networks will draw hordes of advertisers to New York City this week
for their annual bonanza of presentations and parties, a decades-old
tradition known as the upfronts that is meant to dazzle marketers and
loosen their purse strings.
shows and top talent will be pitched from the stages of Carnegie Hall
and Lincoln Center, followed by lavish evening affairs where marketers
can eat lobster rolls and snag selfies with network stars. The fanfare will
kick off weeks of negotiations, with networks aiming to get
advertisers to commit to billions of dollars in spending for the year
beneath the sparkle and the canapés, the networks are also navigating
a serious advertising upheaval. Ratings are on the decline, especially
among young people, some of whom don’t even own televisions. It’s hard
to keep up with the many devices and apps people now use to watch
shows. And there is a host of material from Silicon Valley that is
competing for viewers’ attention, including Google’s YouTube, Facebook
and Netflix. It all adds up to a precarious situation for broadcast
on TV has long been the best way for marketers to reach a large number
of people at one time. And it is still a formidable medium. But cracks
TV ad sales peaked in 2016, when they exceeded $43 billion, according
to data from Magna, the ad-buying and media intelligence arm of IPG
Mediabrands. Sales fell 2.2 percent last year, and the firm estimates
that they will fall at least 2 percent each year through 2022.
of the decline could be mitigated through new business with platforms
like Hulu, but “it’s not yet enough to upset the decrease of
traditional sales,” said Vincent Letang, Magna’s executive vice
president of global market intelligence. At the same time, he said,
while networks have raised the cost of advertising on their airwaves
in recent years, ratings have declined sharply, including some in
unexpected areas like the National Football League.
is still a good value for plenty of advertisers. Mr. Letang said
pharmaceuticals and personal care products were increasing their
presences on TV. But the combination of rising prices and falling
viewership is giving some big brands pause.
hottest shows on TV networks — which command the highest ad prices —
are attracting older viewers, which is a challenge for brands that
want to reach millennials and teens. For instance, this season’s
top-rated show, the
revival of “Roseanne,” has a median viewer age
of 52.9 years. The network show with the lowest median age is
“Riverdale” on the CW, at 37.2.
YouTube, on the other hand, is wildly popular with much younger
viewers. And the brands are so eager to reach those viewers that they
have been willing to continue advertising on YouTube despite the
issues it has faced around ads showing up on
offensive content, like racist videos.
TV ad spending has begun to drop, marketers have been diverting more
money to tech giants like Google and Facebook, which have increasingly
focused on expanding their video — and video ad — business.
love digital advertising because it gives them the ability to target
ads based on their own lists of customers — like holders of store
loyalty cards — and profiles like “first-time car buyers” or “people
who like foreign travel.” And they want that kind of capability on TV,
too. That desire has
prompted four competing media companies —
NBCUniversal, Turner, Viacom and Fox — to work to standardize the
language and some of the data sets that they use, hoping to make it
easier for brands to buy cross-platform advertising with them.
Navy has long been a prominent TV advertiser, and television remains
crucial to the company’s marketing. But the way Old Navy defines TV
advertising has evolved, said Jamie Gersch, its chief marketing
we say we buy TV, even within that, a percent of that buy is in the
digital video space and is on platforms like Hulu and Google Preferred
and programmatic buying and Facebook,” she said. The company is
focusing on figuring out where customers might see its content,
whether that’s on traditional TV or “digital TV,” she said. Ms. Gersch
said that on traditional TV, the company has been talking to networks
about product integrations in TV shows — similar to Procter &
deal, where the company was written into the plot of the ABC
show “Black-ish.” How viewers will react if more brands start showing
up in the actual dialogue of their favorite shows remains to be seen.
opting out of traditional TV packages are watching Netflix and videos
on Amazon Prime, and to a lesser extent, paying for services like Dish
Network’s Sling TV, according to Kagan, a media research group within
S&P Global Market Intelligence.
networks navigate these changes, they are moving to reduce the number
of ads they show. Ads, after all, make money, but they also annoy
viewers. Last year, the average number of commercial minutes during an
hour of broadcast TV was 13.6, according to Nielsen data.
Both NBCUniversal and the
Fox Networks Group have said they will trim
the total time of commercials shown during some of their shows; Fox
has announced a goal of reducing ad time to two minutes an hour by
if there are fewer commercials, how do companies market their
Heim, vice president of media and sponsorships at Sonic Drive-In, said
he was intrigued by several of the new data targeting products for
television ads. But he remains concerned about how the announcements
on limited ads fit with a declining audience.
trying to create a more premium advertising experience for
advertisers, and they’re hoping that people will pay more,” even
though the audience is smaller, Mr. Heim said.
added, “At the end of the day, you’re following the eyeballs, right?”