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As TV Industry’s $20 Billion Week Starts, Signs That Streaming Isn’t King Yet

Author

Michael Beach
May 22, 2019

The upfront presentations have wrapped, and negotiations have begun on $20B+ in TV ad spend. The final presentation was The CW on May 16th.

What are the upfronts? The upfronts are an annual event where the networks showcase their planned programming for the upcoming season. Advertisers can purchase advertising “up front” at a negotiated price versus later in the scatter market, which can cost 15–40% more.

Interesting: The two biggest headlines to come out of the week (Disney/Hulu and NBCU/streaming/The Office) were unrelated to the upfronts themselves.

Upfront ad spend by year (% growth YoY) according to eMarketer:
1) 2008–09 — $16.8B (↑ 1%)
2) 2009–10 — $14.7B (↓ 13%)
3) 2010–11 — $16.6B (↑ 13%)
4) 2011–12 — $17.9B (↑ 8%)
5) 2012–13 — $18.7B (↑ 4%)
6) 2013–14 — $19.2B (↑ 3%)
7) 2014–15 — $18.4B (↓ 4%)
8) 2015–16 — $17.8B (↓ 3%)
9) 2016–17 — $18.6B (↑ 5%)
10) 2017–18 — $19.7B (↑ 6%)
11) 2018–19 — $20.8B (↑ 5%)
12) 2019–20 — $21.3B (↑ 2%)
13) 2020–21 — $21.6B (↑ 2%)

Projected change in upfront spend according to Advertiser Perception:
1) Same — 46%
2) More — 40%
3) Less — 14%

National TV ad spend by year according to eMarketer:
1) 2016 — $43.3B (↑ 1%)
2) 2017 — $42.3B (↓ 2%)
3) 2018 — $41.7B (↓ 1%)
4) 2019 — $41.2B (↓ 1%)
5) 2020 — $40.6B (↓ 1%)

The challenge: Broadcast ratings have fallen 24% over the past 2 seasons, which makes growing the overall ad spend a problem.

Quick math on viewership/cost changes in 2018–19:
1) Ratings — ↓ 11%
2) Total upfront ad spend — ↑ 5%
3) Average CPMs — ↑ 18%

Quote from Gibbs Haljun — Managing Director, Media Investment @ Mindshare:“There is a finite amount of quality rating points [a measure of viewership] in linear television. Everyone fighting for that smaller and smaller amount results in inflation.”

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