The upfronts are one of TV’s great mysteries: They’re always the focus of the advertising year, but the negotiation process remains hush-hush, with only a handful of people on both sides engaged in those high-level talks. That changed last year, when a major TV ad sales exec agreed to (anonymously) take Adweek behind the scenes, compiling an upfront diary that highlighted each stage of their upfront negotiations. This year, we got another behind-the-scenes peek, this time from the other side of the bargaining table, as a top TV buyer—once again, anonymous—took Adweek through every step of their company’s talks. Here’s what this person had to say about the “insane” upfront marketplace, where early movement, a “really dumb” response to higher-than-expected rates of change and the sudden exit of WarnerMedia ad sales chief Donna Speciale affected this year’s negotiations.
Entry No. 1: Getting a handle on upfronts week
The process of preparing for upfronts week—the annual marketplace synonymous with TV and video buying—begins on cold and dreary days in February. Our teams gather for two days of meetings to determine what our posture in the market will be and, more important, what we’re wanting to achieve for clients. Teams will spend February, March and April developing strategies from the information we’ve learned in an effort to maximize our success when the negotiations begin in earnest.
This work includes a good deal of effort forecasting the marketplace, figuring out what’s right for each individual client and trying to ascertain where the dollars are going to be. Pre-upfront recommendations to the clients are made throughout this run-up to May with the objective of gaining client comfort and alignment on where their coveted dollars will be spent. A lot is on the line for brands, companies and the folks empowered to make these decisions. Now is when dollar approvals begin to be firmed up for the battles ahead. Our agency likes to ask for at least a first look at client budgets in April in an effort to lay out our big board. But if I’m being honest, budgets typically don’t get finalized and remain fluid throughout our negotiations. It’s a living, breathing puzzle, and eventually the pieces move into place.
How important is upfronts week?
The answer is: It varies by client. For more than a decade, trade publications have written bold headlines proclaiming “The Death of the Upfront.” Ironically, I wish they were correct back then! However, despite my cynicism, I believe it’s important to look at the new shows that have been greenlit. But I also appreciate that most of the time it’s not an imperative to what you’re buying. When there’s a true breakout hit, then it’s important because you’re going to want to have screened those opportunities. But with some exceptions, what’s more important (and what doesn’t necessarily happen this week) is ensuring that if you’re a prime-time buyer, you’re getting the same quality and consistency that you’ve had year over year.
Personally, I find that the programming and big showcase events become less important each year. What remains very important is that many clients come to New York and get exposure to important media partners they don’t see all year. Upfronts week offers the chance for many client-agency or client-agency-media partner meetings to occur—gatherings where everybody is in the room together setting some baselines for the coming weeks ahead. So while I think the presentations are not that important any longer, the week itself and the time spent with clients and partners, when used wisely, can set the tone for your upcoming negotiations.
This year, I enjoyed that there was no bashing. Each media partner focused on their own strengths and the direction they want to go. But other than one exception, I think the presentations are way too long! The other thing I could not help but notice is the irony of living in a world where we perpetually talk about data and digital innovation, yet we still sit through bloated television upfront presentations. Made me chuckle.
Before I share how I think this year’s upfront will unfold, we need to get some market perspective. We’re coming off 10-plus strong quarters of scatter. Couple that with the continued ratings deterioration, and I certainly think media partners believe they can achieve high- to mid-double digit [CPM] increases. I hope our side of the market does not feed into the hype of that because, frankly, how can we keep paying extraordinary prices for less and less? I would like to see the market end up similar to last year, which is not great, but at least we could sell that. I do think that once it gets started, it will go quicker than it has in the last couple of years. There are definitely conversations already going on, and we will certainly move when the timing is right.
Entry No. 2: Early movement and Discovery’s big shift
Discovery just said it is going to join upfronts week in 2020. My initial reaction is that this is not good for us, since there’s already too much going on that week! But I applaud them for wanting to be seen with their peers Turner, NBCU and Disney. Discovery is probably the next largest in terms of share, and I suspect this move is to get more senior agency and client participation.
There seemed to be a good deal of movement this week, ahead of Memorial Day weekend. Typically, we get through Memorial Day with maybe a smattering of early conversations occurring. If you weren’t having formal conversations, there was pressure to get a lot more formalized. We know there was business being written in a couple of places, so the train is leaving the station.
Personally, I don’t know what the big rush is. Most budgets aren’t solidified yet, so you’re still flying blind from a client perspective. Folks on the other side of the table will say, “Your clients’ budgets aren’t 100% solid anyway, and that’s why you have options—so it shouldn’t matter; you should be able to go.”
Despite the early movement, we did not finish business before the holiday weekend, largely because the numbers being bandied about are pretty high. I’ve heard mentions of teens in prime, high-single digits in cable. We were expecting a marketplace more similar to last year, which was a bit below that. When you hear those numbers, you’re not jumping to write them right away.
Entry No. 3: ‘This is insane!’
Simply put, I’m very disappointed in my fellow media buyers. The marketplace is much higher than I think anybody had anticipated in terms of rates of change. It feels very rushed, and it started earlier than it should have, in my estimation. I don’t understand why people aren’t just sitting back and resisting or quite frankly doing their jobs better. If that’s not clear, then let me explain. Try to work some of these numbers down for your clients! Earlier in my career, if a market moved like this, the reactions were akin to, “The numbers are crazy, and we’re not doing this right now.” Negotiations would stall, and the obligatory articles about the upfront stalemates would be written. I recall one year when we didn’t finish until the end of August. I would have liked to have seen more of a hard line from my fellow colleagues in the business.
Ratings are down, but the ratings have been down for the last three years and the market has been, well, I don’t want to say “manageable,” but it was something we could handle. But this is insane! We haven’t seen numbers like this in 10 years. I think this is really dumb and shortsighted.
Nevertheless, most of the network stuff is done, big cable is all submitted and nearly everyone is talking. But what I cannot stand about our marketplace is the coattail following that occurs. I feel like media partners sit back, wait for one group to do something and then ride the wave. A media partner or two will come out with a number, and everybody will wait to see what that is. And then all of a sudden, people go. Once that momentum starts, you can’t stop that freight train. I’ve never seen anybody at the end do better, because you won’t. If you’re going to go first, you’re either setting the market or you’re getting something for moving early. There has not been a reward for sitting back and waiting in a very long time. Now, maybe sitting back and waiting is getting you something else you may need, like an integration, but there’s no benefit other than you simply want to annoy the media partner. There’s no trophy for last place.
Entry No. 4: ‘A dull acceptance’
I remain frustrated with the pace of the market and what I believe was some poor decision making. However, now there’s more of a dull acceptance and just trying to trudge through to the finish line. We have started to move beyond the big five on to some of the pure-play cable guys, looking at other options beyond traditional players still in linear TV. But we are starting our conversations with the OTT guys, and we’re fully emerged in the marketplace at this point.
As far as how typical negotiations go, it’s different with every company. The way most people operate is on a rate-of-change, inflation basis. Unfortunately, it’s not deflation and then the teams go and do the nitty-gritty. When you get close to the end, you submit budgets. Most people don’t even run plans anymore, unless you’re new business and you need to set a base or there’s something so crazy or different about a particular client that you need to see a plan.
When a budget is submitted, it starts with rates of change. Media partners offer numbers. We go back with counteroffers. This volleying continues for a little while. Then at the end, there’s usually some horse trading. They have needs that perhaps haven’t been fulfilled—for instance, it’s going to be an election year, so there are probably going to be a lot more avails in the second half of the year, especially third quarter, given the convention coverage. So there’s a little bit of horse trading that you can use, if you have it in your arsenal to eventually reach a number that you and your clients can live with. Then you close, and that’s when you start going through plans.
I also want to be clear on what “closing” means. We cannot commit our client’s dollars until they sign off. Ultimately, it’s the client’s decision if they approve of the recommendation the agencies put in front of them, and that’s usually done by the middle to the end of September.
Entry No. 5: Cannes approaches
We’re pretty much finished with all the broadcast and NFL negotiations. We’re also well into cable at this point. I’d say we’re about a week ahead of last year’s negotiations.
Certain folks in the industry will now be heading to Cannes. But negotiations don’t stop, even if you’re in the south of France. While we’re talking about the back end, the people who go to Cannes are typically management, especially on the sales side. They are reachable. Media-partner leadership, including Rita [Ferro from Disney], Linda [Yaccarino from NBCU] and Jo Ann [Ross from CBS], will attend as their process is complete or nearing completion. This is a time for them to see the creativity that finds its way into their media units. But if somebody needs them, they can reach them. Cannes does not stop upfront progress.
Entry No. 6: Post-Cannes, time to ‘story tell’ the upfront
Cannes is now over. The rosé bottles are empty, and traffic around the Gutter Bar has returned to normal. Since the market started earlier, there is no negotiating occurring in Cannes for the most part. We’re waiting on a handful of clients and also have a couple of syndicators left, but that’s pretty much it.
At this point, we begin to “story tell” the upfront. We develop presentations for individual clients that provide a comprehensive review of how this year’s marketplace turned out. So we’ll explain supply and demand, we’ll cover any nuances or trends we saw in the upfront and what that meant for their piece of business. Some teams will start presenting the results to their clients in late July, so we’re working now on gathering all that information.
Entry No. 7: Close, but no cigars
We’re almost done. Each year, there are always the holdouts—a cable guy, a syndicator—where just little things are holding it up. It’s not about disagreement on the numbers; it’s other work getting in the way. If I had to go present to a client right now, I could do so. We pretty much know where the market is going to close.
Some media partners celebrate after an upfront, but not us. I’m not in a celebratory mood. I don’t believe the numbers we saw this period are cause for celebration. Additionally, I can’t recall a celebration of an upfront negotiation since the ’90s. Just because the negotiations are done from a rate-of-change standpoint, the work certainly is not done. We’ve got to get the inventory ordered, uploaded into the system and allocated. … It really never stops.
When we go to market in May and June, we do so knowing budgets aren’t set in stone. There are always people trying to make changes now. I think this year more than ever, adding dollars is going to be difficult, especially in places like prime time and high-end cable. The sellout levels, because of the ratings, are probably high enough that clients now want to try to save funding for scatter—an insurance policy to make their numbers or make more than their numbers.
Entry No. 8: Farewell, Donna Speciale
Donna Speciale is leaving WarnerMedia. She conducted her upfront as if nothing like this was coming, as if she was going to be there long term. Donna was a visionary for them; she is very well-connected with clients and is well-liked in the industry. I view that as a big loss for Warner and for the industry. I appreciate that Xandr is the darling at the moment, so I get the change. While people were speculating that something would probably happen, until it does, you expect leaders like Donna to always be around.
What does this mean for our upfront buys? Nothing. Turner is a broad-based, relatively decent-priced offering, and it has huge data capabilities. Its data-driven linear product is top-notch, so few if anyone will say, “Oh, Donna is not there,” and try to change their buy. The world goes on, right? Unfortunately, we are all replaceable, every single one of us. We’d like to think we’re not, but we are. Makes you a bit sad.
Entry No. 9: Wrapping things up
For all intents and purposes, the upfront process is done. I wouldn’t say any of us are in upfront mode anymore other than the people who have to now build their mixes.
We’ve pivoted and are working on client presentations. Sometimes there are tweaks here and there to their buy. There could be budget cuts; there could be a brand that went away. But for the most part (this is me knocking on wood) I’ve never seen a client say, “Ugh, that’s terrible!”
Client presentations are usually done by the middle to end of September. Then the rush is on to get it ordered and added to the system so they can get on the air before the quarter starts. While most may overlook this part of the process, I find it to be the fun part. Here is where you get to be really creative. Negotiation is an art, but marketplace strategy is also an art, and the way you sell your art to a client allows you to bring in a different creativity. That appeals to me very much.
I also love the upfront prework early in the year. It’s some of the most strategic work we produce. Admittedly, it’s the guesswork on where things are going to net out—it’s when we get to work with our clients on what is the best possible course for their spending next year. My least favorite stage of the upfront, ironically, is the actual negotiations—which, in a word, suck.
This year’s outcome, as I’ve said, is a bit higher than we thought it was going to be. Still, I am generally pleased with what we did. We were successful in a marketplace that was surprising.
Entry No. 10: Looking ahead
The world is definitely changing, and more than ever we have to start relying less on general audiences. And I don’t think that’s an easy task for every single client to complete, especially clients who are looking to target pretty much everybody. But it’s on us to find audiences for everybody.
Despite networks talking about how they’re sold out, I definitely think they have inventory for scatter and they’re expecting it to be expensive because it’s been expensive for the last three years. It will be interesting to see what goes on with the election. That’s an artificial tightener in prime in the next third quarter—between the Olympics and the elections, there are going to be a lot of preemptions—yet also opportunities in news.
The other things that we’re going to keep a keen eye on: What is WarnerMedia doing with its AVOD service? What is NBC’s version going to look like? What happens when Disney takes over Hulu? What happens with CBS and Viacom? There’s still a lot of change and a lot of churn and a lot of competition for eyeballs—and what’s going to happen? It keeps me coming back year after year, like a moth to a flame, because of these questions. Hopefully, we’ll have some of those answers in time for next year’s upfront.