Digital Dominance: Upfronts Spending Favors Media Shift
Digital media is set to dominate upfronts spending, accounting for over 50% of the pie This is expected to offset the decline in traditional TV as the industry adapts to evolving consumer preferences
Brief:
As the economy faces uncertainty and cord-cutting becomes more prevalent, the upfronts are expected to see a 3.6% decline in TV ad spending year-over-year. According to an Insider Intelligence forecast shared with Marketing Dive, advertisers are likely to commit $18.64 billion during this time period.
While traditional TV may be experiencing a decline, marketers still recognize the benefits of securing deals in advance. In fact, the upfronts season accounts for approximately 30% of all TV ad spending for the year, a figure that has increased over the past five years.
However, the losses in traditional TV may be offset by the growing interest in digital video and connected TV (CTV). According to forecasts, spending on digital is expected to increase by 28% YoY during the upfronts and NewFronts, reaching $12.48 billion and making up more than half of the upfront market.
Insight:
One of the key themes of this year's upfronts season is transition. With the rise of streaming and connected TV, legacy players are reevaluating their strategies and some are even opting out of the traditional media-buying frenzy altogether. Meanwhile, new players like Netflix are aggressively pushing their CTV offerings in an effort to gain a foothold in the market. The pandemic has only accelerated the shift to streaming and CTV, while the traditional TV industry has struggled to adapt to a rocky economy and tighter advertising budgets.
Measurement is one of the most fiercely debated topics in the industry, but there is now a wider range of options available. Despite Nielsen's failure to deliver on its promise of a "big data" currency, the company still holds the top spot as the leading currency for the 2023-24 season, according to Insider Intelligence. Even traditional players are shining a spotlight on digital, with the channel now accounting for over half of the upfront market, which has traditionally been dominated by linear and broadcast purchases. Digital spending now makes up about two-thirds of the traditional media pie, up from half the size it was just last year, indicating rapid growth. Furthermore, more digital transactions are now taking place during upfronts. Advertisers are expected to allocate 14.8% of their digital video budgets to the upfronts/NewFronts period this year, with that number projected to rise to 16.9% in 2024.
According to a report by Insider Intelligence, the 2023 Upfronts will be more digital and programmatic than previous events, with Netflix and other digital-first companies expected to make a significant impact. While CTV continues to face measurement and frequency challenges, it remains a growth driver in the industry. Insider Intelligence predicts that brands will invest $8.66 billion in CTV ads during the current upfronts. In recent months, both Netflix and Disney+ have introduced ad-supported tiers, while YouTube's CTV offerings have gained momentum with the addition of popular programming such as NFL Sunday Ticket. Insider Intelligence also notes that programmatic advertising accounts for 87.2% of CTV ad spending in the United States, including YouTube.
According to Insider Intelligence, the upcoming upfronts will offer a great opportunity for buyers, given the ongoing changes in media consumption and platforms. Brands will be looking for flexible contracts and more fluid budget allocations, rather than simply cancelling their buys altogether. As a result, it is expected that networks will be more willing to negotiate on price and contract terms, while focusing on securing large budget commitments from advertisers. So, while prices may not rise significantly, buyers will have the chance to benefit from more favorable terms and conditions.
