Upfront marketplaces drive price discovery, empower buyers and sellers to do long-term planning and facilitate premium content creation. Rather than resetting the marketplace at an annual event, publishers should embrace upfront strategies throughout the year.
What’s wrong with annual upfronts?
Annual upfronts are, by definition, out of date. Once prices are set, the annual rate card becomes dogma. Sellers can depart from the rate card for a preferred customer or a certain level of volume, but what they aren’t doing is gauging the ongoing push and pull between supply and demand. In other words, once the annual rate card is set at the upfronts, sellers operate for the rest of the year inside a silo that blocks out market forces.
That silo has always been there, but it’s become more visible, thanks to the rise of programmatic. As programmatic has scaled, buyers have found that sometimes it’s better to buy media upfront and sometimes it isn’t. Put simply, programmatic has empowered buyers to contextualize the rate card with real-time market intelligence. Of course, publishers can see that information, too, but if they don’t align the open market with the upfront market, they’ll remain stuck in a no-win guessing game about how to maximize value.
What does a continuous upfront marketplace look like?
Historically, publishers have reserved upfronts for video because it costs more to produce. But a shift to continuous upfronts doesn’t have to be content-centric. In fact, as GDPR and other privacy measures put greater emphasis on first-party data, publishers have an opportunity to create audience segments for all content, sell those audiences on an upfront basis and deliver them programmatically.
For example, a publisher can sell a back-to-school audience in the spring, ramp up content production throughout the summer and deliver that audience programmatically in the fall. Of course, the deal will be struck between trading desks rather than at an annual event with fancy parties and lavish presentations. More importantly, because the upfront price is aligned with the open market price on an ongoing basis, buyers and sellers can trade their media contracts as business conditions change rather than locking themselves in a year ahead of timing and hoping that the deal still makes sense when it’s time to execute.
What does this mean for publishers in the long term?
A continued upfront marketplace means publishers won’t have to agonize between upfront sales and the open market because they’ll get price discovery on an ongoing basis. That’s a big deal for all publishers because it allows them to both mitigate uncertainty and extract maximum value for their product.
Beyond price, a continuous upfront market allows publishers to better allocate production resources. In turn, publishers will be able to increase the quality of their product by spending less on content for which demand is low as well as investing more time, money and resources where it counts. At the same time, publishers will strengthen their direct buying relationships with advertisers by engaging in an ongoing conversation about upcoming demand for specific audience segments.
The real shift for publishers, however, will be one of mindset. Annual upfronts condition publishers to think in terms of an annual calendar. In effect, publishers shackle themselves to their rate cards, and as a consequence, move slower than their audiences and their advertisers. Shifting to a continuous upfront market sets publishers free, allowing them to make opportunities every day. When that happens, publishers will become proactive media market participants.