Expected growth in upfront ad commitments shows TV's not done yet

This is an excerpt from a story delivered exclusively to Business Insider Intelligence Digital Media Briefing subscribers. To receive the full story plus other insights each morning, click here.This week kicks off the annual TV upfronts, a process that largely fuels the $70 billion TV ad business, with networks aiming to sell the vast majority of their ad inventory for the upcoming year. This year, upfront commitments are expected to hit a new high of $21.25 billion, up 2.4% year-over-year (YoY), per eMarketer estimates.That would be a deceleration from last year's 5.2% YoY growth, per Media Dynamics, but still significant given the twin threats of cord-cutting and digital ad platforms. Overall, networks are expected to collect some $67 billion in ad revenue in 2019, down 1.4% YoY, per Zenith.Here's what it means: Despite significant TV viewership declines in recent years, TV ad commitments have continued to grow year-over-year. TV advertising remains valuable for a few reasons, including:Sports. The most consistent driver for advertisers is that it provides access to large and reliable sports audiences. That's because sports fans prefer to watch games live, and generally in groups — which often means on TV. And the four major US sports leagues (NFL, NBA, NHL, MLB) are bound to network television until at least 2021, when rights will go up for sale again. That gives traditional media companies a near-term advantage, at the very least.Brand safety. Even as digital companies further their dominance, advertisers are wary of the reputational risk posed by the likes of YouTube and Facebook. The platforms live in a sea of controversy, especially when it comes to the moderation of video content. Even with access to 2 billion people, the risk of a brand's ad being juxtaposed with malicious content may be too high when safer — and still meaningful — alternatives exist, like linear TV. Viewer habits. Advertisers know that people watch TV together, and that it's the fastest way to disseminate an ad campaign with the assurance that millions of people will see it in real-time. In an era of on-demand, and services that have nixed ads altogether, advertising alongside content that creates a sense of togetherness is hugely valuable. As NYT reporter Edmund Lee put it, “A viral YouTube video may generate billions of views, but they don't occur at the same time.” Creating a connection to a brand drives sales.The bigger picture: As media further fragments, it's becoming difficult to reach large audiences at once — and few other media compares to linear TV's ability to do just that.As ad-free SVODs proliferate, there are fewer opportunities for advertisers to reach large audiences on premium video content in a curated environment. Even though primetime viewers ages 18-49 have dropped 38% during the current season versus 2014, advertisers know that with networks they're getting a clear picture of their ad's impact.That's appealing, given the present difficulty of measuring ad impact on streaming and OTT. Further, legacy networks CBS, NBC, ABC, and Fox are increasingly growing the value prop of their offerings by providing more opportunities for advertisers to simultaneously buy commercials across both streaming and linear programming.Networks likely hope that their ability to reliably serve large audiences in real time — combined with their digital efforts — will be enough to help maintain their stature in spite of the threats posed by SVOD services and digital ad platforms. Interested in getting the full story？ Here are two ways to get access: 1. Sign up for the Digital Media Briefing to get it delivered to your inbox 6x a week. >> Get Started2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the Digital Media Briefing, plus more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now