This week the TV industry would typically be gathered in New York City, braving the winding steps of the Beacon Theatre, munching on shrimp cocktail at The Plaza and laughing despite themselves at late-night hosts cracking jokes about ever-declining ratings.
The coronavirus lockdown means the glitzy upfront presentations, which kick off the annual ad haggle, when networks look to secure ad commitments for the next season, won’t go on as planned. At the same time, marketers are reassessing their ad budgets, social distancing has put productions on hold and there are still plenty of questions surrounding how and when live sports will resume.
The pandemic has certainly upended the TV marketplace. At stake is the $20 billion in commitments that are typically accounted for during the upfronts. While negotiations are expected to take place in some shape and form, what’s become increasingly clear is the starting gun won’t go off after Memorial Day and wrap by mid-July.
But the pandemic also represents a real opportunity to accelerate the change that’s been percolating in the space for several years. As marketers reevaluate their media needs and alter business strategies, what has been a slow plod in the adoption of new measurement metrics, audience targeting capabilities and ad formats could accelerate.
The one thing that’s certain: Flexibility will be the word of the year.
Below, TV ad sales leaders shed light on the state of the marketplace, how upfront negotiations might progress and discuss the way forward for the industry.
How did you navigate the early days of the pandemic?
Peter Olsen, exec VP, ad sales, A+E Networks: From March 16 to April 28 we’ve never seen a situation where approximately 25 percent of our revenue base was shut down. You can go back and look at the legality of upfront contracts, but it kind of got thrown out the window. You have to do what you have to do to help the clients. This really put the concept of partnership to the test. We want to help clients, but also need to be mindful of your company in terms of revenue and employees. It’s a tricky line to straddle. There was no win-win. It does feel like it started to transition the last few weeks to more forward thinking.
Mark Marshall, president, advertising sales and client partnerships, NBCUniversal: The hardest part initially was advertisers were asking us was it OK to be on air? Was it OK to be funny? Was it OK to run current creative? But then we started to see these great, positive stories emerge and spurred this creativity. Everyone took a breath and said advertising can play a role, and advertising went from a distraction to being a unifying event for all of us.
Jon Steinlauf, chief U.S. ad sales officer, Discovery: It was triage week after week after week. The first three to four weeks it was buyers calling our sales people saying, ‘Get me off the air,’ no questions asked. It is a little more stable now, but we are coming on third-quarter cancellation time.
Marianne Gambelli, president, ad sales, Fox: There was a sudden shift. We had all the plans in place as we would have for program development, sports road show, the Beacon Theatre in May. We had a whole road map and in the matter of four days had to flip. We had to determine what was worth saving, all the while dealing with making sure employees were safe, could work from home, and clients were putting plans on pause or taking money back. But everyone mobilized pretty quickly.
Kim Kelleher, president, ad sales and partnerships, AMC Networks: I had been at AMC Networks for six months in February before the world changed. We were just cementing our new relationships and pulling together our upfront strategy.
How do you expect upfront negotiations to progress?
Jo Ann Ross, president and chief advertising revenue officer, ViacomCBS: It’s not going to be someone shoots a gun off and we all start collecting budgets. They won’t all be ready at the same time. The message we and others are putting out to agencies is we will be ready when they are. It’s not like we aren’t in the marketplace all the time. We do calendar deals. It will take on a different timing, but that’s not the most important thing. It’s not brain surgery.
Olsen: Whenever the customers are ready we will be ready. We expect to delay a month or so but it could be longer than that. I expect to see some money shift to scatter and calendar year. For us, I would say the broadcast year upfront and calendar upfront are normally a 10-to-1 ratio, this year I expect it to be 7-to-3 or 6-to-4 ratio. It is difficult to think we could do a proper upfront negotiation until we get an answer on the sports front.
Steinlauf: They might come sporadically; we might have a wave, then another wave, then another wave. We are going to see advertisers who have historically bought in the spring buy in the fall. We might see a split upfront moving forward, with some doing business in the spring and others in the fall.
Rob Tuck, exec VP, national sales, The CW: There definitely will be a traditional upfront. It may slide back a few weeks. It could slide back a month. The key for this year, not only on our side, but also on the agency side, it won’t be a one-size-fits-all market. Typically, there is a start and stop and it happened fairly quickly. Some will be ready to go. Others we will need to give them time to figure out what they need. We will be ready to go at the traditional time.
Rita Ferro, president, advertising sales and partnerships, Walt Disney: We are going to be ready when people are ready. We have clients that have already reached out to us to do some opportunities. We have done multi-year deals already. And then we have some clients who said they won’t be ready for a while. No one will be punished for moving later. It requires flexibility.
Gambelli: I expect the transactional time to shift to mid-summer. Things will be clearer when things open up again, when there are guidelines for opening up and when sports come back. We hear some may do a traditional upfront, their business is good and they want to commit. We could see money shift to more direct marketing versus brand building. I think brands will test new waters to get what they need.
Laura Molen, president, advertising sales and partnerships, NBCU: There’s no drop-dead date on when the upfront is going to happen. We are in an unprecedented time. Production season is currently halted. We are looking at the 2021 season evolving right before our eyes. We were already in the marketplace talking to marketers about changing the way we do business and breaking the legacy platform. Those kinds of things are still available.
Joe Hogan, executive VP, sales and marketing, WarnerMedia: The usual time frame is something we both know is disrupted. I am sure we will see some advertisers pivot and/or shift how they work with us. We work in scatter market, broadcast and calendar market in a traditional year. Even year to year we see shifts. It does not matter to us whether they want to engage in a multiple of those cycles or one of those cycles in particular. We are most rooted in what works best for them.
How are you talking about programming when it’s not clear when productions will be able to resume?
Tuck: We are going along the lines of consistency and stability for this coming year. We picked up 13 of our series in January and went straight-to-series with “Superman and Lois” and “Walker.” They know what they are going to get here and what to expect from us. We will be dependent on production, but there are lots of ways to do a deal. Schedules aren’t necessarily required. In this time, when people are watching more on demand, it’s doable.
Marshall: When people are buying Bravo, they know they are getting original, great content. They know when they are buying NBC what they are getting with [Jimmy] Fallon or “The Voice.” Programming does matter, the reason people participate in upfront is to buy programming. When you buy NBCU you know you are getting high quality, premium video.
Ferro: Production usually takes place after July 4, so we still have time. But we are having conversations with the entertainment team about what the fall schedule will look like. We can create productions in different ways. Look at “American Idol,” the NFL draft, Jimmy Kimmel, “Live With Kelly and Ryan.” People have gotten very comfortable with people doing their shows remotely. We are very well planned on what the content cycle will be, but also need flexibility. In the case of the Emmys, which would be on ABC, we are looking at what are remote virtual productions similar to the NFL draft and “Idol.” The audiences aren’t smaller, they are bigger. There are opportunities to push boundaries and test innovation on both the creative and tech side. It’s one of the biggest ahas of this moment.
Kelleher: We don’t have news; we don’t have sports. That gives us a little bit more predictability around our schedule and programming. There are shows that are contingent on the variables, but we don’t have as many large swings as someone who has college football. The potential for having huge holes in our schedule is a little bit less.
Ross: Keep in mind, CBS traditionally at the upfront talks about the stability of the programming and stability of the schedule. We have something every night of the week, Monday through Sunday, for every demographic. We will still be coming up with a very stable schedule. When you see new programming, it will be programming we totally believe in.
Will upfronts presentations take place next year?
Steinlauf: I think we will be doing the presentations next year. There may even be a set of onstage presentations in the fall. [They] are a celebration of the TV industry.
Tuck: From what we’ve heard over the years from buyers and clients, there are too many of them and a lot would like to see the week go away. It comes down to everyone’s own business and portfolio of networks. My guess is this likely will change things for some and for others they will continue with presentations next year.
Kelleher: Upfronts, the ceremony of them, what they really mean in my mind is a date we are working really hard toward to get really organized to have our slate ready and programming and strategies that are bespoke to AMC Networks. As far as having a celebration and marking that moment, do I see us having these huge moments moving forward? No. The ceremonial part could start to fade.
Gambelli: It was surprising to me how many agency partners said, ‘Please don’t give up the upfront presentations.’ The way I interpreted it, it is a special week people still fly in for. It gives everyone a chance to sample everyone’s goods across the landscape, mingle with clients, understand strategy. Charlie [Collier, Fox Entertainment CEO] made the comment that he liked to show the bigness that goes on behind the scenes. Whether or not we continue it, I don’t know, but I am sure it will be a discussion through the year and next year. Those formats probably need to be reinvented. One good thing is it gives us time to think about how to do it differently.
How are you navigating the absence of live sports?
Ross:In terms of live sports, we just don’t know. That question gets asked more than any other question. We are negotiating as if it is happening; then there will be a contingency plan. One of the key terms we are working with is flexibility. And the clients will need to be as flexible as possible. We are acting as if there will be schedules ... We are talking about Super Bowl at this point.
Marshall:The Olympics are the soul of the company. You go on this year-and-a-half journey getting ready for the Olympics. We agree with the decision in terms of postponing. There were certain advertisers that bought the Olympics because it coincided with the back-to-school time period. So they had to move dollars into other areas or shift into 2021. We went to the marketplace for the summer with content where you can reach sports audiences across the portfolio. We are using our set-top box data. So, for example, we see that you can find a golf viewer on CNBC, “Nightly News,” “The Voice.” We are able to provide other options. “Sunday Night Football” draws 21 million viewers. You don’t easily replace that in your schedule. The hope is by mid- September all systems are go with the NFL, but if it doesn’t happen, we can afford advertisers the option to find those viewers. In the fourth quarter, whether or not the NFL is back, brands would need to reach those viewers somewhere. Of course it will take a few more units to get to that 21 million.
Hogan:We all miss our sports coverage. We are blessed with two widely successful entertainment networks with TNT and TBS. We are providing a lot of alternatives for traditional sports viewers: CNN, live news, is providing an alternative for live sports. We have been working with a number of advertisers using data and analytics of Xandr to find live sports viewers across our portfolio. While not ideal, we are doing OK.
Ferro: We are counting on sports being back. By the fall I think you are going to see a pretty robust sports schedule coming back. That worries me less. The one question we are working through is what the format is. Having sports on the air, I don’t think that will be a question anymore based on what the leagues are saying.
Gambelli: We are working with the three leagues to hopefully understand guidelines and get games back either with or without crowds. I’m hopeful we will resume some sports in the fall. I think we have enough entertainment to fill the fall. We have our Sunday block of animation; those have been in production because they have always done their production remotely. We don’t assume our entertainment programming will be significantly impacted.
Is working remotely sustainable long-term?
Tuck: We have all gone from zero to 100 really quickly and we have been very successful doing it. Knowing that any clients, buyers or planners are reachable at any moment without taking a trip or sending someone on an airplane is really comforting. You don’t necessarily have to be in someone’s office to convey your message or get your business points across. People are more engaged than ever before.
Steinlauf: The average commute time for my staff in New York is two hours and 45-minutes door-to-door. Many of these departments have learned to be productive and eliminated the commute. We are heading to a period of time, especially in New York, where it will be a combination of working remotely and in the office. Teams will have to schedule social distancing as part of the workplace.
Molen: As someone who has worked from home a good part of my career and have had the flexibility and given it to people who have asked for it, I know people can work from home and get the job done and now we have the technology to do it. I hope this empowers remote working for people who want to do that, who have a long commute, or want to be able to work from home to spend time with family in the off-hours.
Gambelli: Six weeks ago if you said, ‘Can a sales organization work from home?’ I would have said ‘No,’ but now have a totally different idea of what’s possible. People are more accessible through Zoom. It’s much easier to hold their attention. No one is canceling. We have Charlie [Collier] on calls; he is in L.A. but can now be anywhere we need him to be. We can actually aggregate more people. Everyone is committed to making it work. The technology is fantastic.
What will flexibility mean as a deal point moving forward?
Olsen: We are willing to change some of the terms, like how many days notice and percentage of flexibility in each quarter. What we really struggle with, if we are going to do an upfront that has a guarantee and not have a similar percentage firm, what’s the point? If you want that much flexibility, buy it in scatter. I don’t see how it makes any sense from the publisher side of the desk. There should be a willingness to be more flexible, but we need to define what flexibility is instead of just making a blanket statement. It is difficult to set precedent on something that could carry on for 15 or 20 years during a time like this.
Steinlauf: The 2020 upfront will have more negotiating deal points than we probably ever had before: Flexibility, cancellation, extension, rights to rates of change across windows. There will be a lot of asks coming from the buy side. There may also be asks from the other direction. This might be a year where we trade, where we ask for things like moving away from demos.
Marshall: Flexibility doesn’t just mean the ability to cancel, but also the ability to shift into other programs. If an advertiser is focused on an adult target and wants to move into women, we can do that.
Hogan: Flexibility is just the agility to say we know what we know in any moment in time, and as those things change are we set up to be adaptable to work with our partners?
Kelleher: Longer-term, what flexibility means I think will be different for every single client. It also goes both ways. We are going to have conversations about our programming schedule and conversations about flexibility and understanding that if a show can’t be produced, it may not air.
Ferro: Flexibility has meant different things to different people even during this period. If live sports didn’t happen, how can we make this campaign come alive across the portfolio? Because of the size and reach of Disney’s ad portfolio, we have scale in a way we can move things around and be flexible and agile. We are looking at different ways for clients to look at fluidity of budgets between platforms, measurement of audience, buying on P2+, flexibility in quarters and shifting money across quarters. All those things are in play right now. Clients have been flexible with us too. It goes both ways.
What are the potential long-term impacts?
Olsen: The time of the day we premiere things could use a reassessment. What’s becoming an interesting trend is viewing usage outside of primetime like daytime and weekends. Without sports, it’s hard to say if it is a permanent trend, but we could look to premiering programming outside of the typical time slots.
Gambelli: As we come out of this, I think we are going to learn a lot about what’s necessary and not necessary. We will be more strategic. Clients are looking for more information and more customized conversations. In terms of how the markets transact, I don’t see a big difference. Live will be even more important to bring people together. Clients are going to deploy lots of different levers and be more open to different ideas because their businesses have changed so much and their needs are going to be so different. We just bought Tubi and this could be the day for that kind of platform, which combines TV with digital and data. Viewers are getting more comfortable with these platforms. But TV will still play a big role in this recovery. You won’t get that kind of scale other places.
Marshall: My hope is that this time period creates this great creative renaissance. We have seen over these past seven weeks this confluence of purpose marketing and great creative. Advertising is part of the fabric of the show. It’s uplifting, it fits contextually. This is also our chance as an industry to look at a path forward beyond traditional metrics and push to get beyond CPM discussions.