The TV ad marketplace is off to a lackluster start in 2024, with some buyers deeming it one of the weakest markets in multiple decades. This is fueling a shift of ad budgets to partners with the most built-out ad tech capabilities, according to media buyers. 

The TV advertising market continues to find itself embroiled in a clash of difficult economic and industry conditions as well as a distribution ecosystem in a state of extreme flux. The result is an air of hesitance after the sector failed to recover in the latter half of 2023, according to five ad buyers who spoke to Ad Age. They predict that the coming year will be defined by clients willing to dig deeper into tech capabilities and automated buying at a larger scale in order to keep marketing precise and more cost-efficient.

“A lot of the hopefulness that we had at the end of the last upfront—that things would pick up in fourth quarter, then maybe first quarter, then maybe second quarter—has continued to be tempered,” said one media buyer. “It’s not that there’s total inaction, but it is one of the softest marketplaces that I’ve seen in 20 years.”

A second buyer also described the end of 2023 and the beginning of 2024 as notably slow but with a glimmer of hope for the rest of the year. 

“We are seeing upfront registration sticking, meaning that clients are not canceling media that they booked as part of the upfront, which is a good thing,” said the second buyer. “What we’re not seeing is the traditional healthy scatter market that we would tend to see now.”

The second buyer said that clients are holding budgets close as they react to difficult conditions. Among this year’s concerns are high interest rates impacting the insurance category, last year’s Hollywood strikes’ effect on entertainment marketers and continued economic volatility impacting clients across the board. The buyer, however, said this could mean spending will pick up in the second half of the year, fueled by a strong upfront market, and that events such as the presidential election could help lift spend more broadly.

Also read: 2024 US political ad spending expected to hit $12 billion

The strategy is similar to those outlined during this time last year. At the time, media buyers predicted a slower upfront as brands were opting to withhold budgets until closer to air date than the TV market historically has allowed through its upfront cycle. Doubling down on that strategy this year could mean more clients lean into streaming, where commitments are more flexible and capabilities are more efficient.

Some, though, think these worries are overblown.

“For as long as I’ve been doing this, you always hear at the start of the year clients’ budgets are going to be cut, and they’re going to be looking for pricing rollbacks,” said a TV ad sales executive. “I think the market and the industry has been singing that first chorus of the song for a long time.”

A second TV ad sales executive described the market as “sluggish, but stable.” 

“What you’re seeing is this huge transition of what things used to be and the purpose of the upfront and the purpose of scatter,” said the second executive, who noted that the fourth quarter was strong in programmatic, with advertisers “just sticking money on these exchanges.” 

The sales executive said the overall TV market has been weak “since Thanksgiving 2021,” but that it has been more of a self-fulfilled prophecy by advertisers in recent months rather than a warranted downturn.

“We’re stuck in a weird, illogically soft market, because the recession fears seem to be over and the supply chain stuff seems to be solved and yet the money’s not there,” said the ad sales executive. “We need something to jolt the market back and then maybe everyone starts to open the coffers. Otherwise, this would be two consecutive flat-to-down markets for no real good reason.”

Buyers and media executives were granted anonymity for this story to speak freely about the marketplace. 

Capabilities rule

At the center of the conversation is the ever-sliding scale of linear versus streaming TV, particularly the tech TV companies that are developing in streaming to bring automation, audience targeting and more data into the TV ecosystem. New capabilities to easily merge ad planning and serving across linear and streaming will be key for clients juggling where to place their TV ad budgets, a third buyer said. For example, NBCUniversal announced an AI-fueled capability for cross-platform media planning at CES.

Similarly, the first TV sales executive said that rather than pure audience scale, transparent data and addressable capabilities are of higher importance to marketers as well as progress in “removing the walls between linear and digital with technology investments.”

The second buyer said clients are focused on audience-based, programmatic buying to reduce waste by buying across too many partners individually and can allow clients to make smaller buys better match their goals. While the buyer said some clients, particularly in the pharma category, aren’t willing to leap into new ways of buying, TV sellers that have built the data and tech structures to support automated and audience-based buying will be top picks in future deals. Currently, the buyer said about 60% of spend across clients is allocated to audience-based buying. 

“2023 was a flat-to-down market, both from a volume and a pricing perspective,” said the first buyer. “It wasn’t a fire sale. The good news is that a fire sale would have been indicative of a dying medium that you don’t need any longer.”

Streaming strength

In past years, streaming didn’t hold the audience scale needed to truly stand on its own as an effective medium for advertisers, and streaming inventory was sold at high CPMs, or the cost per thousand viewers. This meant many TV advertisers built marketing for linear TV and used streaming for incremental reach while linear audiences declined, and tech capabilities were slower to develop in streaming as fewer advertisers were allocating resources to streaming-only investments.

A fourth buyer said this year may mark the first time the clients truly begin building strategies solely for streaming, as platforms have reached meaningful subscriber bases and pricing has lowered. A major factor in this shift is Amazon’s Prime Video, said the fourth buyer. 

Prime Video launched advertising for all viewers on Jan. 29, with the option to opt out for an additional $2.99 per month. In early pitches to advertisers, Prime Video predicted an audience size as large as 115 million, while analysts like those at research firm Dataxis predict the ad-supported scale to even out closer to 65 million after opt-outs.

Related: Prime Video offers ad incentives for ad tier

On top of that, while major streamers ended the last upfront with CPMs north of $40, Prime Video entered the market around $30, with some buyers predicting it might drop to $20 in upfront negotiations. Prime Video’s pricing will likely be a topic of conversation in other negotiations as well, according to the three buyers, because the low pricing will put pressure on other streamers to price similarly.

The fourth buyer said that given these factors, plus clients being judicious with dollars, “We’re back to more of a buyer’s market where I can pick and choose partners that I want based on not just the price, but the price, the inventory and the flexibility that I ultimately want.”

Linear’s not dead

But “linear is still bigger than people think,” added the fourth buyer. “People act like it’s dead and nobody’s there. There’s still viewership there, it’s just if you’re only doing linear, you’re absolutely missing people. Broadcast and cable are so fragmented.”

The comment, as well as similar ones from additional buyers, seem a reversal from previous years’ conversations about the balance of linear and streaming. While linear TV still holds a far higher ad revenue in media companies’ quarterly reports, declines are growing while increases in ad revenues for streaming increase. Comcast reported in its fourth quarter report that while ad revenues increased 2.7% excluding the difference of last year’s World Cup coverage, the growth was “primarily due to an increase in revenue at Peacock, partially offset by lower revenue at our networks.”

The fourth buyer said the pharma category, in particular, is strong in linear TV because it typically targets older viewers. Consumer packaged goods marketers also over-index on linear, although the buyer said the primary reason is linear is “priced at a level that it would not make sense for them to walk away from” given legacy deals for many brands in the category.

Broadly, advertisers are pausing efforts in brand-building and awareness given the weakness in the economy, said the first buyer, adding that marketers are placing their bets on media that drives business results. 

“Concern is driven from the economic uncertainty leading to marketers really focusing on the right now,” said the first buyer. “But that true focus on immediacy and performance metrics are hurting brand equity. So there has to be a return to some form of that, but it just might take a few more months than we expected.”

The second buyer said this is driving budgets away from linear to streaming in some cases, where interactive and shoppable ads are becoming more accessible, but also to social media. Also benefiting from marketers seeking short-term buys over long-term commitments are non-NFL sports that are bought seasonally rather than in the upfront, such as the NCAA, which the buyer said is currently negotiating March Madness deals.

Of course, sports is one of the few exceptions in the TV ecosystem generally, since it still pulls a large aggregate audience in linear TV and is the only inventory that can command pricing inflation, said the second buyer. While the first three buyers put pricing rollbacks last year in the range of 5%, sports inventory went the opposite direction, increasing pricing by as much as 5%.

Sports was “the sole bright spot of linear TV” last year, said the first buyer. “The dirty secret [of sports pricing inflation] that we never like to talk about is that the networks have to charge a premium there because they pay so much for the rights. And we just accept that that's going to happen, but I can justify it because it is an incredibly engaged reach-driving area.”