For the first time in three years, the circus returns to town.
The television industry’s largest showcase for advertisers, the so-called upfronts, will return to Manhattan landmarks like Radio City Music Hall and Carnegie Hall after the pandemic puts glitzy, personal galas on hold. As in the past, media executives will pitch their best to convince marketers to buy tens of billions of dollars of commercial time in the coming months.
But thanks to the vastly changed media industry, many aspects will be radically different. The companies themselves have changed: CBS merged with Viacom and then renamed itself Paramount Global, and WarnerMedia and Discovery completed a mega-merger to form Warner Bros. Discovery. Tech giant YouTube is making its debut in the presentation series this week, and there’s already some intrigue that Netflix could join the fray next year.
And rather than reveal prime-time lineups to be released in the fall, media companies are expected to spend much of their time discussing advertising opportunities on streaming services like HBO Max, Peacock, Tubi and Disney+. There’s a good reason for this: Advertisers are now spending nearly 50 percent of their video budgets on streaming, up from about 10 percent before the pandemic, several ad buyers said in interviews. Free ad-supported streaming platforms Tubi and Pluto were highlights for their owners, Fox and Paramount, in the most recent quarter.
“In the past, the pre-announcement was ‘Here it is 8:00 p.m., 10:00 p.m. Monday night’ — I don’t think anyone cares about that anymore,” said Jon Steinlauf, the chief sales officer for US advertising for Warner Bros. Discovery. “You’re going to hear more about sports and things like Pluto and less about the new procedural drama on Tuesday night.”
The courtship is no longer one-sided, as unwilling streaming platforms once had a stiff arm against commercials. As subscriber growth for many streaming services begins to slow, advertising – a mainstay of traditional media – is gaining popularity as an alternative source of income.
Netflix, which has resisted ads for years but plans to launch an ad-supported tier later this year after a subscriber slump, is expected to play a bigger role in future upfronts. Disney+, which has so far continued to increase its subscriber base, said this year it would also offer a cheaper option, supported by advertising.
“Streaming is part of every conversation we have – there’s no exception based on who you’re targeting because whether you’re targeting 18-year-olds or 80-year-olds, they all have access to connected TV at this point” , said Dave Sederbaum, head of video investment at Dentsu ad agency.
Last year, ad buyers spent $5.8 billion on national streaming platforms, a figure dwarfed by the $40 billion allocated to national television, according to media intelligence agency Magna. But television sales peaked in 2016 and are expected to fall 5 percent this year, compared to a projected 34 percent increase for streaming ad revenue as services offer more pre-produced and live content.
Rapid changes in viewing habits have led many marketing executives to move towards ads placed through automated auctions and “away from outdated models like upfronts” where “advertiser choice is limited,” said Jeff Green, the CEO of ad technology company The trade desk.
“As advertisers see the reach and impact of traditional cable TV diminish, they are focused on moving to premium streaming content,” he said during his company’s earnings call last week. “Increasingly, this is the most important purchase on the media plan.”
But streaming won’t be the only topic at the forefront – the events themselves will also take center stage.
After two years of pre-recorded pitches from executives’ living rooms, buyers will fly to New York from across the country. They will commute between major venues to watch presentations while sitting next to their competitors. Some locations ask for proof of vaccination, while masks are a must at some; Disney demands a negative Covid test on the same day.
For many networks, hosting a personal upfront was non-negotiable this year.
“This show can’t be too big,” Linda Yaccarino, the chair of global advertising and partnerships at NBCUniversal, told the producers of the company’s presentation at Radio City Music Hall on Monday. “Having everyone together in the room, there’s no substitute for that.”
“Every brand and marketer and advertiser comes in for the first week,” said Rita Ferro, president of Disney Advertising Sales and Partnerships. “It’s going to look and feel very different because it’s very different – there’s so much more that we’re bringing to the stage.”
Many of the week’s showcases will avoid a detailed overview of nightly prime-time schedules and instead offer a more holistic view of available content platforms.
Mr. Steinlauf, the advertising executive for Warner Bros. Discovery, who has decades of experience, described changes that represent “the biggest change in my career.” He said streaming was “the future, the new frontier” and heavily-watched athletic events were “the new prime time.” Warner Bros. Discovery will make its debut in front of 3,500 people at Madison Square Garden on Wednesday.
Jo Ann Ross, Paramount’s Chief Advertising Revenue Officer, said Wednesday’s event would “provide a broader view.” She described it as a “coming-out party like Paramount” for the company formerly known as ViacomCBS.
“It will feel different from the past,” she said†
On Tuesday, Disney will leave its usual home in Lincoln Center and move to a space on the Lower East Side at Pier 36. The presentation will see its three streaming platforms — Hulu, ESPN+ and Disney+ — share a stage for the first time. NBC Universal will highlight its technology capabilities, such as data collection, while also ramping up its Peacock streaming platform, although the service already made a pitch earlier this month at NewFronts, an event for digital companies courting Madison Avenue.
Competition can lead to more demands from advertisers, such as the ability to meet commitments and lower barriers to how much buyers have to spend.
“It’s basic economics — there are more options available to media buyers now, and so you’re going to see a lot more willingness to be flexible,” said David Marine, the chief marketing officer of the real estate company Coldwell Banker.
Potential problems for advertisers this year could include Russia’s war in Ukraine, global delivery issues and steep inflation, Magna said. But low unemployment and other signs of strength from the US economy, along with the upcoming midterm elections, are expected to fuel a rise in ad spending.
How the upfronts address these concerns, along with deeper moves in the industry, “will be telling,” said Katie Klein, the chief investment officer at the agency PHD.
“There will always be room for the upfront, there will always be a need for it,” she said. “But it will evolve as our industry evolves.”