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The Death Of The Upfront, Scatter Takes Over – only 30% of TV inventory estimated to be sold

The song and dance of the Television Upfronts have gone virtual or aren’t happening at all. Historically, the main reason behind these events was to convince TV advertisers to spend 75% of their budgets at a discount for advertising futures. With content production being put on hold due to COVID concerns, advertisers remain skeptical of long-term contracts forcing broadcasters to shift these conversations to first quarter 2021 for the first time ever! The result is a flood of scatter inventory.

With a greater focus on budget flexibility, advertisers look to digital video. The total digital market makes up 54% of total advertising spend, 16% of which is digital video (source: eMarketer). Advertisers no longer want to lock themselves into long term contracts and Linear TV revenue forecasts are declining 30% because of it. Connected TV (CTV) & Over The Top (OTT) are now becoming larger opportunities. With digital video consumption behavior increasing 100% since March (source: Interactive Advertising Bureau), it’s no wonder why CTV/OTT has grown 70% YOY on vMVPDs. Due to the limited supply and increased demand CTV/OTT is one of the only channels garnering 20-25% CPM premiums. It can also provide advertisers with measurable outcomes, something traditional TV was never able to provide.

With a greater focus on digital, how will linear sales teams evolve? While TV remains a credible medium, the way in which advertisers purchase it will change forever. This change has companies rethinking if linear specific talent is needed. WarnerMedia is a prime example of this. Having purchased AppNexus in 2018, establishing Xandr in September of the same year and Kirk McDonald now taking on a larger role in combining Xandr’s ad-tech business with WarnerMedia, big changes are likely to come soon. As Xandr and WarnerMedia merge, they are quickly becoming a digital first audience-based solution with the potential to close the consumer loop through AT&T’s carrier data. This will no doubt leave less room for more traditional mindsets.

With so many digital video opportunities advertisers can now replace the reach of linear TV and combat the audience decline they’ve been seeing for the past five years. This approach allows budgets to stay flexible as COVID concerns continue. Here are some potential trends you may expect to see as we move into 2021:

  1. The market will continue to consolidate: Conglomerates with money to spare will use this as an opportunity to buy - the current rumor mill is betting on Microsoft’s purchase of TikTok.

  2. CTV/OTT will continue to grow: The use of pure-play virtual MVPDs to view CTV/OTT content will see an additional 30% growth as the holidays approach and we move into 2021.

  3. More AVOD options enter the market: WarnerMedia will launch their HBOMax advertising model in order to supplement audience and revenue declines while networks like Discovery and Univision launch standalone apps.

  4. Sporting tentpoles won’t exist for the near future: There will be a 15-20% growth in targeting sports audiences on non-sports content, considering that tentpole events like the World Series and Super Bowl won’t happen.

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