Upfront: Trad TV Dollars Pivot Into Digital Channels
Some high-priced cable networks forced some traditional TV dollars into the hands of big digital video players this upfront.
Speaking at the OMMA Ad Nets conference on Monday, Donnie Williams, executive vice president, chief digital officer for independent media agency Horizon Media, estimates some clients shifted 8% to 13% more dollars into premium digital platforms during the recent upfront sales.
Williams did not mention specific cable networks or digital video platforms.
Many senior broadcast and cable network executives forecast -- and then claimed big CPM increases for this upfront period, anywhere from 11% to 13%. But Williams notes that some networks collapse from certain price points, where the CPM gap between cable and premium digital video sites closed significantly.
"Those [TV] guys drop their rates by an unbelievable amount," says Williams. "So if last year we were looking at CPMs in excess of $30 [for some demos], let's say they dropped their rates by 75%. It was a real land grab. As a result, tons of money went through our organization to digital channels."
How much money? A lot. "We were writing deals 8%, 12% to 13% -- that's the increase spend on premium digital channels," says Williams. More importantly, he adds: "We weren't taking a hit on rates."
Right now, Williams says, the marketplace for some specific premium digital video sites is solid. "There were guaranteed CPMs in the premium marketplace that sold for $10 -- that's guaranteed against audience," says Williams. These CPMs are for all viewers, persons 2 plus.
He notes that the future looks bright for some digital video players. "It's not going to be very long that dollars are going to be re-shuffled and people start to exhaust channels they feel are more in line with the offline [TV] channels they are purchasing."
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Even with the price changes this upfront, Digital Video sells at a significant premium to cable on a CPM basis.
Media buyers that shifted money to digital video from TV reduced their clients GRPs (and you can argue all day how much more a digital GRP is worth than a TV GRP, but it ain't quadruple).
Re Premium: I agree - even clear on the surface. Note that a $10 CPM is 10 to 100 times higher than other digital media CPMs. Yet testing shows results remain justifiable only at traditionally very low digital CPMs.
Also, I was interested in the disclaimer "some" clients. So a few people are crazy enough to make this shift? Doesn't necessarily mean they are smart. If the digital market makes anything clear it's that far too many companies dash around after fad (like cats chasing a laser pointer) instead of chasing wisdom.
Pepsi moved TV $ into social a year ago. They've already moved it back due to exceptionally low sales results.
All of this analysis is based on Neilsen numbers. People are moving to digital from TV because Neilsen hasn't figured out how to measure audience in the new environment.
I agree there's a huge "blame it on Nielsen" thread in modern agencies. But mostly I find agencies want to blame the failure of their creative or strategy on someone else and Nielsen's an easy target.
But mostly, what Nielsen can't tell us no one can. We're trying to understand what leads consumers to buy products. That process is far more subtle than mere audience numbers.
Anyway, IF digital media in general was very effective, THEN they'd be able to charge far, far more for it. What should stop us all are the extraordinarily low prices online. They have to be that low...because online media generates action at a very low level.
Dropping price has adjusted to where those prices are fair for the value you get. But it also needs to be recognized that if hype about online/digital value was accurate, prices would be far, far higher.
And that's as true with video as it is with any digital.