Courtesy of Always with Honor for Variety
Madison Avenue tends to focus on the young. Now the owner of TV’s Lifetime, History and A&E cable outlets is pressing advertisers to pay more attention to more than a few old souls.
A+E Networks intends to do ad deals based on what it calls a “total audience currency” in the industry’s next round of “upfront” negotiations, when U.S. TV networks try to sell the bulk of their commercial inventory before launching another cycle of programming. For decades, big advertisers have paid depending on how many viewers between 18 and 49 watch a particular show, a nod to the belief that younger consumers can be swayed more easily to try new products and services. But as those viewers migrate to streaming video, executives at A+E believe the ground rules of advertising sales need to change.
“You’ve got a number of clients that only want linear TV. Meanwhile, there’s this huge migration, and then they say, ‘I also want my buy guaranteed on 18 to 49’ – which is no longer the audience that is watching traditional ad-supported TV,” says Peter Olsen, president of ad sales for A+E Networks, in an interview. “Television deals should be on a total audience metric, like adults 18-plus. Then, if each client wants to have a dialogue around secondary metrics — that could be a traditional demo, it could be an advanced target, it could be a business outcome — it’s all on the table.”
There is no guarantee all advertisers that work with A+E will want to do business in this new fashion. “We are expecting some pushback,” Olsen says.
TV advertising is in the midst of massive change. The rise of interactive, streaming video sent via broadband means Madison Avenue has more ability to place commercials more precisely, sending a specific commercial to a household in a particular region of the country, or put an ad for a particular product in front of a family more likely to have interest in it. As more consumers sign up for streaming, they have become more difficult to reach through traditional means, including the primetime TV schedule — prompting new discussions about how to “target” customers and whether media companies should be able to seek a “premium” when they help their clients find important audience niches.
If successful, A+E’s bid could have significant ramifications for the media industry — Walt Disney Co. is a significant investor — and shows just how quickly the economics of television are changing as one-time couch potatoes find their way to new broadband environments. A+E has already broached the topic with some media buyers and will formally unveil the initiative at a “virtual” upfront presentation on March 3.
This isn’t the first time a major TV outlet has made a bid to get paid for audiences in which advertisers have traditionally given less focus. CBS for years pushed sponsors to give the network credit for viewers between 25 and 54 ,and David Poltrack, the company’s former chief research officer, spent much time at industry gatherings telling analysts and buyers of the vast spending power of older consumers.
But that move represented a bid to get more dollars to come to CBS versus its rivals. A+E’s effort takes place as executives notice shifting dynamics behind linear TV as a whole.
TV ads for decades have been backed by giant companies like Procter & Gamble, State Farm, General Motors and Apple. But the networks have become enchanted by a new stream of revenue from e-commerce and online-marketplace upstarts ranging from Wayfair to DoorDash. “We are seeing a continued, huge uptick in marketing from direct-to-consumer businesses, and they predominantly see the business of marketing and advertising on TV differently from the legacy clients,” notes Olsen. “They are not focused on demos.”
They are, in some ways, better customers for the TV networks in a time of flux. Longtime TV sponsors have for years enjoyed more favorable rates, and have been immune from paying the pricing increases to which others are subjected. TV ad discussions often center on these pricing increases — known in the business as the change in a CPM, or the cost of reaching 1000 viewers.
Simply put, the networks would like to do more business with the new direct-to-consumer outlets, who don’t have lower CPM increases grandfathered in to their deals. At the same time, traditional customers like Unilever and Procter have in one form or another, helped sponsor the TV networks since their earliest days on the air.
A+E intends to make the case that older consumers have considerable value that sponsors may not realize. “Marketers and brand that are ignoring the total audience, and just focusing on a very small demographic, perhaps they are missing out on a larger volume opportunity,” says David Ernst, A+E’s vice president of advanced television and digital analytics, in an interview. An older audience has “the resources to act upon the messaging that advertisers provide to them.”
Some advertisers are already paying to reach consumers who have been around for a while. Marketers who place ads in news programming –- the central focus of some of TV’s most-watched cable networks – already do deals based on the number of viewers between 25 and 54 who watch.
Variety's Brian Steinberg contributed to this post.