Future of TV Briefing: How streaming figured into TV networks’ upfront negotiations this year

By Tim Peterson

The Future of TV Briefing this week looks at how TV networks secured a greater share of upfront dollars for their streaming and digital video inventory in this year’s negotiations.

‘The Cicada Upfront’
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‘The Cicada Upfront’

Last year’s annual TV upfront market may not have undergone the seismic shift that many ad buyers and sellers had expected in the spring of 2020. But in hindsight, it served as the foreshock for what has transpired this year as TV networks’ streaming and digital video inventory became centerpieces of their upfront deals.

“Last year and this year are two years that none of us had ever seen before. A lot of people refer to this upfront as ‘The Cicada Upfront,’” said one TV network executive, referring to the 17-year cycle in which some cicadas emerge. “The industry hasn’t seen anything like this in well over a decade.”

“If you look at the peak of TV spending in the upfront, it was probably the 2003-04 upfront, and that was all linear [advertisers spent an estimated $14.8 billion with broadcast and cable TV networks in the 2003-04 upfront]. If you fast-forward to this year, the amount of money being spent in prime time plus [ad-supported streaming and digital video] is definitely going to surpass that,” said a second TV network executive.

To be clear, the majority of money that advertisers and agencies have committed to spend with TV networks in this year’s upfront market has gone to the latter’s linear inventory, with the amounts buoyed by tightening supply that is pushing up ad prices. Nonetheless, streaming and digital video have seized their largest share of spending to date, according to TV network executives.

“Unanimously folks are talking about rates of change on the linear side at historically high levels and investments in streaming in the upfront greater than they’ve ever been and greater than last year,” said a third TV network executive.

The key hits:

TV networks’ streaming and digital video inventory accounted for a bigger share of upfront commitments this year than in previous years.
After reducing streaming ad prices last year, some TV networks secured price increases this year.
Networks also saw influx of new and streaming-first advertisers.

Disney offers the most prominent and public example of the part streaming played in TV networks’ upfront dealings this year. The company has said that more than 40% of the upfront ad dollars it secured was earmarked for its streaming and digital video inventory. It helps that Disney owns Hulu, which has historically been one of the foremost ad-supported streaming players in the upfront marketplace. But Disney wasn’t alone in seeing streaming and digital video account for a sizable chunk of commitments. Executives from multiple other TV networks said that streaming and digital video accounted for roughly 30% of the money they had secured.

Some TV networks issued requirements that a certain share of advertisers’ upfront commitments go to their streaming and digital video inventory. Others, however, found …read more

Source:: Digiday