Marketers who attend the TV upfront presentations this week in New York are likely to drag out negotiations for major media contracts once the market begins to move.
The TV upfronts season brings marketers, media buyers, and executives from all over the U.S. together in Manhattan for glitzy presentations by broadcasters, occasional celebrity appearances, and tough discussions on media inventory.
This is the year of the annual negotiating bonanza, as marketers try to figure out how to best manage their budgets in an economic crisis. Six media buyers who spoke to Digiday said that they will likely take more time to evaluate the products and services on offer, and may spend less overall.
Deanna Mulkeen is the head of media investments at Wpromote. She said: “You’re likely to see more hesitancy and a greater need for flexibility.” She added that “we may see flat or lower outright commitments.” They don’t want a commitment that they can’t easily get out of if another economic downturn occurs. This is true even if the major TV companies are trying to offer more flexibility.
The uncertainty of the economic climate has certainly affected the way brands view the market, said Jason Lim. He is the newly hired chief media director at Assembly North America. Sources indicate that client caution will likely translate into upfront negotiations lasting longer than usual.
“Usually, people try to wrap things up around the Fourth-of-July holiday,” said Juliet Corsinita. She is head of convergent audio and video at PMG. “I don’t believe there will be a big rush to get it done so quickly.”
“Sports will be robust, and everything else will go down”
However, there are likely to exceptions to this trend, particularly for live sports. Coverage of NFL, college football and NASCAR is a major attraction for broadcast networks who are struggling to reach large audiences. Advertisers looking for certainty will be attracted to the safe bet of sports this year. Streaming and linear inventory paired with big-ticket sporting events is likely to be snapped. Kasha Cacy is the chief media officer of agency Known. She said that in this type of environment, clients tend to commit to the must-haves’ and save budgets for flexibility. Corsinita predicted that “Sports will be robust, and everything else will go down.”
In reality, negotiations between broadcasters (including agencies) and holding companies for some sports properties have already started. Cara Lewis, chief Investment and Activation Officer at Dentsu told Digiday via email that “Conversations with Partners, especially around Sports, are already underway”. She declined to reveal which sports inventory is on the table.
Brand advertisers who are looking for places to spend their video dollars on have many options to choose from, and many of them are cheaper than linear television.
This year, digital video will account 58% of all digital ad spending. Per an IAB projection
“Flexibility’s critical”
The importance that marketers place on flexibility threatens the entire premise behind upfronts season. This is a time when publishers offer their best products at a discount in exchange for signing binding agreements months in advance. It’s a dynamic that the industry has seen in the past, during the 2008 recession and the 2020 recession.
Alicia Weaver is the vp for media activation at Mediassociates. She said that whenever there are factors over which agencies and networks disagree, this can cause upfronts to be drawn out.
Delaying decision-making does not necessarily mean that advertisers will collectively spend more on TV in the future upfront season. Brands who delay signing the dotted line until May or June may end up spending more in the scatter market (the industry term for quarterly investments outside of the upfronts season). But that’s not much comfort to publishers worried about cash flow. What will marketers and media buyers look for to unlock investment? Most will value flexibility in the form easy cancellation clauses. Weaver said that flexibility is important and will be the focus of our discussions along with efficiency and value. Mulkeen of Wpromote says that more clients may consider programmatic CTV deals, which allow them to chop up and change the exact inventory that their ads run on later, as opposed to direct deals, which bind them to specific shows or media properties.
Jeff Green told analysts on The Trade Desk’s earnings call that he expects programmatic spending to increase during the spring market. “We expect that this upfront will be a bit weaker for digital and programmatic as a result the uncertainty that is currently facing the world,” he said.
They will also be looking to publishers to pack as many meats into their sandwich as they can – such as CTV homescreen advertisements or media partnerships with creatives, elements which provide “surround audio moments” for clients.
Publishers and broadcasters would prefer to avoid these compromises. A delay in spending could also cost them if marketers decide to wait until later in the year.
Cacy said that if there is inventory that is a “must-have” in Q4, you might buy it during the broadcast upfront… or you could save other inventory until the fall, when the economic situation may be more clear. Seb Joseph contributed this report.
https://digiday.com/?p=578151
