Most of the nation’s biggest TV companies are planning to gather under one roof next week and discuss something that has little to do with traditional boob-tube economics but is likely to play a critical role in them in weeks to come.
When Fox, Warner Bros. Discovery, Paramount Global, NBCUniversal and Walt Disney speak Tuesday morning at an event convened by The Trade Desk, they will give a tacit nod to the growing importance of so-called “programmatic” advertising to their many TV networks. In the not-too-distant past, programmatic sales were an add-on to mainstay TV commercials — and the networks were wary of ceding control to a technology that gave advertisers the ability to essentially use a software algorithm to insert an ad during a particular household’s streaming session or FAST watch, all according to the type of customer seen as most likely to be interested.
Now, things seem to have changed. “I do think we are in this moment, we have reached this inflection point around how TV advertising is bought and sold,” says Tim Sims, The Trade Desk’s chief revenue officer, in an interview. He adds: “Programmatic is playing a bigger and bigger role in how the networks are monetizing their inventory throughout the year, not just during the upfront.”
The five aforementioned media companies will, next Tuesday in midtown Manhattan, offer individual presentations on their efforts to sell ad inventory tied to streaming. Jim Keller, Warner Bros. Discovery’s executive vice president of digital ad sales, for example, plans to discuss what has worked for ad-supported streaming buys around the company’s media assets, among other topics. Fox will bring Vinny Rinaldi, head of media and analytics for Hershey Co., while Paramount will bring Jeff Giacchetti, who oversees programmatic media efforts for Colgate-Palmolive. Neither advertiser is known for discussing its plans regularly in public.
Getting rivals to hash things out in a single meeting doesn’t necessarily mean new rules will be set. NBCUniversal in 2017 held what it called a “summit” of major networks, digital companies, media buyers and advertisers, with an invitation from NBCU ad-sales chief Linda Yaccarino that was the size of a coffee-table book, wrapped in black and festooned with a ribbon. But while the assemblage was notable, changes to media measurement and advertising relationships really only started to happen over the past few years.
The Trade Desk event takes place after all five conglomerates have ad-supported tiers for all their major streaming outlets that are open to programmatic ad buys: Paramount’s Paramount+; NBCU’s Peacock; Warner’s HBO Max and Discovery+; Fox’s Tubi; and Disney’s Hulu and Disney+. Netflix, which is not involved in the presentation, is also at work selling a new ad-supported tier. Disney and The Trade Desk struck a partnership last July that aimed to boost Disney’s programmatic sales efforts around its streaming hub.
TV networks for decades sold ads that appeared alongside big-audience programming that ran on Thursday at 9 p.m. for example, or Sundays at 10. Now they are gearing up to sell more of it to smaller crowds who watch at times of their own choosing. Disney has said it expects 50% of all the inventory it sells to be addressable by the end of 2024, up from 35% at present.
And programmatic, which in its earliest days was something looked upon with disdain by big media companies because it was sold by an outside party, is now seen as more necessary than ever. Ad spend on linear national TV fell 4% in 2022, according to data from Magna, the Interpublic Group media-investment firm, while ad sales related to ad-supported streaming rose 18%. To be sure, the new types of ad sales in TV represent just a portion of the whole. According to The Trade Desk, ad spending tied to connected-TV formats accounts for just $16 billion of the larger $250 billion tied to overall TV.
The networks convene just weeks before the start of the industry’s annual “upfront” sales season, when they try to sell the bulk of their advertising inventory before the launch of their next cycle of programming. The five broadcast TV networks took in approximately $9.9 billion in primetime sales—up a modest 6.4% from the previous upfront—while the cable channels sold $10.2 billion, a 5.2% increase, according to estimates from Media Dynamics Inc. Total upfront sales around linear TV increased 5.8%, to $20.1 billion.
IIn 2023, the networks will focus even more intently on ad sales not tied to traditional TV, most notably streaming. “Ad-supported tiers have become a really important part of a network’s strategy,” says Sims. “Consumers have moved, and the advertising industry is kind of formatting around that.”
