TV Upfront Numbers: Believe In 'Commitments,' Revenue, Or Flexibility?

• by Wayne Friedman , Staff Writer, 6 hours ago

TV upfront network proclamations have always been fuzzy.

But now TV network-based media companies' disclosures of big upfront “commitments” are more cloudy than ever.

The latest comes from Warner Bros. Discovery, which said some $6 billion in upfront deals in commitments were made at low- to-mid double-digit percentage cost-per-thousand viewer price gains versus a year ago.

This season, NBC was among the first to talk up $7 billion in upfront business at high single/low double digits. Then came other big companies -- Disney-ABC ($9 billion in total volume), Paramount Global (high single-digit CPM gains) and Fox Corp.(9% to 12% CPM hikes).

But this does not mean that all this business and revenues will stick.

Focus on the word “commitments.” As media buyers know, this can mean flexibility -- which is why some say that to an extent, the upfront market is a futures market.

Traditionally, upfront deals can mean that fourth-quarter upfront inventory commitments by advertisers are “firm” and the first quarter being 25% cancelable; and 50% cancelable for the second quarter and third quarters.

But those deal points have changed in today's just-in-time media-buying world. Marketers and agencies want ever more of that flexibility to adjust their ad spend -- and choice, something which digital media-first companies provide.

At the same time, TV networks now have their own big digital media inventory supplies -- in order to compete with the Rokus, YouTubes, and Amazons of the world.

While there seems to be a lot of choice for TV networks' streaming platforms, there can be limited inventory due to many limited advertising and subscription streaming models -- at least currently.

Think of the big picture. Traditional linear TV is around $65 billion to $70 billion in total advertising spend per year About $35 billion to $40 billion of that is national TV (upfront and scatter deals). Separate from all this, the connected TV industry -- of which streamers play a big part -- comes in at around $15 billion to $19 billion.

While linear TV viewing and ad spend continue to slip, we can easily see rising data overall for CTV. But not only that. There are Netflix and Disney+ ad options yet to come this year -- as well as growing broad-reach streaming video platforms like Tubi, Pluto TV, The Roku Channel, and others. (For its part, Roku claimed it had $1 billion in TV/streaming upfront commitments)

So, the question going forward is whether TV marketers will be able to increase their strategies to adjust their media buys amid seemingly more supply coming to the business. Or will high-demand CTV inventory make for more stringent deal points?