Newfronts and Upfronts and Outfronts, Oh My! Inertia in the Face of Change is a Powerful Force

Originally published April 2013

As the industry gathers this week for dozens of digital " Newfront" presentations and parties, media agencies, media sellers and advertisers are confronting an increasingly confused and cluttered landscape of video options that all but make the myriad events moot as anything but part of a fun game-playing exercise. TV networks continue to dominate even the digital video marketplace, with TV networks poised to capture an estimated 50% of advertisers' total digital video ad spending this year. Disney/ABC, NBCU and Turner Broadcasting have moved to the forefront as part of the digital video consideration set with Fox, Weather, Scripps, MTVN and CBS Interactive hustling to capture their share.

Yet, according to a Myers survey of more than 400 agency and advertiser executives involved in the TV media planning and buying decision, You Tube offers greater value for the investment than all of the top 54 leading TV network companies except for CBS-TV and ABC-TV. Also actively competing for a share of Upfront dollars are AOL On, Hulu, Yahoo, Microsoft, Facebook, Tremor Media, Grab Media, Alloy, Simulmedia, Pandora, Vevo plus a seemingly endless array of emerging VC-funded competitors.

According to a new Myers survey of more than 400 advertiser and media agency executives, YouTube is rated positively (4/5 on a five point scale) in five performance measures (including value for the investment) by 59% of TV buyers/planners with digital video responsibility. Only ESPN, Adult Swim/Cartoon Network, ABC-TV, Discovery, Turner Sports, MTV Entertainment Group, TBS/TNT and Weather Company are rated more favorably by this group. These companies, along with NBCU Cable and Fox-TV, have led in packaging multi-platform digital inventory with their TV offerings. As digital video inventory is being embraced by media agencies as a significant tie-breaker during Upfront negotiations, powered by Nielsen's new integrated OCR data set, more networks are being forced to increase their focus on multi-platform offerings. Cable networks, which are restricted by distribution contracts from delivering network content across multiple media, are developing original digital video content and repurposing content from their libraries to compete in the digital marketplace.

For the first time this year, Clear Channel, Hearst, Condé Nast, Gannett and several legacy media companies are also laying claim to a share of marketers' video ad spending. Also in the picture are national TV syndication and cinema ad companies such as Disney ABC Domestic Television, CBS Television Distribution, Warner Bros Domestic TV, National Cinemedia and Screenvision, all of which are considered greater advertising values than the majority of TV networks, yet they do not offer meaningful digital offerings.

Further compounding the demands on agency planners and buyers are the realities of:
• integrating data sets from multiple media sources
• continuing network TV audience erosion,
• advertiser interest in earned media and brand/content association,
• new insights on diminishing audience reach and increasingly repetitive frequency,
• investments in programmatic and automated buying processes (trading desks and real-time bidding) that will inevitably encompass video in the next two years,
• OTT viewing and alternate media options such as gaming among younger audiences,
• sophisticated marketing analytics and "big data" insights enabling marketers to measure and predict the impact on sales of increasingly microscopic shifts in advertising and promotional investments,
• the growing importance of engagement and activation based performance tools such as new You Tube video measures from Open Slate,
• issues of transparency and revenue/profit models being reviewed by agencies and their clients.

While not a factor in this year's Upfront and Newfront discussions, on the near-term horizon there will be a marketplace metamorphosis as Amazon, LG, Samsung, Netflix, Intel, Apple and tech-centric competitors develop integrated relationships directly with marketers and at the same time flood the market with incremental and highly appealing video ad inventory.

With all this chaos, conflict and competition is it any wonder that both advertiser and agency executives revert to their tried-and-true practices, investing the majority of their video ad budgets into broadcast and cable networks? The more options that emerge, the stronger the traditional players become. In two weeks, Jack Myers Media Business Report will issue our annual Upfront Investment Forecast. Inevitably, the TV networks' revenues and costs-per-thousand will again be on the rise. To outside observers, that may seem an unfathomable reality, but inertia in the face of change is a powerful force. While digital video takes center stage this week, behind the curtain and pulling the strings is the great and wonderful OZ… aka Disney/ABC, CBS, NBCU, Fox, Univision and Turner Broadcasting.