Even before COVID-19 reared its ugly head, the TV market was having a tough go. Throw in a global pandemic and you get a 22.1 per cent ad revenue dive.
While not as earth-shattering as some other media companies’ financials amidst the coronavirus, it’s not a pretty picture.
The total revenue for the metropolitan free-to-air networks was $1.01 billion for the six months to June 2020, down 21.9 per cent compared to the same period last year. For the 12-months, metropolitan free-to-air advertising revenue was $2.33 billion, down 14.1 per cent.
The good news? As Australia starts to get somewhat of a handle on the virus, budgets appear to be slowly trickling back and people are ready to spend again – just in time for Upfronts season.
Nine has already announced it’s bringing its 2021 Upfronts forward and going virtual, and while it’s not known what Seven and Network 10 are doing, there’s no doubt things will be different this year.
What media buyers want from the 2021 Upfronts
GroupM chief investment officer Nicola Lewis said given the challenges of this year, more than ever there will need to be “a solid focus on the content slate for 2021 across linear versus the catch-up environment”.
Lewis said it will be key to understanding how the total screen strategy will play out over the year.
She added: “I’m keen to see the learnings from 2020 about the genres that really fired, those that didn’t and the new consumption and audience patterns that have emerged. For instance, are they confident they can maintain the spike in audience levels?
“My question really is: ‘Will they show us anything new? Or is this the year for upfronts to be reassuringly focussed on delivering growth, making it easy to buy and deliver cost efficiencies, achieve the necessary reach, in the right environments, underpinned by data?'”
Lewis said she’s keen to see what broadcasters have learned over the last six months, and how they reprioritised their product and plans to work with agency partners to deliver better outcomes for advertisers.
“I’m interested to see all the signals, data and trigger points that they have been able to garner throughout COVID, and ultimately, how they have applied those to their network and deployed a greater degree of targeting and built new products during COVID.”
Nunn Media managing director Chris Walton said he’ll be looking for both the normal bits and pieces, yet also some COVID-19 solutions.
“I’ll be looking for a mix of the usual – an idea about what big initiatives [the networks] have in place for the next 12 months – and the not so usual shorter term, you may say practical, solutions that are on hand to help advertisers navigate through a COVID-19 impacted market.
Meanwhile, OMD Melbourne group trading director Nik Doble said he’s looking for the usual quality content.
“Since a trip to Sydney and lavish party is out of the question, the 2021 upfronts will really come down to the quality of the content, both presented and in the pipeline for the respective networks. But in all seriousness, even if virtually, after a tough few months it will be fantastic to regroup with our key partners and continue to generate momentum for the rebuilding of our industry.”
Has COVID-19 changed the buying process?
COVID-19 has certainly caused a lot of change in the industry, but has it changed the media buying process?
Lewis said while she will be tracking the market for inflation and deflation, she will continue to buy in a way that delivers results for clients.
“We will continue to interrogate our planning principles and processes and apply intelligence and imagination to make sure that we are buying according to those principles, while making sure we can access the right audience across linear and digital environments,” she said.
Lewis also said GroupM will be looking at a multilayered approach.
“We will lean into initiatives that enable us efficiently and effectively buy across all media, and all screens. We look at digital as a reflection of all media channels – so for instance the progression of total audio strategy, and how we buy across a multilayered audio approach including radio, streaming and podcasting – that will evolve. Likewise, we’ll look at linear out of home alongside programmatic out of home and total video across broadcast, CTV, and BVOD.
“We will also make sure we are tracking the market from an inflation – and deflation – perspective, and that we are staying laser focussed on how the market as a whole is tracking and making sure that we optimise our clients’ media investment to extract the right value in the areas that are meaningful to them.”
Walton said the main change in buying will be the continuation of a very short-term buying market.
He added: “In these conditions, the role of negotiation and the value on offer becomes even more important and has a bigger influence on whether or not activity actually occurs than in normal times.”
Doble said flexibility on terms is a key change to buying amid COVID-19.
“The major shift will be the flexibility of the terms. 2020 has highlighted time and time again that flexibility with investment is crucial to navigating the uncertainty in the market, so partners who can offer favourable terms will be in the box seat.”
Are the Upfronts outdated?
In the US, the Upfronts are somewhat different. Brands are striking deals directly with TV networks, with the traditional Upfrtons model widely deemed as outdated. Does Australia’s media industry think the Upfronts need a rethink? Do they think brands will ever start to go directly to the networks?
Network 10 & ViacomCBS chief sales officer Rod Prosser said: “The Upfronts negotiation process continues to be an important part of the industry. Do I think the process needs to evolve? Absolutely. And I’ve been quite vocal about this.
“Agencies and advertisers that haven’t evolved their model are getting diminishing returns from legacy deals, particularly those that are negotiated on a total people audience rather than the demographics that brands target.
“The structure of the agreements need to reflect the way television is now consumed. As the TV industry continues to evolve at such a rapid rate, we look forward to the upfront model evolving.”
Doble, however, said that the upfront model is still a vital part of the buying and trading process.
“Our upfronts serve as an update that will inform negotiations to come. Given the complexity of the networks extends far beyond programming these days, the events are a crucial annual tradition to educate and stimulate the market.”
On whether the Australian industry will head down the same path as the US, Walton said: “I don’t think this will occur any more than it has done in the past. Plus, I think with the market being the way it is committing too much too ahead of time may not be the best way to trade. Keeping an open mind as to where invest money will probably get better value for clients in such an unpredictable market
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