This week\u2019s Future of TV Briefing looks at how fluidity is the new f-word heading into this year\u2019s TV advertising upfront cycle.<\/p>\n
Fluidity is the new flexibility.<\/p>\n
\u201cFlexibility\u201d has been the big buzzword in each of the past three upfront cycles. But this year the term seems to be taking on a different meaning as TV and streaming ad buyers and sellers head into the annual negotiation season, based on recent conversations with executives at TV networks and agencies.<\/p>\n
\u201cClients are making decisions much closer to airdate, and they want to be able to shift a little bit. So we have to allow some form of flexibility or fluidity, ideally with still a firmness to spend,\u201d said one TV network executive.<\/p>\n
\u201cClients are starting to look at budgets as much more fluid. So maximum flexibility will again be something that will help certain partners gain share,\u201d said one agency executive.<\/p>\n
OK, so both executives used the terms \u201cfluidity\u201d and \u201cflexibility\u201d interchangeably, which can come across as confusing. But the equivalence kinda hits at the heart of the matter. Yes, advertisers and agencies still would like looser cancelation options for their upfront commitments, but the flexibility conversation has advanced beyond upfront deals\u2019 out clauses.<\/p>\n
In this year\u2019s upfront cycle, the focus isn\u2019t so much on advertisers being able to take their money out of an upfront commitment but on how their money can move around within the confines of an upfront deal, from advertisers\u2019 programmatic spending counting toward upfront commitments<\/a> to networks\u2019 moving advertisers from streaming to linear and vice versa to fulfill viewership guarantees.<\/p>\n \u201cWe want to be putting deal terms in place that allow us to transact directly, programmatically, whatever makes the most sense for our clients. All the pipes are connected. It\u2019s not either-or,\u201d said a second agency executive. \u201cAs we go into the marketplace, we do need to put more focus on considering that as we set up the framework for these deals.\u201d<\/p>\n A glaring issue for both upfront ad buyers and sellers has been the relative ricketiness of advertisers\u2019 upfront commitments in recent years. This issue came to a head last year when TV networks saw advertisers cut their upfront orders from the initial commitment amounts<\/a> to a greater degree than usual. Considering the economic downturn, executives at TV networks and agencies believe it may be even harder to get advertisers to commit this year, fueling the expectation among some executives that the amount of money committed in this year\u2019s upfront will be lower than last year\u2019s bounty. And TV network executives acknowledged that it\u2019s something of a fool\u2019s errand to expect advertisers to be able to come up with budgets in the spring and for those budgets to remain relatively unchanged come fall, let alone by next spring.<\/p>\n \u201cMore and more, you\u2019re getting these kinds of fake-pledge budgets,\u201d said a second TV network executive.<\/p>\n This is why the upfront model appears on the precipice of actually \u2014 finally \u2014 changing, if not entirely but still significantly. TV networks are talking about a pay-as-you-go model that would let advertisers\u2019 in-cycle programmatic spending count toward their upfront commitments.<\/p>\n Beyond that, there\u2019s likely to be a leveling between TV networks\u2019 primary inventory sources: linear TV and streaming.<\/p>\n Over the past couple years, TV networks have pushed advertisers to purchase their streaming inventory and even pushed away dollars earmarked for linear. This year the push-pull may be less one-way. As much as ad-supported streaming viewership continues to grow, the likes of Netflix and Disney+ have shown that ad-supported streamers can struggle to satisfy advertisers\u2019 reach demands. And of course, this dynamic remains at play on the linear side, as pay-TV subscribers continue to cut the cord.<\/p>\n \u201cWe have to have the flexibility to move from linear to digital or back a little bit throughout the year. It can\u2019t be as rigid,\u201d said the first TV network executive.<\/p>\n That fluidity between linear and streaming raises a bunch of questions, though. For starters, how would this fluidity affect linear and streaming ad prices, especially as ad buyers have railed against streaming services\u2019 rising rates?<\/p>\n \u201cWe\u2019re probably going to have to play ball, depending on where it\u2019ll all fall,\u201d said a third TV network executive.<\/p>\n Again, it\u2019s a fluid situation.<\/p>\n \u201cI think this year is the first true year that streaming [ad spending] will surpass traditional TV.\u201d<\/p>\n \u2014 Agency executive<\/em><\/cite><\/p><\/blockquote>\n 11%:<\/strong><\/a>\u00a0Percentage increase in U.S. advertisers\u2019 spending on TikTok in March despite the potential for the U.S. government to ban the app.<\/p>\n $150:<\/strong><\/a>\u00a0How much money a creator with 42,000 Instagram followers was offered for a branded Reel and branded story through Instagram\u2019s Creator Marketplace.<\/p>\n 4:<\/strong><\/a>\u00a0Number of months after Disney+\u2019s ad-supported tier debuted that it finally became available on Roku\u2019s connected TV platform.<\/p>\n 52%:<\/strong><\/a>\u00a0Percentage of surveyed U.S. adults that subscribe to a pay-TV service, roughly the same percentage as surveyed a year ago.<\/p>\n How TikTok agencies work \u2014\u00a0and why they don\u2019t fear a U.S. ban of the app:<\/strong><\/p>\n Read more about TikTok\u00a0here<\/a>.<\/em><\/p>\n Why advertisers are still waiting on the CTV promised land:<\/strong><\/p>\n Read more about CTV advertising\u00a0here<\/a>.<\/em><\/p>\n A look at the hidden teams behind successful creators:<\/strong><\/p>\n Read more about creators\u00a0here<\/a>.<\/em><\/p>\n Why Comcast could win the Hulu deal with Disney:<\/strong><\/a> Artificial intelligence vs. intellectual property:<\/strong><\/a> TikTok tests creator commerce program:<\/strong><\/a>What we\u2019ve heard<\/h2>\n
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Numbers to know<\/h2>\n
What we\u2019ve covered<\/h2>\n
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What we\u2019re reading<\/h2>\n
Comcast could still end up selling its stake in Hulu to Disney, which owns majority control of the streaming service, but Hulu is losing money and has lost some of its value as TV network owners like Comcast-owned NBCUniversal pull their programming from it, according to The Information.<\/p>\n
Generative AI tools like OpenAI\u2019s ChatGPT and Midjourney pose a threat to intellectual property owners like Hollywood film and TV studios depending on how the legal system interprets the application of copyright law to the AI tools, but they also provide a means of making the production and post-production process more efficient and cost-effective, according to The Wall Street Journal.<\/p>\n
TikTok has started testing an affiliate shopping program for creators to promote products on the platform and receive a commission when people click to purchase a product through TikTok Shop, according to Insider.<\/p>\n