Traditional TV advertisers are seeking greater flexibility from broadcasters, with less spending allocated to the upfronts and new pandemic-related clauses inserted into any deals struck.
Despite the significant price differential between the scatter market and the upfronts, many big TV advertisers are understandably reluctant to commit spending too far into the future: there has been uncertainty around network schedules, and with the number of US COVID-19 cases passing six million there remains the ever-present possibility of renewed shelter-at-home orders and restrictions on business.
When these were first introduced back in March, the exceptional circumstances meant that networks were prepared to cut advertisers and agencies some slack and not hold them to their contractual agreements, but six months on both sides are more wary.
Digiday reports that advertisers and agencies are seeking to include various ‘get-out’ clauses, ranging from being able to cancel the full amount of any remaining upfront commitments to cancelling commitments in stages, depending on how a second-wave pandemic progresses.
While that might seem negotiable, a complicating factor for the networks is that different advertising categories have different trigger points – in automotive, for example, that could come when a particular percentage of dealerships are closed; for a movie studio, the equivalent might be the number of theaters open to show a new release – which could prove difficult to verify.
Agreeing to what would trigger a pandemic clause “is its own kind of negotiation, in and of itself,” an agency executive told Digiday.
But there are other areas where the flexibility sought by advertisers is more easily achieved. Variety recently reported that some networks have discounted CPMs on linear TV in exchange for advertisers committing to their streaming services.
AVOD spending has certainly increased – 31% year on year in Q2 according to eMarketer, which notes that four of the five major ad-supported streaming platforms (Roku, Hulu, Peacock, Pluto TV and Tubi) are owned by major media conglomerates.
“Some advertisers who bought ads in the upfronts are shifting money within the same media company to streaming services,” said Eric Haggstrom, eMarketer forecasting analyst at Insider Intelligence.
Sourced from Digiday, Variety, eMarketer, BBC; additional content by WARC staff