Back To The Basics

by Joe Tartaglia, Sep 5, 2008, 4:00 PM

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As we can all clearly remember from our high school and college economics classes (wink, wink), price is a reflection of supply and demand -- when demand is greater than supply, there is a shortage and prices increase and vice versa. We (online media buyers/consumers) have been in a marketplace with an online ad surplus for several years. Many factors, including DSL, behavioral targeting, broadband, and hesitant clients, have created a surplus and there have been very few instances of a shortage. For a while, the home-page roadblock on high-reach properties, the most common example of this shortage, saw a sharp increase in price. This situation is slowly fixing itself, though, as advertisers are finding other high-reach opportunities. Now we're in a situation that can't fix itself: There is a shortage of ad space on online full-length programming on broadcast network properties.

Not only is online viewership of prime-time TV programming on the rise but it is also facilitating a higher level of consumer engagement, due mostly to the "lean-forward" aspect of viewing, and the clean, clutter-free environment. Some advertisers are willing to pay a premium for this and others use it to align with prime-time without having to commit millions of dollars. In early 2007, most of the network properties announced syndication deals with the likes of AOL, Yahoo, MSN, CNet, MySpace and others to help increase distribution, but we're still seeing inventory prices increase as we head into '09.

Broadcast properties want digital participation in the upfront, but they are not making it beneficial for advertisers. In some cases online video CPMs are 25%-50% higher than those of TV, which just isn't tolerable to many clients.

This is where the problem lies. How do we fix it? By getting closer to equilibrium -- we need greater supply. The network properties should focus on improving syndication relationships. A press release from broadcasters announcing that their online syndicated content will potentially reach 96% of online users is good, but working with those partners to promote their content - even better.

Networks need to continue to build these relationships and create a better user experience in order to increase supply. To watch an episode of "My Name is Earl" on Yahoo, you have to go to Yahoo! TV, click on "Full Episodes" in the top Nav. bar and sort through a list of shows (in text, no graphics) to find it. Can the networks improve on this? Since it's one of the only ways to increase inventory, one would hope so. Small steps have been taken by the networks on syndication deals but the next steps should be taken by advertisers to drive the networks to further build out their syndication. As media buyers, we can send a message to the networks, by focusing our efforts (budgets) on those extending reach through syndication and excluding those that don't, or we can attempt to avoid the situation altogether until it's closer to a balance. After all, advertisers have other video options.

I say, let's leave the video players alone for a while - they all look pretty, they all allow for interaction and they will all run in HD soon. The consumer experience is good, and the players are no longer a point of differentiation among the properties. The point of differentiation will become reach and effectiveness of the network's syndication.

Each of the broadcast networks has content that many are willing to consume; now it's just time to make it happen. If networks do not provide more and better placed online syndication, advertisers will be forced to seek out other video options, including short-form video and clips, and even original online programming. After all, we don't really know which of these online video options engages viewers the most -- but that's a topic for another day.

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