Question from an advertiser: So I have more and more digital sellers asking me for upfront dollars. How do I explain to them that they aren't getting any?
Jason says: Ah the good old upfront, a topic that nobody has been talking about too much lately (is there an emoticon for “dripping with sarcasm”?). Amy and I did have the pleasure of taking on this topic last year when a salesperson wanted to get some easy cash. I think some of our points have held up just fine. Predictably, not much changes in a year. However, some people subscribe to the Magic Eight Ball school of selling. And the Eight Ball is stuck on "Ask again later."
You should just speak about the reality of the situation. Some people working in digital video are simply trying to replicate the model that has worked so long for TV. To boil it down, the following happens:
1) Content creators develop programming they think people want to watch. Somehow, "Basketball Wives" slipped through.
2) The creators tell the advertisers why those programs will be great by showing clips of the shows. This is done while showering guests with things like 14 flavors of doughnuts from a purveyor chosen after conducting a citywide taste test.
3) Networks guarantee that a particular audience number will be delivered to that advertiser, regardless of whether or not people actually end up watching that particular program.
Nothing could be simpler, right? However, according to the Jack Myers Media Business Report, only $10 billion of the $70 billion spent on television advertising in 2012 is spent during the upfronts. What does that tell you? Math wizards will surmise that $60 billion is being spread out among the other less-sexy months of the year.
As a salesperson, it is my job to explain to marketers why and how they could spend their marketing dollars more efficiently. If you are a kind and gentle advertiser, explain to the salesperson that none of the three activities above are ANY DIFFERENT from what networks and advertisers do during the other 50 weeks of the year (except for those 14 doughnut flavor), and that there is plenty of money to go around for those deemed worthy at the appropriate time. In other words, "Ask again later." This is a sound and realistic expectation for doing business. But if the salesperson feels compelled to buy a few hundred pounds of sushi to persuade you, so be it.
Amy says: Why the upfronts still exist is a mystery to me. The data above definitely puts the matter into perspective. The broadcast marketplace has done a great job protecting its business model. Digital upfronts however, are still in test mode and whether or not they really matter remains to be seen.
Certain high-demand categories, like auto and maybe CPG, do benefit from reserving digital inventory way in advance -- but does that really apply to banners? Online video growth over the next year should ensure that any advertiser will have the ability to find quality inventory via real-time planning, as digital planning has always been done. Advertisers don’t have to buy it all at once in an artificially compressed timeframe to manipulate supply and demand.
The challenge that an upfront model will probably never be able to address is the continuing fragmentation of consumers’ content consumption. As consumption spreads across platforms, devices, from media properties both existing and yet to be conceived, media buying in general needs to evolve. And please don’t get me started about two-screen and media multitasking and the effects of those behaviors on how we need to buy media.
But I’m not willing to prognosticate on the future of upfronts per se. Buying models have to converge, and the missing link is common currency. Perhaps common currency will be the great equalizer and kill the upfront.