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Where Did the Ad Spend Go? Local TV Buying From a 2017 Upfront Perspective

August 22nd, 2017   ||    by John R. Osborn   ||    No Comments

National television’s annual upfront buying seasons have always had a close relationship with (and effect on) local TV buying, and this year was no exception. In early June, MediaVillage and MediaPost both predicted that 2017 upfront advertiser demand might soften, with budgets remaining flat from 2016 and supply down due to a decline of ratings.

Additionally, it was thought that buyers’ desires to avoid being leveraged into second- and third-tier programming—content that isn’t prime time or an original cable production—along with efforts to bring in audience guarantees other than the traditional age/gender definitions, might reduce demand as those buyers explored premium digital video options.

However, as The Hollywood Reporter reported in July, upfront sales are coming in higher than expected—in the 3–4 percent range—likely due to advertiser demand for better brand safety and control of ad environments. (Digital video sellers are still working out how to guarantee content adjacency.) And as upfront cancellation clauses provide buyers flexibility to move dollars back to scatter if necessary, some of those increased dollars may have come from scatter budgets.

National-Local Dynamics

Three key dynamics have informed the historic relationship between national TV upfronts and local TV buying, and the 2017 upfronts showed that changes are happening within each. Fortunately, these changes each present opportunities that can benefit the entire TV ecosystem.

For one, there’s been a long-time cost per thousand impressions (CPM) premium for local TV buys over national, which has suppressed investment in local advertising by national brands. Past national CPM efficiencies have been driven by the relative “one-stop-shopping” of national buys. Buying TV locally has been more time- and labor-intensive, with many markets and many stations or cable options per market.

However, automated buying platforms and technologies are reducing the friction and additional costs that have traditionally discouraged spending on local TV. As 2017 upfront national buyers demonstrate that spending discipline and efficiency are still important, local TV becomes a more attractive option.

Standardized Means No Longer Seperate

National and local TV have historically been separate marketplaces, divided by budgets and geographic requirements. Since broadcast affiliates offer much of the same program inventory as networks, look for local TV’s connected and loyal audiences to become an option for previous national-only TV buyers dealing with brand-safety issues. This, however, will require building competitive audience-targeting capabilities, including data management platforms (DMPs), cross-device audience research, and digital ad-tech targeting tools.

The effort in 2017 of three upfront TV sellers—Fox Networks Group, Viacom, and Turner (via the Open AP consortium)—to standardize new TV audience segments shows that employing targeting tools and technologies will become more important as the differences between local and national marketplaces shrink.

Local Begins Catching Up

Both local and national TV buying have been slow and deliberate in adopting automated TV buying capabilities. Programmatic was not a big factor in the national TV upfronts, as national TV sales tend to be more person-to-person. But local TV has been committed to reducing the incremental costs of buying locally through the use of automated buying platforms.

As local TV stations, station groups, agencies, and direct buyers continue to support the automation of the buying process, the “pipes” for future buying marketplaces are being laid. This added advantage of preparation for future exchange platforms will make all current local TV buying stakeholders competitive—not just locally, but nationally and globally as well.

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