Dive Brief:
- Upfront negotiations for TV advertising is ongoing, and so far look to be similar to last year’s 6% drop for cable commitments and 5% for broadcast commitments.
- Several big brands are cutting TV ad budgets this year, including McDonalds, State Farm and Verizon.
- The current state of negotiations shouldn’t be a surprise for anyone as a decline has been predicted, although actual figures are not released for any volume-price deals.
Dive Insight:
Television as an advertising medium is facing another year of falling spending based on current upfront volume-price negotiations. Last year spending commitments for broadcast TV fell 5% and cable 6%, and some predictions for this year expect similar declines with other forecasts, such as from Magna Global, an ad-buying unit of Interpublic Group, sees upfront declines as high as 10% over last year.
Indicative of this trend, several major brands, including McDonalds, State Farm and Verizon are all planning on cutting TV budgets, although none have publicly commented on the reduction.
The upfront TV season is a notoriously opaque time for predictions as networks and agencies are all providing a variety of numbers on spending and price predictions for which they aren’t held accountable. To further muddy those waters, networks are redefining upfront spending by adding in new revenue streams such as social media, syndication and content creation deals into ad spend consideration.
Traditional TV advertising is facing challenges from multiple fronts including alternatives such as Hulu and Netflix, overall declining rating, and ad budgets that are moving toward digital channels.