Upfront 2014: Everything Will Change. Nothing Will Change

As the Upfront presentation season blossoms with multiple TV and digital video content presentations each week, the market is experiencing it's most sustained downturn since 2008/2009. Multiple quarters of a soft scatter market have created a case of the jitters at both networks and agencies. (Our preliminary forecasts for volume and CPMs are shared below.) Meanwhile digital video suppliers are adding to the inventory pool and creating that industry's first confrontation with over-supply. As the Upfront unfolds, several new research tools and measures are vying for attention and funding support. CBS senior research executive David Poltrack, at the recent ARF ReThink Conference, shared a new CBS engagement measure and also explained how the integration of new research tools and metrics into both the buying and planning process is impacting the evolving Upfront marketplace. In February 2014, MyersBizNet and Betsy Frank Insights collaborated to conduct a review and analysis of how advertising agencies are using new (largely non-Nielsen) tools, resources, systems, and data, and whether, how, and to what extent these are impacting the process of television planning and buying.We interviewed more than 30 senior ad agency executives and six vendors/suppliers of new data and systems to the industry.

If the consensus of executives on both the agency and vendor sides are to be believed, "2014 will be the year everything will change…and nothing will change… in the agencies' go-to-market approach to the National Television marketplace. There was strong agreement around the continued support of television from the advertising community, but it was clear that the goal is to integrate the targeting, measurement, and accountability metrics into the overall video planning and buying process," advises Betsy Frank.

With more technology and more data—granular and customized—than ever before at the ready, the agencies are approaching this year's TV Upfront with the goal of bringing targeting, measurement, and accountability into the realm of what they have come to expect from Digital. With more Activation teams bridging Television and Digital (or at least Digital Video), and new systems, tools, and metrics aiding in the evaluation and optimization of the medium, it would seem that all systems are go for monumental change.

And yet…with a diversity of marketer risk tolerance, and no single new metric "ready for prime time," the unanimous expectation from respondents is that whatever takes place within the agencies' four walls, this year's negotiations and primary guarantees will continue to be based on Nielsen age/gender demographics.

UPFRONT DYNAMICS:

• It's a "soft" marketplace with flat to declining demand. There have been eight straight quarters of a soft scatter market, and the general consensus is that network TV demand will be -2% to +2%. Marketers are shifting budgets to digital video. The impact of a very cold winter, the GM recall, the Target data-dump and continued political uncertainty is causing marketers to defray marketing budgets until market conditions become more clearly defined. There are no major emerging categories placing pressure on primetime demand. Early expectations among buyers and sellers suggest broadcast network costs-per-thousand will increase 1% to 3%, with cable CPMs flat to 5%, depending on the network.
• This will not be a uniform marketplace . While agencies are anxious to integrate and match new data sources with proprietary client customer data, decisions around what data to purchase are driven for the most part by individual clients, rather than by the agency. While the agency research teams would like nothing more than to have access to the data that can improve targeting and effectiveness for all clients, the reality is that in very rare instances can they afford to buy data for the entire agency, and that even if they could, they don't have the staff to manage and analyze it.
• Agencies point to clients as a reason the change is so slow. They reference the broad range of client awareness of, support of, and embrace of the new tools. They point to the fact that many if not most CMOs still evaluate a potential buy based on CPM increases versus last year, and are less willing to create a new benchmark to measure performance. They note that their hands are often tied by broad-based client strategies and objectives that don't take into account a more fragmented and fluid marketplace. And they are clear that their clients are extremely protective of their own customer data, especially when it is needed to create a better targeting opportunity.
• Not one of the new data and measurement tools as yet possesses the attributes of a currency: trust, credibility, projectability, representation, and bipartisan acceptance. While new metrics are considered appropriate to fine-tune the daypart, network, or programming mix, a new currency is likely years away. Unless and until one of these new tools is accredited, validated, and accepted by both buyers and sellers, the marketplace may complain strenuously about Nielsen, but default to it for primary guarantees. While no new currencies have emerged, one company, Simulmedia, is attracting the attention of several networks and marketers, along with a handful of agencies, for its model designed to build supplemental media plans that compensate for network reach under-delivery. A senior cable network sales executive reports that Simulmedia has generated incremental revenues at attractive costs-per-thousand.
• The networks, who currently are perceived to hold the advantage in negotiations, may lose some of that advantage this year . While everyone may be purchasing the same data and the same systems, the networks will not have client customer data. The agencies believe that it is critically important that, regardless of new data they acquire, that they have information the networks do not and cannot possess. The rationale is to make sure that the networks don't increase price based on the unique value of a program or daypart to a client. This suggests that much of the most important activity in understanding new data will take place "behind closed doors:" In an agency "black box;" during the Planning process; on a client-by-client basis; and without the mutual transparency Nielsen offers the marketplace.
• For 2014-15, agencies see the new data and systems impacting the Planning and Allocation processes. Agencies will focus on better defined daypart, program, platform, and genre mixes—but for primary guarantees, the default will be Nielsen age/gender demographics. For all the talk about data, analytics, and behind-the-scenes insights, networks remain dependent on ratings, demographics

CBS has built a comprehensive Media Demand Landscape segmentation of the U.S. population to fully capture today's dynamic media environment, which segments the audience to provide planners with data to target more engaged and responsive audiences. The CBS study enables agencies to re-rate programs based on their share of each marketer's best customers and potential customers. "The study also confirms that the television medium today, enhanced by social media and the online connectivity of the viewer, is more powerful than ever. We, and our Nielsen partners, have made that segmentation available to all Nielsen clients on an 'open source'basis," says Poltrack.

Disclosure: Jack Myers is a member of the Simulmedia Board of Advisors

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