The CTV upfronts have begun and kick into full force with the IAB Newfronts this week. And so the tradition of slick, glittery upfront presentations continues as media companies attempt woo brands and their agencies with new content, data, and AI. But this year CTV ad buyers may want to rethink their upfront strategies for 4 reasons:
An uncertain economy
New tariffs have injected uncertainty into the economy, including the volatile bond and stock markets. Even with the 90-day pause on the most significant tariffs announced by the administration a month ago, the impact of the 125% tariff on Chinese goods and the 10% baseline tariffs on American consumer spending is unclear. But according to an IAB survey released in March, about one in eight marketers already plan to slash CTV budgets due to tariffs. The uncertainty around the results of tariff negotiations, slated to end in a couple of months, is bad timing for the CTV upfronts. Basic business instincts suggest that is smarter to take a more cautious approach to making significant financial commitments in uncertain times.
Upfronts are a dated selling model
The upfronts are a vestige of the days when there were only 3-4 TV networks which had significant power and influence on both viewers and advertisers. Gone are the days of NBCs “Must See TV” of the 1990’s that provided massive TV audiences and share, which commanded the importance of upfront inventory commitments. While major media companies like Disney, Paramount, Comcast, and Fox will package upfront deals across both broadcast and streaming audiences to gain clout, there are few streaming hits like “Only Murders in the Building” and “The Last of Us” that can garner the need for upfront deals. The other digital advertising markets, such as display and online video, are primarily traded on an ad hoc “scatter” basis. It’s logical for CTV to follow.
CTV viewership becomes even more fragmented
In an increasingly fragmented CTV environment, there is less reason to commit significant marketing dollars to a handful of media companies. According to eMarketer, it will take 6 years for US CTV average viewership to nearly double between 2020 and 2026. Meanwhile, in the FAST sector, hours of viewing (HOV) skyrocketed 98% in the US and Canada in just one year between Q4 2023 and Q4 2024 according to Amagi’s recent Global FAST Report. While some FAST inventory will be sold in the upfronts via FAST services such as the Roku Channel, Tubi, and Pluto, a vast majority will be available in the scatter market.
Upfront pricing is not necessarily better
For years, the prevailing logic for buying TV in the upfronts was that brands could grab discounted CPMs compared to scatter via big and early commitments. But CPM prices in the overall CTV ad market are declining as supply outpaces demand. Amazon has led the market in dropping CPMs by about 20% in the last year, which will likely carry over to this year’s upfronts across the usual suspects such as Netflix and Disney+. And CPM pricing in the scatter FAST market may drop even more. In the aforementioned Amagi FAST report, while hours of viewing increased 98%, ad impressions only increased 67%, putting significant downward pressure on pricing. So, net-net, it makes sense to limit upfront media investments in a market with declining prices.
Given the trends above, CTV Ad buyers may want to consider a more cautious approach to this year’s upfronts and allocate a higher share of their budget to quarterly scatter budgets. And by doing so, they may gain significant insights by experimenting more in an “always-on” market with new inventory, data, and AI.