- Mike Shields, former advertising editor for Business Insider who's now CEO of Shields Strategic Consulting, says the TV industry will phase out its direct sales business for streaming and ad-free experiences.
- Companies have had to quickly react as ad categories in travel and movies declined, live viewership sunk, and production stalled for months during the pandemic.
- Shields argues it's a critical time for ad sellers to pivot their business, form strategic partnerships, and move towards a "platformization of sales."
- "The future of advertising-supported, premium content, especially serialized narratives, is at a crossroads," said Joe Marchese, the former head of sales at Fox who now runs Attention Capital.
- Visit Business Insider's homepage for more stories.
If you even just glanced at Disney's complicated reorganization announcement on Monday, despite all the confusing maneuvering, the message was pretty clear. In terms of media, we're a Disney+ company now.
But if you looked closely, buried at the bottom of the news accounts was a brief mention of which teams ended up controlling ads sales. This for a company that owns the majority of a broadcast network in ABC as well as ESPN.
Similarly, if you've watched CEO Jason Kilar operate at WarnerMedia, with his no sacred cows mandate, there's little doubt what he cares most about (HBO Max, and going after Netflix), and cares less about (investing in linear basic cable — which he compared to DVDs and gas-powered cars).
Across the TV industry, networks are going through painful rearchitecturing as they endeavor to become direct-to-consumer companies, giving customers the control they expect, while not screwing up their still-lucrative but declining ad revenue.
So it is worth asking the once unthinkable question — how long do TV companies want to be in the direct sales business? Is it time to finally turn TV over to the machines?
"Until now, the changes we've seen in the TV business have been incremental at best," said Adam Gerber, global chief media officer at Essence Global. "But we live in a world that is going through monumental change, and recent moves by media companies signal the dominoes are falling faster and harder. Streaming is the future, and ad models need to evolve much more quickly. The question is whether the dominos fall cleanly, or not."
Might those dominos land right on those old fashion TV network sales organizations?
Ad sales no longer plays the starring role in TV
There was a time in the ad industry when, much like on the creative side of the business, big name salespeople were the stars of the show.
Names like Mike Shaw at ABC. Ed Erhart at ESPN. David Levy at Turner. Discovery's Joe Abruzzese.
These executives, along with their TV buyer counterparts, made markets. They became brands. Their deals, their breaking points were legendary.
It's obvious that things have changed radically.
Of course, as we've all declared repeatedly, the pandemic has sped up all sorts of inevitable changes. The TV upfront spring buying ritual, always in question, was thrown into chaos this year, as certain ad categories cratered (like travel and movies) and others faced major uncertainty (such as autos). Plus, live viewership continued to plummet — and, oh right — nobody could produce TV shows for months.
When the upfront finally did happen, it wasn't pretty. Variety reported that business may end up down 20%, and $2 billion may be lost in just broadcast primetime.
Here's a question: How much longer is primetime going to be primetime? The TV giants seem to know where things are headed. According to The Wall Street Journal, NBCU is exploring phasing out some long standing cable networks entirely.
Gerber guesses that media companies will, if they're not already, start gearing their best shows for ad-free or ad-light platforms (like say Peacock), only to pare these shows down for linear networks at a later date.
"Advertisers need ways to reach and engage young audiences, without pissing them off," said Gerber. "Streaming is one of the solves — but we haven't cracked the ad experience nut yet."
To get there, ad sellers need to reorient their business. They can't have the same kinds of ads or ad volume, or ad delivering mechanics. That's a different business model entirely — one that would seem to lend itself to software and data.
Can TV still justify having big advanced TV units?
In fact, if you talk to ad buyers, many would love to see the TV ad business start to look more like Facebook and Google. They imagine logging into an interface, looking at inventory across 10 different networks and use their data to target and move stuff around in real time. That's mostly been a fantasy.
Indeed, TV has resisted this platformization of sales for good reason. Business was booming! Even though ratings are down, we've still got the eyeballs. Why give up leverage, and go down the digital path of losing control of inventory and pricing, etc?
Instead, the major TV giants each have built their own specialty advanced TV units — Viacom Vantage and Discovery Engage and Disney's Lumninate and so on. Given how things are treading from the top, how long can these companies justify those on their balance sheets?
Former NBCU sales exec Scott Schiller, now global chief commercial officer of Engine Group, says TV companies will likely resist anything that seems to dilute their individual potency.
"TV's sales pitch is moving from shows to audiences, media selling continues to be less about the three-martini lunches and more about data and analytics. That being said, walled gardens will never die, and the industry will have to be content with that."
There's no doubt that there have been numerous lackluster attempts to somehow unify TV ads selling. AT&T's Xandr was going to be one such central industry hub — but not everyone loved that it was owned by the same company as WarnerMedia. The consortium OpenAP was also headed in this direction — although it didn't help that WarnerMedia did its own thing.
I'd argue that now the time is more than right, as new leadership atop media conglomerates rethink everything — and investing in sales seems low on the list.
(It's worth noting that NBCU sales chief Linda Yaccarino was just elevated to chair of global advertising partnerships. Even as she's pushed the TV industry to embrace digital metrics and software-driven sales, Yaccarino remains perhaps the last of the big dealmakers.)
One ad sale vet was skeptical that TV networks will dare to give up any perceived leverage. "There is still so much revenue in TV, and each company wants to maintain its own unique data and demand," he said. "I just can't seem them locking arms on some kind of data collective or platform any time soon."
I certainly understand why TV execs would be concerned about the bad sides of programmatic (fraud, shady resellers). But theoretically, TV networks can learn from the ills of the display world and set up tons of protections and controls. They can keep core teams together for major sponsorship deals for sports and events, just like the digital guys do.
Now is the time to be bold.
"The future of advertising-supported, premium content, especially serialized narratives, is at a crossroads," said Joe Marchese, the former head of sales at Fox who now runs Attention Capital. "We have known for a long time that this day would come, but the question is, who will establish a model that the entire market will adopt and viewers will embrace? And is it possible in time?"
The bigger question is, if the TV business was really ready and willing to outsource much of its ads sales for linear TV, who do you partner with? Given that CBS and others already use Google's ad tech to deliver streaming ads, it would make sense to work with these guys — they are sort of good at this sort of ad tech exchange thing.
The thing is, there is also Google, which makes lots of media people not want to hand over their livelihoods to the search juggernaut.
I'd argue that going all in on OpenAP might be the way to go. Or maybe TV starts from scratch, finds a tech startup, and built a joint venture.
Yes, that sounds crazy. But at one point, so did Hulu.