Networks and Buyers Prepare to Stand Their Ground in the Upfront Showdown

Double-digit demands, new data options highlight this year’s talks

Look for a bit more swagger on display than usual during this week's broadcast upfronts. For the past several months, network execs have eagerly pointed to this season's exceptionally robust scatter market as an indication that this upfront will be the strongest in years. Those boasts only intensified during the most recent round of earnings calls. As usual, Les Moonves, chairman, president and CEO, CBS Corp., led the charge, telling investors on May 3, "With these ratings, this schedule and the ad market on fire, we are salivating as we head into the upfront season." When asked whether he expected to secure double-digit price increases in the upfront, Moonves—whose network will win the season in total viewers and the 18-49 demo—responded confidentially, "Yes, I do."

In other words, while there will be lots of splashy fanfare on stage this week, the real upfront fireworks might not come until later when negotiations begin. Buyers, speaking both on the record and on condition of anonymity, said that while they also expect some increases this year, they aren't prepared to go anywhere near what Moonves is suggesting. "I don't think that advertisers are going to tolerate a double-digit increase," said one buyer. "I can't see the market bearing it, not with the ratings declines we've seen and the consistent shift in the way people want to consume content."

Especially when buyers have options on other platforms. "We don't want to keep paying more for less. The money's going to follow where the eyeballs are going," said another buyer, noting recent big moves like Magna Global's multiyear YouTube deal to invest $250 million into digital video, much of that coming from its TV ad budget.

"Double digits is not necessarily a place that clients want to go because then they start to pivot to other options, and I do think that linear television will be consumed in other ways that aren't measured. It provides a lot of value, but we have to be smart about what we do, and we can't overprice things," said Shari Cohen, executive director, media investments, GroupM. "If things get silly, then we can easily find other places to go to spend the money. If you've evolved, which we have, we're ready for anything that may happen."

Also complicating this year's upfront discussions will be a new portfolio of data capabilities, as several companies, including Fox and NBCUniversal, are making inventory available for programmatic advertising. Both NBCU and Fox also announced plans to transact on data-based, non-Nielsen currencies for the first time this year: Fox's Audience Insights Manager and NBCU's Audience Targeting Platform.

"It may not be the only deal we do with any particular advertiser, but it may be a component of a broader deal," said Toby Byrne, president, advertising sales, Fox Networks Group. "It's a big shift, a big capability, and different advertisers will have a different appetite for it."

Look for all of these new wrinkles to slow down the pace of this year's upfront deals. "For I while I thought it would probably move quickly," said one buyer. "Now, I think we might stare at each other for a little while before the market comes to terms on where people think it should be."

Others, meanwhile, are hoping that after all the posturing, both sides will ultimately be able to easily find common ground. "Everybody can make their predictions, but until a dollar is registered and a deal is done, they're just predictions," said Dan Lovinger, evp, entertainment ad sales group, NBCUniversal. "We anticipate having a terrific upfront, but ultimately one that satisfies our advertisers and agency partners as much as it does us."

This story first appeared in the May 16, 2016 issue of Adweek magazine.

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