Furious's Blog

When you consider the various ways that COVID has disrupted the TV advertising business this year, the Upfronts are where the effects may be the most enduring. Will media buyers be wooed again with live performances by A-list celebrities? Probably. But now that networks, media agencies and brands have been forced to carry on without them, the more interesting question is whether the Upfronts will continue to play such a dominant role in TV ad sales. (Consider that they accounted for 73% of network ad buys during the 2018-2019 TV season.)

As we head into winter and the pandemic continues to rage, the next few months are ideal for staying at home and catching up on all your favorite shows and even some new original programming. The big question is: Which streaming service should you subscribe to? Consumers have an ever-increasing buffet of options to pick from.

For more than two decades now, programmers and operators have wanted to emulate digital publishers’ ability to offer dynamic advertising to targeted audiences. The notion of applying sophisticated targeting on top of linear TV’s appeal and mass reach has been the holy grail, and it’s starting to come to fruition.

The enduring appeal of traditional linear TV to national advertisers has lulled many sellers into a false sense of security—and no small amount of denial about the headwinds they face.

The marketplace for TV and video advertising is incredibly dynamic right now, and it’s hard to be certain of anything. On the one hand, major sports have all returned, which is great news for buyers and sellers alike, but we can’t necessarily count on an uninterrupted NFL season. And while studios are finding ways to safely resume production, we’re still left with much less premium primetime programming than we can usually count on in the fall.

We continue to live in a weird time with high uncertainty. Although it sometimes feels like a semblance of normalcy could be returning, it’s also clear that things can quickly turn the other way.

Likewise, the fate of premium content this fall is still very much unknown. Although studios should theoretically be able to limit access and institute intelligent procedures in order to resume production, one virus carrier can set off a chain of events that puts everything in jeopardy—as we’ve seen with Major League Baseball.

For that reason, content providers need to have a thoughtful plan B. Although networks might be inclined to lean on recent reruns or old standbys like “How I Met Your Mother” or “The Big Bang Theory,” now would be a smart time to look into the extent of your catalog and make more of it available on VOD.

If we’ve learned anything from the streaming wars, it’s that a range of content can have a firm place in the hearts of millions of viewers—from decades-old movies and shows to recent programming with small but intense cult followings. Obtaining VOD rights may be less expensive and easier than airing rights for linear TV content, and there’s no time like the present to start converting traditional linear advertising dollars into digital ones. Given the prevailing uncertainty, going all in on your VOD library is a smart idea.

Here are three steps to get started.

Like everything else in 2020, the fall TV season will be an exercise in creativity and adjusting on the fly as uncertainty reigns supreme.

No matter what data source you consult, the flight of TV viewers from traditional linear TV to Netflix, Roku, Hulu, Disney Plus and any number of other VOD platforms is unmistakable. Consider that 40% of adults in U.S. TV households are now watching video on a TV set via a connected device on a daily basis, compared to just 1% in 2010.

Addressable CPMs can be 10 to 20 times higher than a seller’s effective CPM across the rest of their linear portfolio, naturally leading sellers to want to sell as many addressable impressions as they can. But sellers need to be strategic in their approach to this channel because blindly offering as much of it as possible can negatively impact the value of remaining core inventory.

Providing addressable linear advertising is neither easy nor cheap for sellers. When you factor in headcount to manage extra volume, complexity of sales and execution, expense of data sourcing and data management, and legal compliance surrounding data privacy and security, the costs can wipe out the profit potential of selling inventory at high prices—particularly when inventory remains limited.

Here are three areas sellers should focus on to ensure that their addressable linear ad business is profitable in the context of their portfolio as a whole: