Where Have All the Upfront Dollars Gone?

Online is only part of the answer

It's obvious by now that something has gone wrong in the television advertising world—upfront dollar volume fell by 6.1 percent to $18.125 billion, including a 4.7 percent hit for cable, which dipped for the first time in four years to $9.675 billion. So, where are those dollars going?

More than one source has suggested that we're finally seeing the advent of digital advertising: With so much inventory on the market, it just makes sense that some TV dollars are shifting to digital video, where it's easy to buy cheaply and in bulk for an ad to run next week. But even digital video sellers caution against making such a blanket assertion.

Jason Krebs, head of sales at Maker Studios, has seen a "noticiable uptick" in marketer spending but isn't entirely sure where the dollars are coming from.

"You can never tell where the money is coming from specifically unless the client verbally tells you, 'I have taken this money from my TV spend,'" and of course, nobody says that out loud," Krebs said.

Krebs suggested that the shift may not be from a TV budget to a digital budget, but rather toward an overall video spend that includes everything on the market, given that many of the ads are the same on TV as online.

"Advertisers say, 'Now we have a general video budget and we address it across screens where we see fit,'" Krebs said. "More and more people are video planners and buyers and from what we see that’s healthy, because as a Disney company we have many different platforms and work across all of them."

Scatter prices may not go up

What's interesting about the overall spending shift is that it seems to be away not necessarily from TV advertising in general but from upfront buying specifically. The implied threat to buyers who bow out of the upfront bazaar is that scatter prices will be higher once hits are established. During the upfront, buyers purchase inventory on new broadcast shows mostly on the strength of their gut feelings and their faith in the network to promote new material.

But if everyone holds back cash from the ufpront at once—as appears to have happened this time around—there's not nearly as much scarcity when time comes to move the inventory in the fall.

And with a dismal hit rate among broadcast networks and a rapid turnaround for new, high-end analytics on both television and digital platforms, the opportunity to place your ad dollars where you can know beyond a gut check that you're reaching customers—well, that may be worth taking that step back from the upfront market.

Ad budgets down?

One thing that most in both digital and TV worlds have noticed is that those dollars from last year aren't all out there yet—not in either market. There wasn't as much cash committed during the upfront, and while the NewFronts boosted the profile of some companies, the digital advertising market (which is a fraction of the size of TV) didn't explode overnight.

As one buyer put it, "I think it’s more like they’re either a, going to a bottom line, b, going to digital or c, being held for flexibility to do anything with."

Traditionally, clients give media agencies a certain amount of money and say, "Spend it, or else." In a lot of ways, consolidation has been good for those buyers, because they can go to Linda Yaccarino at NBCUniversal, for example, and buy multiple broadcast networks and dozens of cable channels at once. But given the fluctuation in TV ratings, marketers may be considering if it's worthwhile to spend.

"I think it’s just coming down to more real time decisions," the buyer said. "Clients get away with it in digital and want to try to think about it more in TV."