You can never truly guess how the Upfront season will go, but we made our predictions and the market played out much like we thought. Networks sought out volume over high CPM increases to hold back less inventory and avoid a repeat of this year’s soft Scatter market. We saw Linear dollars remain flat versus year ago and OTT up by 30%. Linear total spend in Primetime (Broadcast and Cable) was about $20B and OTT saw $9.4B. Categories that were the strongest players included retail, QSR, CPG, technology, pharmaceuticals, sports gaming and travel & leisure.

So How Did the Buyer/Seller Negotiations Fare in the End?

The Upfront season was going seemingly quick, wrapping up most holding companies by mid-July. However, there was no surprise that the Warner Bros. Discovery (WBD) negotiations had barely begun, causing a standstill. Working to set new bases, WBD started conversations with aggressive numbers, and agencies refused to agree on those terms. Other network partners said they’d welcome those additional dollars with open arms at their more reasonable increases. WBD eventually came down and wrapped up deals being the last major Upfront week player to cross the finish line.

The marketplace increases closed at rates not too far off from predicted, in the mid-singles to low double digits. Overall TV Upfront investments were driven by premium programming, live sports and news. Specifically, live programming/events were in demand and made it increasingly more challenging to find supply in Primetime.

OTT requirements were as expected – many advertisers naturally shifted dollars from linear to digital, following the consumer trend, and pricing was much kinder than YAG (year ago) as we saw flat to minimal increases.

We spotted a few more emerging trends but, in many instances, they were either not as strong of a lever to pull in negotiations, or the potential to test was both minimal and premature.

• Total Audience Guarantees were not required nor used as a lever for greater Rate of Change incentives. In most cases the switch was minimal, giving advertisers little reason to make the shift.
• DEI continues to be a priority for the industry, as strategy shifts to ensure content from both a programming and advertising point of view reaches different audiences, inclusive of all human experiences. Representation on screen was a common theme. Minority-owned media and minority-targeted networks/content found themselves in a unique marketplace with high demand.
• Nielsen alternative currencies were experimented by many advertisers, but very few deals were guaranteed on those alternatives in the Upfront.
  • 85% of Networks reported they were adopting new measurement providers but less than half of their advertiser clients are trying them
  • 25-49% of Upfront advertisers are still testing an alternative option to Nielsen

Other Marketplace News

• Disney: Disney+ announced that they will now offer their subscribers an ad-supported option, beginning 12/8
• Warner Bros. Discovery: Future plans announced to combine HBOMax and Discovery+. In the interim, CNN films and shows will air on Discovery+ and select Magnolia programming will be coming to HBOMax
• Univision: Launched ViX+; the premium SVOD tier of ViX – their ad-supported streaming service
• Netflix: Announced its recent partnership with Microsoft, to manage their ad-supported tier
• AVOD Streaming partners like Tubi and PlutoTV had seen a growth in Upfront spend. Strategy continues to add original programming to their growing library, hoping to drive greater subscription numbers in the near future.

Looking Ahead to the ’22/’23 Scatter Market

Dollars have been registered but with a looming recession, the real marketplace will show as dollars are ordered since there is still potential to cut budgets before finalizing. The Scatter market in the back half of 2022 had been soft as ad spend was estimated down 15% vs YA due to economic concerns. Other factors to low Scatter spend can be attributed to supply chain and product inventory issues. So with demand potentially down, we predict the Scatter market to be softer than in previous years.

Be Comfortable with Change

As much as we learned about change since the Pandemic began in 2020, we still find bits and pieces of the “old ways” in our negotiations. Networks want to revert to old cancellation terms. Advertisers want to hang on to their AD18-49 demo guarantee. Nielsen wants to remain as the main currency for the industry. That is all changing and it’s changing fast. Be prepared for more audience-based buying. Retrain your brain to know what “general audience” means (or doesn’t mean) in today’s culture. Plan based on impressions as video deals become more fluid across screens. There is still a lot to work out, but we, Empower, are already on the forefront with a lot of the moving pieces. Stay nimble in strategy and execution and we’ll see that greater return on ad spend that we always dreamed of.