How automation and AI are rewriting the upfront marketplace

**Kamiko McCoy** (0:11)
Hello, hello, and welcome to another episode of The Digiday Podcast, a show for anyone wondering when AI bots are gonna start leading upfront negotiations. I'm Kamiko McCoy, senior marketing reporter here at Digiday.

**Tim Peterson** (0:23)
And I'm Tim Peterson, executive editor of video and audio at Digiday Media. Kamiko, when do you think Claude, Chad GPT, Joe and I are gonna be handling upfront negotiations?

**Kamiko McCoy** (0:34)
I think they're already pretty deeply involved in the process as far as handling, and that last, where we've talked about before, like that last 10%, right? I don't know, maybe this time next year. Where are your bets at?

**Tim Peterson** (0:49)
Leading the negotiations, I think never if buyers and sellers are smart and want to keep their job.
That means that for all I know, the chief investment officers at agencies, chief ad sales officers at TV networks and streamers, may be like surreptitiously having Claude Chachi VT. So maybe like a kitchen cabinet of AI agents involved, but I want to bring in our media buying expert, our senior media buying editor, Michael Berge, who's joining us to talk about this. Michael, when do you think AI agents are going to be leading upfront negotiations?

**Michael Berge** (1:31)
Hi, guys. Thanks for having me here.
I think it's going to be a couple of years. It does feel like it's rolling in really, really fast. But I do think there's more smoke than actual fire when it comes to this. There's a lot of talk of bots being incorporated. But I look at the holding companies, the agency holding companies, and they're still developing their systems.
And I don't see it taking root in any significant way for at least another two years. But who knows? We'll see. It is coming in fast.

**Tim Peterson** (2:11)
Yeah, it's also interesting because maybe the agency holding companies take a little bit more time, but maybe individual clients or other agencies don't. I mean, Kamiko, we just had Ellie Huberto from Duluth Trading Company on the show recently, and she talked about they're already having AI agents be involved in their bidding, so they're buying. So it just feels like everything just keeps speeding up quickly and quickly. We'll get to the agentic AI part of the upfront in a bit, but another way in which changes in the upfront have sped up has been on the programmatic advertising side of things. So, Michael, you and I have been reporting on the upfront for years.
I feel like each of us, at least once, if not more than that, have written a story along the lines of, the upfront model is changing or the upfront model is not long for this world.

**Michael Berge** (3:07)
Right. I think I've even said dead, but that was about 15 years ago, and it's not dead yet as Monty Python so wisely declared.

**Tim Peterson** (3:16)
So, the upfront model has changed, though.
Maybe the upfront model hasn't changed so much as what the upfront has meant for how ad dollars are flowing, is what's changing. I remember talking to folks by side and sell side, even just six years ago, and asking, okay, programmatic though, or does programmatic fit in the upfront? Does it fit in the upfront? And six years ago, even five years ago, I was like, no, not really. That's a whole other thing. This is a very traditional marketplace.

**Michael Berge** (3:53)
Right.

**Tim Peterson** (3:55)
Three, four years ago, that conversation started changing a bit.
Well, it's kind of related to it, but it's a separate thing more or less. Then about two, three years ago, it was, yeah, we're starting to talk about actually having our programmatic spend count towards these upfront commitments. And now this year, I've been having conversations with folks on the sell side, and I spoke with Jamie Power at Disney. She said that for their Disney's biddable inventory, so the inventory puts up for sale in programmatic auctions, 70% of the advertiser demand is coming from upfront advertisers. So that's not quite the same as people in the upfront committing to spend a certain portion of money programmatically, but it shows how the upfront has become a majority of Disney's biddable ad sales.

**Michael Berge** (4:52)
Yeah, exactly, you can say that 70% of the upfront is being bought programmatically, but the Disney example is a really good one. I mean, I think of the impact that the pandemic had on everyone needing to become digitally savvy in their business. And then the effect of that has been being able to then buy and invest programmatically as a result of everything being digital. And as one buyer said to me, by investing programmatically, you just get a much clearer story of what the audience is you're buying.