As media planners gather in New York for the annual upfronts, this season’s talking points are emerging: a debate about “alternative currencies,” the impact of a slowing U.S. economy, what constitutes premium content, and a Hollywood writer’s strike that threatens the production of that very content.
Significantly, this is the first upfront since streaming viewership reached a new milestone last July, when it surpassed cable viewership for the first time. That fact underpins the changing economic model of this year’s upfront negotiations, which are more focused than ever on programmatic buying and selling. While the upfronts remain a legacy seasonal event, does programmatic dealmaking signal a shift in the market toward an “always on” model?
“Programmatic has a seat at the table within the upfront conversation […] for the first time,” Samantha Rose, EVP of strategic investment at Horizon Media, tells The Current. “We’re having a lot more significant conversations about how we want to activate and how we want to work together prior to the upfront.”
Programmatic buying was present in previous years, she notes, but it often happened after the negotiations were complete, sometimes as an add-on. Now programmatic is becoming an integral part of the dealmaking on both the sell side and the buy side, she says. With Netflix joining the upfronts for the first time, and five U.S. media conglomerates all marketing their ad inventory tied to streaming, the marketplace has rapidly scaled as a precursor to this shift.
“There had to be enough of an exchange of media within streaming video for [programmatic] to be important. And that’s happened in the past several years,” says Rose. The fact that more inventory is now available programmatically — in programmatic guaranteed (PG) and programmatic marketplace (PMP) deals — is another driver. At the same time, she explains, clients are getting more comfortable activating programmatically, with recurring activations and not just one-off programmatic executions. “We’ve gravitated toward the idea of using programmatic for better frequency distribution, a better consumer experience, as well as increasing the reach of our campaigns,” she says.
To be sure, connected TV (CTV) is the fastest-growing ad format in the United States, according to a recent study by Insider Intelligence, even factoring in a slowdown in the economy. U.S. CTV ad spend is anticipated to increase by 21 percent to over $25 billion in 2023 and is expected to continue growing by double digits through to 2027, according to the study.
That said, as a percentage of total digital ad spend, investment in CTV is low, averaging less than 10 percent of total ad spend, according to the data. “This is a missed opportunity, and we generally recommend that CTV and streaming video spend should be at least 10 percent, but preferably closer to 20 percent and in some cases as high as 30 percent,” Michael Leichman, the associate vice president at Analytic Partners, tells The Current. The global agency, which helps marketers optimize their brand performance, recently published findings that CTV drives 30 percent higher ROI than other channels, including search and social.
As marketers factor ROI into their upfront planning, the question of measurement is also critical and has become the source of “very heated” upfront discussions around alternative currencies for measurement, according to Rose. The shift to streaming has unsettled the historical practice of relying on Nielsen’s U.S. TV ratings, according to a report in the The Wall Street Journal. Competitors like Comscore Inc., VideoAmp, and iSpot.tv have emerged with their own measurement products, which have gained momentum at this year’s upfront.
“There’s been a ton of innovation and improvements [in measurement] in the last year,” says Danielle DeLauro, the EVP at the Video Advertising Bureau. “Whether it’s Nielsen or any of the alternative measurement providers…, we’re going beyond testing and learning to actually trading in CTV streaming,” she says.
The Video Advertising Bureau (VAB) recently published a study called You Oughta Know — inspired by the Alanis Morissette song of the same name — intended to help marketers assess the value of video measurement and explain why all impressions aren’t created equal. “We found — regardless of platform — that premium, professionally produced content outperforms other video sources in ad effectiveness,” she says.