Nets to Sell $270 Mil in Digital

Apr 3, 2006  •  Post A Comment

The nation’s marketers are expected to buy about $270 million worth of advertising in the digital and on-demand offerings of the traditional broadcast networks in the upcoming upfront marketplace.

That’s about 3 percent of the approximately $9 billion that is estimated to be spent on the conventional national TV outlets of ABC, CBS, NBC, Fox and The CW.

“It all depends on how progressive the clients are and how much they’re believers in the space,” said Tracy Scheppach, VP and video innovation director for Starcom USA. “Some are bigger believers than others, but on average, [the 3 percent number is] probably fairly accurate.”

“We’re certainly looking at this as a new revenue stream,” said Keith Turner, president of sales for NBC Universal, where senior management has mandated that considerable additions be made to the digital extensions of its television programming since last year’s upfronts.

The networks and the ad agencies that buy from them have been tweaking their organizations to identify digital opportunities, negotiate prices and implement them as integrated marketing programs.

Ad Dollars Working Harder

Shrinking audiences and gadgets like TiVo have advertisers feeling that their 30-second spots are less effective, so they’re turning to digital and on-demand executions to make their ad dollars work harder.

To collect those dollars, the networks have both traditional and digital salespeople hitting the street and are trying to keep them coordinated.

Last year, for example, NBCU set up a digital sales team headed by Seth Winter, senior VP of digital media sales. Mr. Turner said the team works two ways: It deals directly with digital agencies that buy online and on-demand advertising for clients. It also has staffers “embedded” in NBCU’s network, cable, news, sports and Olympic and Telemundo sales groups to develop online extensions for on-air buys.

The digital team was formed about a year ago. “We’ve been at this for a while,” Mr. Turner said. “If people just want the online, then they’re doing it through the online agencies. But the better integration is taking place at the general market agencies.”

CBS had digital sales under its network sales umbrella until May, when it was put under Larry Kramer, who built CBS MarketWatch and was named president of CBS Digital Media.

“We were growing in leaps and bounds, so it morphed into its own digital sales unit,” said Jo Ann Ross, president of sales for the CBS Television Network. “But what we’ve found as we’ve gone into this brave new world together is that we need to work really closely with them and vice versa to capitalize on the deep relations we in network sales have with clients.”

Ms. Ross said that when traditional advertisers are looking for digital extensions, “We can bring in somebody from digital who is an expert in the space and marry it together with whatever conversations we’re having and basically do an extension of the show online and give them what they want.”

A Fox spokesperson said that Fox’s network group works with Fox Digital Media reps on integrated media deals.

TV Is Key

Cable networks, many of which were early adopters at building integrated and digital deals to attract ad dollars, are also looking for the optimal structures to sell ads across multiple platforms.

“I don’t know that a best practice has emerged,” said Sean Cunningham, president of the Cabletelevision Advertising Bureau. “Everybody’s new at this.”

In pitches the CAB makes to clients, about 25 to 30 percent of its material is about broadband video or video-on-demand, Mr. Cunningham said. “That’s what the marketplace wants to hear about.”

In those conversations, TV remains the key to the marketing equation. “We call it hub and spoke. The hub is your 30-second linear ad and your spoke is some nonlinear video,” Mr. Cunningham said. “You still need to do the heavy lifting inside the television plan with the hub, with the 30-second TV. That’s what drives your traffic; that’s what basically pushes all the buttons on your business today.”

For the buyers, the number of digital options has been exploding.

“Three years ago I probably would have said that there were only three, Yahoo being the biggest, MSN, AOL-the big portals,” said Kari Hooper, associate media director for Starcom, which has tried to get a broadband upfront organized. “This year it’s a much different story. Our marketplace analysis has well over 150 sites that we’re considering, from cable-affiliated sites, broadcast-affiliated sites, major portals, independent online sites that syndicate content. The marketplace is huge now.”

But even as the number of players expand in the broadband area, prices remain high because there are still more buyers interested than there is quality content available.

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