Web Video Again Fails to Diminish TV Upfront

Trying to swipe market share a flawed strategy?

Each May the digital video sales executives squawk about stealing ad dollars from television, as the national TV buyers begin gathering budgets in advance of the upfront market. But again this year, they failed, if not from lack of trying.

As the outlook for the 2011-12 TV marketplace took on an ever-rosier hue, digital media executives became bolder about voicing their desire to crash the upfront. In April, Erin McPherson, video programming head at Yahoo, said the portal’s original content reached a bigger audience than some of the shows on linear cable. Given the breadth of its homegrown programming slate, McPherson said Yahoo “definitely wants to play [in the upfront], absolutely.”

And Efficient Frontier, a search engine marketing firm that manages $1.2 billion in annual ad sales, last month kicked off the first “Social Upfront,” a daylong rhapsody on all things Facebook and Twitter. In quick succession came “Studio Live,” a Facebook-hosted show-and-tell for advertisers, and NewFront, Digitas’ fourth-annual powwow designed to hook clients up with programmers, distributors, and talent.

As late as May, some digital buyers were saying they’d look to shift a significant percentage of client dollars to online video platforms. But many agency veterans asserted that the very nature of digital made comprehensive upfront investments untenable.

“Fundamentally, an upfront is a sellers’ market,” says one agency higher-up. “The reason the system works as well as it does for TV is it rewards scarcity. There is no such thing as scarcity in the digital arena.”

Ultimately the upfront was a success for the broadcast and cable networks’ pockets, a near-record $18 billion in advance commitments. The same cannot be said for those in the digital media space.

Trying to steal upfront share might be a flawed strategy for digital video players. The TV upfront affords relatively little in the way of flexibility, which makes it a poor fit for the mercurial digital media business. Online campaigns are processed in a manner that’s very similar to the TV scatter market; i.e., buys are made in close proximity to their run dates. Additionally, as has been well documented, Americans are watching more television than ever before.

According to Nielsen, every day some 288.5 million people watch TV. That’s twice the audience turnout for online video (142.4 million).

None of which is to suggest that online advertising is in any way deficient. (We’re talking about video here, as display advertising is fairly useless from a branding standpoint and a nonstarter where product launches are concerned.) MagnaGlobal now expects online will overtake newspapers as the second-largest advertising medium by 2012; this year alone, sales should top $30 billion, or 17 percent of the overall projected media spend ($173.1 billion).

But until the Web can siphon off a far larger swath of traditional TV viewers, the notion that digital video will nick  dollars from broadcast and cable networks’ wallets remains the dubious boasts of early spring.

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