A Beginners Guide to the Upfronts: Navigating the Changing TV Landscape in 2023

Upfronts, the highly anticipated annual TV industry events, serve as an opportunity for networks to showcase their fall programming to advertisers and sell ad time for the upcoming season. Nowadays, linear TV, CTV, and digital TV all take part in upfronts (or ‘NewFronts’), shifting strategies for many buyers as advertisers navigate the evolving media landscape. Held in May over the course of a few weeks, the upfronts are also when networks secure a substantial portion of their revenue, as evidenced by the $19.21 billion worth of ad time sold during the 2022 upfronts. With attendance from network executives, marketers, senior agency leadership, media buyers, and journalists, these events play a crucial role in shaping the advertising environment for the rest of the year.

In this blog post, we explain how upfront deals are negotiated, the macroeconomic challenges currently facing marketers, and what you can do to make the most of your media dollars this year. 

How the TV Upfronts Work 

Since their inception, the TV upfronts have adhered to a standardized order of operations. First, networks create a rate card that lists the prices for different types of ad time. This rate card is used as a starting point for negotiations with advertisers. Next, networks hold presentations for advertisers, where they show clips of their new shows and discuss their primetime schedules for the upcoming season. During this time, networks have the opportunity to sell advertisers on their new and returning programs and specify which (if any) will not be renewed for another season. Finally, it’s time for networks and advertisers to negotiate deals.  

Types of Media Buying Deals 

These deals can include a variety of stipulations, including:  

• The number of ad spots that an advertiser will buy  
• The price of each ad spot  
• The time slots when the ads will air  
• The demographics of the audience that will see the ads 

And there are several different types of deals that are made during TV upfronts. Some of the most common types of deals are:  

• CPM Deals: CPM stands for “cost per thousand.” In a CPM deal, the advertiser pays a certain amount of money for every 1,000 people who see their ad.  
• CPP Deals: CPP stands for “cost per purchase.” In a CPP deal, the advertiser pays a certain amount of money for every purchase that is made because of their ad.  
• CPV Deals: CPV stands for “cost per view.” In a CPV deal, the advertiser only pays when someone watches their ad all the way through. 

Benefits of Participating in the Upfronts 

Now you may be asking, why would you want to commit your media budget so far in advance? A few key benefits stand out.  

• Guarantee: Advertisers who participate in upfronts can guarantee that their ads will air at certain times and on certain networks. This is important because it allows advertisers to plan their marketing campaigns in advance. In addition, buyers can secure inventory at a guaranteed CPM, ensuring pricing and impressions are all guaranteed.  
• Discounts: Compared to the scatter market, ad prices obtained during the upfront are generally lower (sometimes 20% to 40% lower) since networks aim to sell as much advertising time as possible.  
• Access to New Programming: Advertisers who participate in upfronts get early access to new programming that’s coming up and can make plans to buy ad time.  
• Expand Reach: The upfronts present an opportunity to stay ahead of the game and strategize new methods to reach target audiences, like including CTV in your media buy.  
• Relationship Building: Advertisers who participate in upfronts have the opportunity to build relationships with network executives which can lead to more favorable ad deals in the future. 

However, there are some significant drawbacks, such as if a new show does not deliver the expected CPMs or your marketing plans change before the media is planned to go live.  

Challenges Ahead for the TV Industry 

While there is typically considerable excitement in the lead-up to the upfronts, this year’s events have taken on a notably different tone. Lingering economic uncertainty and rising inflation has driven many advertisers to tighten their belts, meaning media budgets are projected to be flat to only slightly up, year over year.  

Consumer viewership also continues to shift. The rise of streaming services has led to a decline in traditional TV viewership. In 2022, streaming services accounted for 20% of all TV ad spending. This number is expected to grow in the years to come. eMarketer’s data shows that advertisers are increasingly shifting their budgets from traditional TV to digital channels, making OTT/CTV a “must buy” as nearly half of the adults in US households watch video on a CTV device daily. Cord-cutting is also changing the TV ecosystem, with 13% of US households reporting that they had no traditional pay TV subscription – a trend that is expected to grow over time. 

The result of these compounding factors has meant an increase in the fragmentation of audiences and a decline in ad rates. The audience for traditional TV is becoming increasingly fragmented making it more difficult for networks to reach their target audiences. According to Kantar Media, the average number of viewers for a prime-time broadcast network program in 2022 was 10.2 million, down from 11.2 million in 2021. Simultaneously, the decline in traditional TV viewership has led to a decline in ad rates, pushing networks to find new strategies and innovations to drive revenue. In 2022, the average cost of a 30-second ad during primetime on the major broadcast networks was $125,000 i.e. a decrease of 6% from 2021. Similarly, the average cost of a 30-second ad during primetime on cable networks decreased by 5% in 2022 to $50,000. 

To survive, networks will need to adapt to meet the evolving needs of their advertiser customers and consumer audiences. This could include selling focused more on streaming – selling ad time on streaming platforms, creating original content for streaming, or partnering with streaming services to create co-branded content – and offering more flexibility – selling ad time on a more ad hoc basis, offering deeper discounts for early commitments, or allowing advertisers to move their ad time around if needed. 

Making the Most of Every Media Dollar 

As you look for more precise ways to reach your target audiences, advanced TV – indexed TV, addressable TV, OTT, and CTV – provides the opportunity to use data to engage specific households based on viewing habits, demographics, and a variety of behavioral attributes. Therefore, leveraging strategic audiences for your advanced TV campaigns allows you to improve the effectiveness of your advertising and increase return on ad spend (ROAS).   

Measurement is another hot topic. In the past, you could only buy ad time in broad demographic categories; however, recent developments in measurement data and analytics are allowing TV advertising to become increasingly smarter and more performance-driven. Last year’s Upfronts created a buzz about programmers moving away from Nielsen and using alternate currencies like iSpot after the measurement giant lost MRC accreditation. This year, advertisers are demanding better proof of performance from their TV ad campaigns, to ensure budgets are spent when and where they will have the most impact. Whether your focus is on currency or business outcomes, TV measurement is now a must.  

Ready to make your upfront commitments? Contact us now to discuss how we can develop a strategic advertising solution specifically for your brand this upcoming TV season.