Traditional TV viewership may be in decline, but TV ad dollars are not necessarily going away. TV remains a pretty efficient way for advertisers to reach a lot of people. As a result, advertisers in this year’s upfront cycle are likely to commit slightly more money than in prior years to lock up that inventory because there will be less of it available afterward in the so-called “scatter” market, according to Catherine Sullivan, chief investment officer for North America at Omnicom Media Group. The interview has been edited for clarity and length.
Has the role of the upfront negotiation cycle changed in any meaningful way?
Because of the diminishing linear ratings, you really have to pay attention because it’s going to be harder and harder to actually buy scatter. Why would you want to buy scatter, quite frankly? So whatever the flexibility benefits were for scattering are no longer outweighing the actual price that you have to pay in order to be in scatter. More and more clients are probably moving their scatter money upfront. So from that perspective, it’s probably as important if that’s a place you actually want to spend money.
You’ve said that advertisers are paying more for less in the light of the TV viewership declines. Will that continue to be the case in this year’s upfront, or are there opportunities to offset that in any way?
The more a client is willing to follow the audience, meaning that a lot of premium content viewing is happening off-platform, the more you allow the media companies to deliver you where the consumer is watching — I think you can start to mitigate inflation.
What have you seen from the media companies in terms of how they are looking to take advantage of that?
They all spoke a lot about their streaming services and their digital assets. That was the big push. People are still watching their premium content, but consumers are behaving differently.
How would you characterize the level of parity between the TV networks and the bigger digital platforms, such as Hulu, YouTube, Roku, Amazon and Facebook, when it comes to competing for upfront budgets this year?
Hulu, out of all of them, has done a really good job of getting into that upfront marketplace because they represent some of the best premium content that’s out there. As it pertains to some of the others, I think they’re still just getting started and don’t have as much of that real premium content that people want.
Does that mean they need to be investing in more original programming? Or what premium content do you want to see from Amazon, Facebook, YouTube and Roku?
Certainly, Hulu’s invested in a ton of original content. I think some of the others probably need to do more of that. They’re just beginning to enter the marketplace, so we’re still not doing remotely as much with them as we are with Hulu.
With the TV networks taking up their digital inventory so much more this year, what effect does that have?
That goes back to mitigating inflation. If Fox is seeing 40% of their audience watching off platform and, of that 40%, half of them are not watching linear television at all, you have to start moving there. You’re missing a big part of your potential audience. That’s really happened in the last 18 months.
With the ability in digital to target audience beyond the traditional age- and gender-based demographic targeting, what impact does that have on how the money is being allocated, especially among the TV networks?
The more you’re willing to start moving towards audiences and getting away from demos, there’s a large appetite out there on both sides. I think the media companies are more willing to mitigate inflation as you start moving to that type of buying model.
Were there any standouts this year among the media companies in terms of who is moving to that audience-based model?
Certainly Turner, now WarnerMedia, having Xandr is a huge positive. Donna [Speciale, president of ad sales at WarnerMedia] spoke about it in her upfront presentation: business outcomes versus buying demographics. With [NBCUniversal’s audience-targeting product] AdSmart, NBCU has done a lot of great work. And I think now Disney, with Google [as the media company’s ad server], is going to get their act together and do a lot more. And Viacom has always had some good tools.
For a long time, the question was whether the digital companies would take ad dollars away from the TV companies. But with the TV companies putting more attention to their digital inventory, are the TV companies taking ad dollars away from digital?
Listen, Hulu’s now controlled by Disney, so that’s changed everything over there. So I think you’ll see more and more of an integration and combination of people looking at Hulu through the lens of Disney.
This year’s upfront is the first following the closures of AT&T-Time Warner and Disney-ABC, and even though Discovery-Scripps was last year, they seemed to make a point of this year being when they are really able to start taking advantage of that merger. What has been — or what do you expect to be — the effect of those mega-mergers on advertisers in the upfront?
They’re all just trying to reaggregate scale at this point. But I’ve been telling our clients right now it is business as usual in terms of the way they’ve done a pretty good job of integrating this pretty quickly. So hats off to them by doing these integrations as quickly as they have. So far it’s been fine.
TV viewership is declining, but every year the total amount of money that advertisers commit in the upfront has grown year over year, according to estimates. Will that again be the case this year?
It looks like it could be slightly up, but I also think there’s a lot less scatter. So I think people are just moving their money towards the upfront. You have to look at the marketplace differently than you did a couple of years ago.
Any other ways in which we’ll see the money move around differently this year than in past years?
If you’re moving money upfront and you have less scatter, then they need to make different assumptions than they have in the past in terms of what their sellouts need to look like and look at this as a 52-week [market], not as an upfront versus scatter.
What about when it comes to the digital companies in the mix? With more of the TV money going into the upfront from the scatter market, does that change where the money goes with the digital platforms or individual publishers?
No, I don’t really think there’s going to be a big change there. No.
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