• by David Goetzl  @dgoetzl, April 3, 2008

When MTV Networks holds its upfront presentation May 8, it promises to offer a twist on the industry's relentless push for ROI. Enter "Return on Innovation," a catch-phrase for the breakthrough opportunities MTVN says it will encourage marketers to experiment with, ranging from new ad models to integrated campaigns with on-air/digital connections.

The event itself, at a Times Square theater, will be held in what MTVN refers to as an "intimate" setting--and is slated to last about an hour, a sharp contrast from the afternoon-long galas of yesteryear. Unlike last year, it will feature all 13 of the company's domestic networks and their digital extensions. For some years, MTVN offered a company-wide presentation, but dropped it a year ago when only three networks held their own, smaller events in New York.

Arguably, MTVN drew the most attention of any single seller in last summer's upfront market. The reason: Coveted younger audiences that watch its MTV and VH1 networks can also be aggressive commercial-skippers. And MTVN at first was loath to make a wholesale switch to the new C3 currency without more time to evaluate the new data. Instead, it eventually opted to make deals in which commercial ratings guarantees didn't start until January. No issue that divisive is expected this year--at least so far.

When MTVN's ad sales president Hank Close takes the upfront stage in a month to tout "Return on Innovation," he'll do so as the company appears to have weathered past ratings downturns, potential shortfalls in salable inventory due to C3, and the youth market's continued migration to the Internet.

An optimistic Close engaged in a question-and-answer session with MediaDailyNews about various aspects of the 2008 upfront, touching on subjects ranging from new research MTVN will unveil to the potential impact of the economy to a picture-in-picture innovation on MTV's "TRL."

MediaDailyNews: Two years ago, you held a lengthy presentation in a large theater at Madison Square Garden covering all networks--then abandoned that last spring. Now, all your networks are back in one room again, so to speak. Is that an attempt to encourage more advertisers to do multi-network, multi-platform deals?

Hank Close: We are doing more and more of that. It is a nod to that approach, but I would also say that the messaging is more about what we can do across all of our brands. It's about programming number one, and number two, how to innovate around programming.

MDN: MTVN's announcement about the coming presentation said it "will reinforce the company's commitment to partnership, industry-leading research and innovative integrated marketing campaigns." Can you elaborate on that?

Close: We've done terrific work this year with many marketers in terms of integrated marketing. We're going to showcase some of those executions and talk about our plans going forward.

In the research category, one of the things that we're doing a lot of is working with our clients and trying to explore together how this generation of consumers is consuming content: how do they move from screen to screen, and what kind of engagement is enabled in moving screen to screen? We've got some great multi-platform engagement research to share.

To some degree, I see research as being the new integrated marketing. And, obviously the media landscape has gotten so much more complex for all clients and for us, so we welcome the opportunity to research and discover together.

MDN: What is the concept of "Return on Innovation"?

Close: It's a fine turn of phrase on "Return on Investment." One of the ways we're providing ROI to clients is through innovation--because we have relationships with this new generation of viewers/users. We share that relationship with our clients--and we're trying to innovate in the ways that marketers can reach those consumers.

It doesn't have to be in a commercial pod with four or five executions that are all 30 seconds. There are various approaches that we're taking.

One of them is what I would call "scalable retention devices." In commercial pods, we're running crawls with relevant content through the break. The second is what I would call "branded integration"--that's where we're sharing assets such as characters from client creative or some kind of brand equity from that creative. And the third is where we're actually producing the commercial message for marketers in our voice to reach this audience that we know so well.

And so what you're seeing is a real revolution in how companies can take advantage of that relationship on MTV Networks.

MDN: Are lengthy big theater upfront presentations going away?

Close: We don't plan on keeping everyone longer than an hour, maybe slightly over. I think these things go in waves, as to what you may feel is right or wrong in a given year. This year, a little bit smaller felt right. Again, it fits the messaging. We are not going to have each individual brand or network talk about their development slate. It's going to be tighter.

I think what the marketplace gives us a lot of credit for is--we do a great job bringing (a younger) audience to the screen. We know how to create content that they love. And the message this year is more about "how do I access that content, how do I innovate around that content?"

But this is not superseding or taking away the individual road shows that we do network by network. We are still going agency to agency and client to client for the individual brands themselves.

MDN: How will the economy affect upfront sales as marketers look several quarters out when they place their buys in June?

Close: I think everyone would like to know the answer to that question. Right now, we don't see any impact in the marketplace. Basically, I think--and what I hope for--is that we are more recession-resistant than most out there. And the reason is the categories that we do the most business with tend to be a little bit more recession-resistant.

We're studio-heavy, video-game heavy ... wireless is a category that has been up this year in a big way. (Quick-service restaurant) spending has been up--in addition, beverage spend has been up.

So the categories that drive the youth market have been looking pretty healthy. We're not very big with automotive and retail. We love our business with those categories, but they are not some of our biggest.

I would be lying if I said it's not on my mind, but for right now we are not seeing any impact from the economy.

MDN: If the economy causes some belt-tightening among clients and cable offers lower CPMs and better targeting, could that lead to money flowing from broadcast to cable?

Close: If marketers do decide to cut back, then they're going to have to find more efficient ways--because of course you want to keep your reach and frequency, but do more with fewer dollars. Certainly, the targetability of cable is a big benefit, and price is a big benefit as part of that.

In terms of the broadcast marketplace, I actually see ourselves as being part of a broader competitive environment. There isn't that much money in the 12-to-24 and 18-to-34 demos as a percentage of broadcast revenue. How much of that shifts into cable may not be a big factor for us.

And yet at the same time, I would say that the younger end of the broadcast audience is where they've seen the biggest fall-off. I think that bodes well for us. But again, we're part of a little broader environment than most because of the demographics that we deal with.

MDN: Of course, if marketers cut back and look for improved targetability from the Internet and spending shifts there, could that be an issue--even though you have robust Web offerings yourselves. How might you manage that?

Close: I think that what we offer in that environment is convergence. The discussion today tends to be around: "Is advertising going to move into being all transactional? What's the future of brand advertising?" I think, ultimately, the answer is they both have very bright futures. But the power of both mediums combined is bigger than either one separately.

And that's what some of the research that we've done recently has shown, and we'll show that on May 8.

A very strong benefit that we bring to the marketplace is--we reach consumers on many screens. And when you do that, the engagement is higher and the recall is higher. And so it gives us an ability to play in both of those worlds in a very strong and leading way.

MDN: A high percentage of your deals involve both an on-air and online component. With that added complexity, are those deals being made in the hurry-up upfront market?

Close: They're negotiated in that time frame, but all of the legwork is done leading up to that upfront period.

I do believe, however, that with the marketplace getting more complex and with the influence that digital has had, it puts more emphasis on having multi-quarter conversations outside the upfront window.

MDN: What percentage of upfront deals involve multiple screens?

Close: It's increasing, although I think the digital marketplace will continue to be largely scatter. Where it is really important to be in the upfront from a digital perspective is where an advertiser is looking for multi-platform opportunities that are tied to a TV event.

Every one of our brands has significant events that we do every year, whether it be the (MTV Video Music Awards) or the (Nickelodeon) Kids' Choice Awards. And those cross-platform opportunities are sold in the upfront. So, to that degree it makes sense to be there in the upfront if you want to participate on an exclusive sponsorship basis.

MDN: Last year, the shift to the C3 currency held up some of your upfront negotiations. Do you envision another issue doing the same this year?

Close: I don't. I think the environment right now is fairly well set. In terms of the currency, last year we switched to the C3 currency as of first quarter (this year). Moving to C3 currency in this year's fourth quarter will be new for us--though, realistically, I think C3 is going to be a weigh station on the way to something else.

It was a timing difference in terms of what we wanted to accomplish last year versus the rest of the marketplace. But we welcomed it. We've made some big strides, particularly with a couple of brands in VH1 and MTV in terms of the performance of the commercial pods.

I think that's for two reasons. One is, we moved from a two-pod format to a three-pod, per-half hour format on both of those channels. The second is that we're doing an awful lot of creative executions in the commercial pods, which are doing a much better job retaining audiences.

MDN: Can you talk more in-depth about some of the "pod-busting" innovations you've undertaken to retain audiences with C3 performance as a backdrop?

Close: On "TRL" on MTV, we are using picture-in-picture technology. The commercial message occupies the full screen, and in the small screen is what is happening on the live set throughout the commercial break. We like what that is doing for us and advertisers in terms of retention.

On VH1, we've employed menus to alert the audience to which commercials are coming up, and then we weave relevant content through that pod.

We regularly execute pod takeovers in which a single advertiser owns the pod, which allows us to explore branded entertainment options, such as what we did with Target with (MTV's) "The Hills." We saw radically improved retention from that execution. These are just a few approaches of many across our brands.

MDN: Last year, you altered your ad sales structure, dividing the portfolio of networks into three "clusters" with an executive vice president in charge of each. Going into your second upfront with the new organization, how has it worked?

Close: We think it's worked out great. The goal in the restructuring was really to give clients a way to more easily access the organization cross-brand--and in addition cross-site.

Before this, all individual brands had their own individual sales management. And we put in a "three-evp" structure, so a client looking to access a certain demo or certain type of programming can have one point of contact.

We wanted to be a little bit more agnostic as to where that budget or possible budget may end up. I think it fits well with what I would say is a "marketing solutions approach." We want to sit with marketers, find out what their brand goals are, and then figure out what the solutions to those challenges are--no matter what screen they go on.

And I think this structure has enabled that in a really good way. Feedback from the marketplace has been strong, so were happy.