While reducing commercial loads is good for consumers, for
advertisers it means further shrinking the supply of gross ratings
points, which are already being squeezed due to ratings declines,
driving prices up further.
"From a price standpoint, it is tricky and complicated," OMD's
Mr. Geraci said. "You don't want to make yourself too expensive,
but you do want to make yourself more valuable."
Fewer commercials surely would be nice, but Dan Lovinger, exec
VP-advertising sales, NBC Universal, said commercial loads are not
the real problem.
"The commercial load discussion feels pervasive, but really it
is TV waving the white flag of surrender," he said. "The real issue
is people don't value the ads they are seeing."
Fixing that problem is about creating "more engaging ad formats"
and serving "the right people the right ads," Mr. Lovinger
That's where the possibilities get really interesting. While
network executives are coy on what the actual formats might look
like down the road, everything is being considered, from branded
content in the style of the surrounding show to serialized ads.
But for right now, it's about giving viewers more content while
still creating opportunities for marketers.
American Express partnered with NBCU in February to give viewers
additional content from shows like "The Voice," "Blindspot" and
"Late Night With Seth Meyers." The stunt replaced nearly 18 minutes
of commercial time with programming that was sponsored by AmEx.
Intel worked with Turner's TBS for the show "America's Greatest
Makers," an eight-episode reality competition dedicated to changing
Intel's perception among millennials, said Penny Baldwin, VP-global
marketing and communications group and general manager of brand
reputation and partner marketing, Intel. The tech company has
replaced more than two hours of commercial time with native content
on Turner's networks, said Dan Reiss, executive VP of content
partnerships at Turner and co-head of Turner Ignite.
A&E Networks is creating what it's calling "enthusiast"
blocks of programming that will turn parts of the schedule
typically occupied by reruns (like Saturday mornings) into homes
for native content. The programming blocks will air fewer
The pinnacle of all of this, so far, is Pepsi's collaboration
with Fox's "Empire" this season for a meta-integration that
prominently featured the soda giant in a three-episode story arc.
It culminated with a music video starring character Jamal Lyon and
directed by "Empire" co-creator and executive producer Lee Daniels.
The video occupied an entire commercial pod.
"In the new model, we are looking for partners who will bring us
in early to the creative process, when shows are just being
created," Pepsi's Mr. Harter said.
But partnerships of this nature are few and far between, for
plenty of good reasons.
"The reality is that integration was a result of the stars
aligning perfectly," Fox's Mr. Byrne said. "We won't force those
things. We will only do it when it is great and it fits. In the
case of Pepsi and 'Empire' it truly enhanced the storyline."
Moving forward, creating native advertising on a large scale
seems to be the biggest obstacle. "I can only deploy resources in
so many ways," said Mr. Lehrfeld of American Express. The goal is
to achieve a large enough scale and drive an impact that's
comparable to "the sweat and time and money you put into it," he
NBCU's Mr. Lovinger agreed. "Can we do a hundred of these
American Express deals a year? The answer, to some degree, is no,"
he said. "But there are things we can do to make each of these work
That includes working with brands that can use their own reach
and social influence to help provide scale.
Turner is looking to expand branded content's exposure by giving
marketers a home for the content they are already creating and
airing on their own sites and social media accounts, Mr. Reiss
said. Still, he is expecting only a small percentage of commercial
pods, in the low-single digits, to be occupied by more custom
And then there's automating all of this, which is perhaps the
most questionable and complex part.
TV networks like NBC Universal and Fox Networks Group are
building private exchanges to sell both traditional and digital ad
inventory with greater automation and application of data.
But "programmatic" on TV means something very different than in
digital, where you can auction off ad inventory in less than a
"We are using data to better prepare for and plan our upfront
expenditures, but the actual transaction still needs to be
person-to-person," Horizon's Mr. Campanelli said.
Many of the current offerings require plenty of lead time, and
inventory still needs to be manually cleared, Mr. Scanozi said.
Only a very small percentage of inventory is being offered, a
media buyer added, speaking not for attribution to avoid the
appearance of criticizing network offerings. It is not biddable,
the price is static and none of the ad time comes from the pool of
desirable programming offered in the upfront.
"It is as far away from programmatic as you can be," the buyer
said. "You don't want to confuse smoke and fire with a lot of this
Perhaps it isn't even necessary for TV networks to adopt the
"We don't need more automation in national TV execution.
… We need more automation in data optimization applied to TV
inventory," Mr. Scanzoni said. "The reality is TV is not like
digital. Ads are not dynamically inserted outside of VOD. You can't
do it in real time or even close to real time."
"Programmatic, in quotation marks, doesn't exist in the true way
it does in digital," CBS's Mr. Morris said.
TV sales leaders expect the future to arrive in degrees.
"Near-term, age and gender will still be the currency," said Jo Ann
Ross, president-network sales, CBS. "Not a lot is going to change
how we are speaking to advertisers during the upfronts."
"The TV ad model is going to be very recognizable," said Mel
Berning, president-chief revenue officer, A&E Networks. "The
model is too valuable and powerful to change overnight. What we
will see is a subtle change toward continued personalization of
"Today 30-second, 60-second and 15-second ads are still very
much the mechanism for how brands build purchase consideration and
drive sales," Fox's Mr. Byrne said. "I'd be really surprised going
forward if the 30-second spot will go away anytime soon. But there
will be more iterations and flexibility."
What is changing is the number of choices for marketers.
"What new products allow us to do is be a reach player, targeted
and personalized. Everything we are developing will allow the
client, depending on their needs, to use us in different ways,"
said Peter Olsen, exec VP–national ad sales, A&E
Even networks with the same parent company will operate
differently. A&E, History and Lifetime in primetime will still
be predominantly about broad reach, Mr. Olsen said. And then
Viceland and FYI, which are much more niche brands, will offer
different ad loads and more custom content.
"There will be a world with multiple models," NBCU's Mr. Bhatia
said. "To date, there has only been one model."
~ ~ ~
An earlier version of this article said CBS Interactive Chief
Revenue Officer David Morris expects 1% of CBS ad revenue this year
to come from deals pegged to nontraditional, data-driven
guarantees. Mr. Morris was citing research about the overall
upfront last year.