Today’s television viewers are thinking outside the box…literally. With the steady proliferation of “TV Everywhere” enabling people to watch content where they want it, when they want it, traditional broadcast networks are increasingly challenged to engage and expand their audiences. Issues such as fragmentation, declining ratings, the linear/digital equation, and the evolving definition of “watching television” are shaking up the media landscape and its formerly reliable maps.

Overall, ad spending on television media rose by +5.5% in 2014, with a total of $78.1 billion dollars, said Jon Swallen,Chief Research Officer at KantarMedia North America. While ad spend on broadcast network TV was up +2.5% for the year with a total of $22.75 billion, compared to 2013’s $22.18 billion, “this is not really an indication of an upward trend,” Swallen said, as it incorporates the Sochi Winter Games.“Excluding incremental revenue generated by the Sochi Olympics, core ad spending on broadcast network TV was flat.”

Looking (kind of) up

As networks and advertisers approach this year’s upfront, there is, however, reason for qualified optimism, according to James Fennessy, Chief Commercial Officer, Standard Media Index. Following a disappointing Q4, in which national broadcast TV ad spending was down -2% to $4.8 billion, Q1 broadcast revenues were up +7% on a year-to-year basis when taking out the Sochi Winter Olympics, SMI figures show.

Advertisers also increased their 1Q spending in the scatter market, with broadcast up +13%.

“Q1 was a bit of an odd quarter, because we’re comparing it against the Winter Games last year, so that obviously throws the cat among the pigeons,” said Fennessy.

The+7% uptick when the Games are stripped out, however, “is a lot better than it was tracking toward the end of 2014 so the mood’s a little bit more vibrant. I think companies are generally feeling a lot more optimistic going into the upfront than they were maybe 60 days ago,” Fennessy said.

TV or not TV: That is the Question

Optimism or no, the actual role of the television set itself is shifting rapidly, particularly as younger viewers increasingly gravitate to alternative viewing options.

“The TV set is absolutely here to stay, but there’s an accelerated decline in the usage of it to watch TV shows,” said Gavin Mann, Global broadcast industry lead for Accenture.

New Accenture research found that viewership for long form video content on TV sets has declined by -11% in the United States in the past year, and much of this is being driven by “screenagers,” who are turning away from TV screens faster than any other group.

“Younger viewers might be watching content, but they’re not watching it on television,” agreed Brad Adgate,Senior VP of Research for Horizon Media.

The good news is that overall content viewing is actually up, but it’s the way viewers interact with that content that is seismically shifting, Mann told Cynopsis.

“Content remains king, and is being consumed over more and more devices, many of which have a more powerful set of capabilities than the [broadcast] industry can harness,” Mann said.

Traditional broadcasters continue to have a “strong advantage,” but they need to take a page from Netflix, Amazon, and other new players on the scene and create new “powerful and rich formats to capture and capitalize on the rich usage data flowing from IP-connected devices,” he said.

They should also take advantage of their strength while the “iron is hot,” Mann said, “by aggressively investing in multi-device platforms and securing partnerships that leverage their footprint into the mobile space.”

“No one should ignore the fact that viewers have more options in the way they watch network television,” said Bill Carroll, Vice President/Director of Content Strategy, Katz Television Group. “That has to be part of the equation in how the networks are going to provide programming both to the viewer and present it to the advertiser.”

Linear, Meet digital

The paradigm shift away from pure linear TV viewing to widely available digital options continues to shake up the way advertisers view their upfront opportunities.

“TV isn’t just TV anymore,” said Catherine Warburton, Chief Investment Officer for Assembly, the MDC Media Partners media agency group. “You watch it on demand, and you watch it streaming.” Add social media and other essential platforms to the media plan mix, and “there’s a lot more competition for dollars than in the past were earmarked for linear TV,” adds Warburton.

“There’s less and less of what you’d call a reach vehicle regardless of who your target audience is,” said Adgate. “Digital will have a place in disrupting how television ads have been sold for over 50 years.”

Digital is increasing its share of total ad dollars, growing at a much higher rate than any other media platform, according to Scott Grunther, SMI’s Executive Vice President of Media. “Our data shows that digital ad spend is up over a billion dollars through the first half of the broadcast year, compared to the same time period a year ago,” he said.

At the same time, as Mann points out, broadcast television continues to be the primary “go-to” choice for viewers.

“When allocating their advertising dollars, marketers should remember that network television is the most powerful and proven medium in building both brand awareness and equity,” said David Poltrack, Chief Research Officer, CBS Corporation. “Given this, clients looking to incorporate digital into their overall media plan should not do so at the expense of their network buy.”

Digital ad sales can of course also flow to the broadcast networks’ own video properties. “If linear sales are declining, or if they’re not growing at as fast a rate as they have in the past, some of that difference may be soaked up by digital ad sales by the same media company,” Swallen said.

But “there’s no doubt that the pure play digital companies like the Hulus, the YouTubes, and the Rokus are certainly doing very well at the same time,” said Fennessy.

The Data Game

As a corollary to increasing competition, fragmentation, and shifting viewing patterns, advertisers and networks are turning to “Big Data” and programmatic processes to help transform old measurement models, extend their reach, and refine their targets.

“We know that premium video content is more powerful in the presence of data, and over the years we have unveiled several data-driven initiatives to provide more insights, including our Audience Targeting Platform (ATP), NBCU+ Powered by Comcast, and NBCUx, our programmatic offering,” said Dan Lovinger, EVP, Entertainment Advertising Sales for NBCUniversal. “With ATP, clients no longer have to choose between the scale of television and the data-enabled targeting of digital.”

“We’re developing new ad products and measurement solutions to marry data science to the art of persuasion to prove the value of our content across platforms,” said Toby Byrne, President, Ad Sales, Fox Networks Group.

The broadcast business is currently “entrenched” around ratings, according to Jim Nail, principal analyst at Forrester Research, “so they’re not going away anytime soon, but that is colliding with the world of big data.”

He points to Nielsen’s just-completed acquisition of data technology provider eXelate as evidence that Nielsen is “clearly making moves to remain relevant if ratings go away.”

Audience-centric vs. ratings-centric buys let advertisers go much deeper into age, gender, shopping preferences and patterns than traditional demo groupings, Nail said.

“There has always been qualitative measurement in broadcast, but most buys were done on a demographic,” said Carroll. “Now it can be parsed even further.”

“We’re seeing agencies use companies like Rentrak as kind of a research tool,” Nail explained. “They’re still using Nielsen ratings as currency, but they will look at the Rentrak data with those overlays.”

“Advertisers are trying to get closer to their actual targets, and there is data out there that will help them do this and eliminate waste,” said Warburton. “I think every advertiser has always been interested in that. They just didn’t have the data to get there.”

As Mann points out, despite insurrection on all fronts, viewers continue to prefer established brands, and broadcast content creators are still producing programming that audiences turn to:

Fox announced a range of new shows including Minority Report, from Steven Spielberg’s Amblin Television; Rosewood; Grandfathered, with John Stamos; The Grinder, with Rob Lowe and Fred Savage; Ryan Murphy’s Scream Queens; The Frankenstein Code; The Guide to Surviving Life; and Bordertown, from Mark Hentemann and Seth MacFarlane. The final season of American Idol will launch in January.

David Duchovny and Gillian Anderson will reprise their roles in a six-episode reboot of The X-Files, debuting in January, and a live production of Grease will air Sunday, Jan. 31, 2016.

The Fox brand stands for “big concepts, larger than life characters, and dynamic storytelling. Activating our audience, not just engaging them. Starting a conversation, not just being part of one,” said Gary Newman, Co-chairman and CEO, Fox Television Group, at the network’s upfront event on Monday.

NBC is “attacking the new season with the same programming strategy that successfully turned [the network] around,” said Robert Greenblatt, Chairman, NBC Entertainment, “a slate of provocative and innovative series and events that cut through the clutter and will continue to build on our momentum.”

New programming includes Blindspot; Heroes Reborn; Heartbreaker; The Player; Chicago Med, from Dick Wolf; Game of Silence; and Shades of Blue, starring Jennifer Lopez.

New comedies include People Are Talking; Superstore; You, Me, and the End of the World, with Megan Mullally, Rob Lowe and Jenna Fischer; Hot & Bothered, with Eva Langoria; and Craig T. Nelson in a reboot of Coach.

Best Time Ever with Neil Patrick Harris is a new live variety show; and Little Big Shots, hosted by Steve Harvey, features “extraordinarily talented kids.” Event programming will include The Wiz Live, original movies exec produced by Dolly Parton; and miniseries The Reaper, based on the memoir by Sgt. Nicholas Irving.

ABC is introducing 10 new series for the 2015-2016 season. “Our 2015-2016 schedule, with new shows and returning favorites that reflect our commitment to world-class storytelling, will solidify ABC’s place as the network that raises the bar for what viewers expect from broadcast television,” said Paul Lee, president, ABC Entertainment Group.

New series include a reboot of The Muppets; The Catch, from Shonda Rhimes; Dr. Ken, starring Community’s Ken Jeong; Of Kings and Prophets; OIL; Uncle Buck; The Real O’Neals; and Wicked City.

After thanking advertisers for “letting us do this” at its Upfront yesterday, CBS announced seven new shows: Supergirl; Dick Wolf’s Criminal Minds: Beyond Borders, a spinoff starring Gary Sinise; Code Black; Limitless, based on the film starring Bradley Cooper; Rush Hour, based on the film franchise; Angel From Hell; and Life in Pieces.

“This is a schedule well-positioned to build on the foundation of last year when we introduced five successful new series and increased our audience by 5%,” said Nina Tassler, Chairman, CBS Entertainment. "With the kind of strength and consistency at this network, TV’s most popular shows, big events, football, late night, CBS is, without a doubt, the single best environment, anywhere, to launch new hit shows,” she added. Commented President & CEO Les Moonves during the presentation, “We are 124,000 viewers behind NBC; that’s not even the population of Paterson, NJ.”

Cookie-based advertising

One particularly strong indicator demonstrating the continuing power of broadcast television would have to be the Empire phenomenon, courtesy of Fox.

In the Nielsen Live +7s  viewing captured within 7 days of a program’s premiere telecast  the show averaged a 7.1/21 rating and 17.3 million viewers.

Advertisers and the industry are “excited by Empire because it showed what [broadcast] television can do in this age of fragmented viewing,” said Warburton. And it didn’t just succeed through “live” viewing. “That’s a show that really benefitted from off-the-TV screen, or certainly on-demand viewing,” said Adgate.

The program averaged a multiplatform audience of more than 22.8 million over the course of its season, and the premiere episode is still being viewed about 20,000 times every day on FOX NOW, Hulu, and VOD.

While programmers would like, and probably will try, to find a way to copy Empire’s success, it’s an unlikely prospect.

“That’s almost a once in a decade kind of situation,” said Carroll.  “It’s so much an exception to the rule.”

Duplicable or not, “the real plus of this is that many have tacked up the death notice for broadcast television, and every time they do we have a breakout show,” Carroll reiterated. “Despite the naysayers, and despite the challenges, and there are challenges, I still believe that broadcast television is alive and kicking. We’re doing well, not just surviving.”

Roberta Caploe: Editorial Director @robertacaploe
Diane K Schwartz: Senior Vice President, Media Communications Group 

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