Falling CPMs and Demand Produce Slowest Upfront in Years

The 2023 upfront is officially a waiting game. Just one year ago, publishers brought in record commitments during 2022's upfront market, with NBCUniversal and Disney reporting their most lucrative upfronts ever, securing $7 billion and $9 billion in commitments respectively. And though Warner Bros. Discovery brought in a lower amount than its competitors, securing nearly $6 billion in commitments, it earned some of the highest CPMs (cost per thousand viewers reached), with increases in the low- to mid-teens. However, this year is a different story. The Ongoing Writers Strike Could Take Upfront Negotiations Off Script Thus far, every major publisher has yet to announce that they've closed upfront talks, which typically happens as early as mid-June, indicating those historic numbers are coming back to earth as negotiations drag on—and that the industry is in the midst of the slowest-moving upfront marketplace in recent memory. "Between where the economy is and the continued erosion in TV ratings, I think we're seeing demand down, and it hasn't been down in years," one media buyer told Adweek, speaking anonymously. "I think people are taking time to wait for the market to play out and for volume to grow a little bit." Though linear ratings have drastically declined in recent years with the rise in cord-cutters and streaming options, CPMs have continued to rise. However, multiple media buyers told Adweek that lower demand has a lot to do with CPMs finally coming down this year, leading to more softness in the market—outside of sports, which continues to be robust regarding demand and ratings. "Demand is down to a degree that I don't think it's been down in recent history from a linear standpoint," the buyer said. "Networks are probably hoping that they could scrounge up more money if they took a little bit more time." There's also more competition than ever among publishers as dollars continue to shift into streaming. Disney+'s ad tier is in its second year in the upfront market, Netflix's ad tier is in its first year, and Warner Bros. Discovery is rolling out new offerings with Max. “You’re seeing the real decline in linear economics, everyone pushing more toward streaming, the globalization of content, and you’re really at a crossroads," Michael Nathanson, senior research analyst at MoffettNathanson, previously told Adweek. "Therefore, I think this is going to be a very difficult negotiation because we’re such a changed industry.” And with more and more publishers jostling for dollars, even those enticing new streaming offerings are leveling out. Typically, new CTV offerings have entered the market with premium pricing; however, one buyer noted that CTV partners are starting to "right size" those initial premium packages. In this economy... Of course, uncertain economic conditions are also affecting the marketplace. Many execs on the publisher side have echoed the talking point of a second-half economic recovery, including Marianne Gambelli, Fox's ad sales chief, who spoke to Adweek following the company's upfront week presentation in May. Despite the optimism, advertisers are taking a wait-and-see approach, with Gambelli noting that clients are being "cautious" and are "reluctant to commit quickly." Unlike publishers, who may typically seek a faster market to lock in higher CPMs, advertisers aren't in any rush. "It's waiting on the market, and it's also waiting on the perfect flexibility terms for us," a second buyer said, speaking anonymously. "So there are some economic concerns from certain clients." A third buyer added that, though "everybody focuses on price," the slower market is pivotal for digging into deal terms and conditions. "Even though it's frustrating if it drags on too long throughout the summer, it gives us the time to talk through all of the other deal terms that we want," the third buyer said. "We want to know what the rate of change is going to be, but we need to talk about what our flexibility asks are, what our programmatic deal terms are, all of the other [things] that come along with it." Measuring the future of the upfront One of the other big factors coming into play during the slower upfront is measurement and currency. Though alternative currencies were all the rage ahead of last year's upfront, the execution wasn't quite there yet, with several industry insiders previously telling Adweek that progress was slow and one equating it to "12 months of false starts.” However, with the Joint Industry Committee bringing the topic of measurement and currency standardization to the forefront and Nielsen set to sunset C3 and C7, the industry's standard for TV measurement, in fall 2024, the currency conversation has accelerated in 2023 as marketers look to future-proof negotiations. "What is going to be our methodology? What's going to be our baseline? How are we going to build this? And then taking that to the partners," the second buyer said. "That's still ongoing, so that is being wrapped up into this negotiation as well." Strike zone Perhaps surprisingly, the ongoing Writers Guild of America strike isn't playing a major role in holding up negotiations, according to the buyers Adweek spoke to. For now, buyers are confident publishers will get a deal done with the WGA. Additionally, much of the upcoming programming, including unscripted fare, is already lined up for fall. The Most Memorable Moments of 2023’s Upfront Week "It's not five or 10 years ago when the bulk of it was dramas and comedies," the third buyer said. "And a lot has shifted to the streaming services as well." The wait for upfront talks to close will likely come to an end soon, as buyers told Adweek several publishers are in the midst of wrapping things up. And though the commitment dollars may be lower than usual, publishers will look to make up for that in the scatter market later in the year. In fact, scatter could help determine if the buyer's market continues. "With demand being down in the upfront, if scatter comes back, the economy turns around, that's going to change things. I don't think it's safe to say that this is what it's going to be like for the foreseeable future," the third buyer said. "If the situation stays the same, I think this would be the way of the world, at least for next year."

TV Upfronts

Falling CPMs and Demand Produce Slowest-Moving Upfront Market in Years

Publishers are trying to scrounge up more dollars in a softer TV ad market

Bill Bradley

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