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Upfronts: Can ‘NewFronts’ Dent TV’s Ad Cash?

Analysis: Ad buyers say Big Digital needs to act like Big TV to win more sponsor dollars

When a media company – old or new – presents new programs featuring John Stamos or Gwyneth Paltrow, why wouldn’t an advertiser throw money at some of them? Ad buyers have a couple of answers.

Shows like AOL’s “Second Chances” (which features Paltrow) or Yahoo’s “Losing Your Virginity with John Stamos” would seem to have the exact elements that win ad dollars – celebs whose past shows have performed well and the imprimatur of new-tech distribution for which so many marketers are clamoring. More intriguing, perhaps, they come from media outlets trying to turn online streaming video into a viable business, and were part of a series of glitzy presentations made in these last few days called the “newfronts,” a ploy by digital-media concerns to wrangle some of the billions of ad dollars advertisers commit to TV at this time of year in a process known as the “upfront.”

But for all the desire to use YouTube, Hulu and so many others to reach younger viewers who have abandoned the watch-this-show-at-this-time-on-this-day thinking behind the prime-time grid, there are a lot of questions about why Big Digital won’t use the techniques that have made Big TV an ad venue that draws around $74 billion annually across broadcast, cable, Spanish-language and local outlets.

In their decades-long dealings with TV, ad buyers have grown accustomed to some accountability. They understand a) how a TV network is going to draw audiences to a new program; b) how the shows perform against specific audiences week in and week out; and c) get a heads-up when a program has something unique about it – like a finale or plotline – that could draw their clients in further. As one buyer suggested this week between “newfront” sessions, the digital players seem to be unveiling all sorts of interesting properties, but it’s impossible to tell whether any of the new programs will be around for more than a few months – or if the digital streamers will ever mention them again (Conde Nast Entertainment’s “newfront” pitch included a promise to match every dollar put into production of new content with a dollar put into marketing and promotion of that content, but, tellingly,  it came from a former TV exec – Dawn Ostroff, who spent many years at the CW).

Of course, it’s fascinating to hear this sort of talk from ad buyers, who have also spent the weeks before the upfront swearing up and down that TV networks better keep pricing on an even keel or they’ll lose ad dollars to digital. Now they’re saying that digital better act more like TV if those ad dollars are to move.

But the simple facts make shifting an abundance of money to digital tough. Advertisers need to reach mass audiences. For all the hoopla accorded ad-supported YouTube and its cousins, their video offerings reach hundreds, thousands or millions of individual viewers separately. There’s not necessarily any rhyme or reason to why or when a consumer streams video. It’s always available. There’s not enough of a crowd on the order of “Sunday Night Footbal”  tuning into it to make one worry about spoilers or missing out on a seminal plot point. Sponsors will still get their messages across, but they’ll do it a click at a time, rather than with the 15.7 million-viewer megaphone of last night’s episode of “The Big Bang Theory” on CBS.

Lending some of these thoughts ballast was YouTube’s announcement this week that it would back off announcements about “original” video channels, zigging where so many others are beginning to zag.

Despite the hard-to-resist lure of these “newfronts,” the digital sites have been making similar plays for years. In 2007, a very different Yahoo trotted its wares out to about 1,000 media executives in a February presentation that made use of an animated gopher named Gus. The goal was to keep advertisers aware of Yahoo even as the TV networks started to put their shows online. These days, Univision, CBS, NBC and Hulu, a video-streaming site backed by ABC, NBC and Fox, are among the players raising their hand for the same ad dollars Yahoo once tried to lure.

To be sure, there’s little question ad spending on digital will increase. In a forecast released Friday, Interpublic Group-owned media researcher Magna Global called for Internet advertising to climb 11.5% for 2013, while predicting TV ad spend would fall 2.8%. Even so, the company had previously expected Internet advertising to climb 14% this year while predicting TV ad spend would fall 3%. In 2014, the rate of ad spending on web properties should plateau at 12% while TV ad spend reverses course and grows 8.9%, Magna Global said.

It’s hard to really understand where “upfront” dollars go. The numbers that make their way into press reports are unreliable and merely represent advertiser commitments made in Spring that can change course once the fall season goes into effect.

What the numbers seem to tell us, however, is that advertisers have already taken a chunk of change out of TV. In 2004, the big broadcast nets captured their greatest total of upfront ad commitments, estimated at about $9.5 billion. Since that time, the numbers have dipped or remained flattish.

One could argue that marketers have peeled off a few dollars from their ad money rolls and thrown them at everything from YouTube videos to social media – all of which are significantly cheaper to buy than 30-second spots on ABC or CBS, according to buyers. Perhaps Big Digital has already won its ad cash.

The question now is whether the “newfronts” can loosen purse strings further, and the answer doesn’t seem quick in coming.

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