Could this year be the last TV upfront?

Also, Epsilon's retail media boss on inevitable consolidation

This past week, the analyst Michael Nathanson put out a report titled “U.S. Advertising: Linear TV Enters Radio & Print Territory,” which included the harsh line, "decades from now, media executives and investors will likely look back at 2023 as the year where linear TV advertising officially broke." (Hat tip Bloomberg’s Lucas Shaw).

I was talking to veteran ad executive this week about the state of TV, and wondered - could the upfront finally break?

Yes, I know, the upfront has been a candidate for death going on 20 years. The annual TV sales ritual, which is known for a lavish set of sales presentations each year, but is really about a media space marketplace, has survived the great recession, the rise of digital media, the emergence of streaming, Covid, you name it. It’s hard to kill, primarily because it has still served a purpose.

But does it anymore, really?

Let’s get one thing out of the way - yes, sports needs an upfront. Live sports has scarcity, huge demand, and kind of operates as its own marketplace within the broader TV landscape. And brands are probably always going to lock up the limited number of avails in say, the College Football playoff on ESPN, well head of time.

Besides that, let’s consider where things are in TV:

• Linear TV is becoming a tonnage play, or a market for brands that appeal to its very old audience. There are almost no must-buy shows and virtually no scarcity.

• The upfront was built around a fall season, particularly when new cars come out. Today, TV is increasingly on demand, and content is released constantly.

• In fact, because of the strike, there was no fall season - and most brands survived. Lots of them succeeded in fact, as consumers keep spending.

• The TV upfront has long been about negotiating rates of change each year - X brand has paid a $13 CPM for years, this year we don’t want to go up more than 2%, and we have to beat the market. How many brands need to - or even should buy TV this way?

After all, the ad world is increasingly becoming performance-driven, and the pressure is on TV to get on board. TV is pushing to become more data-driven, selling advanced advertising tactics and outcomes-based campaigns. Both NBCU and Disney made announcements this week regarding more programmatic buying options. Do you need an upfront for this stuff?

I’m not saying big marketers wouldn’t want to sign annual deals - either based on the calendar year, or their own fiscals. But most of those deals would likely include all sorts of pricing variables and offerings based on their varied goals and tactics. Does one flat CPM really matter?

Ok, what about the dog an pony shows? Already, we’ve seen Paramount back off a splashy, single event in New York in exchange for a series of dinners and meetings with holding companies. In a year or two, Paramount may be part of another company - and the same goes for Comcast and WarnerDiscovery. If the field further shrinks, does upfront week?

To date, we’ve seen the opposite. YouTube’s in upfront week. Amazon will join this year. Netflix was supposed to be last year (the strike messed that up) -though you could argue the company’s ad business is still too nascent to even need one yet.

Of course, appearances are everything -and it’s hard for newer entrants to make the statement that this whole upfront thing doesn’t matter when they themselves are trying to play TV party crasher. In fact, I wouldn’t be shocked if we saw a Walmart/Vizio upfront next year.

Yet that is exactly the argument for not doing this sort of thing? Brands are going to work with Walmart to sell their stuff - not to get a better rate on GRPs next fall.

Go ahead, yell at me and tell me I’m stupid. I’m ready.

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I had another terrific podcast episode this week, this time a conversation featuring Dave Petersen, Epsilon’s general manager, head of global retail media. Before taking that role last summer, Peterson spent nearly 20 years at Target, where he helped build out the company’s first foray into retail media - which eventually yielded Roundel.

Dave is obviously bullish on the monster growth in the sector - but he actually believes things could be moving faster, if not for a few obstacles.

For one, many retailers, particularly those that have recently launched RMNs, likely have a lot of internal issues to work out.

“There is this internal struggle of, you know, who owns the relationship with the brands?” he said. “How does retail media work with the marketing? Cause we're both marketing to target [consumers']. How do we do that in the right way? [At Target] there was a lot of early internal friction, but we kind of went through this process internally, and this is a huge thing for any retailer that's going at this.”

Meanwhile, on the brand/agency side of things, this space has suddenly gotten very crowded, which brings another set of complications.

“It was pretty easy for them to work with [RMNs} when there were five. Now we're talking about hundreds, literally hundreds of retail media providers that the brands just can't manage,” said Peterson.

Which is why this space is likely ripe for consolidation - yet which retailers want to cede ground in a booming market?

Peterson has some thoughts on this as well - take a listen!