allows us to be able to service, the streaming marketplace and Service the linear marketplace.”

Steinlauf said that what’s holding up the pay-TV ecosystem are “the wealthy, the sports fan and the people who see the value in the bundle relative to cobbling together seven or eight streaming services.”

Viewers also stay with cable for news. “Don’t underestimate the power of the news channels, CNN, Fox News, MSNBC and CNBC, in keeping the bundle healthy because not everybody wants to watch news on their phones,” he said.

Measurement is a mess: Just before the start of the upfront, Nielsen declared that its old panel-based viewing data is what buyers and sellers should use as currency in the upfront. But it also said they could use its unaccredited big data stream if they wanted.

That added another layer of complexity to the measurement mess, where alternatives to Nielsen are being offered to upfront buyers.

“We are working with everyone. VideoAmp, Samba TV, iSpot. We’re talking about measurement expansion,” said Disney’s Ferro. 

“I think it’s important to differentiate between measurement and currency. Nielsen will be the currency in this upfront,” Ferro noted. 

“We are going to be as flexible as possible to give our partners the best combination possible on the measurement side, but from a currency perspective, no one has been able to scale currency to take the place of Nielsen today,” she said.

“If you want to guarantee on Nielsen panel only, we can do that. If you want to guarantee on the Nielsen panel plus Big Data,  we have it in the system and we can do that,” said Paramount’s Halley. “If you want to guarantee on VideoAmp, we can do that. If you want to guarantee on Comscore, we can do that. So we’re coming in with four different currencies for guarantee.” 

And at Fox, “we’re already working with everyone. We’re  working with VideoAmp, iSpot, Nielsen.  You can bring in  your own data. We’re agnostic when it comes to that because we don’t feel that one company has won the race,” Gambelli said.