2017 Ebiquity UpFront Annual Report

2017

UPFRONT POV

The Data & Insights Behind Broadcast T V’s
Biggest Week for Advertisers

About Ebiquity

Ebiquity is a world-leading, technology-enabled, independent consultancy, specializing in marketing and media
analytics. We employ over 900 people across 19 offices in 14 countries worldwide. Ebiquity partners with 80 of the
top 100 advertisers in utilizing data, tools, and insights to optimize their media and marketing investments.
We partner with each of the major U.S. agency holding companies and we work with more than 80 of the top 100 adver-
tisers worldwide to assist brands in developing accurate benchmarks and a smarter investment strategy. Our cost pool
in the largest of its kind and is based 100% on actual clients’ transactional media costs. Our robust pool is representa-
tive of the U.S. marketplace, making it the best way for brands to benchmark against top U.S. advertisers and identify
improvements.

What’s Happening
Now

Page 2

Inside Newfronts

Page 4

A Look Back at CPMs
Over Time

Page 6

Placing Your
Upfront Bets

Page 8

2017 EBIQUITY UPFRONT POV | 1

2017 Annual Report

Upfronts & Newfronts

We are at a turning point in the industry, with advertisers looking to capitalize on
the recent events across the marketplace to create a better reality for everyone.
The truth is, it’s working; however, there is still more work to be done.

Thus far, 2017 has had an increased While TV presents its own challenges, technologies, and independent
focus on marketing effectiveness many of which will be detailed partnerships. We see this every day,
and ensuring that every dollar throughout this report, marketers are as we continue to work with our
spent is adding value across all turning to both new & traditional TV clients to create clarity. From that
media channels. With that comes an platforms to try and reap the benefits clarity comes the insights needed
increasing amount of pressure on of a more transparent channel.  In to ultimately alleviate the pressure
advertisers and their marketing teams working on modeling and effective- and make data-driven decisions that
to produce results. Via our partner- ness projects for our clients, we often ensure your marketing dollars go
ships with these advertisers, we try find that TV plays a critical role in the further for you.
to alleviate that pressure by way of value generated from their invest-
education, insights, and building a ments. In short, TV is not dead, nor We are at a turning point in the
data-driven culture. As part of our is it going anywhere anytime soon. industry, with advertisers looking to
dedication to thought leadership in TV tends to still be one of the largest capitalize on the recent events across
the industry, we are proud to present drivers to branded search, from our the marketplace to create a better
our 2017 Upfront POV Guide. analyses; and ultimately with the rise reality for everyone. The truth is, it’s
of ad blocking in the digital channel, working; however, there is still more
The unfortunate issue compounding advertisers are looking more closely work to be done.
upon the pressure marketers at how they can best leverage TV to
are feeling to best allocate their reach younger audiences. So, where does TV fit into this as
spend is transparency. The lack of we head into the critical buying
transparency acts as the funda- Amongst all of these questions lies an season? What can you expect from
mental roadblock to ensuring that opportunity for brands to capitalize the Upfronts this year? Will the
effectiveness is truly able to be on the data they have at their finger- trend of the Newfronts continue to
measured, monitored, and acted tips. It’s easy to focus on the negative gain popularity despite the inherent
upon. You don’t have to look far with the many challenges out there issues with digital? This guide will
to find news articles calling atten- in the marketplace, but this provides answer those questions, and more.
tion to the issues amongst the an opportunity to better analyze the I’m extremely proud of my team for
digital channel; whether it’s fraud, effectiveness of all marketing invest- continuing to push the envelope as
viewability, brand safety, or issues ments to determine the optimal mix strategic advisors to our clients.
with walled gardens and the metrics for your business. While this is not an
within them.   easy task by any means, it is possible - Bill Bruno
with the right people, processes,
CEO - North America, Ebiquity

2 | 2017 EBIQUITY UPFRONT POV

What’s Happening Now

From the public uncovering of fraud and a lack of transparency in the ad-buying chain, as well as
the emergence of brand safety concerns across digital, the past 12 months have been a turbulent
time for the advertising industry.

As for all things that fall down, the only way to go is environment, even if at a premium. Scatter ended well
up and 2017 will likely prove to continue on the path in the fourth quarter of 2016 and that momentum has
of transition and evolution that the past year set out. carried over into the first quarter of 2017, albeit in select
Luckily, this may be in favor of the advertiser as the areas.
industry looks to clean up its issues around fraud, trans-
parency, viewability, and effectiveness. 2017 will likely prove to continue
on the path of transition and
Media continues to be increasingly fragmented, with
advertisers cautiously seeking to make more educated evolution that the past year set out.
and diversified investments across paid, earned and
owned communication channels. We’ve seen advertisers As advertisers look to uncover the best value for their
willing to pay a premium for quality ad placements over investments in 2017, and given the recent concerns
cheaper, more frequent exposures. From a TV perspec-
tive, the scatter market has been fairly robust since the
emergence of the high-profile digital quality concerns
which may be an indication of a desire for quality brand

2017 EBIQUITY UPFRONT POV | 3

about online video brand safety & viewability, will money flow back to TV from Google and Facebook? While the steps
taken by Facebook and Google/Youtube to be independently audited are earnest steps in the right direction, it’s not
yet clear when this will start. Nor is it certain whether it will usher in a comprehensive and transparent measurement
process, according to Tim Hussain, Head of Digital, Ebiquity - UK. It may be too soon for some advertisers to change
their media plans and shift more dollars into the Upfront, but it may impact attitudes about commitment levels. Part
of the shift will come as leading advertisers start to question large digital enterprises’ ability to justify its advertising
revenue and threaten to take their money elsewhere.

Advertising markets were not the only aspects affected by the turbulence, there were major shakeups across the
network C-suite. Sales leaders from ABC News, Viacom, and Fox departed ahead of this year’s Upfronts and the
movement within C-level marketing leadership was even more drastic. These leadership shifts may prove to help the
industry march toward more innovative, transparent and effective advertising programs, but this remains to be seen
and we will be watching what develops with great interest.

CPM Remains King... but for how long?

With the combination of innovation and ambiguity in the TV market
this year, CPM will continue to be the dominant currency. In February,
commercial ratings among viewers between 18 and 49 — the key numbers
on which TV ad deals are based — were down high-single to low-double
digits in primetime and total day, according to media-industry analysts. To
assuage buyers’ concerns, big networks have announced major new devel-
opments for 2017/2018 as engaged TV viewers become ever more difficult
and costly to reach.

• Upfront volume forecasts vary somewhat, but are consistently
conservative. Pivotal Research/Brian Weiser predicts that overall
prime-time ad spending commitments for broadcast TV during this
upfront may decline 2% to 3% compared with last year, to roughly
$9 billion.* Others predict flat to slightly increased volume.

• Audience-based deals, i.e. buys informed by big data to target
more specific audiences, will be significant. Viacom, Fox and Turner
have formed an alliance to track and validate data-driven buys on
a single platform. NBCU is aiming to sell about 15% of its Upfront
inventory on a similar basis. And the top media agencies have all
announced their intent to seek opportunities to make audience-
based deals. Be alert. Transparency around audience verification and
audience guarantees will be challenging; make sure your partners have a very clear and transparent operating
model before committing dollars.

• Nielsen’s new Total Content Ratings (TCR) will capture live viewing across linear, VOD, DVR playback, online
video, and mobile streaming. Not yet an accepted currency and not yet perfect measurement, it still will change
the conversation this year about capturing and monetizing TV content across all platforms. In order for TCR to
make a significant impact on the market, the top online video platforms – Google and FB – will need to partici-
pate. CBS has released numbers which show the potential value of TCR. “The numbers are coming in at the levels
of audience around 2000, which was a time when time-shifted viewing was not measured,” said David Poltrack,
chief research officer of CBS Corp., in an interview.”**

• NBC 2018 Winter Olympics guarantee reflects a new approach. With digital consumption continuing to rise --
NBCU has streamed every event live since the 2012 Games -- NBC Sports is deploying Total Audience Delivery, a
metric combining viewing across broadcast, cable, and streaming outlets and based on viewers 2-plus.*** This is a
strong move toward monetizing audience across platforms.

*WSJ 3/28/17 **variety.com, 3/6/17 ***Mediavillage.com 4/3/17

4 | 2017 EBIQUITY UPFRONT POV

Inside Newfronts

Over the last several years, in an effort to mimic the financial success of the broadcast TV

upfront marketplace and take advantage of shifting video consumption trends, Newfronts

have been held by varying digital media entities.

At the surface, all seems to be good Trouble in Digital Paradise that need to meet any measurement
on the digital front – in fact, digital standards that come out of these
ad buying was reported as topping In 2017, issues surrounding digital efforts.
traditional TV ad-buying in the US quickly caught the spotlight and
for the first time ever in 2016. And brands started to take notice. Digital All hope is not lost, though,
industry insiders are touting the ad-buying took a hit in early 2017, according to Michael Karg, global
success of digital in 2016 as a sign of when major brands across the globe chief executive officer of Ebiquity,
continued growth for the channel. pulled their dollars for programmati- “anything that increases transpar-
cally traded ads that risked being ency and control for the advertiser
“Investment in the (digital video) placed next to extremist material is very welcome so this is obviously
medium has been significant, with 51 and other offensive content across very positive from Google.” But by
percent year over year growth in the YouTube and the roughly two million no means should the issues be left
first half of 2016 alone,” said Anna sites in Google’s display network. to publishers to fix themselves as
Bager, SVP and General Manager for Karg adds, “however, advertisers also
Mobile and Video at the IAB. “The The concern for brand safety need to improve their own digital
strength of the 2017 NewFronts’ quickly rippled through the industry skillset and learn how to use those
roster of blue chip media companies and more than 250 companies controls.”
and inventive content creators is suspended their advertising invest-
sure to inspire advertisers and media ments with Google. Additionally,
agencies to increase their commit- Facebook faced its own backlash
ment to digital video even further.” when it announced that it had
exaggerated its “average viewing
Additionally, 2016 marked the first time” metric by potentially as much
time that more than half of all US as 80% over the past two years.
digital video ad dollars were traded
via automation; that portion will In response to these issues, the
grow another 42.3% this year to major digital enterprises have been
$9.13 billion. According to our recent quick to take action with both
study with the World Federation Facebook and Google agreeing to be
of Advertisers on Online Adver- independently audited by the Media
tising Effectiveness, the majority of Ratings Council (MRC). Although a
the world’s largest advertisers (we positive step, it remains to be seen
surveryed more than 50 leadings if the MRC’s methodologies and
brands) are planning to increase technology will be able to deliver
investment in online advertising in standardized measurement for
2017 and 2018, with half planning to Facebook and Google at scale. And
spend up to 20% more year-on-year. while the two platforms are impor-
tant – accounting for more than 70%
of global online display revenue –
there are thousands of other proper-
ties and sites carrying advertising

2017 EBIQUITY UPFRONT POV | 5

A Brand, New Approach effectiveness, advertisers new Fueling the concern, a few companies
to Digital drive for transparency is only the including BuzzFeed, Fullscreen Media,
first step. Effectively determining and Yahoo decided to scrap their
The shift of control is necessary for the most significant KPIs and then presentations in 2017. These compa-
advancements in the digital realm, understanding the true results of nies opted to allocate their NewFront
and we’ve already seen the tides these efforts will take some time, marketing investment in other ways.
changing. One of the first to take but will ultimately be a stronger Yahoo, one of the founding members
action, JPMorgan Chase, took charge assessment of the effectiveness of of the NewFronts, had been scheduled
of their digital presence by curating advertising investments long-term. to present in what was considered
a ‘human-checked’ whitelist of a prime time; instead, the company
approved sites, ultimately trimming Digital Publishers Shift Gears launched a series of “localized events
down their ad placements on about on Newfronts across the country” to pitch marketers
400,000 websites to a mere 5,000 on Yahoo’s video ad offerings.Other
websites. The relative success of Newfronts digital publishers followed suit,
remains unclear; meeting the objec- BuzzFeed and Fullscreen also opted
The results, according to Kristin tive of driving upfront deals is still for more intimiate meetings instead
Lemkau, the bank’s chief marketing undetermined on the cost/return of putting on what amounts to a
officer, have been surprisingly side. A significant number of events two-hour stage show.
favorable for the company. They have were held this year, although at
reportedly seen little change in the what is deemed to be a consider- Interestingly, the NewFronts organizers
cost of impressions or the visibility of able cost to the media companies in have had little problem replacing the
its ads on the internet. Many brands terms of content and entertainment. vacated spots. Twitter and the BBC are
will likely follow JPMorgan Chase It brings about the questions raised two of the firms who have stepped in
in ensuring brand safety, although in the past by senior media buyers hopes that their NewFronts presence
perhaps at varying scales. as to whether the NewFronts have bolsters the perception that they’re
moved “from showcase to market- committed to digital advancements for
The thing to keep in mind is that place”. their platform.
along with the efforts of digital
publishers to gaurantee safety & One has to pause and consider that
there is a strange irony to the very
existence of the Newfronts. While
there’s a long list of reasons why it is
good business for the digital video
industry to tap into the “open wallet”
opportunity of the TV Upfronts, it is
counter to the needs of marketers.
The media industry has bemoaned the
irrelevance of the Upfronts for years.
Pressure on marketers to secure fair
pricing and inventory by commit-
ting huge sums of ad dollars during
a period that falls outside of their
marketing planning cycle (in most
cases) creates egregious manpower
and logistical pressure.

Now digital video, which should
represent the future, has taken a cozy
seat on a bandwagon that has vexed
marketers for as long as most of us
can remember. As marketers scruti-
nize digital media investments through
some new, clean lenses, we hope that
digital trading models will continue to
evolve in favor of the marketers, who
make it possible for the industry to
exist.

6 | 2017 EBIQUITY UPFRONT POV

A Look at
CPMs Over Time

Coming back to linear TV, we cannot forget that this is where the majority of
marketers’ investments will fall, with most deals being written on a traditional
CPM basis. We tapped into our proprietary National TV cost pool to retroactively
analyze the results from CPMs over time. In other words, when the dust settles
and the spots have all run, what did you really pay to reach your audience?

Last year, Upfronts closed with double-digital This year, with viewership down, and Amazon,
growth for CPMs across the market. This growth Netflix and Hulu gaining viewers by offering
was somewhat predictable, yet paradoxically content with limited, or with some premium
surprising, given that rate at which advertisers subscriptions - no ads, some networks are racing
are moving their investments to newer media to reduce ad loads by as much as 50% to improve
avenues. Not to mention that in 2016, networks consumer experience and advertiser satisfaction
continued to experience ratings erosion as - and as demand for ad inventory runs against a
viewers took to digital and nontraditional broad- tighter supply, CPMs will continue to rise.
casting formats at a rate that many consider to be
a tipping point for the TV industry. So is the price of linear TV a valid investment for
advertisers? Every year, media sellers, buyers, and
However, scrutiny across the digital channel research firms use trends in TV viewing to predict
helped to provide a strong bolster for TV last year supply in TV audience. They use forecasts of the
as consumer-focused brands moved dollars back economy and other market drivers to predict
to TV from digital. Due to the sudden increase demand.
in demand, the network rates increased. Buyers
at the Upfronts said the basic CPM measure (the These analyses combine to generate an estimate
cost of reaching 1,000 viewers), rose for the first of Upfront dollar volume and CPMs and,
time since the 2011 market. ultimately, help clients place their bets in the
marketplace.

2017 EBIQUITY UPFRONT POV | 7

What We Can Learn from the Past

Here, Ebiquity offers a 5-year trended historical
view of post-analyzed CPM results of Upfront and
Scatter CPM as an added perspective on a persis-
tently hard-to-predict marketplace.
• Focus dayparts: Network Prime, Network

Late Night, Cable Prime, Network Daytime
• Upfront vs Scatter
• Relative efficiency
• Relative volatility, i.e. how predictable,

especially Scatter
• Upfront – Daypart vs Daypart
• Network Prime vs Cable Prime
• Scripted Originals on Cable

Are You Overpaying for the Hype?

What we found was Scripted Originals on Cable...
• For the past 5 years, Upfront CPMs have

beaten Scatter by a wide margin in all
dayparts
• Some quarters are clearly more unpredictable
than others; place your bets where there is
less volatility
• Prime Scatter and Late Night Scatter
premiums have been high, while Daytime
Scatter and Cable Prime Scatter premiums
have been moderate
• Scripted originals on Cable carry massive
premiums - caveat emptor!

8 | 2017 EBIQUITY UPFRONT POV

Placing your
Upfront Bets…

Deciphering insights through industry spin can be misleading and confusing;
many brands rely on predictions to allocate their lucrative advertising dollars,
but betting your money on guesswork is risky business.

Many top brands may be feeling the heat to ensure their investments don’t fall
flat against projections. As the world leader in media effectiveness, our team of
industry experts work with 80 of the world’s top 100 global advertisers to offer
local expertise with market-to-market insight – we approach our work with an
independent framework along with our marketing and media expertise to provide
truly objective insights. Neither a publisher, agency, nor buyer, we strive for full
transparency across the entire ecosystem.

We routinely audit and advise on the media investments of many of the US’s
largest brands across every major industry. As part of our media auditing process,
we collect buy files representing unit-by-unit advertising investment data from
many of the US’s largest brands. The television pool of information is actualized,
based not on as-purchased spend and impressions but on post-analyzed spend
and impressions, on which the information that follows is based.

This allows for a true representation of performance and marketplace conditions
as opposed to other providers who do not take into account actualized Nielsen
data and cannot account for audience deficiency, or over/ under delivery. It is the
only database of its kind. Other cost databases reflect purchased CPMs that do
not echo the real-world changes that occur as a result of eroding audiences and
ADUs scattered across dayparts. Our database is significant in scope and is the only
database of its kind, encompassing over $8 billion of US national broadcast activity
over the last two years.

Interested in seeing what insights can be gleaned across this robust
database?

We’ll walk you through some of the most interesting finds from the past five years
of US advertising data.

2017 EBIQUITY UPFRONT POV | 9

Upfront CPMs by Daypart

1Q'12 1Q'13 1Q'14 1Q'15 1Q'16 2Q'12 2Q'13 2Q'14 2Q'15 2Q'16 3Q'12 3Q'13 3Q'14 3Q'15 3Q'16 4Q'12 4Q'13 4Q'14 4Q'15 4Q'16 Past 5
Yrs

Day Late Nt Cable Prime Prime

Over the past 5 years (P5Y), of the dayparts inves- Ad clutter, attention levels, content/context relevance
tigated, there is a consistent relationship between and, if you have the analytics in place, lift on brand
Upfront CPMs by Daypart on a post analyzed basis. health or sales should be factors in your investment
decisions.
While there have been variances in cost quarter to
quarter and year to year, not surprisingly the relative Network Prime is consistently the
ranking of CPMs have held by daypart over time. Led highest CPM, Q2 and Q4 CPMs are
in price by Network Prime, it is followed by Cable the most consistent. Q1 is the most
Prime, Late Night and Day. So it is interesting to note volatile.
that, despite the ups and downs of linear TV viewing,
relative supply and demand is fairly constant when The gap between Late Night and
the industry comes together for the annual ritual of Cable Prime CPMs is narrow.
Upfront deal-making.

These costs are factored into the buying decision
when weighing objectives relative to reach, target
audience concentration, and frequency. Of course,
these traditional media KPIs of Reach, Frequency,
Target Composition, and CPM should not be the only
factors in determining how to allocate TV invest-
ment. In a more measurable media landscape, many
marketers also investigate the qualitative and effec-
tiveness aspects of each daypart.

10 | 2017 EBIQUITY UPFRONT POV

Multi-Dayparts Past 5 Years,
Scatter Premium vs Upfront*

$200.00 46% 50%
$180.00 45%
$160.00 41% 40%
$140.00 35%
$120.00 14% 30%
$100.00 7% 25%
20%
$80.00 15%
$60.00 10%
$40.00 5%
$20.00 0%

$-

Day Late Nt Cable Prime Prime

P5Y Scatter P5Y Upfront % Diff Scatter vs Prime

TPrime and Late Night have consistently shown the Network Prime and Late Night
highest premiums in Scatter Scatter pose significant cost risk on
a post-analyzed basis.
Interestingly, while Late Night has generally had lower
CPMs than Cable Prime in the Upfront, high Late Night When considering these dayparts in
Scatter premiums push that daypart’s CPM above Cable Scatter, give serious consideration
Prime. to the value proposition and
potential alternative media buys.
*A18-49 post analyzed

2017 EBIQUITY UPFRONT POV | 11

Network Prime vs Cable Prime
Upfront CPM Changes, Past 5 years*

$70.00 93% 84% 100%
$60.00 83%
64% 90%
$50.00 68% 54%
62% 80%
$40.00 54% 51% 69%
56% 38%
70%
47% 48% 52% 60%
43% 43% 41% 42%
$30.00 60%
47% 49% 48% 50%
$20.00 28%
26% 40%

$10.00 30%

20%

10%

$- 0%

1Q'12 1Q'13 1Q'14 1Q'15 1Q'16 2Q'12 2Q'13 2Q'14 2Q'15 2Q'16 3Q'12 3Q'13 3Q'14 3Q'15 3Q'16 4Q'12 4Q'13 4Q'14 4Q'15 4Q'16 All All All All All
2012 2013 2014 2015 2016

Cable prime Net Prime % Diff, Network Prime vs Cable Prime

Q1 Avg. 41% Q2 Avg. 72% Q3 Avg. 58% Q4 Avg. 44%
Difference 28 Difference 37 Difference 46 Difference 11

Range

Q2 Network Prime is consistently the highest Network Prime continues to carry
quarter in the Upfront, and has increased steadily. a consistent heavy premium in the
Q2 and Q3 Network Prime have the highest CPMs Upfront. Be sure you’ve done an
and the largest premium over Cable Prime. exhaustive analysis of cost-per-reach-
point to ensure your Upfront daypart
Network Prime CPMs are generally consistent, but mix is optimized.
variance to Cable Prime in Q2 and Q3 is volatile
and therefore harder to place bets on where to
invest for the most efficient Reach. Q4 is the most
efficient on a post-analyzed basis and has the
least volatile CPMs.

In general, the CPM gap between Network and
Cable Prime has narrowed in the last few years
but is still a large gap.

*A18-49 post analyzed

12 | 2017 EBIQUITY UPFRONT POV

Network Prime CPMs – Upfront vs Scatter*

40.00 80% 93% 100%
20.00 80%

68%

00.00 52% 50% 51% 60%
45%
37% 35% 30% 36% 34% 34% 33% 33%
26% 31% 26% 3% 40%
80.00 26% 27%
20%
60.00 5%
0%
-5%

40.00 -40% -20%
20.00 -40%

$- -60%

1Q'12 1Q'13 1Q'14 1Q'15 1Q'16 2Q'12 2Q'13 2Q'14 2Q'15 2Q'16 3Q'12 3Q'13 3Q'14 3Q'15 3Q'16 4Q'12 4Q'13 4Q'14 4Q'15 4Q'16 All All All All All
2012 2013 2014 2015 2016
Net Pr S
Net Pr U % Diff Scatter vs Upfront

Q1 Avg. Q2 Avg. Q3 Avg. Q4 Avg. All Avg.
11% 45% 63% 42% 40%

Over the past 5 years, Network Prime CPMs in Scatter As TV ratings continue to decline,
have been very high, exceeding Upfront by 40%, or 32% Scatter buys – especially those
when 3Q’15 is excluded. without an audience guarantee – pose
significant risk. If Network Prime is
Scatter exceeded Upfront CPMs in 18 of the past 20 important for your business, place as
quarters. Varies by quarter with a low of 11% in Q1 and a much as possible in the Upfront unless
high of 63% in Q3. Q1 and Q3 have been the least volatile marketplace forecasts dramatically
Q2 has the highest overall CPMs; Q1 has the lowest change direction.
overall CPMs.

*A18-49 post analyzed

2017 EBIQUITY UPFRONT POV | 13

Cable Prime CPMs
Upfront vs Scatter, Past 5 Years*

45 100%

40 80%

35 47% 60%

30 17% 38% 36% 39% 33% 40%
39% 6% 1% 23% 27% 26%
13% 16%
25 30% -8% 1% 11% 20%
-6% 4% 4%
20 -15%
6% 8% 0%

15 -1% -20%

10 -40%

5 2Q'12 2Q'13 2Q'14 2Q'15 2Q'16 3Q'12 3Q'13 3Q'14 3Q'15 3Q'16 4Q'12 4Q'13 4Q'14 4Q'15 4Q'16 All All All All All
2012 2013 2014 2015 2016
0

1Q'12 1Q'13 1Q'14 1Q'15 1Q'16

Cable Prime S Cable Prime U % Diff

In the 20 past quarters, Scatter CPM surpassed Upfront Cable Prime premiums are
CPM 16 times. consistently significant, but not a
certainty. Scatter premiums have
The average CPM difference is +16% for Scatter vs moderated in the last few years.
Upfront. However, ratings erosion continues
and long-tail networks are starting
Q1 and Q3 have been the least volatile. Q2 has the to drop from cable line-ups. Monitor
highest overall CPMs; Q1 has the lowest overall CPMs. closely in 17/18.

*A18-49 post analyzed

14 | 2017 EBIQUITY UPFRONT POV

Network Late Night CPMs – Upfront vs Scatter*

$80.00 180%

159%

$70.00 160%
$60.00
125% 140%

115% 120%

$50.00 80% 100%
$40.00
75% 71% 75% 80%
63%

$30.00 33% 39% 37% 37% 60%
28% 38% 39%
21%
40%

16% 6% 13% 14% 11% 20%
3%
$20.00 6%

0%

$10.00 -22% -20%

$- -40%

1Q'12 1Q'13 1Q'14 1Q'15 1Q'16 2Q'12 2Q'13 2Q'14 2Q'15 2Q'16 3Q'12 3Q'13 3Q'14 3Q'15 3Q'16 4Q'12 4Q'13 4Q'14 4Q'15 4Q'16 All All All All All
2012 2013 2014 2015 2016

LNt Scatter LNt Upfront % Diff Scatter vs Upfront

Upfront CPMs below Scatter in 18 of 19 latest quarters**. There has been strong demand for Late
Night as Primetime and Sports ratings
Scatter premiums consistently high have disappointed advertisers seeking
Upfront CPMs have increased steadily YOY for each a younger, more affluent viewer and
quarter. Late Night programs have potential
added benefits. For marketers that can
Q1 and Q4 have been the most cost-efficient overall, commit the dollars, creative marketing
but Q1 has been more volatile. partnerships with on-air components,
plus strong social media opportunities
*A18-49 post analyzed have made Late Night attractive for
**1Q’14 data not available connecting with the audience.

2017 EBIQUITY UPFRONT POV | 15

Network Daytime CPMs

$25.00 80%

$20.00 64% 60%
$15.00
45% 41% 25%
20%
21% 38% 40%
9% -2% 13% 20%
-13% 29% 28%27%

$10.00 11% -8% 0%
-3% 2% -1% -13% -20

$5.00 -11%

-18% -18%
-22%

-27%

$- -40

1Q'12 1Q'13 1Q'14 1Q'15 1Q'16 2Q'12 2Q'13 2Q'14 2Q'15 2Q'16 3Q'12 3Q'13 3Q'14 3Q'15 3Q'16 4Q'12 4Q'13 4Q'14 4Q'15 4Q'16 All All All All All
2012 2013 2014 2015 2016

Scatter Upfront % Diff Scatter vs Upfront

Upfront CPMs have increased steadily in the P5Y Network Daytime is a challenging
whereas Scatter was relatively flat, in aggregate, marketplace and has been for quite
until 2016. some time. But if inexpensive
impressions can ultimately
Over 5 years, the average premium for Scatter was generate results for your business,
9%, far less than most other dayparts. don’t shy away just because it’s
out of fashion. It may be the only
Also, 2014 and 2015 saw CPMs drop below Upfront, place in the video landscape where
even though in other dayparts there was a consistent a bargain is still available to
premium for Scatter. advertisers.

*A18-49 post analyzed

16 | 2017 EBIQUITY UPFRONT POV

Scripted Originals in Cable

Thanks to Netflix, Hulu, and Amazon, scripted original programming has enjoyed a lengthy cultural “moment.”
A seven year tracking study by FX Networks tallied US scripted original TV series on all major channels - broad-
cast, basic cable, pay cable and streaming services – which showed a rise in series from 210 in 2009 to 455 in
2016, an increase of 117%*.

Which made us wonder…for those scripted originals on Cable that are carrying commercials, just how much of a
premium are advertisers paying, and is it worth it? We’ve seen the record-breaking unit costs in top programs
like Walking Dead and we wonder “how high is up?”

So we compared CPMs of scripted originals on top cable networks carrying a significant slate of originals to
their own Prime ROS/non-scripted CPMs and, in almost all cases, the premiums for scripted originals on a
post-analyzed basis are huge and completely unjustified. The average premium is 175% and run as high
as 300-400%. It is likely that high ratings estimates based on a few hits, and the use of terms like “tent-pole,”
have lured buyers into a bit of a trap, only to have to scramble to make up for under-delivery in less desirable
programming.

We urge you to consider – when is it worth it?

Final thoughts...

2017 will be, by all accounts, a challenging
year for the Upfronts and for the video
industry overall. We’ve seen enormous
disruption in confidence in online video,
linear TV audience erosion at a tipping
point, the Newfronts continuing a tradi-
tion of creating “demand” by pressuring
marketers to make investment decisions
when it may not be in their best interest,
sky-high inflation of TV properties based on
hype, and new currencies based on specific
audiences that will – hopefully – create new
benefits rather than new forms of opaque-
ness.

For 2017 and beyond, however, there is
great opportunity to turn the challenges
into successes. Advertisers should focus on
performance measurement and account-
ability - they are the keys to optimizing your
investments long-term.

Visit us at www.ebiquity.com or blog.ebiquity.com for more industry insights, news,
and expert views - or reach out to us directly at [email protected].

* *eMarketer 3/13/17

2017 EBIQUITY UPFRONT POV | 17

SOURCES & ADDITIONAL RESEARCH

For research not directly sourced or to learn more about topics
discussed throughout this guide, you can read more at:
www.ebiquity.com | https://blog.ebiquity.com

https://www.wfanet.org/news-centre/global-marketers-committed-to-increase-online-ad-
spend-despite-concerns-around-viewability-fraud-and-metrics/

https://www.thetimes.co.uk/article/global-brands-shun-google-p9zlr7bq7
https://www.thetimes.co.uk/edition/news/taxpayers-fund-extremism-csdn0npsf
https://www.nytimes.com/2017/03/29/business/chase-ads-youtube-fake-news-offensive-

videos.html?_r=0
https://www.emarketer.com/Article/eMarketer-Releases-New-Programmatic-Advertising-

Estimates/1015682
https://adexchanger.com/digital-tv/tv-upfronts-strength-hamper-programmatic-progress/
https://www.nytimes.com/2017/03/29/business/chase-ads-youtube-fake-news-offensive-

videos.html?_r=0
https://adexchanger.com/publishers/new-york-times-pitches-programmatic-adver-

tisers-clamor-brand-safety/
https://adexchanger.com/tv-and-video/2017-upfronts-buyers-market/
http://variety.com/2017/digital/news/studio71-pulls-out-digital-content-

newfronts-1202029230/
https://www.wsj.com/articles/ad-buyers-offer-advice-for-the-newfronts-1462197601
newfronts2016-digital-publishers-buy-expensive-lottery-tickets, http://digiday.com/media
https://adexchanger.com/digital-tv/nbc-closes-upfronts-12-5-cpm-increases-volume-

jumps-10
http://variety.com/2016/tv/news/2016-tv-upfront-tv-networks-ad-rates-tv-adver-

tising-1201729219/

444 N. Michigan Avenue Thank you to the following
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Suite 2401 Bill Bruno ■ Lauren Gelecke
New York, NY 10038
Tel: 646 998 7226 and the entire Ebiquity Media Value
E: [email protected] Team, who work every day to provide
insights to the world’s largest brands.

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