Digital NewFronts: An Advertising Tipping Point?



This could be the year that digital ads prove they’re a real alternative to that classic 30-second TV spot. Monday kicked off the two-week long event called “Digital Content NewFronts,” when Internet content and ad companies showcase new shows, formats and technical tools to target and measure ads’ impact.

The series of presentations and parties are Internet companies’ answer to the “TV upfronts” period in May, when broadcasters sell about two-thirds of their ad dollars. The Internet giants presenting—including Google’s YouTube, Hulu, Buzzfeed and AOL—aren’t looking to sell that much of their annual inventory.

Rather they have their eyes on a larger prize: Showcasing everything they can do, and convincing Madison Avenue that their ads are more efficient and effective than traditional formats.

The trend is in the Newfronts favor. U.S. digital video ad spending is projected to grow 34 percent to $7.8 billion this year. TV advertising is nine times its size: $70.6 billion. But it’s growing at a snail’s pace, just 3 percent this year, according to eMarketer.

But this does mean that TV advertising will add more new dollars than digital video, by just a hair, an indication that digital revenue growth won’t necessarily come at the expense of traditional media, says eMarketer senior analyst Paul Verna. “This shows U.S. consumers have a healthy and growing appetite for ad-supported visual media, and they care less and less how it’s delivered.” And who’s losing ad dollars? Print and display ads.

What’s happening this year is that the content—and the targeting of it—are proving more appealing than ever, especially when it comes to targeting the younger demographic that’s less likely to pay for cable TV. In fact, two-thirds of marketing and agency executives say they believe original digital video will become “as important” as original TV programming within the next three to five years, according to the Interactive Advertising Bureau.

“Advertisers are starting to realize that their audience’s behavior is changing,” said YouTube’s head of marketing programs, Jamie Byrne. “They’re starting to change spending behaviors as well.” And with advertisers getting massive response to the posting of Super Bowl commercials on YouTube, they’re starting to apply that approach throughout the year. “We’re absolutely seeing advertisers start to think like content creators,” said Byrne.

YouTube is going after those TV advertisers by expanding its “Google Preferred”—a way to advertise to just the top 5 percent of YouTube channels. The digital video giant says it’s drawn more than 30 traditional TV advertisers who hadn’t before advertised with YouTube, and says the results so far have been great. A study of 50 companies using Google Preferred found an 80 percent increase in ad recall and a 17 percent rise in brand awareness.

Meanwhile premium original content will be in the spotlight across a range of companies. AOL’s making a big push for more live programming; it’s planning 3,600 episodes of news and talk shows this year. Hulu’s promoting new exclusives including the Amy Poehler-produced “Difficult People.” And Yahoo is showcasing its original shows—putting Katie Couric out front and center to promote big-name content, and the fact that Couric has generated 118 million views at Yahoo since June.

With a dozen more Newfront presentations this year than last, there’s no question the marketplace is getting increasingly crowded. So much so that Facebook got ahead of the crush to present its formats to advertisers last week. (It doesn’t produce original content like most of the others).

YouTube says it’s not threatened by Facebook and Twitter introducing their own video players—an alternative to YouTube’s player. “We’re seeing new entrants into the market—Facebook, Twitter and others,” said Byrne. “That’s broadening the conversation. … If you think about the video industry and ecosystem as a whole, that’s going to help drive everyone forward.”

Reprinted by permission.

Image credit: CC by Esther Vargas

About the author: Julia Boorstin

Julia Boorstin joined CNBC in May 2006 and covers media with a special focus on the intersection of media and technology. Before joining CNBC, Boorstin worked at Fortune magazine where she was a business writer and reporter since 2000, covering a wide range of stories on everything from media companies to retail to business trends.  She graduated with honors from Princeton University with a B.A. in history. She was also an editor of The Daily Princetonian.

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