There is a slide in The Interactive Advertising Bureau’s Brand Disruption 2022 presentation that nicely summarizes the demand side of the upfronts. 

The upfronts have historically offered a fixed supply of linear inventory to a fixed demand of buyers: 200 “retail-cartel” advertisers supplying 88% of U.S. network television revenue (the term “retail-cartel” applies to the brick-and-mortar retailers who have historically bought from networks). But recent upfronts addition YouTube now generates more annual revenue ($28.8B in revenues in 2021) than Netflix from a mix of these 200 advertisers and many of the 10MM or so advertisers who buy from Google and Facebook. [1] So, the demand for TV inventory is evolving and is increasingly being shaped by Connected TV (CTV).

Last week’s “The Upfronts Model Isn’t Dead Yet” essay focused more on the supply side dimension of the upfronts equation: what value does traditional linear inventory offer in a world where data and audience targeting are increasingly valued by the demand side?

The deeper story playing out at upfronts was a tension between the persistent demand for linear inventory, and the need for better solutions in addressability (meaning, targeting) and measurement in CTV. 10MM advertisers need the latter - especially those who rely on direct-to-consumer models - while 200 “retail-cartel” advertisers and their media buyers also have that need, but less so.

I think there are three helpful ways to look at that tension: 

1. the upfronts lens
2. The e-commerce lens, and
3. The gray area in which Free Ad-Supported TV services (FASTs) and YouTube now sit.

All three reinforce two points I made in a recent mailing, Streamers Hit a Dead-End (Macro) & Consumers Hit Dead-Ends In Streaming (Micro): Discount FASTs (especially Pluto and Tubi) at your own peril, and Discount YouTube as a competitor to legacy media at your own peril.