TV upfronts grasping at straws before programmatic swoops in

The upfront advertising sales season is upon us and this year will be the most critical year of all – setting the scene for the inevitable collapse in upfronts that will be triggered by the growing proliferation of programmatic advertising, together with the snowballing fall from grace of TV ad ratings.

Broadcast and cable networks saw an unexpected upswing last year, with ad sales increasing $800 million to $18.6 billion in the completion of summer 2016, but they fell the year prior to that. Although ad sales may continue to rise this year, in the next couple of years or so there will be another slump on a much more calamitous scale. The only thing really preventing a mass-migration to programmatic advertising is the need for advertising systems to have some form of third party verification that the reported number of video adverts have actually been viewed and viewed all the way through (see Faultline Online Reporter 685).

Viacom’s Nickelodeon was the first network to initiate the upfront proceedings this month, which will then be followed by Scripps Networks and Crown Media next week, before the mad rush throughout April and May.

Networks are hoping to bring some of their successful online shows to the TV, to claw back some of those lost ad-supported cable dollars. Nickelodeon is putting its faith in successful website series Welcome to Wayne, as well as the second season of sports show Dude Perfect.

These shows are hugely popular online due to the younger generation they appeal to, including increasingly younger children, which have open access to tablets, smartphones and streaming devices. It is certainly not as simple as guaranteeing that an online hit will be able to replicate the same success on cable TV – but the networks have little choice but to give it a shot.

After all, Viacom’s advertising revenues in the US have been falling quarter after quarter, down 3% to $991 million in its most recent filing ended December 2016, and they dipped 8% in the quarter before that. The only reason the whole industry’s decline in ad sales hasn’t been more dramatic is due to higher pricing to offset the decline in TV ratings.

Nickelodeon President, Cyma Zarghami, told the audience at the company’s upfront presentation earlier this month: “today’s kids are coming of age in a revolutionary period of change, in tech, entertainment, politics and culture, and these factors have definitely influenced how they see the world.”

Programmatic buying and selling is entrenching gradually on the upfront model. This method allows automated bidding and dynamic pricing, so that budget and demographic decisions can be made with more up-to-date information, rather than the months in advance needed in the traditional upfront model – giving buyers and sellers more control over their inventory.

One of the top ten cable entertainment networks, Game Show Network (GSN), has spoken openly about its strategy going into the upfronts, saying that it wants its viewers at home to interact with contestants on game shows. It is developing a mobile app in partnership with interactive developer Megaphone TV, to bridge the gap between smartphone and TV set, and it will be presenting this to agencies in its upfront meetings.

GSN didn’t say so specifically, but this will clearly be a valuable tool for gathering data metrics – going beyond audience demographic and gender, to tap into a host of juicy insights harnessed from the device the viewer is using to interact with the show.

GSN’s EVP of ad sales and CMO, John Zaccario, said: “when we do it in-show, the content that we’ll push through the device will be related to what’s going on in the show, but not completely synced. That’s the mistake we’ve made in the past; we’ve tried to sync the questions or the challenges that the contestant was getting on television, and it’s tough to get the timing down.” Zaccario also claimed that GSN has been more successful in the last five years than its rival ad-supported cable networks, in terms of audience viewing time and frequency.

Zaccario added that “all of ad-supported cable is down roughly a third over the past five years, while GSN has been relatively flat,” suggesting the reason is that “our audience is less fickle than most audiences and do a lot of less channel surfing than other audiences.”

The rise of ad blocking has caused concern for marketers, causing some to shift their ad spend away from digital platforms and back to linear TV, coupled with the threat of ad fraud – and it’s worth noting that the pay TV players have done particularly well at feeding this to the media.

Networks are upping the stakes to give marketers more control over data-driven advertising on linear TV, with NBCUniversal recently announcing it will open up access to its Audience Targeting Platform (ATP) and its programmatic offering NBCUx.

Nielsen’s demographic data is no longer deep enough in today’s demanding targeted advertising landscape, so NBCUniversal said it is sidelining $1 billion worth of ad inventory to be sold on metrics that drill down further into the consumer experience than Nielsen can provide. The figure is around one sixth of NBCU’s total ad sales.

CBS also came out at the start of this month, saying it will be giving out total content ratings from Nielsen which measure DVR playback and VoD content on top of traditional linear viewing, and claims it will add online and mobile viewing in the future.