THE PRESIDENTS DAY (AD) SALE!

The Ad Biz is about to get mad, man

Happy Monday Day War & Peaceniks! It’s Presidents Day, which means the 2023 Upfront is just 90 days away!

Call me an “ad nerd,” but every year, I start thinking earlier and earlier each year about how the upcoming NewFronts and Upfront season will play out, and what that will mean for the larger ad economy in the following eighteen months. Last year I called out the ad recession (in which we’re now mired) early and often. For the last month, I’ve looked under the hoods of major Big Media and Tech players via their 2022 earnings results. And today, Presidents Day, I am ready and able to announce my official theme for the 2023/24 ad market:

PERFORMANCE

For those of you asking the inevitable question “The Upfront? Do we really need that anachronism anymore?” the answer is “Yes, thanks for asking.” I too used to believe that the process invented to match the TV calendar, which itself was designed around the academic school year, which itself was created to match yearly the planting and harvesting seasons of the agricultural age, would fade into memory as “television seasons” disappeared and Nielsen ratings went the way of Friends and Bonanza.

Then the Upfront gave birth to the NewFront, digital overtook television, TV became CTV, and our collective measurement became a joke without a punchline. Now, I must admit, I find the yearly convening of Media’s sellers and buyers, metaphorically and IRL, to be an important annual injection of adderall into the chaotic whirlwind that has become the ad business. This has become especially true since the Spring season incorporated both of the two largest slices of the advertising pie: TV and Digital. The ritualistic parade of platforms helps FOCUS our industry around important movements within ad-supported Media, and serves as an important forcing mechanism to discuss the challenges the industry faces.

You can already see this year’s “ad-erall” taking effect, with NBCU, FOX, Paramount, Disco Bros and Telemundo trying to get out in front of the annual “how tf do we measure this shit” debate, by forming a Joint Industry Commission to determine “how tf we measure premium video now;” and with Netflix (after denigrating the ad biz for a decade) announcing they’d be joining Upfront 2023, stealing Paramount’s spot. Both point to a Spring ad sales season chock full o’ change.

This is not to say that everyone comes to these meetings of the minds with their minds actually open; nor to imply that logic pervades all (or even most) of the overpriced cocktail parties packed tightly with magical thinking. But, after the awful no good ad year of 2022, you can feel the need for, and fear of, major change in the (hot) air.

Before I break down why Performance will be this year’s major ad trend, some context on precisely where the US ad market is right now: Down.

In 2022, after two years of massive Media over-usage in lockdown (and somewhat irrational ad demand), advertising fell off a cliff mid-year. Digital media was hit hardest, but not universally. While Meta, YouTube and Snap hit proverbial brick ad walls, Amazon (+21% in 2022) and The Trade Desk (+32% in 2022) saw major lifts on their ad platforms; and TikTok played the share-stealing monster everyone (from social media to TV) bemoaned.

Simmering beneath this surface, major economic and operational headwinds wreaked havoc on the ad market. Supply chain crises caused by the pandemic remained prevalent even through the end of last year, and became commingled with sky-high inflation, due to rising labor costs. Consequently, numerous important sectors cut far back on ad budgets.

Retail is advertising’s biggest sector; Auto is typically a top five category advertiser. Both slashed their ad spends in 2022. With supply chain issues slowly getting resolved, and inflation abating, indications are that Retail and Auto ad budgets will loosen in 2023. But not for every ad platform. The big question is: How will they spend, and where? The answers point directly to why, IMHO, the theme of this year’s ad market will be Performance…