Many media plans have now been deferred, delayed, or cancelled entirely as marketing messages, as well as budgets, are being re-calibrated for an anxious world.

Amid this complex and fast-changing environment, Cortex Media is providing advertiser guidelines to likely scenarios going forward. There are three critical areas for U.S. media right now:

1. The Current Outlook for Media Cancellations
2. The Status of the 2021 TV Upfronts & Likely Scenarios Going Forward
3. The Media Inflation Outlook for both 2020 and 2021

The Current Outlook for Media Cancellations

What can be cancelled now in terms of TV commitments, as well as other media– including digital? 

Television….

Although the deadline to exercise Q2 cancellations for Upfront TV commitments was February 1^st, networks are allowing Q2 cancellations for affected categories including airlines, cruises, hotels, restaurants, etc. However, cancellations for Consumer Products Companies and other categories not directly affected are not being accepted.

Shifts from Q2 to Q3 are being allowed with limitations, but there are concerns that Q3 inventory could become scarce.  Networks are cautious about advertisers moving Q2 activity to Q3 and then exercising Q3 options– effectively canceling Q2 activity.  This will require negotiation.

It remains to be seen how Q3 options will net out and how much inventory will be available after May 1^st.  Many advertisers are expected to exercise all options and buy back in Scatter, which is expected to drop by about 10% in terms of CPM. Options are likely to be exercised in full to provide flexibility and take advantage of lower Scatter pricing.

Other Media, including Digital…

Yearly or long-term commitments will need to be renegotiated on a case by case basis.  Rescheduling flexibility is expected in most cases where inventory is not a critical issue. Short-term commitment cancellations will vary depending on standard practice for specific media.

Digital will offer the most flexibility, particularly any real-time bidding (RTB)  or Programmatic plans, since it is purchased on a short-term basis.

The Status of the 2021 TV Upfronts & Likely Scenarios Going Forward

Live Upfront presentations have been cancelled, and many networks have moved presentations on-line.  Currently, Newfronts have already been pushed back to late June. And the 2020 Olympics have been delayed, so budgets are likely to move to 2021 and not be allocated this year.

Note that only one of 54 new shows are in the can and many pilots have not been produced, which means they cannot be shown at Upfront presentations.  In fact, many season finales for current shows have not been produced yet.

The likely scenario going forward is that the Upfront process is expected to be delayed to late 2020, which means that Upfronts will probably cover Q1 2021 to Q3 2021.  (Q4 2020 is likely to be Scatter only.) Networks don’t want to move to a Calendar Upfront permanently.  They are also expected to use this opportunity to move to bundled upfront offerings-in other words, both linear & non-linear offerings.

In terms of Inventory Supply and Demand, CORTEX anticipates that while the supply of impressions is currently up due to C19 restrictions, the impact is likely to wane when schedules return to normal.  Demand for Q4 is hard to predict and will depend on how the economy rebounds.  In any case, pricing is expected to be down.

The Media Inflation Outlook for both 2020 and 2021

Media Inflation 2020 Outlook:

National TV…

• Q2 TV CPMs may see a reduction due to over-deliveries, however, efficiencies may be reduced if media is cancelled or re-scheduled. 
  • Cancellations of live-sports programming has seen minor reallocation of budgets to other properties but not enough to create inventory pressures yet.  However, campaign reach goals are being affected due to lack of live sports audiences. 
• Q3 pricing for existing Upfront commitments should be flat but Scatter is expected to be down 10+% due to low demand
• Q4 pricing is also expected to be down 10% but may be affected if market moves to 100% scatter for the quarter.  Pricing will depend on demand that will hinge on how strong the economic rebound is.

Digital

• Addressable, Data-optimized and Non-linear Video offerings are seeing a high increase in viewership.  (Nielsen predicts an increase of 60% in content viewing.)  This will result in lower pricing for some offerings.
• Programmatic pricing is expected to decrease due to investment cuts and increased inventory. 
• Social usage rates have increased dramatically but this has not resulted in more investment.  This will result in short-term pricing decreases.  Cost decreases are likely to last into the recovery.

Other Media

• A 10% decrease in pricing is also expected for all media.  There may be some pricing distortions for Local TV and Radio due to elections.

Media Inflation 2021 Outlook:

National TV

• 2021 planning is already being done with flat pricing vs. 2020.
• Upfront pricing for 2021 is likely to be 10% to 15% down.
• Due to the increase in non-linear viewership, networks will aggressively package Linear with other offerings.

Digital

• Display is likely to see a sharp drop of 15%+
• OLV will be more resilient in terms of pricing.  Budgets are likely to increase due to flexibility vs. broadcast.  Pricing is expected to be flat to -5%.  Premium content will fare better.
• Social usage rates are likely to return to normal levels, but pricing is likely to be down about 5%.

Other Media

• A 10% decrease in pricing is also expected for all other media overall. 
  • Print at -5% to -10%.  A lot of publications are expected to close or move to on-line only.
  • OOH will also see decreases of 10%+.  Based on experience from the 2008 crash, advertisers will try to hold on to incumbencies in premium locations, but all other inventory will see decreases in pricing.
  • Local TV and Radio are likely to see pricing down by 5% to 15%+, depending on the market.

Agency Fees, Payment Terms and Opt-in Buys

• Agencies are getting requests from clients to reduce fees and extend payment terms. 
• At the same time, agencies are really pushing non-transparent “opt-in” transactions to clients to improve their revenue.  In many cases, they are requiring advertisers to opt-in to these transactions in order to reduce fees or extend payment terms.

Cortex Media and has been providing media auditing and consulting services to leading advertisers in North America, Latin America, Europe, and Asia since 2001. The company is recognized globally as a resource for balanced and independent viewpoints on key advertising media topics in U.S. and worldwide. 

Cortex is also well-known for its Media Inflation Outlook.