As the digital rebellion chips away at profits, the broadcasters are coming out swinging, pitching less commercials and better measurement — and swiping at recent Silicon Valley scandals — to secure $9 billion in ad sales.
The $70 billion television advertising market is at a crossroads — buffeted by peripatetic consumers and deep-pocketed Silicon Valley players many years into an incursion on content and distribution. But legacy media companies are fighting back and are gearing up to present their battle plans.
During the upfront presentations in New York — beginning May 14 — the broadcasters (ABC, CBS, Fox, NBC, The CW and Spanish-language net Univision) as well as ESPN and the Turner networks will present a dizzying array of charts and graphs to demonstrate their scale and efficacy in an effort to get media buyers to commit an estimated $9 billion to the 2018-19 season.
These players go into the annual sales bazaar amid a roaring economy and high consumer confidence that network ad sales chiefs insist are harbingers of a strong upfront. But the narrative for linear television — declining live viewing and ad skipping — is a stubborn one. Total consumption may be at an all-time high, but live ratings are near a nadir.
With the recent and very public debacles at YouTube, Twitter and especially Facebook, this year presents a unique opportunity. By touting TV’s safety and an embrace of new tools, legacy brands will try to shift the narrative and grab more cash than ever. Here’s what they’ll be touting.
WE’RE SAFE, THEY’RE SCARY
Legacy media executives have made the slipshod brand safety standards of digital companies a running theme in their presentations for at least the past two years. Weeks before 2017’s upfront, several large companies pulled ads from YouTube after it was revealed that spots were running with offensive content. Yet holes in content filters remain; on April 23, YouTube announced that it had removed more than 8 million objectionable videos during the last quarter of 2017 — a problem CEO Susan Wojcicki addressed in her NewFront pitch to advertisers: “We apologize for letting some of you down. We will do better.”
This year, Silicon Valley has handed broadcasters another giant club in the form of the massive Cambridge Analytica data breach at Facebook that forced Mark Zuckerberg to take the congressional hot seat. “Cambridge Analytica has changed everything,” says Daniel Ives, chief strategy officer at data marketing firm GBH Insights. “So far the damage has been containable. Over the coming three to six months, we’ll have a better barometer. We’re talking about a fundamental shift in the landscape. The second half of 2018 is going to be a treacherous landscape for these digital players.”
Linda Yaccarino, NBCUniversal ad sales chairman, has been a persistent critic of Silicon Valley. Last year, from the stage of Radio City Music Hall, she skewered her digital competitors (“Let’s be honest: Brand safety is a low bar, and some companies can’t even get that right.”) And she certainly will hammer that point again. “It’s really about the lack of discipline — from a gigantic large-cap company — and the loss of trust,” she says. “It’s going to take a long time to regain that trust.”
WE CAN STRIKE SURGICALLY
The key for broadcast networks is to shift the market to a metric that effectively counts viewers wherever they watch content. Nielsen — upon whose data most ad guarantees are still written — has products that claim to track viewers across all platforms; last year it rolled out its Total Content Ratings. But many in the industry are dissatisfied that TCR truly captures every view on every platform, and instead of holding their breath for major innovations from one of their favorite upfront whipping boys, all the major media companies have introduced proprietary tools that purport to give advertisers a more complete picture of how many people watch their spots and on which platforms.
Ahead of the 2017 upfront presentations, Turner, Fox and Viacom announced that they would join forces on an audience targeting tool called Open AP, which uses data from Nielsen, comScore and others to allow advertisers to target consumers beyond standard categories of age and gender. The tool facilitates so-called “audience buying” deals, which allows advertisers to target consumers based on more precise attributes such as first-time car buyers, new mothers or eco-conscious consumers. The venture is unusual because it has competitors joining forces; and in April, NBCUniversal announced that it would also join the consortium.
Meanwhile on April 5, NBCUniversal unveiled CFlight, which measures all live, on-demand and time-shifted commercial views within full episodes of NBCUni shows, wherever the consumer is watching them, be it linear, NBC’s VOD platform, an SVOD service like Hulu or an OTT platform such as Roku. “The really important thing to know is that with CFlight, it includes completed viewing for your spot,” says Yaccarino. “So if your spot ran 14 seconds and not 15, or 29 seconds and not 30, those [views] don’t count. Completed views only count, so it further separates television versus what goes on in digital with a 1.7-second view or something like that.”
Buyers have responded to the technology. John Swift, CEO, investment & integrated services North America, Omnicom Media Group, characterizes CFlight as “an important step toward better measurement in a cross-platform video environment.” And in 2017, Yaccarino’s portfolio, which includes NBC and a slew of cable networks (E!, Bravo, Syfy, MSNBC) and their respective digital platforms, brought in an eye-popping $6.5 billion in upfront commitments. She says advertisers “are getting a total audience metric that is unfortunately unavailable by Nielsen now. But I’m optimistic. I believe it will inspire quicker change by Nielsen.”
FEWER COMMERCIALS!
There has been a growing acknowledgement across the industry that stuffing seemingly interminable commercial blocks into programming is a losing battle when consumers can avail themselves of ad-skipping technology and ad-free platforms.
“Consumers hate advertising,” NBC chairman Bob Greenblatt admitted at a media forum in November. “People are running away from advertising in droves.”
Viacom began cutting back on in-show ads in 2015. And two years ago, Turner announced it would reduce primetime commercials by 50 percent on truTV, a younger-skewing network. “The angst was, can we cover these costs?” says Turner president David Levy. “Are the advertisers going to be willing to pay a premium for this environment?”
The network’s ratings actually increased — a rare feat in an industry almost universally down in live viewing. Fox also has experimented with limited commercials, and this year ad sales chief Joe Marchese pledged to trim primetime ad totals to just two minutes each hour by 2020. (Last year, Fox averaged approximately 13 minutes of ad time per hour.) Beginning in the fourth quarter, NBCUniversal will also decrease ads during original primetime programming by 20 percent and will trim overall primetime commercial time across its network by 10 percent. “Fully loaded commercials are not a great consumer experience,” says Levy. “This all boils down to that.”
So far, ad buyers seem willing to pay a premium for a less cluttered environment. As one puts it: “The six-minute ad load is death. Nobody is sitting through that.”
FOOTBALL STILL SCORES
Despite single-digit declines during the regular NFL season for two consecutive years, league games still accounted for 37 of the 50 most watched telecasts of the season, while ESPN’s Monday Night Football was the most watched cable program in 2017. NBC’s Sunday Night Football, the top-rated, most watched program for six years running, averaged more than 18 million viewers a week. And getting consumers to watch live is of increasing value.
Turner’s Levy, whose networks do not carry the NFL but have deals with the NBA and NCAA men’s basketball, scoffs at the notion that the NFL is flagging. “There have been other factors — a political campaign, the kneeling, the concussions,” he says. “But sports has a built-in, passionate fan base.” (That includes the NBA, which just wrapped its most watched regular season in four years.)
That said, the NFL’s media partners privately acknowledge that they don’t want a repeat of the 2017 season, when political issues generated negative headlines and many popular teams endured disappointing seasons. Advertisers are squeamish when it comes to anything even mildly controversial. But as one media buyer says: “I think the ratings had more to do with the quality of the games than anything else. And that’s not something you can plan for.”
This story first appeared in the May 9 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.