Forget Subscribers. Now It’s All About Advertising

Hank Price

Back in the day when the network upfronts were about networks, you could always tell who was in first place and who was last by watching the presentations. The No. 1 network would be arrogant and dismissive of all competitors.  The other networks would make ugly jokes about whoever was in first place, predicting their own imminent move there. Every year was going to be “The year of (insert any network name here).”

If that truism remains in effect, then apparently Netflix, which does not have a linear product, does not currently sell advertising and had no presence at the upfronts, is now the No. 1 network. All it took was an announcement by Netflix to their employees that the service was considering an ad-supported tier for the lemmings at the organizations formerly known as NBC, ABC, CBS and Fox to rediscover the value of commercial inventory.

Like prospectors hearing there was gold in California, the networks pivoted on a dime from complete concentration on the quest for direct payment, to their former adoration of advertising, using the upfronts to profess undying love and loyalty to all things sponsored. “Subscribers? What subscribers? We just care about advertising” they cooed.

Of course, the upfronts are targeted to ad agencies, so we should expect the presentations to be tailored to that audience. But reading the various press reports, one cannot escape the impression that by lumping all ad venues together, any sense of unique value related to brand was lost.

Perhaps unique value doesn’t matter anymore. If it did, the networks would not have avoided the uncomfortable fact that most of those impressions they are selling are delivered through their traditional affiliate partners. These are partners that can still make or break a program’s success, not to mention that other forgotten fact that a spot running on a local affiliate can be more valuable than one on Bravo. Forgive me for digressing into reality.

Contrast all of this with local stations that have been in the multiplatform business for a long time, making quite a bit of money by selling the value of their local brands. Station digital products, especially mobile apps, offer stations unique selling propositions, driven by the power of their brands. Stations also do quite well selling third-party digital advertising that has increased value because the sellers have direct relationships with local merchants.

Local stations also have the unique value of over the air, a service that continues to see steady growth and does not have to wait for the promise of NextGen to have real value. OTA produces loyal audiences on multiple channels right now.

According to BIA, total local television/digital advertising is so important that it should top $20 billion this year, including political advertising, which is almost exclusively local. Perhaps next year stations should have their own upfronts. TVB could put it on the same week as everyone else. The theme might be “Advertising That We Know Works.”

With everyone from Disney+ to Sundance now selling spots, one must ask if there is enough ad revenue to go around? David Bloom has an insightful piece on the subject worth reading, but the short answer is probably not. Just as we are beginning to see consumers demonstrate limitations in the number of paid services households can afford, there is also a limit on the number of commercials any household is willing to absorb. We will see over time who succeeds and who fails.

Meanwhile, what does all this mean to the future of the networks? I’m not sure. Perhaps we should subscribe to Netflix’s in-house newsletter to find out.

Hank Price is a media consultant. His second book, Leading Local Television, has become a standard text for television general managers. In a 30-year general management career, Price led TV stations for Hearst, CBS and Gannett, including WBBM Chicago, KARE Minneapolis, WVTM Birmingham, Ala., and both WXII and WFMY in Greensboro/Winston Salem, N.C. Earlier, he was a consultant with Frank N. Magid Associates. Price also spent 15 years as senior director of Northwestern University’s Media Management Center. He is currently director of leadership development for the School of Journalism and New Media at Ole Miss.