Why This Matters TV networks will sell the bulk of their advertising inventory during the upfront, setting a financial tone for the new broadcast season.
Related: Upfronts 2017: Network Execs, Sales Execs and Buyers
Data might be dandy, but reach remains the reason why advertisers still buy good old-fashioned TV against a rising tide of digital.
This week, the companies that own the big broadcast networks make their pitch to media buyers. Most have consolidated their broadcast, cable and digital sales operations under a single leader, making it easier to produce campaigns that incorporate multiple networks, platforms and other corporate assets, reaching more people in more ways.
The broadcast networks represent the biggest attraction during the annual upfront season, and while media companies have pinned their futures to precision targeting, audience selling and other forms of advanced advertising to enhance the value of TV, for now, what they're selling is mass media-style reach.
It's important that the message be persuasive. Spending on TV advertising has been relatively flat, as ad dollars have poured into digital. But digital has been slowed by a yellow flag as issues of fraud, view-ability and finding ads placed next to objectionable content have made advertisers more cautious.
That could create an opportunity. Once this week's presentations are over, upfront negotiations will begin over how much advertisers will pay for the bulk of the commercials that will run during the 2017-18 season, setting a tone for the industry's financial future.
As always, the salespeople are optimistic.
They understand that they absolutely need the reach of broadcast television, said Jo Ann Ross, president of ad sales for CBS of her advertising clients. When Apple wants to introduce a new phone, where do they do it? When Google has their new Pixel phone where do they do it? When Netflix advertises they do it where? You fish where the fish are swimming and we have a big school of fish.
We think that Fox has the most unique portfolio of assets that allows us to not only generate reach at scale but also provide premium environments for advertising messages, said Bruce Lefkowitz, executive VP for ad sales, Fox Network Group. Fox is high-quality, innovative, breakthrough, bold.
Lefkowitz acknowledges that consumer behavior has changed and Fox sells ads in content online, through its app and in video-on-demand. We want to re-aggregate that fragmentation and we re-aggregate it across platforms in premium quality programming.
Other than price, Lefkowitz says that flexibility is something that seems to be important to buyers during this upfront. Clients want the ability to move spending commitment from one quarter to another, from one show to another. We're in the business of doing business and I think not to be flexible in this day and age doesn't make good business sense. We're going to find a way to do business with our customers, he said.
Related: Top Buyers See Networks Working to Keep TV Thriving
NBCUniversal has reserved $1 billion worth of its ad inventory for data-driven audience-based ad sales. But precision targeting is only effective if you have lots of viewers to pick from.
We want to make sure we're telling the story of the value of broadcast primetime, which still delivers the quickest reach out there, something that our digital friends can't necessarily do, and that's probably the biggest differentiating point that we have in the marketplace, said executive VP, ad sales, Mark Marshall, whose portion of NBCUniversal's portfolio features NBC and its entertainment cable networks including USA and Syfy.
THIS IS A HIT
What NBC has this year is that rare gem of a big hit in This Is Us, which was introduced at last year's upfront and grew in the ratings as the season went on. The price of 30-second spots also grew after the premiere.
I come from the sports world and it's the first entertainment show I've worked on in my four years here where people are calling like it's the Super Bowl, looking for their pod position and wondering what other advertisers are in their pod. It's that heavily watched, Marshall said.
Having a big scripted hit was a bit different from NBC's prior experience with The Voice and America's Got Talent, Marshall said.
These shows are consumed live, he said, but This Is Us was by far and away our biggest time-shifted viewing hit that we've had in the digital era.
When the show airs on Tuesday nights, it delivers 10 million viewers. But by the end of the month, it has more than doubled that, leading to a change in the way NBC will try to monetize the show.
We are going to look to sell things a little differently with This Is Us, to sell things on a more converged basis, which would be the first program we're looking to do that with, Marshall said. Time-shifted viewing or IP-enable programming had fallen a little bit in no-man's land. It's not TV, but it's not Facebook and Google, but it's an unbelievably valuable audience who's sought it out. So primetime isn't just 8 p.m.-11p.m., it's whenever these people choose to seek out this programming and they're doing that in record numbers, so we're looking to continue to evolve how we sell things.
Because it was a new show, NBC was limited in the number of sponsorships and integrations that could be done. But it did do branded content deals with General Motors' Chevy brand, as well as with retailer T.J. Maxx. For season 2, we're looking to find partners with whom we can do seamless integrations that are authentic, he said.
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Why This Matters TV networks will sell the bulk of their advertising inventory during the upfront, setting a financial tone for the new broadcast season.
