In the Age of Digital Data, Nets Say Reach Matters Most - Broadcasting & Cable

In the Age of Digital Data, Nets Say Reach Matters Most

Multiple screens, more flexibility to be factors in upfront market
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Related: Upfronts 2017: Network Execs, Sales Execs and Buyers

Data might be dandy, but reach remains the reason why advertisers still buy good old-fashioned TV against a rising tide of digital.

This week, the companies that own the big broadcast networks make their pitch to media buyers. Most have consolidated their broadcast, cable and digital sales operations under a single leader, making it easier to produce campaigns that incorporate multiple networks, platforms and other corporate assets, reaching more people in more ways.

The broadcast networks represent the biggest attraction during the annual upfront season, and while media companies have pinned their futures to precision targeting, audience selling and other forms of advanced advertising to enhance the value of TV, for now, what they’re selling is mass media-style reach.

It’s important that the message be persuasive. Spending on TV advertising has been relatively flat, as ad dollars have poured into digital. But digital has been slowed by a yellow flag as issues of fraud, view-ability and finding ads placed next to objectionable content have made advertisers more cautious.

That could create an opportunity. Once this week’s presentations are over, upfront negotiations will begin over how much advertisers will pay for the bulk of the commercials that will run during the 2017-18 season, setting a tone for the industry’s financial future.

As always, the salespeople are optimistic.

“They understand that they absolutely need the reach of broadcast television,” said Jo Ann Ross, president of ad sales for CBS of her advertising clients. “When Apple wants to introduce a new phone, where do they do it? When Google has their new Pixel phone where do they do it? When Netflix advertises they do it where? You fish where the fish are swimming and we have a big school of fish.”

“We think that Fox has the most unique portfolio of assets that allows us to not only generate reach at scale but also provide premium environments for advertising messages,” said Bruce Lefkowitz, executive VP for ad sales, Fox Network Group. “Fox is high-quality, innovative, breakthrough, bold.”

Lefkowitz acknowledges that consumer behavior has changed and Fox sells ads in content online, through its app and in video-on-demand. “We want to re-aggregate that fragmentation and we re-aggregate it across platforms in premium quality programming.”

Other than price, Lefkowitz says that flexibility is something that seems to be important to buyers during this upfront. Clients want the ability to move spending commitment from one quarter to another, from one show to another. “We’re in the business of doing business and I think not to be flexible in this day and age doesn’t make good business sense. We’re going to find a way to do business with our customers,” he said.

Related: Top Buyers See Networks Working to Keep TV Thriving

NBCUniversal has reserved $1 billion worth of its ad inventory for data-driven audience-based ad sales. But precision targeting is only effective if you have lots of viewers to pick from.

“We want to make sure we’re telling the story of the value of broadcast primetime, which still delivers the quickest reach out there, something that our digital friends can’t necessarily do, and that’s probably the biggest differentiating point that we have in the marketplace,” said executive VP, ad sales, Mark Marshall, whose portion of NBCUniversal’s portfolio features NBC and its entertainment cable networks including USA and Syfy.

THIS IS A HIT

What NBC has this year is that rare gem of a big hit in This Is Us, which was introduced at last year’s upfront and grew in the ratings as the season went on. The price of 30-second spots also grew after the premiere.

“I come from the sports world and it’s the first entertainment show I’ve worked on in my four years here where people are calling like it’s the Super Bowl, looking for their pod position and wondering what other advertisers are in their pod. It’s that heavily watched,” Marshall said.

Having a big scripted hit was a bit different from NBC’s prior experience with The Voice and America’s Got Talent, Marshall said.

“These shows are consumed live,” he said, but This Is Us “was by far and away our biggest time-shifted viewing hit that we’ve had in the digital era.”

When the show airs on Tuesday nights, it delivers 10 million viewers. But by the end of the month, it has more than doubled that, leading to a change in the way NBC will try to monetize the show.

“We are going to look to sell things a little differently with This Is Us, to sell things on a more converged basis, which would be the first program we’re looking to do that with,” Marshall said. “Time-shifted viewing or IP-enable programming had fallen a little bit in no-man’s land. It’s not TV, but it’s not Facebook and Google, but it’s an unbelievably valuable audience who’s sought it out. So primetime isn’t just 8 p.m.-11p.m., it’s whenever these people choose to seek out this programming and they’re doing that in record numbers, so we’re looking to continue to evolve how we sell things.”

Because it was a new show, NBC was limited in the number of sponsorships and integrations that could be done. But it did do branded content deals with General Motors’ Chevy brand, as well as with retailer T.J. Maxx. For season 2, “we’re looking to find partners with whom we can do seamless integrations that are authentic,” he said.

COME TOGETHER

ABC enters the upfront as part of a consolidated sales operation for the first time.    BROADCAST FAMILY SALES EXECS Rita Ferro, who had been in charge of advertising for Disney’s kids business, now heads up ABC, Freeform and the Disney Digital Network.

Preparing for her first broadcast upfront, Ferro says she sees a lot of opportunity.

Related: Abruzzese’s A to Z Guide to the Upfronts

“You think of ABC as this behemoth and that it’s doing anything and everything already, but there’s so much upside,”

Ferro said. “We talk to clients and we talk to agencies and they want to do more.” Ferro said her organization has worked out ways to work more closely with Disney-owned ESPN, linking the female audiences on ABC and Freeform with the male viewers on ESPN.

In fact, clients will be able to take advantage of a new version of Disney Different that will make Disney’s parks, studio and retail business available as part of a total audience solution, she said.

For the first time in more than a decade, Jimmy Kimmel won’t be lampooning media buyers at the ABC presentation because of his son’s health issues. But Ferro still thinks the event will be entertaining.

“We just want to make it fun. It’s different from what we’ve done historically. Obviously the shows are always the centerpiece and the crown jewel of the event. But I think there are going to be things around the show that will be different and you’re going to enjoy it,” she said.

When it’s over, she wants clients thinking, “‘Disney/ABC provides the best environment with the best storytelling, the greatest opportunity for connecting brand and emotional connections that lift brands with the right data and technology to deliver audiences that matter and the best outcomes.’”

Related: Turner’s Levy Thinks Audience Buying Will Grow in Upfront

ROUNDING OUT THE LINEUP

Sports will also be a key part of the upfront. “Sports is the only bullet-proof vehicle today,” said Fox’s Lefkowitz. “It’s live. It has scale. It has attentiveness. It’s full screen. It’s 100% viewable. And I think that in years to come as fragmentation continues, it’s just going to continue to be a more valuable media asset.”

With the NFL, college football and baseball capped by the World Series, “we own the fall,” Lefkowitz said, and fall is an important season for most advertising. “It’s peak messaging. We have more GRPs [gross ratings points] and better GRPs,” he said.

One of Fox’s priorities will be getting advertisers to pay for out-of-home viewers, now measured by Nielsen. ESPN has done some deals with advertisers based on audiences including out-of-home viewers and other networks are trying to do the same with the sports programming.

Lefkowitz said Fox’s NFL broadcasts get a 15% lift in viewers when views in hotels, bars, offices and so forth are counted — and that ought to count. “It works for both the advertiser and the vendor in that there’s more supply in the marketplace and vendors are accurately compensated for the audience they’re delivering to advertisers’ messages.”

After Fox’s fall, NBC jumps in with its big sports events, the Super Bowl and the Olympics. NBCUniversal will also have the World Cup on its Spanish-language network Telemundo. Rival nets note that it will take a lot of work for NBC to find enough dollars to sell out those events.

“We like to think we have good buckets to fill up,” said NBCU’s Marshall. Those events will also boost primetime. “Just the power of the promotion we’re going to have for our primetime lineup will be unmatched in the marketplace.”

MARKET REPORT

There has been some softness in the scatter market recently, although during earning calls, some media company executives saw some strengthening with the approach of the upfront. How will that affect the market?

“I don’t think it’s a quiet market. I think there’s a lot of dynamic conversation already happening with groups and advertisers. I think a lot of folks are really asking for big ideas and they engaged early, which is I think a great sign of what the marketplace could be,” said Disney/ABC’s Ferro.

Related: Ask A Buyer: Most Pressing Upfront Questions Answered

“I think we feel it’s going to continue to be a strong market. I think the ability to provide quick reach that’s unmatched in the marketplace will drive broadcast to a very healthy level. We saw that last year and continue to see that as we’ve gone through the year so we feel very confident about what the marketplace will hold in ’17-’18,” said NBC’s Marshall.

“If you look at the traditional metrics and signs, the signs point to a decent, healthy upfront. And what are those traditional metrics? They’re scatter volume, scatter pricing and you combine that with some of the genuine concerns about digital environment and measurement and you would think it portends well for the market,” said Fox’s Lefkowitz.

“That having been said, I know how the upfront is when we receive real budgets, which are intentions to spend,” Lefkowitz added. “Before that, it’s posturing. But if you look at traditional indicators, the market seems to be healthy.”

THIS IS MONEY

NBC had a hit in This Is Us last season, and will look to capitalize on it in the 2017-18 upfront.

Last May, media buyers were impressed by the clips of This Is Us screened during NBCUniversal’s upfront presentation. Because it showed promise, spots in the premiere sold in the upfront for a healthy $375,400, according to research company Standard Media Index.

Commercials in other regular season episodes of This Is Us sold for $230,915 on average, which proved to be a bargain. Later, in the scatter market, spots cost $291,525.

After the show became a hit, buyers in the upfront paid $227,885 for commercials in the highly rated season finale. NBC got $383,667 for spots it had held onto for scatter and sold after it was a smash.

Prices are likely to be even higher for next season.

Related: Upfronts 2017: Network Execs, Sales Execs and Buyers

Data might be dandy, but reach remains the reason why advertisers still buy good old-fashioned TV against a rising tide of digital.

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