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‘Broadband Upfront’ in the Works

Oct 13, 2003  •  Post A Comment

Media agency Starcom MediaVest Group has launched phase one of what it calls the first “broadband upfront,” a series of advance advertising buys on top broadband video outlets.
After four months of research, planning, talks and negotiations, SMG plunked down $5 million for a schedule of 30- and 15-second TV spots that will be streamed over the Internet to the American public via Yahoo!, MSN and FeedRoom.
SMG executives said the broadband upfront is similar in logic to the broadcast and cable TV upfronts. The goal is to lock up the most desirable video programming on an exclusive basis with built-in terms and conditions that network advertisers would expect from a TV upfront buy.
But over and above such conventional upfront TV elements as audience delivery guarantees and cancellation options, the broadband buys come with a heavy element of research and development. That’s because all parties concerned-the agency, its advertisers, its broadband content providers and a range of supporting players in Internet research and third-party video hosting-are still finding their way in the new era of broadband video advertising.
“A big part of what we’re doing here is getting some knowledge about how this stuff works,” said Rishad Tobaccowala, CEO of Starcom IP, the SMG unit that has been charged with planning, buying and posting the agency’s broadband upfront deals. “The idea is for all of us-our team, our clients and our partners-to learn what works and what does not work in a digital broadband advertising environment.”
Among the many things the agency hopes to learn: When, where and in what types of broadband video programming is it appropriate to advertise? How many TV commercials can be scheduled in such programming? Should the spots run before, after or during the video programming? And most important, will users stick around to watch commercials in what is essentially a video-on-demand environment?
“In many ways, this is really just a laboratory for benchmarking how people relate to commercials with video-on-demand,” Mr. Tobaccowala said. “If you think about it, isn’t broadband just another form of video-on-demand?”
While other agencies and marketers have placed conventional TV commercials into broadband video programming, SMG’s approach differs in that it is part of an ambitious agencywide effort to develop a conventional marketplace around such buys, including the type of market-based elements that drive the TV upfront.
In fact, it was the soaring demand in the past two network upfronts that led the agency to accelerate its broadband upfront plans, not so much as a hedge against the network upfront but because TV ad budgets were expanding so quickly that it would be easier to convince marketers to shave off a small slice to test and develop a broadband marketplace.
While the initial investments are relatively small compared with the $9 billion-plus network prime-time marketplace-not to mention the billions more spent on other dayparts, cable and syndication-SMG said its broadband strategy differs from TV’s upfront in one more important way: It’s not static and locked in time. Instead of negotiating all of its clients’ broadband deals at one time for an upcoming year, SMG is negotiating deals on a rolling basis and doing them in purchases that cover from one quarter to four quarters at a time.
Mr. Tobaccowala would not disclose how much the agency ultimately plans to invest in the broadband upfront. To a large extent, he said, it would depend on how the market of broadband video providers and the agency’s clients reacts.
The initial $5 million buys covered commercial time mainly through the fourth quarter of 2003 on Yahoo, MSN and FeedRoom. At press time, SMG was in negotiations with AOL Broadband; it has also been talking to ESPN in Motion and others.
The agency did not disclose which of its clients participated in the deals but said it is negotiating on behalf of a dozen advertisers. SMG’s clients include Coca-Cola, Kellogg Co., Kraft, McDonald’s and Procter & Gamble, all of which are top TV advertisers eager to develop a broadband advertising marketplace.
To demonstrate its commitment to developing the market, SMG has also created a dedicated team of Internet experts, media strategists and conventional media buyers who are the broadband equivalent of an agency network buying group. The unit is headed by Saneel Radia and Dan Buczaczer.
“The big idea here is to spur a market by investing real dollars on behalf of real clients in real video advertising opportunities,” Mr. Tobaccowala said. “What we’re saying here is this is going to be an important part of media-not that it’s going to take over television, just that it’s going to be another part of it.”