September 21, 2023

Digital Marketing Education

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SAG-AFTRA strike: what advertisers should know

“Unfortunately, [the strikes] could go on for quite a long time, but as they do, they get worse for everyone over time,” said Jacqueline Corbelli, co-founder and CEO of Brightline, the company that provides the tech for major TV companies’ interactive ad units. “Getting delayed upfront commitments adds a really important layer of pressure on the studios and streamers to negotiate [with the unions] with more speed and willingness.”

As media companies have sought ways to reduce the cost of producing content for streaming, advertising has become a necessity for monetizing digital audiences, whose subscription fees alone weren’t enough to fund the hundreds of millions now spent on many series. And as fresh content threatens to wane should the strikes continue, consumers already struggling with subscription fatigue may begin questioning the value of cable or streaming payments.

Writers’ union reaches out

Negotiations between media companies and agency buyers have begun wrapping—multiple buyers said they were approximately 80% done with their dealmaking as of late July, with the major sellers such as NBCUniversal, Disney, Warner Bros. Discovery and Paramount already completed. But phase two of the upfronts, in which clients agree on dollar amounts and place orders with each media company, may become complicated as the strikes’ impacts have yet to be determined.

“If there were no strikes, I have a high degree of confidence that there wouldn’t be a ton of churn from hold to order, because the budgets were already somewhat conservative and already down in a lot of cases,” said one agency buyer.

If the strikes continue, causing more upsets in new content, clients may begin to either cut their commitments or continue forward with intentions to take options.

The buyer also noted the WGA had sent correspondence to prompt them to leverage the strikes into their negotiation talks with sellers. The emails, reviewed by Ad Age, began by calculating the number of series that had halted production due to the writers’ strike—50 series each on linear and streaming before the actors’ strike disrupted numerous more this month. The letter then listed questions buyers might pose to networks: “How are you addressing the risk that diminished content slates resulting from the writers’ strike may lead to viewership declines or subscriber loss?” and “What are your plans to end the strike and unfreeze the content pipeline?”

The buyer said their agency had not participated in direct conversations with media companies or the Hollywood unions about negotiations to resolve the strikes.

One network executive said that if the strikes continue past Labor Day, that would start to more urgently trigger alarm bells for advertising revenues. “Advertisers don’t go to order until October,” said the executive. At that point, clients might start shaving percentages off of their spend with TV companies, said the executive. “The sales forces are saying to the powers that be, ‘You better have this figured out by Oct. 1, or we’re going to see some changes.”


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