TV’s gestalt: What’s on offer for broadcast year ’17

PHD's Rob Young points to the tech-focused nature of this year's upfronts as buyers prepare to tune in on addressability.

By: Rob Young

Few traditional components have survived the radical transformations that have hit our media industry over the last four decades. But the upfronts, which showcase the TV industry’s direction for the year, have thus far escaped being chucked into oblivion.

Perhaps that’s because it’s the only time in the year that buyers get to encounter the TV business’ gestalt (the sum of RobYoungits manifold parts), placing the industry in its redefined entirety on display.

TV buyers understand that behind the flickering screens and stand-up comedians, the upfronts provide an up-to-date enunciation of how the TV business will be conducted for at least the next 12 months.

This year we’re likely to see the upfronts feature presentations around the complex and expensive issue of addressability; notable because this will represent the beginning of a new way of thinking about the TV medium.

This isn’t the first time that the upfront prepared the industry for change. In 1977, Roger Hone and Peter Viner introduced the “grid” TV rate card on behalf of Global TV. Also known as the ” demand” rate card, buyers were startled to find that a spot in a TV show no longer commanded a constant, fixed price. Hone and Viner explained that if spot inventory in a TV program began to dry up, the rate would start to climb; by contrast, soft demand to lead to soft rates. The concept that the early bird TV buyer gets the lowest cost TV spot had been unleashed.

From that point on, TV upfronts moved beyond the simple drink tickets and a chance to gamble the client’s money on new TV programs. The upfront became a starting pistol that, once fired, triggered a buying race through the upcoming broadcast year.

The upfront changed again during the economic downtown of 2008-09. TV dollars were set aside to pad deteriorating financial results. Cost per rating points went down, not up. TV sales witnessed the downside of demand pricing.

The tone of the upfronts has also changed. No one wants to party hardy when people are getting laid off – the results of revenue declines and a share of advertiser spend shifting to the online medium,.

But the rumour mill suggests the atmosphere might be turned up a notch this summer. It’s time to celebrate “new TV.” Addressability is at the core of almost all new TV science these days. That’s because online is addressable, while TV is not. And if TV wants to be like online, it needs to be able to offer addressability.

There are three conditions that must be satisfied before true “TV Addressability” can occur: rich household/viewer target data, dynamic ad serving and the capability to download unique content to individual households.

The upcoming upfronts will probably set the stage for announcements addressing one or more of these three conditions; not true addressability but perhaps some significant steps towards the goal.

We might hear about “big data” targeting approaches such as the creation of TV program indices by neighbourhoods that have been enhanced with geo-demographic data. Or perhaps some updates from the “set top box” initiative.

And we may hear about video-on- demand initiatives that allow one unique household to”demand” a particular piece of content, another key criteria for true addressability.

We’ve already heard about Rogers plan to distribute Sportsnet online (for a monthly fee) which satisfies the dynamic ad serving condition. Add some third-party targeting data and voila – true ATV. Perhaps this year’s upfront will contain some more examples of this revolution and some clarification on the intermixing of programmatic and addressable worlds.

Gestalt, it turns out, is a good word to describe what is going on with the TV upfront this year. During the day-to- day parry and thrust of buying and selling, we only witness isolated parts of the TV industry.

We see the “Hollywood” part in the form of good and bad narratives. We see the “Las Vegas” part in the form of expenditures on win, lose, and show program bets. We see the “Wall Street” part, in which quarterly results trigger quarterly layoffs and new hires. And then we see the “Silicon Valley” part, where new technology is acquired and employed in the march towards addressability.

But it is only when all these parts come together, with all players playing, over a week of upfronts, that we get to witness the whole of the TV medium and the extent to which that whole is greater than the sum of these parts.

Rob Young is SVP, director of insights and analytics at PHD Canada.