Upfront online presence on rise

Old, new media in turf war for funds

With the likes of AOL and Yahoo making a play for the advertising upfront market, the TV networks this week will escalate their own assault for digital turf.

Broadcast networks are expected to tout a host of online offerings in making their pitches to Madison Avenue, casting their Internet sites as not only innovative but, in contrast to YouTube, much safer when it comes to content.

It is the latest in what is shaping up to be an increasingly toxic environment between old and new media. Viacom is suing Google for copyright infringement on its YouTube site. And corporate chieftains have engaged in more hostile rhetoric against the new media competitors — some of whom they count as partners in various ventures.

At the National Cable Television Assn. convention last week, Time Warner CEO Richard Parsons compared Google and like companies to the “Custers of the modern world,” with old media as the Sioux nation. Time Warner is part owner of the CW with CBS Corp.

“They will lose this war if they go to war,” Parsons said. “The notion that the new kids on the block have taken over is a false notion.”

But as the networks promote their online offerings, many factors have yet to be worked out, not the least of which is how much they will be able to charge advertisers for online spots.

And the networks also find themselves competing in the online world against much more established — and heavily trafficked — sites like Yahoo and MSN.

For their part, advertisers are prepared to commit significant dollars, but they want guarantees that the networks will deliver.

In their upfront presentations last year, all of the networks focused attention on their online offerings. But “the reality was they hadn’t developed them fully,” says Jeff Ratner, managing partner of advertising firm Mindshare Interactive.

The networks have been able to boost traffic to their Web sites, with NBC offering downloads of shows like “The Office” and “Heroes” and ABC hits like “Lost” and “Desperate Housewives.”

And the networks have been sharpening their alternatives to YouTube.

News Corp. and NBC Universal have what could be called a digital Manhattan project, dubbed “Newco” or “Newsite,” depending on who you talk to. CBS Corp. will be selling “CSI” on its own “Interactive Audience Network,” an online syndication service hastily cobbled together just in time before upfront negotiations begin in earnest.

What also has goosed broadcast networks is that new media firms are making an earnest play for their upfront advertisers.

In March, AOL and Yahoo held their own “pre-upfront” in Gotham, in part to remind ad buyers that they are waiting in the wings. Ironically, both companies are eager to partner with broadcast networks around fall season premieres, through syndication of network shows on the Internet firms’ highly trafficked sites.

“What Yahoo and AOL were saying at their pre-upfronts is, ‘We have better reach than the TV networks; we’re bigger and more flexible,'” Ratner says. “They were asking advertisers to put aside some of their big-budget dollars to play in that.”

As Yahoo’s sales chief Wenda Harris Millard put it, “Traditional television sellers are bundling their digital wares and selling them to the TV buyer, but the TV buyer doesn’t know how to buy (digital media) any more than the TV seller knows how to sell it.”

Digital spending is still expected to be a small percentage of overall ad spending in a medium dominated by the 30-second spot. Group M chief investment officer Rino Scanzoni predicts that digital spending will account for $500 million to $700 million of the $29 billion that will be committed to broadcast and cable upfronts this year.

The networks will be trying to convince advertisers to bundle their spots with online offerings. For example, in the case of ABC, a marketer might decide to do one fewer ad spot on “Desperate Housewives” and instead shift that unit to streaming video on ABC.com.

But they also hope to draw Madison Avenue to the safety of advertising on sites in a copyright-sanctioned environment, in contrast to a YouTube, which has run into problems with its users posting copyrighted clips.

That was some of the reasoning behind the NBC U and News Corp. “Newco” venture, which announced with much fanfare in March.

But perhaps the biggest strength will be the networks offering of recognizable brands. NBC, for instance, has “Saturday Night Live” and “Deal or No Deal,” which have played well in the online environment.

Fox has been streaming shows on its broadcast affiliate Web sites, and has streamed on Fox.com through a link to MySpace.

This year, Fox will develop its own player for Fox.com, which will allow it to syndicate video there. Fox is pursuing a single-sponsor model for streaming video, in which a pre-roll ad runs before the content.

CBS, which has partnerships with YouTube and Joost, unveiled its Online Audience Network in April.

Like other online broadcast competitors, the strategy is to build on what they have.

In a recent conference call, CBS Corp. chief Leslie Moonves said, “We are building our online audience at CBS.com and we are also putting our content where the audience already is.”

Ted Johnson contributed to this report.

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