Upfront Redux: Perspectives from Beyond the Day-to-Day

Leading up to the Upfront transaction period there was so much conversation (again) about audience buying, advanced data and the need to do business a different way.  These conversations are important, interesting and involved -- however, we haven’t seen significant change in how we buy and sell media.  The common guestimate is that only 5-10% of total TV dollars were transacted in ways that weren’t available a few years ago. While many industries evolve because of consumer behavior, technology or other factors (electric and hybrid cars, music consumption, food) the TV industry seems to sit largely in idle.  Is it because large, diversified companies like Disney, Comcast and AT&T see traditional ad dollars as a diminishing percentage of overall company revenue?  Is there fear traditional models that make media companies and agencies money might blow up in smoke?

There could be an entire host of reasons, but I am fairly certain of one thing:  Despite being on opposite sides of the fence there is a dire need for all constituencies on the buy and sell side to work together to identify new models or modes for transaction to avoid extinction.  Additionally, new types of ads will be critical to enhance the viewer experience.  Small strides are being made such as six-second ads and in-action ads during sports.

The death knell for TV as we know it isn't coming tomorrow, but it also isn't too far from the foreseeable future.  Fox has placed its biggest bet on live television consisting of news and sports, and CBS, NBC, ABC are all moving to subscription streaming models.  Advertisers, while still flocking to traditional TV (for lots of good reasons), are casting their vote by dramatically increasing their support for Roku (have you tracked their stock price?) and OTT in general and mobile.  At Cannes, Quibi announced they have secured 100M in ad dollars for their yet-launched service. Whether that number is true or not, two agency executives have told me they have at least one client who has made a substantial commitment.

The ultimate decision-makers have been and continue to be consumers who actively cast their vote.  While still a big "secret" because they refuse to acquiesce to the traditional TV standard metrics, common sense suggests viewership of Netflix, Amazon and Hulu are on a sharp rise while traditional TV ratings are generally and substantially down.  Need we discuss cord cutting?  Disney is no longer selling programs to Netflix, and the beleaguered streamer is also losing its most viewed show, The Office, to NBCU at the end of 2020.  AT&T, while willing to cash a 100M check for Friends, appears to be heading down the same path.  Maybe this lack of library content will choke Netflix and ads will ultimately appear for survival reasons because their current business model is as unsustainable as that of the broadcast networks!  Amazon can do whatever it wants because it is a locomotive when it comes to generating cash, and as content is not its sole or even primary business, it is under less direct financial pressure.

In all the conversations I had with TV execs there was one that lead me to believe that change may be on the horizon.  A major agency that refused to pay significant double digit CPMs created a game plan to replace the reach of one broadcast network in prime.  When broadcast network inventory is not essential, and may be totally dropped from a buy with no concern for loss of reach, it means we have come to a turning point.  To me, that epitomizes the need for change.  While TV is still the best bet in town, in a few more years if double-digit ratings decreases and double-digit cpm increases continue, it will not be sustainable.

Every year, the echoes of the end of traditional TV are heard, but somehow this time it seems closer to reality.  With so much on the line, I strongly suggest that it is time for the major players to get serious to protect their business.  How about a joint investment by media agencies and sellers to fund true consumer research to identify how best to compete in world of eyeball dispersion?

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