TV’s upfront advertisers hold tight

Advertisers secured more favorable cancelation options in last year’s upfront negotiations, but they have been reticent to take advantage of them.

The key hits:

• TV advertisers have kept their upfront commitments rather than cancel a large percentage of their ad buys.
• Agency executives expect clients to retain their second-quarter commitments as cancelation deadlines near.
• Advertisers are keeping their commitments as advertisers’ businesses have rebounded and TV ad inventory has become harder to come by.
• Upfront advertisers keeping their commitments, combined with viewership shortfalls, is stretching an already tight TV ad market.

Upfront advertisers’ unwillingness to give up their precious TV inventory in the first quarter, combined with continued linear TV viewership declines, has tightened an already taut TV advertising market that will likely continue to tense up in the second quarter. “There were hardly any [cancelation options] that were taken for the first quarter. That’s really jamming up what’s happening right now,” said one agency executive.

Executives at other agencies also said advertisers largely did not invoke their upfront deals’ options to cancel a percentage — up to 50%, for some advertisers — of the ad dollars an advertiser had committed to spend a with a TV network owner in the first quarter.

“I’m not really seeing any major cutbacks outside of the normal cadence,” said a second agency executive.

“The expectation was that there would be more cancelations, but so far we haven’t seen that much of it,” said a third agency executive. “I heard of cancelations here and there, but nothing so pervasive that indicates a bottom falling out.”

While the bottom could fall out in the second quarter, it will more than likely hold. The deadlines for some advertisers to cancel a portion of their second-quarter upfront commitments are this week, but agency executives expect most clients to keep their commitments in tact. “We’re seeing clients continue to spend on linear,” said a fourth agency executive.

As with the digital ad market, the TV ad market has rebounded from the depths of last spring. Advertisers in industries like quick-service restaurants and retail saw their businesses largely withstand the pandemic and began to increase their ad buying in the second half of 2020. TV inventory was particularly prized for its ability to simultaneously reach a large number of people on the biggest screen in their homes and let them know a company was open for business.

However, as advertiser demand has flowed, audiences’ attentions have ebbed through the end of the fourth quarter and into the first. “Networks are continuing to face struggles with the ratings,” said the fourth agency executive. That …read more

Source:: Digiday

Author: Aaron