Top media buyers, who insist they have lots of choices, believe data will drive more of the upfront spending decisions this spring and through the next TV season
As television's upfront season warms up, the industry’s most influential media buyers see a lukewarm market and more choices than ever for spending their clients’ video dollars.
If networks want bigger budgets, they’re going to have to earn them because the buyers will be armed with more data about their customers and what makes the cash registers ring. In other words, an open bar and colossal shrimp—while still quite welcome—won’t seal the deal anymore.
And don’t even think about just selling spots. Buyers say their clients want TV to be part of a complete marketing program, with their message integrated into programming and distributed via the multiple platforms being used by viewers.
That said, some things never change: In May, the broadcast networks will roll out a shiny batch of new programming. Once again, ratings for the current season are down, but networks will want advertisers to pay higher prices.
They might wind up paying those prices, but not before digital alternatives get weighed, measurement problems get addressed and high-tech ways to turbocharge commercials—from social media to dynamic insertion—become more prevalent.
To see how some of the issues being discussed in ad circles will affect this year’s upfront, B&C business editor Jon Lafayette posed questions to media agency leaders responsible for billions in spending. An edited version of their responses follows.
Will marketers put more or less of their marketing budgets into the upfront this year? Is scatter a realistic alternative for marketers who want additional flexibility?
Chris Geraci, president of national broadcast, OMD: While this year’s upfront is sure to provide participants with the traditional advantages of availability of the most in-demand programming, audience guarantees and sponsorship opportunities, there is no doubt that the current broadcast year has proven to be not as disadvantageous to scatter market buyers as years’ past. With mild CPM inflation in scatter, advertisers have had the opportunity thus far in 2013-14 to enjoy the flexibility of scatter, in exchange for moderate price premiums. There needs to be relative confidence in that dynamic remaining in place for a noticeable shift toward scatter to occur.
Todd Gordon, executive VP, U.S. director, MagnaGlobal: The upfront is just one part of the many options out there for marketers. We continue to utilize the upfront as an effective tool to secure scarce inventory, build custom partnerships and manage media inflation, but we are increasingly looking at the marketplace across video channels, and across varying marketplace cycles to ladder up to a comprehensive and holistic media plan. Broadcast upfront, calendar upfront, scatter, video, mobile, cinema, programmatic…there are many options and alternatives that we deploy on behalf of our clients.
Michael Law, executive VP, managing director, video investment, Dentsu Aegis Network: We will be active in the upfront marketplace but the decision of how we invest our dollars will be predicated on many marketplace factors. As fragmentation continues within the linear marketplace and video consumption habits evolve, advertisers have many options to consider. We can no longer depend solely on the upfront marketplace and need to engage across all video screens. Although the upfront is typically where we negotiate most of our linear television needs, we will also be active in the scatter marketplace if additional budget flexibility is a key priority for our clients.
Christine Merrifield, President, investment MediaVest: It is no longer about upfront vs. scatter. It’s about fewer, bigger, better partnerships. Today we’re in a 365-day-a-year marketplace where big deals can be signed at any point in the calendar. Part of this is driven by a shift in what we’re looking for. Old deals were simply about inventory and price. Price, of course, is still a key pillar, but our focus today is always inventory—plus innovation. What data is included, what content opportunities, what long-term alliances for our clients? These are necessary parts of any deal equation and driving a different type of marketplace.
John Nitti, president, activation, Zenith: We don’t expect a reduction of the share of budgets allocated to the upfront. Scatter pricing has softened over the past couple years, but has remained at a premium over upfront. We are seeing less activity in the scatter market, as well as fewer dollars being canceled over the course of the year, both indicators that advertisers are being more realistic with their upfront investments.
Within an upfront framework, advertisers who are looking for flexibility with their inventory can take advantage of deals that allow them to shift their presence across a media company’s assets. A good example is a client who has various campaigns over the course of the year, each targeted towards a different demo. A deal with a large media company who has assets that target these various demos could be struck in a way that allows us to shift inventory across these assets to make sure a client’s message is reaching the appropriate consumer target, even as their needs change over the course of the year.
With regard to upfront vs. scatter, there will always be a large group of advertisers who need to lock up inventory in specific windows of time, as well as in specific high-profile inventory. For them, the upfront will continue to be the only option that guarantees they get what they need, when they need it. Large-scale marketing partnerships are still vital to many of our clients, and for the most part, these need to be locked up with a larger upfront investment.
Amanda Richman, president, Starcom USA: The need for flexibility, expectations around accountability, and desire for more engaging ad experiences is driving a more [choice-driven] upfront investment this year. Marketers are placing more value on the sum of the parts vs. the whole of TV, and that means TV upfront investment is no longer a given.
Lia Silkworth, executive VP, managing director, Tapestry: All the expected historical TV variables come in play when determining when and how to invest in the upfront: demand, supply, scatter pricing and marketing goals. There is, however, a continued shift attributed to social media and technology that has changed how we watch TV so it makes sense that it will impact how we have historically bought it. The upfront as is will continue to make sense to a lot of marketers and will hinder others. We have a good handle on most of the historical variables outlined, but the power of data & analytics, emerging technologies and the continued impact of social media are still potential game changers.
When will programmatic buying affect the upfront? What data are you using to help select the networks and shows you buy?
Geraci: That really depends on your definition of “programmatic.” The manner in which we transact some traditional TV business already is automated, if not programmatic, but the bulk of desirable national television commercial inventory has not been commoditized, and therefore, is not being offered for sale in this way.
Gordon: We have much more compelling and granular data that we are deploying across the media planning and buying process. We know more about who our true customers are and what media is best to influence them, we know more about the audiences available from media owners, and how to leverage them to effectively deliver improved business result for our clients. We are using Nielsen data, set-top box data from Rentrak, client first party data, past buy performance data, past purchase data….all of these are informing our buying decisions, both within programmatic channels and without. Programmatic platforms enable us to more easily apply our data to available audiences, and we will be using programmatic TV and video solutions as a complement to our upfront buys this year.
Law: Programmatic buying is already impacting all of our buying decisions, including the upfront. The principles of programmatic—automation, audience targeting and real time bidding—will affect how and where we invest our clients’ dollars. It is inevitable that dollars will be shifting to programmatic platforms. Through the use of these platforms, we will apply relevant data to reach a more valuable audience. We also believe that it is important that we do not lose sight of true scale by becoming too over-targeted with our video buys.
Merrifield: Programmatic has arrived and is something to embrace rather than run from. If you are not participating, you are behind. MediaVest is a data-driven company. Our proprietary tools and strategic data partnerships allow us to make both short-term and long-term decisions. This upfront, everyone’s data partners will be as critical as their broadcast partners.
Nitti: Programmatic has gotten a lot of press recently, but realistically there will continue to be a lag until we have better systems to manage the inventory. We do, however, see more and more data-informed inventory becoming available and since clients want their media investment to be governed by intelligence and relevant data, over time we will continue to see a shift in this direction. That said, the most important pieces of many marketers’ video buys will still be the top tier inventory and marketing partnerships, which would still operate under the traditional set of rules. The future of TV buying will incorporate both of these.
We are looking at a number of different data sources to help optimize our buys. These can be syndicated sources, client-owned data, proprietary agency data, or really any other source that makes sense for a client. We are creating systems that allow us to import the most relevant data for a specific client and provide an output that allows us to make better informed buying decisions.
Richman: Programmatic buying is already impacting the upfront. Programmatic is shifting dollars from longer-term planning to real-time decision making based on best available data. Yes, ratings still matter, but we also want to understand networks’ audiences—their social behavior, video viewership across platforms, purchase habits—to refine our mix and reach our audiences. If we expand the definition of programmatic to include planning/buying automation, addressable media and auction, programmatic is not a threat but an opportunity for networks to simplify how they do business and develop a deeper understanding of their audiences that can inform cross-platform experiences.
Silkworth: Programmatic buying will continue to become a more prominent approach to buying. The impact on the upfront, however, will depend on the balance marketers want to strike between longer term bets with upfront buys vs. a shorter term, data-driven market. From a multicultural standpoint, we are looking to a whole host of data options including first, second and third party data in an effort to advance programmatic for multicultural audiences.
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