In a few short weeks, most will kick the summer off with cookouts and swimming pools – while we media folk embark on the most wonderful time of year as video buyers: the Video Upfronts 23/24. And, honestly, we wouldn’t have it any other way. Let the negotiations begin!
What are the Video Upfronts?
The Upfront refers to the time of year when advertisers and their partner ad agencies negotiate year-long deals with video content publishers like NBC Universal or connected TV and streaming publishers like ROKU or Netflix. These deals are negotiated based on a one-year commitment to spend big bucks on their video properties.
As we take our seat at the table with the various video publishers, here are a few of the bombshell predictions we expect to see play out in negotiations.
Dollar volume, demand, and CPMs
Despite the news of a looming recession, advertising dollars negotiated in the Upfront will be flat to up slightly versus those committed in the 22/23 upfront, which exceeded $20B.
While volume is predicted to be relatively flat, the demand for the ad-supported video supply these publishers are selling is expected to remain of high interest to advertisers despite the amount of supply on TV continuing to decrease. The number of eyeballs watching television content on the TV screen in its traditional sense is diversifying across other screens like mobile and tablet. Consumers are still watching the content these publishers are creating, they are just consuming it through non-traditional means like SmartTVs, phones, and tablets.
The lure of the Upfront will also entice advertisers to protect those coveted “base rates” by having their agencies negotiate their Cost Per Thousand (CPM) rates of change and guaranteed delivery. Brands will do this to avoid Scatter market increases where dollars are placed quarterly, typically with non-guaranteed delivery. These increases in Scatter could be anywhere from 5-15% over this year’s Upfront.
As far as year-over-year CPM (Upfront audience currency) increases are concerned, we predict the market to trend anywhere to mid-single digits to low double digits depending on the network or daypart for linear impressions. For digital streaming impressions, CPMs have typically been averse to rate-of-change increases. This year, we could see publishers tack on heftier increases due to the expected higher digital demand.
As mentioned, impressions are diversifying away from linear TV to streaming content on other screens. A large part of these impressions includes audiences who are younger and those who have cut the cord from broadcast and cable. To reach these coveted audiences, advertisers are expected to allocate upwards of over 20% of their budget specifically for digital video extensions. This demand could result in higher increases from mid-singles to low double digits for the first time.
Digital video also provides advertisers the opportunity to bring incremental reach to their overall video strategy. Seeking proof of incrementality via brand studies will be key in negotiations to prove awareness KPIs for the overall strategy. This would hold the upper funnel tactics to the same outcome standards as the lower funnel. Should results bring the proof they are intended to, video publishers will inevitably look to vie for more budgets from lower funnel tactics to further drive awareness.
We expect the need for flexibility to remain a hot negotiation point for advertisers and agencies this year. Due to the economic outlook, video buyers will look to push for flexibility on linear execution timelines to be closer to start dates for brands and shorter cancellation periods where brands are allowed to opt out of a portion of their Upfront dollar commitment. Buyers will also look for flexibility to shift out of tactics – or cancel altogether – should the business outlook require them to do so.
On the flip side, anticipate publishers to push advertisers with digital investments to mirror their deadlines for the linear side of the deals. Current IAB cancellation standards are 14 days. We could see these terms move to 60-90 days out for commitment based on linear optional terms.
As advertisers allocate budgets across the various video screens and shift to more strategic or addressable audience-based buying over age/sex demos, the desire for standardized measurement across video continues to be a hot topic in the industry.
OpenAP formed a JIC (joint industry committee) with a group of publishers like NBCUniversal and Warner Brothers Discovery, along with streaming platforms like ROKU, and even the Video Advertising Bureau to create a set of standardized data to transact from measurement companies like iSpot, VideoAmp, Comscore and 605.
Who’s missing? Nielsen. In late April, the company informed OpenAP they would not participate as they don’t agree with the set of requirements issued by the JIC. Nielsen has said these requirements are biased and not supported by statistical evidence.
While this Upfront will be a “fruit salad” of measurement opportunities for advertisers to test, measure, and learn how their audiences perform across the video landscape, don’t expect one to come out the sheer winner, at least this year. The bickering is expected to continue and cause a stalemate in measurement standardization.
At Curiosity, we will look to evaluate alternative currencies in this year's Upfront based on our client’s goals and test and learn in this space. We will learn and optimize based on these learnings for future video initiatives.
The Writers Guild of America, representing 11,500 screenwriters, went on strike on May 2 after contract negotiations with studios, streaming services, and networks failed.
The Guild negotiates and administers contracts that protect the creative and economic rights of its members; conducts programs, seminars, and events on issues of interest to writers; and presents writers' views to various bodies of government.
The Writers want:
- Increased pay - Starting pay has not kept up with inflation.
- Better residuals - Writers used to be hugely compensated for their programs going into syndication, but now that they air on streaming, the value/pay is being underreported due to streaming services not sharing viewership data.
- Staffing requirements - During the pandemic, a rise in “mini rooms” emerged with a limited number of writers working on a series. This concept has remained, causing writers to be short-staffed and overworked.
- Shorter exclusivity deals - Historically, writers worked on 22-25 episodes per year. But with the shift to shorter seasons where a show may only have 8 episodes, the writers are still tied to longer deals, limiting them from working on other programs.
- An assurance on AI - Writers want safeguards in place to protect themselves from being replaced by AI.
The impact of the strike has already been felt with the late night talk shows and production schedules for original content across linear and digital platforms, in some cases halting it altogether. As for the Upfront, buyers may view this as a determinant to place dollars with publishers who are unsure what they will be putting on-air and shift dollars to those with deeper pipelines of original content already produced or to other tactics.
Is there an end in sight? Yes, it will eventually end, but it is anyone’s guess when that may be and how much publishers are willing to lose from their pocketbooks before taking a seat at the bargaining table to come to a resolution with the writers.
In the end
The economy, measurement mess, and writer’s strike all point to a Video Upfront that will break, like it normally does, not long after your Memorial Day celebrations. However, the swiftness of negotiations will be anything but swift. Expect a long, drawn-out Upfront, lasting through the summer.
Video, specifically television, is still the “mass that feeds the grass” and advertisers who need awareness know it plays a big part in securing the reach needed to build it. Linear, complemented with digital, will be bigger this year and agencies need to ensure they help brands prove out the bigger shifts by putting a lens of measurement across their investments.
At Curiosity, we recommend our clients remain nimble in their approach to the Video Upfront and, with our help, navigate all the moving pieces with an open mind. Get comfortable being uncomfortable with the new ways of deploying. These will be just the beginning of the changes yet to come. Keep an open mind to testing, learning, and optimizing in environments across measurement, video platforms, and audiences. Join us in getting hyped up about, yes, the most wonderful time of the year! Hello, Video Upfront 23/24!