How cable TV will compete for ad dollars in a difficult upfront

As streaming TV and attention-stealing digital platforms such as TikTok continue to blur the lines of media budgets, it has become increasingly more difficult for traditional cable networks to compete for upfront ad dollars. And this year that tension for deal-making will be even more intense as it comes amid what is expected to be a sluggish marketplace. The catchphrase of this year’s upfront has become “flat is the new up,” as media buyers predict a market that mirrors last year’s, which was plagued by uncertainty around the Hollywood strikes. At least seven media buyers said it will be hardest to justify allocating meaningful budgets to cable TV, whose networks once represented the crème de la crème of TV, as the industry questions how these channels will remain competitive against streaming and tech rivals. Check out the latest Ad Age events and award programs “The big networks that have enough sports content and live event content will be fine, and most of them will bundle it with their streaming inventory as well,” said one media buyer. However, the cable networks that haven’t established owned platforms in streaming to combat audience fragmentation may not have the breadth of assets to aggregate reach large enough “for clients to commit an upfront to them. The cable networks are going to really struggle,” said the buyer. It’s no surprise that cable TV is declining in favor of streaming platforms. In February, cable’s share of overall TV consumption dropped to its lowest to date at 27.6%, according to Nielsen. Still, there are a variety of converging conditions in the current TV ecosystem that could both benefit and hinder network groups such as AMC Networks, A+E Networks and Hallmark Media, which are some of the few remaining cable network groups that produce their own content and pitch the market independently from the mega media conglomerates with all-encompassing streaming platforms. As such, AMC, A+E and Hallmark are each taking their own approaches to winning this year’s upfront market. AMC Networks AMC isn’t afraid of TV buying shifting away from the upfront model, said Kim Kelleher, chief commercial officer of AMC Networks. Kelleher said the company has “built an infrastructure that allows us to be reactive to whatever the marketplace throws at us.” For example, Kelleher said the fourth quarter was a turning point for AMC’s investments in programmatic sales and cross-platform addressable sales. The network group has over the past few years struck up numerous partnerships with programmatic vendors, including taking portions of its linear inventory to the biddable marketplace, and launching tools such as Audience+, which allows advertisers to target specific audiences across AMC’s linear and digital assets. Although the media company reported a 23% decline in ad revenue for the quarter, that was “partly offset by digital and advanced advertising revenue growth,” it stated in its quarterly notes to investors. Memory is the monster. #InterviewWithTheVampire season 2 premieres May 12 on AMC & AMC+. pic.twitter.com/MJbsoJ5pCr— Anne Rice's Interview with the Vampire (@Immortal_AMC) April 1, 2024 Whilie AMC, home to “The Walking Dead” franchise and “Anne Rice’s Interview with the Vampire,” has its own streaming platform, AMC+, it has emphasized content on third-party platforms, where it retains the ability to sell ad inventory. The connection of these channels through audience-based buying has been the core of AMC’s sales pitch as advertisers seek diverse audiences in media. Audience-based buying is one area where smaller cable channels can compete, according to buyers. “Fragmentation is actually an accurate description with a negative connotation—could we just call that choice?” said a second buyer. “It means that we can diversify our spend out and there is a place for AMC and those smaller networks. When we go into an audience-led world beyond broad demographics, it builds up some of the smaller partners because even small audiences are important.” However, the buyer added that while that’s the theory they take to clients for buying with AMC and other smaller network groups, “it’s easier said than done and doesn’t mean that I’m also able to back it up with my checkbook. But philosophically, it’s the right idea.” A third buyer said that AMC’s tech re-invention means buyers “don’t have to differentiate between linear inventory and digital inventory. It just runs on AMC … it’s real and we’re excited about it.” As TV increasingly competes with tech platforms and social video for ad dollars, Kelleher said AMC’s emphasis on highly produced scripted content will be the final piece in differentiating the company as buyers weigh them against larger media companies also pushing tech advancements. “There’s been a flight to low-cost reality [content], and we are not conceding to that,” said Kelleher. “That’s probably our biggest bet, and it keeps us in these upfront conversations and with the CMOS at the clients direct.” A+E Networks A+E has taken a similar approach to the market as AMC—accommodating advertisers’ needs in the age of digital media while pointing out the flaws of TV’s biggest players. This year, the owner of cable channels including A&E, History and Lifetime announced a new planning tool for advertisers that merges performance metrics from measurement partners TVision, Brand Effect and EDO to aggregate case studies for existing advertisers’ partnerships with A+E. The tool, called “InterAction,” can be used in tandem with previous work A+E has done to allow advertisers to negotiate guarantees based on outcomes rather than audience demos. “The true power of big tech is that they talk to every client from the Fortune 500 down to small businesses, and we’re figuring out ways to expand our client base,” said Peter Olsen, president of ad sales at A+E Networks. Olsen said that tools like InterAction help A+E speak the vocabulary of performance marketing, which could open the doors for appealing to new and smaller advertisers. “We want to get to the point where we can compete in these different levels of the economy. Right now it’s changing perception from a legacy cable company to a content creator and solution provider.” To further express what Olsen called A+E’s “reinvention,” the media company is seeking to tap into marketer budgets outside of traditional TV. Rather than focusing on contracting funds set aside for linear TV, “we’re actually asking for budgets and revenue out of [advertisers’] innovation fund,” said Roseann Montenes, head of strategic audience solutions, partnership and alternative currency measurement at A+E Networks. “We’re not going in and saying, ‘Hey, we want an incremental 10% of your cable budget,’” said Montenes, “We’re going to innovate for you at a capacity that none of our competitors can, so we should be coming out of your innovation revenue as opposed to your media revenue.” A fourth buyer said that while the idea was interesting, it is removed from the reality of the current market, in which money for test-and-learn type spending is tied up in the ongoing measurement and currency race. The buyer also said that testing advanced capabilities being brought to market by both AMC and A+E is difficult to justify with clients when major media companies such as NBCUniversal and Disney are making the same requests, and buyers are able to negotiate incentives across their larger portfolios to do so. While other media companies are lowering the amount of new content produced as they seek profitability in streaming, A+E will also boast the amount of content it will produce during the 2024-2025 broadcast year, which it places at 2,500 hours of unscripted series and features. Olsen said the focus on unscripted and documentary content across multiple distribution points in linear and digital has kept A+E’s content production profitable as other media companies struggle to create a sustainable model in the current landscape of top-dollar series in streaming. More news: Streaming TV’s future will depend on marketing plans A+E didn’t rush to launch an owned streamer over the past years and has instead focused on distributing content across FAST channels. As such, A+E is positioning itself as a content creator that’s accessible outside of any single platform and aggregating reach across multiple platforms, although an A+E spokesperson said the media company owns most of the ad inventory for its content on third-party platforms though declined to specify how much. A fifth buyer said content is still a key differentiator in the upfront market because “we know that consumers watch a show more than they watch a platform,” but that distribution can make a difference in who gets the benefit of investment given market conditions. The buyer said if a media company doesn’t own all of the inventory around its content on third-party platforms, it may be more efficient to invest in the platforms the content runs on alongside other channels that may reach the same audience, such as Roku. A+E’s recent hits include “The Prison Confessions of Gypsy Rose Blanchard” on Lifetime. A follow-up has been slated for June. View this post on Instagram A post shared by Lifetime TV (@lifetimetv) Hallmark Media Hallmark has taken a somewhat opposite approach from AMC and A+E for its go-to-market strategy. While its competitors have fled to digital where they compete with Amazon, TikTok and YouTube, the go-to for holiday movies is reiterating itself as a last bastion of cable, according to Ed Georger, executive VP of ad sales and digital media for Hallmark Media. “There’s a perception that there’s not as many places where a buyer can find reach [in TV]—I’m talking about real, big numbers that may not exist as often as they used to,” said Georger. The executive compared Hallmark to live sports, which has remained the primary driver of demand for linear TV for advertisers as well as the upfront model in general. Also: GroupM doubles women’s sports investment commitment The average viewership across Hallmark Channel’s “Countdown to Christmas” slate of holiday programming during primetime hours from Oct. 20 to Dec. 25, 2023 was 1.19 million, according to Nielsen. The channel hit a viewership high for the fourth quarter on Nov. 26 (a double feature of “Our Christmas Mural” and “A Biltmore Christmas”) at 2.35 million average viewers. While the numbers don’t hit the heights of marquee NFL games, they are comparable to the NBA, which averaged 1.62 million viewers during the 2023-2024 season through late February, according to Sports Business Journal. “It’s an uphill battle for a lot of [the cable networks] that don’t have their own streaming … Linear TV is old, and Hallmark has a winning formula: it’s wholesome, it’s clean, it draws an audience. Perhaps as some audiences age up, then it will make more sense for Hallmark to invest in streaming,” a sixth media buyer said. Although Hallmark also has a presence on FAST channels, as well as platform-specific partnerships that include airing content on Peacock, Georger said Hallmark’s linear channels remain its emphasis for now, though he did hint that changes to Hallmark’s distribution strategy may change the approach in future years. Even in discussions of modern TV buying practices, Georger offered a Hallmark twist to express the company’s strengths. “The way people buy—automation, programmatic, data-driven solutions—they’re all important, but I think along the way you give up a little bit of knowing exactly where your ads are being placed.” Rather than focus on automated deals that other media companies are flocking to in order to increase the number of advertisers able to access inventory (although Hallmark does utilize for some of its digital sales, Georger said), “I'd rather sit down and understand their business and find a creative solution,” said Georger. To be sure, the executive did say that Hallmark’s clientele is still expanding. While Georger said insurance, pharma and consumer packaged goods are typically categories that invest heavily in Hallmark’s content, other categories such as automotive and entertainment brands have been increasingly tapping into Hallmark’s ability to aggregate larger audiences in cable. “Even DTC startups embrace what Hallmark stands for and want to be associated with high ratings in a relevant contextual environment with the brand safety that drives their business,” said Georger. Read more: DTC marketing news and trends However, as advertisers continue to shift spending beyond the upfront to a more incremental approach, which often favors programmatic transactions, Hallmark and other linear-centric sellers may have a hard battle ahead. For agencies with clients that over-index on middle-America consumers, “we fight hard to keep Hallmark on their media plan—they’re good partners,” said the fourth buyer. “In a world of consolidation, in a world of agencies having less staffing, and from an operational efficiency, is it easier to just go with the big companies that have content and tools that also reach the same audiences? So [cable networks] are secondary.” View this post on Instagram A post shared by Hallmark Channel (@hallmarkchannel) “It’s an uphill battle for a lot of [the cable networks] that don’t have their own streaming … Linear TV is old, and Hallmark has a winning formula: it’s wholesome, it’s clean, it draws an audience. Perhaps as some audiences age up, then it will make more sense for Hallmark to invest in streaming,” a sixth media buyer said. Although Hallmark also has a presence on FAST channels, as well as platform-specific partnerships that include airing content on Peacock, Georger said Hallmark’s linear channels remain its emphasis for now, though he did hint that changes to Hallmark’s distribution strategy may change the approach in future years. Even in discussions of modern TV buying practices, Georger offered a Hallmark twist to express the company’s strengths. “The way people buy—automation, programmatic, data-driven solutions—they’re all important, but I think along the way you give up a little bit of knowing exactly where your ads are being placed.” Rather than focus on automated deals that other media companies are flocking to in order to increase the number of advertisers able to access inventory (although Hallmark does utilize for some of its digital sales, Georger said), “I'd rather sit down and understand their business and find a creative solution,” said Georger. To be sure, the executive did say that Hallmark’s clientele is still expanding. While Georger said insurance, pharma and consumer packaged goods are typically categories that invest heavily in Hallmark’s content, other categories such as automotive and entertainment brands have been increasingly tapping into Hallmark’s ability to aggregate larger audiences in cable. “Even DTC startups embrace what Hallmark stands for and want to be associated with high ratings in a relevant contextual environment with the brand safety that drives their business,” said Georger. Read more: DTC marketing news and trends However, as advertisers continue to shift spending beyond the upfront to a more incremental approach, which often favors programmatic transactions, Hallmark and other linear-centric sellers may have a hard battle ahead. For agencies with clients that over-index on middle-America consumers, “we fight hard to keep Hallmark on their media plan—they’re good partners,” said the fourth buyer. “In a world of consolidation, in a world of agencies having less staffing, and from an operational efficiency, is it easier to just go with the big companies that have content and tools that also reach the same audiences? So [cable networks] are secondary.”

How cable TV will compete for ad dollars in a difficult upfront

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