Slowly but surely, the TV ad market is changing in profound ways

For decades, TV’s annual upfront marketplace has been organized around a bargain. In exchange for locking themselves into long-term commitments, advertisers receive lower rates than if they were to spend their money in TV’s so-called scatter market, where networks sell ad space left unsold by the upfront sales process. Now, driven by advertisers canceling portions of their upfront commitments and viewership going up, TV advertising’s supply-demand dynamic has flipped to the point that it has become cheaper for advertisers to buy some TV inventory outside of the upfront. That’s a profound shift, equivalent to scoring concert tickets from a scalper for less than the pre-order price. In effect, what was once a tax is becoming a discount, threatening to lead cost-conscious advertisers to spend their money outside the upfront. “Scatter pricing going below the upfront, if that happens, then the precedent is set because then why buy in the upfront? The whole point of the upfront is to get better pricing,” said one agency executive.

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