Upfront, Scatter and the Slinky Effect

By Thought Leaders Archives
Cover image for  article: Upfront, Scatter and the Slinky Effect

For the past 40 years or so, the TV advertising marketplace could count on the “slinky effect” -- strong scatters following weak upfronts and vice versa. While oversimplified for brevity’s sake, this dynamic held serve while TV ad dollars remained a walled garden. The TV plan, its hegemony intact, was subject mostly to the vagaries of “upfront” versus “scatter” allocation. The demand-side reacted to strength in either upfront or scatter markets by pushing next year’s dollars in the other direction. Notable exceptions to the dynamic occurred in years when significant economic or other upheaval intervened (1987/2001/2008).

The 2014-2015 television upfront witnessed a 5-7% decline in cable investment, with enough triangulation to support the range. In past markets in which we saw the improving economic conditions we have right now, our expectation would be that scatter would rise, rebounding off of a weak upfront. For too many scatter markets running, this isn’t the case. Scatter is uneven at a time when available ratings supply in the TV world is down.

TV managers are talking a traditional game -- we hear often that the market is “difficult to read because advertisers are spending their dollars so close to air.” I, for one, can’t recall any strong scatter market that saw advertisers spending their dollars close-to-air. Unfortunately, “we don’t have visibility” doesn’t suffice any longer.

We have enough of a track record to know that online video, mobile and social are draining dollars at a time when the total pool of advertising spend is not rising fast enough to re-fill all buckets. While I might argue about the wisdom of investing so much spend on new platforms, no one can argue that advertisers are deep into a pattern of doing so.

New data sets are increasingly shedding light on “which half of my advertising isn’t working.” As ad investment in poorly performing platforms stagnates, dollars will be re-directed to “media that work.” Some percentage, however, will find its way back into marketer pockets. For this and other reasons, a rising advertising tide lifting all boats is unlikely.

There will, of course, be many TV winners. I work with networks whose on-air plans anticipate quite well the impact of DVRs on their programming and scheduling models as well as other strategies against the downdraft. Television works, and will continue to be resilient through a broad sponsor-able ad-supply revolution. The fact that TV ad investment is not performing to past standards doesn’t make it a bad business, nor a poor stock investment. Television’s ability to communicate a brand message on a large, 100% dedicated screen, in a controlled content environment, will continue to be a dominant force. That will be truer as the definition of “television” evolves, and the technology to measure follows suit. But looking forward, let’s start calling the TV ad market what it is, and not “unpredictable,” or not “visible.”

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