Many of the biggest brands in online video are banding together for a series of advertiser presentations starting today in hopes that these “newfronts” can counteract some old perceptions of their business.
If the term “newfronts” brings to mind the TV industry’s own upfronts, that’s intentional. The seshes hosted by big digital content companies including AOL, Yahoo and Vevo are modeled on the dog-and-pony shows broadcast and cable channels hold for Madison Avenue every year.
The goal is siphoning a portion of massive TV ad budgets. Marketers spent $68 billion on U.S. TV in 2011, up 2.4% from 2010, according to research firm Kantar Media. The medium’s strength makes a juicy target for rival sectors that want a piece of that pie: TV was the only ad-based media sector that didn’t experience declines in the fourth quarter of last year, when digital media dropped 6.2%.
But forecasters have a rosy outlook for online video. Though its share of the digital pie is dwarfed by that of search and banner ads, online video is projected by eMarketer to grow by 55%, a greater pace than anything else online in 2012, when it is expected to comprise about 8% of the $40 billion U.S. online ad spending expected this year.
“This year will be looked back as a tipping point in terms of both recognition of the online video space and the shift of money into our medium,” said David Kohl, exec VP of ad sales at Vevo, which will talk up scripted original programming as a supplement to the musicvideos that have made the brand a huge draw online.
An unprecedented volume of original programming will be a key component of the newfronts. YouTube has launched dozens of channels with mostly shortform original programming backed by an investment pegged north of $100 million. Yahoo has launched several slates of content with some big names participating in upcoming fare including “CSI” creator Anthony Zuiker and Tom Hanks. Hulu has tried its hand at scripted longform series, with 30-minute episodes of the comedy “Battleground.”The pitch will be that the quality of these programs is no different than what ad buyers typically pony up for on TV. The only difference is the diversity of screens on which consumers watch them.
When Vevo takes the stage April 25 at Manhattan’s Equitable Center, it will look to inject that infotainment mix familiar to upfront-goers, from a panel discussion featuring Magna Global CEO Tim Spengler to a performance from Grammy winner John Legend.
Ad agency Digitas is the ringleader behind the newfronts, which are strategically timed a few weeks ahead of the broadcaster upfronts but will still lag most of the cable upfronts that began last month and continue through May. Hulu will be the first to present over a two-week period ending May 2 with Google.
It’s not just new-media brands but the digital divisions of old-media companies like NBCUniversal and Disney that are hunting for dollars.
“It’s great for the industry to give content creators a bigger stage to get content in front of new partners in the space,” said Olivier DelFosse, VP of interactive, mobile and digital content at FremantleMedia Enterprises, North America, which has a new YouTube channel coming out soon.
In terms of eyeballs, online video continues to grow at a rapid clip by a wide range of metrics. Nielsen found that the total number of streams increased from 14.5 billion in January 2011 to 17.9 billion nine months later.
Advertisers, however, have been slow to embrace anyone beyond the TV networks with which it has relationships going back decades. And online video is still a drop in the bucket when compared to TV: Nielsen estimates that the average American watched TV for more than 153 minutes daily in the second quarter of last year compared with less than four minutes on the Internet.
But Madison Avenue’s reluctance to invest more in original video runs a lot deeper than just relative time. There’s been persistent criticism of a lack of standardization in ad units and metrics.
Brian Wieser, senior research analyst at Pivotal Research, believes marketer interest in online video could be hampered by the short-term nature of spending on digital budgets that don’t typically require committing dollars months ahead of time. “We are less optimistic about the prospects for other participants in the so-called newfront,” he wrote.
Righting those wrongs will be a part of the pitch. AOL will leverage Nielsen’s Online Campaign Ratings system to allow advertisers to embrace familiar TV-style gross ratings points. Google plans to go it alone, introducing its own metric, Active View, that also fits into the GRP mold. Hulu has already announced that it will begin charging advertisers only for spots that are viewed in their entirety.
Though they compete with each other for ad revenue, digital heavyweights are forming a united front at the newfront to raise their profile overall. “A rising tide lifts all boats,” said Chris Young, CEO of Digital Broadcasting Group, which produces and distributes digital programming. “It certainly couldn’t hurt.”