Report: Streaming Platforms To Get More Ad Dollars

This year’s annual spring ritual known as the upfront, in which advertisers commit to buying commercials for fall programming, is expected to bounce back from a tepid 2020 and show more ad dollars migrating to streaming platforms, the Wall Street Journal reports.

As pandemic restrictions ease, ad spending rebounds and TV production largely returns, this year’s upfront negotiations are poised to look more like those of years past, albeit with an uptick in streaming investments and negotiations taking place earlier than usual in the season, according to marketers and ad buyers.

There is no official start date for ad commitments to be made, and ad buyers talk with sellers year-round, but many negotiations start in earnest after programmers showcase their fall offerings in the spring.

Despite the fact that fewer people are watching traditional cable and broadcast programming, demand for ads in popular shows remains robust. Sellers have been giving advertisers free ads to make up for ratings shortfalls. That gives them less ad inventory to sell, which is driving up prices.

“What last year taught us or demonstrated was that there is still a tremendous demand for the supply of TV and video that exists,” said Carrie Drinkwater, chief investment officer for the ad-buying firm Mediahub, part of Interpublic Group of Cos. “Supply continues to erode and demand is not eroding at the same pace.”

That means spending commitments are expected to increase 4% to 6% from last year even as broadcast and cable TV ratings are likely to decline at least 20% over the same period, continuing the long-term erosion of traditional TV audiences, ad buyers said.

Declining audiences for traditional TV and the steep increase in streaming viewing will embolden some advertisers to shift dollars from broadcast and cable to ad-supported streaming TV services.

Major powers in traditional TV are trying to stay in the game as more viewers eschew cable and broadcast systems. NBCUniversal’s Peacock, Walt Disney Co. ’s Hulu and ViacomCBS Inc.’s Paramount+ offer versions of their streaming services with ads, and an ad-backed version of HBO Max is due from AT&T Inc. next month. ViacomCBS also owns Pluto TV, an entirely ad-supported service.

“We’re absolutely expecting the biggest shift we’ve seen to digital from a percentage standpoint than we’ve ever seen in our history,” said Mark Marshall, president of advertising sales and partnerships at NBCUniversal. The breakdown for viewership is 70% for NBCUniversal’s broadcast and cable channels and 30% for its digital properties, including Peacock and the company’s apps. It expects that split to be 50-50 in the next two years.