Upfront fallout

The key hits:

• Advertisers are cutting upfront orders from their initial commitments by 10% to 20%.
• Advertisers are unlikely to reallocate those dollars.
• These reductions continue a trend of advertisers cutting back on their upfront commitments.

The 2022 TV advertising upfront marketplace did not evade the economic downturn.

While TV network owners secured year-over-year increases in annual ad spending commitments from advertisers over the summer, those dollars have proven to be not so secure as the upfront’s registration period gave way to its order phase. Over the past month or so, advertisers and agencies have placed their orders with networks for how much money they will actually spend over the next year, and in many cases, the order amounts have been lowered from the initial commitments, according to executives at agencies and TV networks.

“We’re seeing the dollars aren’t realizing,” said one TV network executive.

Upfront orders are “coming in light and being cut substantially,” said an agency executive

The size of the upfront reductions vary by client and have typically ranged between 10% to 20% of the initial commitments, according to industry executives. Moreover, some advertisers have not cut their commitment amounts or have only cut them by single-digit percentages, which is not unusual, whereas other advertisers have cut upwards of 30% of their commitments.

“There’s not a common reason [for the cuts]. Maybe a product goes away, so dollars are no longer in market. Movie titles shift, so there’s not as much need in certain timeframes,” said a second agency executive.

Well, there is an overarching theme when it comes to the cuts: the economic downturn. Ongoing supply chain issues, rising interest rates and rising inflation have led advertisers to reduce spending across the board over the past few months, affecting everyone from Meta and Roku to BuzzFeed and Dotdash Meredith. And the ad dollars being taken out of the upfront marketplace appear to be out of the broader market altogether.

While a third agency executive said it’s possible that advertisers may opt to reallocate these dollars, and would likely do so on digital platforms like TikTok and YouTube that make it easier for advertisers to spend their money on a piecemeal basis, this executive and others surmised that the money is most likely to return to brands’ coffers and stay there to protect their businesses’ bottom lines.

“Most of these are true budget cuts. It doesn’t feel like it’s being reallocated; it feels more like just pure cuts,” said the second agency executive.

“That money is not being redistributed,” said the first agency executive. “That money is going back because of a few things. The supply chain continues to be a major issue. The second thing is really economic uncertainty. There’s a lot of fear or stigma in the marketplace about what next year holds from the …read more

Source:: Digiday

Author: Aaron