NEW YORK Two years ago, MSN's sales team started talking with retailers in the spring about locking up key ad avails for the holiday shopping season. Last year, those conversations were pushed up to February. Now, according to Mike Hard, MSN's vp, U.S. online ad sales, his team is spending the current holiday season talking about the next one, and in some cases is selling inventory a year or more in advance.
That flurry of advanced selling is indicative of an emerging trend in online advertising—a business typified by perpetual media planning. Even as the medium continues to expand and fragment, and as the industry preaches long tail and audience aggregation, sellers from top sites say that many brands have been pushing them for more upfront-style buying. And categories such as retail, pharmaceuticals, travel and packaged goods are following the lead of the automotive business, which for the past few years has seen advertisers commit significant portions of their budgets to the top handful of publishers in each segment on a yearly basis.
Several forces appear to be propelling this trend. The Web is becoming a more crucial ad vehicle for traditional brands, and thus the dollars are getting more serious: eMarketer predicts growth of 29 percent in 2008. And, as many categories grow more competitive, brands risk being shut out of the most desired inventory if they don't move quickly.
"We've definitely seen some pretty dramatic changes in the way people are doing upfronts," said Hard. "It's been particularly dramatic in the last three or four months."
That's not to say the Web is going the way of TV and brands will soon be dumping two- thirds of their budgets for the year during a single week in May. Rather, sellers say online advertising's version of an upfront turns the old model on its head. "What's different is that advertisers are leading the upfront instead of the publishers," said Scott Meyer, CEO, About.com. "They are inviting their key publishers in. It's flipped around."
Of course, as the number of pages consumed on the Web continues to grow, particularly with the explosion of user-generated content, there is no shortage of inventory. But, "there is not lots of quality out there," observed Meyer. "It's mostly low-rate, undifferentiated stuff. Marketers are realizing that quality stuff is going earlier and earlier."
The quality of inventory that tends to go early, according to sellers, is super-targeted content (like Web pages related to specific car models), home-page avails, video and those ever-elusive "big ideas" that clients always seem to want. "More advertisers want custom packages," explained Sheryl Goldstein, svp, sales, About.com, who spent the last several years at AOL. "And the only way to do that is selling upfront."
As online marketing becomes increasingly crucial to the pharmaceutical industry, upfront sales are becoming prevalent on health sites. Greg Smith, COO of Neo@Ogilvy North America, said that several years ago he was encouraging pharma clients to sign deals with top health publishers like WebMD.com for as long as three years "to grab every single cholesterol impression out there."
Michael Keriakos, co-founder and evp of Waterfront Media, the New York-based parent company of Everyday Health, said his company was invited, for the first time, to several advertiser-led upfront events this year. As a result, the company has already locked up 35 to 40 percent of its revenue goals for 2008.
Wayne Gattinella, president and CEO of WebMD, said his site's experience was similar, and that several brands committed 2008 budgets by September. "That was earlier than any time previously," he said. "I wouldn't categorize it as a tidal wave. But these are large commitments of scale."
Beauty also is buying in early, according to Tessa Wegert, interactive media strategist, Enlighten, Ann Arbor, Mich. Wegert said that for her client Kao Brands (Bioré, Jergens), there are two or three core beauty sites, including style.com, that have become must-buys, and competition is fierce. "In the last few years, we found that we need to be buying way in advance of when we would for other clients," she added.
A similar dynamic exists in the bridal category, according to Carrie Reynolds, publisher, TheKnot.com, which has participated in upfront selling for several years. Lately, "what's happening is that non-endemic brands are starting to adopt these practices," she said.
Although some buyers bristle when the word "upfront" is uttered, the consensus is that online advertising has become more cyclical. "Buying and selling is getting a little bit less crazy than it was," said Jeff Ratner, North American digital director, MindShare Interaction. "But there is still a lot of opportunistic buying."
Amanda Richman svp, director of digital services, MediaVest, wondered whether some sellers were overstating the importance of such upfront events.
For digital buyers, she said, "it's a 52-week upfront."