Thescatter market has been booming over the last few quarters, as media buyers andtheir clients pay prices well above upfront levels.
Flushwith these gains and the belief that buyers won't want to get caught in thatcycle again, networks are looking to break a downward spiral that has enveloped broadcast since the2011-12 upfront and cable during the last two negotiating rounds.
Butbuy-side executives, speaking at MediaPost's "OutfrontForum," were not yet ready to concede that the 2016-17 upfront willyield major pricing and volume increases.
Audiencefragmentation continues, owing to the rise of over-the-top services as well asother, alternate platforms and delayed viewing habits, which has resulted inlinear audience shortfalls. As such, those supply-side issues may be what islifting scatter and overstating the true demand for linear inventory.
MaureenBosetti, chief investment officer at Initiative, part of , saidlinear TV has supply-side challenges that are going to continue. "We'renever going back to the way linear TV was," and with inflation in thescatter market, that will make for "a challenging upfront." She saidbuyers must look through "different lenses and find differentopportunities in the marketplace."
CatherineWarburton, chief investment officer at Assembly, said in recent years she hasbeen focused on declines in broadcast, but ratings problems have surfaced withcable, which "doesn't seem to be coming back either." She suggestedthat problem would persist as cable penetration continues to whither.
Warburtonalso took a more holistic view of the market, noting that sellers areconcentrating on the expectation that the upfront will be up, but not focusingon that as "scatter may not continue that way. Total dollars in the marketwill probably be constant," she said.
Sellerssee a bit of strength and tend to overreact, said Marianne Gambelli, executivevice president, chief investment officer at Horizon Media. She offered someadvice to content providers: "Relax a little," adding that agenciesand clients are going to push back against attempts for "ridiculous"increases. That will force buyers to find others solutions in differentdayparts and through data. "We have to unlock the opportunities. That'sthe fun part," she said.
Otherexecutives mentioned the role the economy always plays in shaping the market.Gibbs Haljun, managing director of media investment at 's GroupM, said that whilegross product demand and consumer spending are up, there is no real consumerwage growth. And with companies like Apple Inc., Twitter Inc., IBM and Xerox all reporting financialmisses, that may signify the economy really isn't strong. He noted that whileclients are willing to spend more money in video, they are cutting otherexpenditures and that is "not good for the economy."
ChrisGeraci, president, national broadcast investment, at 's OMD USA, said itis the time of year to assess where the economy is "going forward"and how that plays into advertising demand. That dynamic is being tempered, hesaid, by a client base that has "a growing discomfort" with thelong-term commitments the TV upfront represents.
Thatmeans looking more to digital content, but he noted that buyers need to actquickly because the "big stuff" tends to sell out, resulting insupply issues there as well.
Warburtonconcurred, saying Assembly segments digital video into Hollywood- and non-Hollywood-producedfare. "To [Geraci's] point, there is 'a limited supply'" of premiumdigital content, she said.
Gambellisaid Horizon doesn't look at any ecosystem separately. "We are assessingwhat's available across the landscape," she said, adding that cable andbroadcast are not viewed as separate buckets.
Askedby Wayne Friedman, Media Post West Coast editor and panel moderator, ifprogrammatic/automated buying would play a major role in shaping the upcomingupfront, Bosetti said buyers are trying to find more data-driven solutions, butshe views programmatic as a complement to the traditional upfront process. Shesaid it will have a small effect during this cycle, with more of an impact overthe next year or two.
Gambellisaid dollars have been migrating to automated programs for a while throughaddressable advertising platforms, and that programmatic will help unlock moreopportunities as the process becomes smoother. She hoped that a strong upfrontmarket would not set back these platforms because when "sellers make moneythe traditional way, they don't bother with technology." She said thatduring soft markets sellers look to different solutions and varied offerings.
Geraciprefaced his remarks by saying that programmatic is a broad term, one that isoften misused.
"I'mall for more automation. There are a lot of legacy systems that could useimprovement, but I don't see programmatic inclusive of demand-based pricing andI don't know when it will," he said.
Still,Geraci supports programmatic because he believes it brings more efficiency tothe media-buying process overall.
Clients are interested in securing commercials units in NBC's "The Voice."
Haljunsaid not putting top-flight fare into these platforms makes them "lessappealing." He said scatter deals are driven by packaging; a buyer who islooking to secure a commercial unit in NBC (US)'s "The Voice" may have to take unitsin the network's Saturday programming, or those interested in a 30-second spotin "Empire" on FOX(US) may have to purchase inventory in NASCAR programming. "Thatall goes out the window with programmatic," which he said is all aboutaudiences and not reflective of what unfolds during negotiations.
Similarly,he noted than in speaking to clients before the upfront they want to know howmany commercials they will have in "Empire" or "The Voice.""Content is still very important; that makes it harder forprogrammatic," he said.
Anotherdynamic that doesn't figure to have a major bearing on this year's MadisonAvenue bazaar is the reducedinventory loads in select original programming on networks owned byViacom Inc., Time WarnerInc.'s TurnerBroadcasting System Inc., and Sony Corp.'s free streaming service .
Warburtonsaid the lower loads wouldn't have a dramatic impact this year, but the idea isthat fewer commercials will engender higher ratings. "That's what we wantfor our clients, too," she said. "We want to see if it's successful."
Gambellisaid that it sounds "great on paper," but the programmers are onlytargeting a couple of shows and "acting" as if it's an industrywidemovement. "It won't have even a nano-impact on supply," she said.
Gibbs,who acknowledged that everyone wants a clutter-free environment, also isn'tconvinced, calling it "a ploy. At the end of the day they're trying tofigure it out." He said that although certain shows are being"de-cluttered," the units are being moved from prime time intodaytime, which will then become more cluttered.
Asto overall upfront prognostications, the executives stopped well short ofspecific predictions.
OMD'sGeraci said it will be "a relatively strong market, with certain pocketsof weakness."
Warburtonsaid the market will be inflationary, but the sellers' hype will be greaterthan the actual increase. She hopes it will be an orderly market and that therewon't be a standoff for weeks with sellers coming to the table with outlandishoffers.
Bosettisaid "we know what the supply and demand issues are," and that buyerswill try to find every opportunity to mitigate any inflation, while deliveringon all of their clients' needs. She's optimistic because "the videolandscape is so robust, but all that content makes it challenging."
Gambellisaid the market is still in the hands of buyers, who have "a lot moretools to rely on to make smart decisions. I think it will go a little quickerthan last year." As was the case during the 2015-16 selling season, shesaid "the good, quality stuff will get good pricing," but there arelots of places where the quality is not there and buyers will capitalize onthat. "We have opportunities to mitigate a runaway market."