With the TV upfront in doubt given the strike, where does the frequently floated notion of an online ad version stand? Mediaweek suggests that advertisers — particularly those pharmaceuticals, autos, travel, retail and packaged goods — are increasingly clamoring for a marketplace to negotiate buys for online inventory in advance. The article’s takeaway: although spending growth rates are slowing, many ad categories are increasingly competitive and advertisers don’t want to miss out on prime inventory. And so, some are going to larger internet sites like MSN, which claims to be completing deals today for next year’s holiday season. More after the jump.
– Media buyers are skeptical: MSN isn’t saying how much “upfront” business it’s doing. Other examples of online upfront participants like TheKnot.com (NSDQ: KNOT) and WebMD (NSDQ: WBMD) also say they’ve had increased requests to lock in long-term deals. But the implication that the online media buys will increasingly resemble the TV model seems like a stretch. Mediaweek acknowledges that no one expects marketers will soon be throwing two-thirds of their ad budgets at websites during a single week in May. And the article does leave the last word to two media buyers who say calling this an “upfront” is a misnomer. Amanda Richman SVP, director of digital services at MediaVest, suspected that some sellers were overstating the importance of these early commitments. Meanwhile, the Interactive Advertising Bureau says that it hasn’t heard any demands from its members to establish an online upfront. Sherrill Mane, SVP-industry services: “It’s not on the IAB’s agenda.”
– Internet inventory not as limited: There are many reasons why forming an online upfront not only remains unfeasible, but would end up failing the majority of websites. Scott Meyer, CEO of About.com, tells Mediaweek this internet upfront is the opposite of the original TV version — it’s being led by advertisers, not publishers. But that’s how the TV upfront started after the networks began arranging programming seasons in the mid-1960s. Marketers moved away from direct sponsorship to buying commercial spots as the number of viewing choices and marketing costs grew. The TV upfront has always been predicated on selling a limited inventory. Despite claims that quality internet ad spaces are limited too, it doesn’t compare with the finite spots on broadcast or even cable.
– Cable’s experience: A look at how the cable upfront has faired recently offers a warning to those who think that a 40-year-old model of media buying can be cast in the internet mold. One former cable executive who has since moved to the online advertising side said to me in an interview: “The market has been slow for the last two years and the CPM increases were fairly marginal to flat. … The internet is completely different form of media than TV.” Too many advertisers and publishers insist on conforming to that older model.
– A different concept: Dee Salomon, SVP-sales and marketing for CondeNet, has had a few advertisers, especially in the retail category, seek advance commitments. But she also told me that in terms of nomenclature, representing such agreements as an “upfront” reflects the learning aspect that advertisers and publishers still find themselves in: “It’s less of an upfront – a coordinated season where buyers and sellers negotiate – and just signing a long-term, annual contract. That’s pretty much how Conde Nast has been doing business anyway, though not necessarily how we do business online. It’s a different construct than the upfront.” It makes sense for a few large advertisers to lock in deals in advance when their businesses depend on specific seasons. But the majority of marketers with smaller budgets still prefer short-term buys, mostly on a month-to-month basis. That dynamic has no signs of changing.