Digital Upfronts: Issues and Opportunities For Advertisers

Didit Editorial

12 years ago

By Chris Bell: April 30, 2013

The future of video content advertising is hanging on the precipice. Although the majority of video content advertising is produced for and sold in the traditional TV upfront advertising market, online video channels such as YouTube, Hulu, and Vimeo are attempting to break the network stranglehold on the $72 Billion TV advertising market.

While digital video spending jumped 40% in 2012 to $3.1 Billion, it’s worth asking the question of whether it’s worth it for online advertisers to invest in the “newfronts” (the new term for digital upfronts, which are currently scheduled for May 2nd.) As Nielsen will now be tracking data for online as well as traditional viewing via its Nielsen OCR product, the 2013 upfront season is now wide open for digital to complete with traditional TV. With the increased visibility offered by the new Nielsen data in regards to demographics, use of video ads presents new opportunities to use this new channel synergistically along with more conventional online marketing. Right now, digital video represents a small piece of the pie, and the touting of the ‘Newfront’ format may seem to represent more of the continuing efforts of digital agencies to eat the lunch of traditional TV budgets.

The original purpose for TV Upfronts was to take advantage of the long lead time required for television production, encouraging early purchase of advertising so as to both finance commercial production and to enhance the cash flows of agencies by early receipt of fees. Due to the speed at which digital campaigns of varying formats can be carried out, the actual time lag of the traditional Upfront is no longer a factor. I feel that the Newfront is there more to make brands feel comfortable by replicating a 40-year old media buying process as opposed to representing any real need or necessary process.

What does this mean to you as an advertiser? The question as to how the expanding space and inventory in the online video channel should be used is a difficult one. The outlook is clouded by issues such as the use of mobile devices while watching TV and the perception that video advertising, as used in channels such as Youtube, as more for branding instead of direct sales. However, the set top box, the PC, phones and tablets are merging. It’s becoming clearer and clearer that advertisers cannot simply rely heavily on PPC as they might have done in the past.

The new landscape is demanding a mix of channels. The good news is that it appears that conversion rates for branded video are drastically increasing. Advertisers would be foolish to not seek ad placement with shows and channels whose content resonates with their brand. Viewing great content is a way to prompt a customer to start his or her buying journey. Because cookies can be planted when a prospect clicks through from a video site and hits a landing page, online video ads are an ideal way to start the retargeting cycle and to get a customer into the sales funnel.

So while the Newfronts may seem to be a short-term, tactical move by agencies and online networks to take business away from their traditional TV counterparts, it’s in the long term a response to a changing media landscape driven by technological landscape. Brands must be able to navigate this complex new landscape or will fail to meet their objectives.