Upfront 2015: Early Forecast

By Jack Myers TomorrowToday Archives
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Scroll down for MyersBizNet's preliminary Network TV Upfront Forecast.

Originally published April 13, 2015. Bottom Line: TV networks may still be the engine that drives the marketing train, but advertisers are not convinced they need first-class seats nor are they overly concerned they'll miss the train if they're late to the station.

There's a debate going on among TV buyers and sellers about prospects for the upcoming network TV Upfront season, but the overall consensus is a negative outlook. MyersBizNet is projecting a more negative outcome than last year, when broadcast network TV volume declined 7.9% and cable network revenue declined 4.8%. These declines were partially offset by double digit growth in the networks' digital ad revenues. Some senior agency executives foresee an overall drop in broadcast network TV spending of as much as 12% and a decline of as much as 6% in network cable spending, and possibly more. Scroll down for the average estimates of selected advertiser and agency executives.

The investments made by networks in Upfront presentations and parties are just basic table stakes that may prove to be too little and too early. The Upfront season seems headed into mid-July unless broadcast networks opt to take share at the expense of unit costs and CPM – a somewhat unlikely scenario. They're more likely to hold out for higher CPMs and take their chances in the scatter market.

CBS, Turner Broadcasting, Viacom, NBCU and Discovery have made meaningful seven figure investments in advanced metrics and data to provide marketers and their agencies with incentives to increase their share of market. A few networks, notably AMC, FX and Hallmark have positive ratings and original content stories that will buoy them in a difficult market. Fox has Empire. ESPN, Turner and NBCU have good sports stories, but Fox Sports will take some share. NBCU Hispanic and Univision offer attractive options. The Weather Channel is depending on its dominant digital presence and geographically addressable opportunities to weather the storm.

But even these networks will find strong headwinds as they're confronted by a perfect storm that is driving down overall ad spending, pushing budgets into alternate video options, and depressing per-unit and cost-per-thousand costs. Below are the early forecasts of selected senior agency and advertiser executives, who anticipate:

  • a smaller share of their network TV budgets moving in this year's Upfront;

  • more money moving to alternative video options;

  • increased procurement-based pricing pressures;

  • and overall reductions in total ad spending even as the overall economy improves.

While network executives point to the most new car introductions in years, auto execs counter that the majority of TV support for these introductions will go to local and regional television support. Many of the fastest growing new companies and categories are marketed almost exclusively through digital media. Major marketers are shifting budgets to Facebook, Google, Twitter and other digital options, with Facebook and YouTube aggressively incentivizing advertisers. Simulmedia is gaining both acceptance and momentum. And print media has awakened as companies like Time Inc, Hearst, Rodale, New York Times and Conde Nast provide quality video content with compelling native content and innovative solutions. Digital video OOH offers an expanding array of viable inventory and there is an endless supply of inexpensive lower quality video inventory available through programmatic systems.

MyersBizNet Upfront Spending Volume     
  Actual Estimate
  2014-15 2015-16
Broadcast Legacy Revenue Volume -7.9% -9.8%
Broadcast Digital Video Revenue Volume 24.0% 18.0%
Cable Legacy Revenue Volume -4.8% -5.2%
Cable Digital Revenue Volume 16.0% 12.0%
All data is based on estimates compiled from multiple sources. MyersBizNet 
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