Advertising and upfronts

In the 1960s, ABC pioneered upfronts. The concept was simple: In the spring, give advertisers a glimpse at the new programming launching the following fall, then give them a chance to secure their ad spots for those programs a few months in advance.

The upfront time period is full of parties, celebrity appearances, and anything else media companies can do to optimize their influence over media buyers. 

It was a win/win for both sides. Media companies could secure their revenue ahead of time and advertisers could secure the inventory they needed for big launches.

And it’s been a success for 60 years.

Ever wondered why car companies launch their new models in the fall? It all started with upfronts.

In 2022, it’s estimated that more than $19.3B was booked during the upfront time period. That’s nearly ⅓ of all linear television advertising dollars.

Upfronts are also a big moment for digital publishers.

According to Erika Nardini, in this insightful video, more than 60% of Barstool’s revenue is booked in one night at their annual upfront event.

When I was at Spiceworks, we surpassed 35% every year I was there. At The Hustle, we typically hovered around 30%. 

This is even more important for the publishers that have strict inventory delivery dates (ex: newsletters, podcasts, etc.). The further you can get ahead of selling your inventory, the higher you can drive CPMs.

Perpetual Tip: I typically see a 15% increase in CPMs in a month when that month is sold out 60 days in advance compared to those that still have 10% of inventory open going into the month. Having a successful upfront season essentially guarantees your CPMs will be higher for most of the year.

Strong upfronts drive improved business across the board – it spins the flywheel that raises CPMs, increases unit economics, and enables stronger user growth. 

How to judge the success of upfronts

Retention revenue of advertisers

In the digital era, rarely do you get a net new client who will spend 6 figures on an upfront deal. You need to build relationships throughout the year, grow spend, and then make the case for an annual agreement. 

So, what % do you think is a good metric to retain revenue from previous years?

Depends on your total revenue size, but generally, you need at least 80% of your new revenue dollars to come back the following year in order to build a foundation for growth. If it’s less than that, there was probably some sort of issue with performance or expectations. For example:

Client	2023 New Client Revenue	2024 Estimated Upfronts
Client #1	$100,000	$300,000
Client #2	$50,000	$20,000
Client #3	$25,000	$0
Client #4	$25,000	$0
Client #5	$25,000	$0
Client #6	$25,000	$0
Client #7	$25,000	$0
Client #8	$25,000	$0
Total	$300,000	$320,000 (106% of 2022)

Here’s what you need to realize if you’re wondering how to get to this level – 

The likelihood that you can get 50% of your clients to book an upfront deal is very low. What’s more likely is that you can get 10% of your clients to 3-4X their investment – focus on that. Your top 10% of new clients will drive 80% of your renewal revenue for next year. 

TLDR it’s difficult to have a high growth year next year without a baseline of your new revenue returning. The reality is you need north of 100% of your new client revenue to be in upfronts to have a breakout year. 

Last thing: Start early planting the seed with these clients that you book upfronts. You want to have them know before they set their budgets.

Perpetual Tip: Pitch your newest products and services to these upfronts – upfronts were created to woo marketers with the “shiny new objects”. Also, if you’re relying only on price incentives, you’re going to have a hard time scaling upfronts. Content has to be at the center of the pitch and appeal. 

% of revenue booked 

The reality is that you need to have a certain % of your revenue booked going into the year.

We set a specific % goal every Q4. For some, this number may be 30%. For others, it may be 50%. More than likely, it shouldn’t be less than 20% – unless you plan on investing heavily in your S&M team during the year. 

If you’re falling behind on this number, you’ve probably lost touch with your top advertisers. 

Give them a call, listen to them, and schedule monthly calls going forward. It’s the best way to keep a relationship alive and to hear what you need to do to make it happen. 

Perpetual Tip: To incentivize your team to book upfronts, assign your goal upfront % as part of their annual quota. This requires you to get quotas, planning, and all inventory figured out by Sep/Oct, which will naturally help the business. 

Good luck this year

Many of you on this list have had years of experience in dealing with upfronts. What tips do you have to share? Feel free to respond and I’ll share a few in the next email.

For all of those who are knee-deep in PowerPoint, Excel docs, and planning periods — best of luck. The next 12 weeks will be a wild, exhausting time, but it’s the most important time period to set up 2024.