According to our most recent estimates, the US upfront advertising spending will rebound to pre-pandemic levels for the TV season 2021-2022, if not to its 2018-19 peak.
Advertisers will increase their upfront TV spend by 7.6% this fiscal year, to $19.90 Billion. This assumes that the US is recovering from the economic crisis and pandemics.
The upfront TV advertising spending forecast includes TV ads spending that result from national primetime TV upfronts. This includes both linear and digital inventory sold by broadcast networks and cable channels during upfronts. However, upfront commitments that don’t result in a transaction are not included. Since some upfront commitments are canceled, commitment estimates can differ from what advertisers spend.
In June 2020, we last predicted upfront TV advertising spending. We expected major decreases due to the pandemic. But those decreases took on a different form than we anticipated.
Media Dynamics reported that while we only estimated a 1.4% decline in upfront TV advertising spending for the 2019-2020 seasons, the pandemic caused TV advertisers to cancel $3 billion worth of upfront commitments. We were able to reduce our 2019-2020 upfronts estimate and now believe that upfront TV advertising spending fell by 6.8%.
The 2020-2021 season saw fewer advertisers leave the TV market than we had predicted. We had predicted a 27.1% drop in upfront TV advertising spending for June 2020. However, we now expect a 3.5% drop in upfront TV ad spending as advertisers spend $18.50 million on commitments to networks.
The pullouts at the end of the previous cycle are why the percentage drop in 2020-2021 isn’t more dramatic. Comparing the 2020-2021 cycle with the two-year prior, we can see a drop of $2 billion in upfront TV advertising spending.
Advertisers can’t always spend the money they make upfront. Advertisers cancel approximately 4% of their upfront commitments in a typical year. In the unusual H2 2020, cancellations increased. As the economy recovers, brands will have more control over their media plans, and cancellation rates should return to the normal range in the 2021-2022 upfronts.