A Whole New World: Breaking Down Programmatic and Upfront TV Spend in 2023

The upfronts are fast approaching, and this year we can expect more spending on TV overall, be it programmatically or through deals. Part of the reason for this increase is the influx of digital-first and performance advertisers venturing into the TV space, because they can target many of the same audiences. 

But if you are imagining a status-quo upfront cycle, think again. While client budgets have been generally healthy this year, a cloud of economic uncertainty has been weighing overhead for many buyers. Flexibility is more important than ever, and many are looking to spend closer to air dates—or save their money for programmatic buys.

Some sources believe that this is just a sign of a changing industry more focused on performance advertising than big upfront spending. In one interview with Ad Age, a buyer suggested that even healthy upfronts will begin to see less and less in commitments, “If [the networks] really want to see a market move, they’ve got to offer the financial incentives to move it. And right now, they’re still trapped in their own legacy thinking.”

Connected TV Is Changing the Game

The rise of streaming has helped contribute to advertisers’ new priorities. We saw this last year, with companies like Disney reporting that 40% of their $9 billion in upfront commitments for 2022 went to its streaming platforms. NBCU saw a similar increase in streaming commitments, with their streaming sales rising 20% from 2021. 

This year, advertisers are planning on spending more on Connected TV overall, with CTV ad spend expected to reach $18.89 billion. While this is still less than a third of linear’s $68.35 billion in expected ad spend, linear is trending downwards, while CTV is seeing significant gains. In fact, by the end of 2026, CTV spend will have more than doubled to reach $38.83 billion.

Part of the reason for this growth is CTV’s audience targeting and measurement capabilities. A 2022 survey conducted by Advertiser Perceptions found that this year, buyers are looking for deal outcomes they can prove. For nearly half of buyers, ROI and return on ad spending are their key focuses for the 2023 upfronts, and agency and marketing professionals say the biggest advantage of CTV advertising is precision audience targeting. As more streaming platforms launch ad-supported tiers, there will be even more opportunity for advertisers to reach viewers through streaming on CTV.

So What’s the Spending Breakdown?

Now that we know the context for buyers’ approaches to TV advertising in 2023, let’s look at how they plan to divvy up their spend between programmatic and the upfronts.

Upfronts

Upfront TV ad spending overall is expected to reach close to $20 billion this year. But it looks like growth won’t be the big story coming out of this year’s upfronts: according to one survey, buyers report that they plan to spend just 49% of their annual video budgets at the upfronts in 2023—down from 56% just last year. Only 27% of buyers expect to increase their upfront spend this year, as opposed to the 51% who reported increases last year. 

CTV-specific upfront commitments, on the other hand, are expected to rise. That same survey found that advertisers are planning to allocate 40% of their 2023 upfront budgets to CTV. This will amount to around $8.14 billion, according to eMarketer, up from $6.41 billion in spend last year.

Programmatic

Unlike the upfronts, TV advertisers are expected to turn to programmatic more and more this year. Before the pandemic, 53.5% of CTV ad dollars were spent programmatically. But in 2023, eMarketer expects that percentage to reach nearly-three quarters (74.4%) of CTV ad spending—amounting to $14.04 billion. According to Ashley Luongo, senior vice president of advanced advertising sales at NBCUniversal, that’s to be expected: “The only limitations of programmatic are the data you’re applying, the audience you want to reach, and the price you’re willing to pay to reach them. It’s the most dynamic, sophisticated, agile way of buying media.”

Programmatic on linear TV will also see some growth, with advertisers expected to spend $6.90 billion on linear programmatic ads this year. That’s up 27.4% year over year, but still less than half of the amount that will be spent on programmatic CTV. And as advertisers continue to shift their dollars away from linear, growth in linear programmatic ad spend is expected to slow, increasing just 6.8% to $8.42 billion in 2024.

TV Advertising in 2023 Is Survival of the Fittest

The TV advertising landscape will continue to change rapidly as advertisers shift towards performance driven advertising and the rise of Connected TV. While upfronts remain a significant part of TV ad spend, flexibility is becoming more essential than ever, and many buyers are increasingly turning to programmatic advertising for its targeting abilities and agility. TV is evolving, and advertisers will need to adapt and adjust their strategies accordingly to keep up.