Why All Brands Should Have a DTC Mindset When Approaching TV Ad Buying

By Jay Friedman, President, Goodway Group

TV and streaming ad-buying events like the Upfronts and Newfronts have been staple components of the advertising, media and marketing industries for some time now. However, as we’ve been forced to rethink all aspects of our industry over the past year it’s also time to rethink how we approach ad buying in the TV space. It’s time to reassess what the best process is not only for media owners but for buyers. The buyers driving this transition are DTC, an industry segment that could not be hotter right now.

And this trend is only increasing. According to a recent investigative piece in Business Insider, TV networks are increasing pricing for CPG brands and others who typically have enjoyed lower rates due to upfront buys and flexibility for when spots can air. Networks including NBCUniversal, WarnerMedia, Disney, and ViacomCBS are reportedly asking to raise base ad prices 20% to 30% over last year.

DTCs are benefiting from this shift by being seen as more desirable advertisers by networks.

DTC is all the rage in retail because brands who used to be blind to their customer’s data and buying preferences now have full visibility. Brands who used to have to rely solely on retailers for their sales success can now influence sales themselves. But there’s one more reason DTC is so hot: DTC puts marketing at the top of their executive agenda. Marketing is THE growth engine for these companies. To earn a seat at this table, marketing has to be highly measurable and predictable.

Prioritizing flexibility in marketing plans

Right now, there isn’t a traditional brand unconcerned about DTCs stealing shares from their business. To beat DTCs at their own game, traditional brands have to take a page from the direct-to-consumer playbook. Only outcome-driven metrics with a sensitive pulse on what’s working, what could work better, and agility, will be successful. This means that buying Upfront media can quite literally be the opposite of this.

The least predictable item within media is what content will be hot a year from now. What channel will have the latest viral show? What device will be the consumer favorite for watching, or creating? For example, looking back at the 2019 Newfront and Upfront season, we could have never predicted that TikTok would become so popular. In fact, in a two-week period from late August to early September, it spiked in popularity by 600%. In mid-2020 its popularity spiked 100% again. Or even CTV, this segment has boomed in the past year and it’s only expected to continue growing in 2021.

No one can predict these changes in consumer behavior, but there’s no need to when marketers leave sufficient flexibility in their planning to account for dramatic changes in media consumption. In fact, Hulu, which is a quality media outlet, would have had great success in the 2019 and 2020 Upfront season, but if you look at the search-related interest between the two during that time, a different story emerged. TikTok exploded past Hulu at its height, receiving five times the amount of search queries — even though by standard industry benchmarks Hulu was up for a banner year.

Simply put, marketers must adopt an agile, flexible approach to their media planning. The status quo of checking off planning for a full year after Upfronts can no longer remain.

Three biggest challenges plaguing the TV Ad Buying

The industry as a whole must move past the concept of ‘the more you buy, the lower your rate – no matter what. As well as the idea that there is value in publishers and media owners reserving a small percentage of their highest-valued inventory specifically for real-time or near-real-time bidding. Right now, there are three big challenges within the current status quo of TV ad buying:

1. Buying in bulk and getting a lower rate per unit: This only works when there is too much supply. If there is ample supply, buyers should demand spot pricing closer to or equal to Upfront pricing. Additionally, sellers should cut this supply differently for different marketers to differentiate it and create limited opportunities where available, selling that as Upfront and allowing for more flexibility throughout the year.

2. Auctions bring the highest prices: What is the ideal item to auction off at a premier art auction? A child’s painting or a famous Monet? Auction houses know that average items often fetch less at auction than they could have if they were directly sold to a particular buyer, but they also know that the highest value items often sell for far more, and faster, than they would have if put on a retail shelf. That which truly can’t be differentiated can be sold in bulk, but de-commoditization is a seller’s job!

3. Future discounting: Sellers need to experiment with reserving some of the most differentiated and coveted inventory until the moment (or at least the week!) when buyers want to buy it. The convenience store effect kicks in – people willing to pay 25c per aspirin pill rather than $.01 per pill because they need it right now. Buyers are willing to pay much more for something in the present moment based on current needs instead of the traditional Upfront buyer mindset of discounting the future.

If brands are able to adapt the way they’re thinking about these three staple components, they’ll be able to meet new consumer demand. Those that are able to go into major ad-buying events such as the Upfront season with a nimble, agile mindset will be the ones that are most successful down the line.