Every May, TV advertisers, executives and stars congregate in New York City for an annual TV tradition: the upfronts. During the week-long event, networks and advertisers cut lucrative ad deals for the upcoming TV season. Now online video publishers are taking a page from TV’s book. As MSNBC put it, "the web guys want in on this action."
Some of the biggest names in technology and digital media are organizing an upfront ad event of their own. Google, Microsoft, Yahoo!, AOL and Hulu have initiated a two week event dubbed the Digital Content New Fronts. NBC Universal
is also attending.
Last year, TV upfronts generated an estimated $9.3 billion in revenue. That sounds like a lot of money, but the reality is that it's less than 10% of the domestic TV market, less than 5% of the U.S. advertising market, and less than 2% of global advertising markets.
The idea of online media companies trying to sell video inventory through an upfront process feels like a step in the wrong direction. TV advertising and online video advertising are fundamentally different. Upfronts obscure the real opportunity of online video advertising, which comprises real-time viewer data, precise ad targeting, social features and click-to-buy options.
The power of online video advertising comes from matching paid content to viewers, locations and devices in real time -- not selling blocks of ads months in advance. TV broadcasting is a chainsaw and online video micro-casting is a scalpel. They both cut, but one is a more precise instrument. Recent findings show that brand recall resonates deeper
with corresponding online video ads compared with standalone TV commercials, especially for the coveted 13- to 34-year-old demographic.
Another advantage that online video has over traditional video distribution channels -- especially for large tech companies like Yahoo! and Google -- is the ability to offer a comprehensive, multi-platform viewing experience. It’s the difference between reaching viewers only when they’re on the couch, remote control in hand, and reaching viewers whenever -- and however -- they choose to connect. What’s more, tech companies hold the power to offer advertisers unrivaled access to consumers and their preferences. Advanced content recommendation technology will soon deliver paid content that matches a viewer’s likes, dislikes, device type, location and more.
Innovation is tricky. It’s iterative. There are hits and misses. Digital New Fronts are interesting because they show the online video market is maturing. But as online media companies explore new ways to generate revenue, they should remember that online video ads have the most power when they are deployed in real time to receptive viewers, not sold months in advance like TV paid messages.