- The TV networks will kick off their upfronts this week, pushing the staying power of their talent and shows.
- But advertisers are frustrated, saying the networks’ effort to battle Google and Facebook have stalled.
- They complain that cooperative efforts have stagnated while TV is still filled with ad clutter that’s a turnoff to viewers.
- Some say nothing will happen as long as TV ad spending holds its own.
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The TV giants will kick off their upfront ad-selling period this coming week, hoping to impress ad buyers with the glitz and emotional power of their talent and shows.
For now, though, some big buying and measuring initiatives have hit snags or fallen short — threatening the $70 billion TV business.
Take Open A.P., for instance. In 2017, WarnerMedia’s Turner, Fox Networks Group, and Viacom founded the consortium to make it easier for advertisers to buy audiences across those rival networks. Industry leader NBCUniversal joined it a year later.
But Open A.P. has lost two of its original champions, Joe Marchese and David Levy, who are gone from their senior ad sales roles at Fox and Turner, respectively. Earlier this year, Turner pulled out as its new owner AT&T decided to pursue its own audience-selling play, Xandr.
Open A.P. still has three big networks. It just installed its first CEO, former Fox Networks exec David Levy, which addresses a criticism that it didn’t have dedicated leadership. Open A.P. also promised to grow and expand the platform to simplify audience buying at scale.
Some agencies say Open A.P. hasn’t fulfilled its potential. They say it was designed for the networks, not the advertisers, who still have to negotiate deals network by network and can’t easily compare their performance. Open A.P. is only driving about 5% of spending right now.
There have been other setbacks on the measurement and buying front. Last year, agencies got excited when the big media measurement giants, Nielsen and Comscore, installed new leadership from the marketing worlds, firing up hopes that they would speed up the long-awaited move to measure everywhere people are watching TV, with the rise of cord cutting and digital viewing.
But Comscore’s CEO and president left earlier this year after less than a year after clashing with the board over the company’s direction.
In another high-profile initiative, NBCUniversal has rolled out CFlight, an ambitious effort to deliver ads across platform. But success meant getting rival networks to adopt it, which has been slow going.
Agencies also have their gripes with it. In accounting for multiple people viewing one show at the same time, CFlight uses an audience proxy rather than actual person-level measurement, which buyers are used to getting for digital campaigns, while asking for up to 1.5 times higher ad rates, said Jonathan Steuer, the chief research officer at Omnicom Media Group.
"That’s the thing that’s driving us and all our clients crazy," he said.
What happened to cutting ad clutter?
With people watching less traditional TV, NBCU, Fox, and Turner have made various promises to cut commercial clutter in hopes of improving the viewing experience and staving off cord-cutting. Networks also pushed short, six-second ads that are popular in digital. But in practice, ad time actually increased last year, and some insiders said the six-second ads didn’t perform as well as longer ones.
"Watching the industry kill itself is amazing," lamented a prominent industry insider.
Some insiders said the short ads didn’t perform as well as longer ones.
"Being able to communicate a message in six seconds is incredibly, incredibly difficult," said Dave Morgan, founder and CEO of Simulmedia, which helps advertisers buy targeted TV. "In 15 seconds you could say something to cause them to take an action. But it has to be really well understood."
Cutting ad time only works if advertisers will pay more for the scarcer ads (NBCU reportedly was asking for 40% to 70% more), which they’re reluctant to do unless they can be sure the ads will actually work better.
If networks can’t get advertisers to pay more for scarcer ads, addressable TV ads that are pinpointed at narrower audiences hold the potential to get more value out of TV. Advertisers are excited about this because it would let a carmaker show an ad for, say, a minivan, to just minivan buyers, rather than all potential vehicle buyers. But addressable TV hasn’t taken off for a host of reasons, on the measurement and advertiser side as well as the network side.
Meanwhile, advertisers can already do this targeting in lots of other places.
"I can go into Hulu and use an advanced target," said Ed Gaffney, managing partner and director of implementation research and marketplace analytics at GroupM. "I can go to Amazon and Target to find people who are most likely in market. There’s a lot of opportunity to get video ads in front of people."
All this means buyers are heading into upfronts with low expectations.
"I don’t know that we were going to get this great ‘aha’ moment," said Gibbs Haljun, total investment lead for Mindshare US, of the networks’ upfronts presentations. "There are going to be a lot of recurring themes, and none are going to be new. ‘Live programming still drives audience. Brand safety. We provide you full transparency.’ What we want to hear more about is the research and how we’re moving the industry forward."
Does the TV industry even want to change?
Some buyers wonder if the TV business really wants to modernize. After all, there are powerful forces keeping TV doing things the same way. It’s built on letting advertisers spray ads to mass audiences, not narrowly targeted ones. If TV companies let big advertisers buy addressable ads, they might realize they don’t need to buy as many of them.
Networks know that their heavy commercial loads risk driving away viewers. But cutting time means potentially sacrificing revenue because advertisers don’t want to pay more unless they see proof that scarcer ads perform better.
And if media sellers measure themselves the same way as everyone else, then it’s harder to make the case that they’re special and worth paying more for.
"Everyone’s trying to do things to differentiate themselves from their competition," Haljun said.
Sticking to the old ways could mean missed opportunities, though. Direct-to-consumer companies like Casper and Harry’s that started online are revolutionizing how people are being marketed to. The DTC companies are starting to migrate beyond Facebook and spend on TV advertising.
But they’re unlikely to be represented by an agency holding company, their budgets are relatively small for TV, and they expect real-time reporting on campaign performance that TV companies aren’t set up for and will cost more to manage.
Not selling addressable ads also means missing out on all the small to mid-sized advertisers that flock to Facebook because they can do neighborhood-specific targeting there that’s not possible on TV.
TV is changing, just not as fast as agencies would like
Agencies are optimistic that change will come when TV starts feeling the pinch as advertisers can cobble together enough audience on digital platforms that linear TV becomes less essential. The linear TV market dipped slightly in 2017 and again in 2018 as people shifted to digital viewing.
Buyers aren’t without sympathy. People like Steuer give credit to efforts like CFlight. They also acknowledge TV companies aren’t fully in control of their destiny as increasingly their shows are being watched on others’ platforms like Apple TV and Hulu.
"No matter how big CBS is, they’re not going to get full data on Apple TVs," said Chris Wexler, SVP of media and analytics at Cramer-Krasselt. "But more and more, the CMOs are digital natives and will demand the level of control they’re used to having in digital."
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