TV Audience Erosion Looms At Upfront Sales Events

As television executives prepare lavish stage presentations in New York this week to dazzle advertisers during the annual TV upfront sales season, a harsh economic reality looms offstage -- digital video advertising now eclipses spending on traditional television ads.

Reuters reports the shift in spending and competition from tech players like Amazon has taken a toll on media companies' financial results, raising the stakes for the annual showcase of TV content to attract spending commitments from advertisers.

“We’ve definitely seen that audience erosion in linear TV in certain pockets -- especially more so in entertainment,” said Nicole McCurnin, director of advertising insights at ad tracking firm Guideline. “But I do see, broad strokes, ad companies’ attention is just going more so towards those digital platforms.”

Digital video refers to a broad category of TV alternatives that includes paid streaming services like Netflix social video platforms such as TikTok, free ad-supported TV offerings like Pluto TV and cable replacement services including YouTube TV. It will account for an estimated $62.9 billion in U.S. ad spending in 2024, according to an April report from the Interactive Advertising Bureau and Guideline.

That represents 52% of the projected spending on video advertising this year, reflecting a change in viewing habits nearly two decades in the making.

Walt Disney, Warner Bros Discovery, Fox FOX and Comcast's NBCUniversal all reported declines in domestic television ad revenue in the most recent quarter, though NBCU's exclusive streaming of an NFL Wild Card game on its Peacock service helped fuel revenue, offsetting those declines.

Ahead of the upfront advertiser presentations, Disney and Warner Bros Discovery announced they would combine their Disney+, Hulu and Max streaming services this summer in a bundle of programming reminiscent of cable television. Such a combination might reduce subscriber cancellations and perhaps coax money-losing competitors to follow suit, analysts said.

Media companies are also tying up with tech giants to sell more ads. During a presentation to advertisers last month, Google announced that brands would be able to buy ad space with media companies like Paramount and Warner Bros Discovery through Google's automated tech tools, rather than working with salespeople.

The fragmenting of the video landscape is well understood -- and media companies like NBCUniversal have developed new advertising tools that let marketers' messages ride along with their content, wherever it appears. For example, a T-Mobile ad featuring U.S. TV show "Saturday Night Live's" Chloe Fineman could air during the live network TV broadcast of “SNL,” appear the next day on NBCU’s Peacock streaming service and show up on social platforms like X, TikTok and YouTube.