Buyers Expect Staggered Upfronts Marketplace as TV Ad Forecast Remains Murky

'We don't know when the world will be back,' explains one marketer

a bunch of TVs overlaid with a question mark
Advertisers have many questions—and few answers—about what the TV marketplace will look like over the coming year.
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Key insights:

For the past month and a half, the TV industry has been grappling with the fallout from the Covid-19 pandemic, which has halted Hollywood production, canceled almost all live sports and will cause an estimated $10 billion ad revenue loss in the first half of 2020.

While buyers and advertisers continue to navigate their necessary short-term coronavirus-related moves—adjusting ad spend and messaging—they are not ready to think long term yet. With so many unanswered questions about the economic impact of the crisis on their respective businesses, this year’s upfront marketplace will not take place during its usual early summer timetable. (Already, May’s upfronts week has collapsed, as most media companies delayed their virtual events.)

Instead, because of the continued economic uncertainty across the country, coupled with TV’s production shutdown, buyers tell Adweek that this year’s upfront negotiations will likely operate on a staggered schedule, with clients and categories engaging in talks at various times during the second half of the year.

A more pressing issue for many marketers is their looming third-quarter options, which give them the ability to cancel some of their third-quarter buys made during last year’s upfront negotiations. Many of those options must be exercised by May 1—though there are indications that some media companies will allow those deadlines to be extended—and are likely to further blunt the TV ad marketplace.

According to new data from eMarketer, U.S. TV ad spending will decline by between 22.3% and 29.3% in the first half of 2020 compared to previous forecasts, a loss of between $10 billion and $12 billion in revenue. This morning, AT&T released its quarterly earnings, revealing that first-quarter advertising revenue had fallen 24% year over year to $957 million—a loss of $304 million—as a result of the pandemic.

No one’s up for an upfront yet

With no clear picture of when the economy may be able to bounce back or when it will be safe for Americans to stop sheltering in place, advertisers are not in a position to talk about upfronts.

“I don’t know what type of client is willing right now to commit money in 2020. We don’t know when the world will be back,” said one buyer, speaking anonymously. “I can’t imagine any client’s CEO or CMO or CFO approving money right now for fourth quarter—at least any substantial enough money to create a marketplace. Who knows what’s going to happen with automotive and theatrical; there’s so much unknown for those big categories right now.”

“I don't know what type of client is willing right now to commit money in 2020. We don't know when the world will be back."
Anonymous ad buyer

While pharmaceutical, insurance companies and streaming have increased their ad spends during the pandemic, travel continues to be hit hard. The food industry is a mixed bag: Casual dining is taking a hit as restaurants have closed, but QSR brands are pushing their delivery options.

Multiple advertising organizations have been conducting talks among marketers and publishers about the upfront marketplace, according to sources, including the 4A’s and Association of National Advertisers, and many upfronts week presenters are gathering today for the VAB’s semiannual board of directors meeting, where upfront plans are expected to be discussed.

While some people are advocating for a switch to a calendar-year upfront, buyers said a staggered approach is more likely, depending on when a particular company is ready to go to market.

As one buyer explained, “Key categories are going to have different timelines on when they’re ready to make commitments. What might be good for CPG may not be good for travel, and what might be good for travel may not be good for auto and so on and so forth.”

Because of that, “I don’t think we’re going to have a unanimous decision. I think we’re just going to have to spend an enormous amount of time listening to our clients—as we have already been doing—gathering the information and weighing the options. And then, as we always do, dive in when we think we see opportunity. That’s how we’ve always negotiated,” said Catherine Sullivan, chief investment officer for North America at Omnicom Media Group.

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