TV Upfronts upheaval: Show ponies, rollercoasters and annual deals out, quarterly commitments in but warnings abound
At last year's TV industry upfronts "showcase" there there were rollercoasters, Olympic activations and carpool karaoke. In 2020, TV’s annual upfronts will look a whole lot different, as will the advertising deals they influence. With upfronts going digital in response to COVID restrictions, media agencies are approaching annual TV contract negotiations with an air of caution, as quarterly deals look a safer solution than the decades-long approach of annual commitments.
What you need to know:
- Nine, 10 and Seven are taking their annual upfronts events digital in 2020.
- Nine has confirmed the date and some elements of the event, while 10 and Seven continue to work through options.
- In the US, the networks’ upfronts triggered pushback and threats from major brands looking to ditch typical 12-month deals.
- In Australia, the big agency negotiating groups will be looking for flexibility, with a move to quarterly contracts one option.
- TV networks and buyers say they will be open to the idea of short-term deals, depending on the client and the sector.
- Seven’s sales boss Kurt Burnette told Mi3 that buyers could find themselves without major sponsorship slots in 2021 if they opt for quarterly deals.
- Buyers say they will be more “pragmatic” in their approach to 2021 deals and upfronts, expecting a larger focus on sales strategy and audience delivery over typical content announcements.
Let’s get digital
Celebrity guests, after parties and rollercoasters: last year these all accompanied sales strategies and programming line-ups in the television networks’ annual upfronts season.
The three-week period that usually runs in the fourth quarter of the year is the opportunity for TV networks to showcase what’s in store for brands and consumers over the next 12 months. It also provides TV execs with the opportunity to address agencies and clients directly, as they plot out terms for annual sponsorship and advertising – and revenue share – deals.
This year the upfronts will look very different, as COVID restrictions force commercial networks to take their show-and-tells online.
Nine was the first to announce a move online, while Network 10 and Seven both confirming to Mi3 that they would do likewise.
“There’s not really much option,” 10’s Chief Sales Officer Rod Prosser says. “We’re going to keep a level of entertainment in there, while also exploring how we can communicate with agencies and brands more directly in separate blocks.”
Network 10 has already had an early run at the digital presentation concept, hosting UpClose, a COVID update live stream, in May this year.
Nine and Seven are also familiar with the concept, each mounting virtual presentations since lockdowns began.
As for the content inside the events, the three networks confirmed there will the typical mix of content and sales strategy announcements.
Media agencies have welcomed the shift online, with some hoping for more succinct and direct presentations, including a focus on explaining the outlook for 2021.
“There’s obviously going to be less of a spectacle given the format, which should also force networks to deliver a more succinct and to the point update on market conditions, content slates and audience delivery strategies,” Publicis Media Commercial Director Jodi Fraser told Mi3.
“We already know most of the shows that will be returning, so it would be good to see Nine, Seven and 10 discuss how they are going to address concerns around 2021 and what plans they have in place to safeguard marketers’ investment.”
Industry insiders say Nine’s upfronts will be more “client-led than ever before”, with content announcements making up less of the presentation.
Nine Chief Sales Officer Michael Stephenson says this year the TV, print and digital group will be less driven by transactional relationships with clients for 2021.
Not surprisingly, he says brands and media partners need to move to more “enterprise-level” agreements, driven less by cost and more by insights, audience strategies, data and effectiveness.
“It's not just about striking a rate or CPM. Of course, that needs to happen, but that's the transactional part,” Stephenson says.
“Brands need media partners to work alongside them as they navigate through the current situation back to recovery and growth.
“That’s why upfronts are arguably more important than ever now, because media partners will need to prove they can sustain this support for clients on more than just a cost-based level.”
New negotiations, shorter deals
In the US, marketers pushed back on the annual upfronts season in June with concerns over 12-month commitments led the Association of National Advertisers to call for the dates to be moved.
In some cases, companies such as Procter & Gamble went direct to the big American networks, striking deals outside of the typical agency and upfront structure.
Despite a different US upfronts system, Australian media agency executives say marketers will look for short-term deals in 2021 given the “volatility” of the market.
“There will be very few clients that will be able to confidently commit to [calendar year] spend volumes [given the likely] changes in audience consumption,” Amplifi’s GM of Investment Melanie McDonald told Mi3.
“Share of spend will be the likely metric for 2021 due to this lack of clarity and I would not be surprised if we saw shorter deals – quarterly or biannual – as clients look to manage their marketing expenditure in line with market conditions.”
McDonald says this will present a challenge for the TV networks in terms of managing their revenue and yield, as a large chunk of the market is “likely to be relatively short term”.
“That being said, it also presents an opportunity for the media owners to review how they manage their inventory and pricing across platforms to meet this challenge,” she says.
Fraser says the likelihood of quarterly deals will “certainly increase” given that there is more flexibility available to agencies, as networks have already made adjustments to deals prior to upfronts. The adjustments have included shortened cancellation deadlines of up to a week prior to the campaign running, depending on the network.
“There will be those holding groups that still need to make annual, larger deals, particularly for those national brands that maintain a high level of activity all year around,” Fraser says.
“However, the level of investment from other brands simply won’t exist until later next year and the networks will have to accommodate that by allowing for more short-term opportunities.”
Magna Global GM of Investment Nick Durrant says the structure of deals from this year’s upfronts will look “entirely different” to the deals that started to be negotiated after the 2019 upfronts.
“Upfronts, for the most part, won’t have that big of an influence on how agencies and brands look to negotiate deals [for] 2021. It’s going to have to involve a more collaborative approach, client to client,” Durrant says.
“We are not beholden to any large annual negotiations. For us, it’s about client-specific deals and that will only become more relevant, as networks are already seeing that there are some sectors in which budgets aren’t coming back until the second half of 2021.
“It becomes less about what the upfronts mean for the networks and more about what the market means for how clients can spend. That’s where finding the balance will change the nature of these deals for next year.”
Nunn Media Sydney MD Chris Walton says shorter deals may be applicable for the networks that still have questions hanging over their programming slate for 2021.
He says with the Olympics still not guaranteed to happen next year, Seven may look to create “more workable” solutions for long-term brand partners.
“It can’t be about driving down price or discounted deals. Brands, agencies and media partners will need to work hand-in-hand to create more tailored terms, as there are unknowns for all parties,” Walton says.
“What is clear is that clients are focused on risk surety. Deals won’t necessarily be driven by length but rather what contingencies and safeguards are placed around their investment.”
Brands could miss out
10's Prosser says his fear is those clients who think there is more value playing the short game will lose out in the long run, especially given the speed of recovery TV has seen in recent months.
“We’re heading into a high-demand period and already have started to see that buying on a shorter cycle has become less common,” Prosser says.
“That says to me there’s less security for those brands looking to make a quarterly deal later this year, versus those willing to maintain investment annually.”
Burnette agrees, adding that the “big ticket items” during the year will have limited spaces for those unable to commit earlier on. He says an example is Seven’s mini-golf competition series Holey Moley, which only has one main sponsor slot left.
“There has been a widespread conversation around a need for brand building since this all began, with many arguing that remaining active throughout this next 12 months will be vital,” Burnette says.
“We know many brands will be coming out of hibernation in 2021, looking to push out their refreshed messaging, and we know the reach TV provides in those instances.
“That’s why a short-term approach may not be the right call. That’s something we will address at this year’s upfronts – the long-term strategies that will help guide us all back to recovery.”
Permanently changed upfronts
Burnette says the face of upfronts could be “permanently changed”. He says networks will keep a close eye on how agencies respond to the online format to determine if it should become permanent.
Walton says such a move would make sense, giving the high cost of traditional upfronts, which can cost each network well over $1 million a year.
“There’s the event itself, the accommodation and travel costs and a raft of other factors that could see networks reassess upfronts on a cost basis alone,” he says.
“However, that would also have to be compared to the value of conversation, interaction and value derived from having so many marketers and agency people all together.”
Prosser says there could be a “hybrid” of the online and physical events.
“There’s room for both. Our UpClose presentation earlier this year demonstrated the value of being able to keep the industry updated as conditions evolved,” Prosser says.
Stephenson says the format of upfronts has always evolved.
“I can’t think of a year when upfronts haven’t pivoted or changed based on market conditions and 2020 is a pretty clear example of that,” he says.
“What will they look like in 2021? Who knows, but they will remain a staple of proving the industry’s innovation and value to clients.”