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Madison Avenue’s upfront ad markets are the place where TV broadcasters and cable companies sell the bulk of their billions of dollars in commercial time. But this year, the biggest tech companies have a plan to crash that party.
In April, a full month before the networks kick off this selling season with formal presentations of their new shows and fall schedule plans, the big tech companies hawking online video plan are planning what they’re calling “newfront” presentations to major brands and their agencies. Hulu will kick off the the presentations on April 19; that will be followed by programming presentations from Microsoft (NSDQ: MSFT) and AOL (NYSE: AOL) on April 24, Yahoo (April 25), Digitas (April 26) and Google/YouTube (NSDQ: GOOG) (May 2). Digitas has staged small presentations around the broadcast upfronts for several years, but this is the first time that a big group of major tech companies have challenged traditional TV as it makes its annual sacred journey to the bank.
In touting the week-long series of events, Yahoo noted data compiled by eMarketer showing that ad spending on online video grew 52 percent last year to $2.16 billion and should reach $7 billion by 2015. In order for that to happen, the tech companies making major investments in premium internet video are going to have to sieze at least some of the $60 billion currently spent on traditional TV.
“You can obviously look at the timing and see that we’re purposely doing this before the TV upfront,” said Wayne Powers, senior VP of North American sales for Yahoo (NSDQ: YHOO).
So in addition to conducting expensive dog and pony shows in the spring like the big TV networks, do big tech companies plan to also subsequently sell the bulk of their ad inventory in the form of multi-quarter long-term commitments? “We’re just kind of working our way through that,” Powers added. “What’s important to us right now is just to showcase the opportunities for advertisers. We’ve all launched a lot of digital entertainment programming recently, and (sectors) like the consumer packaged goods industry and automotive are interested in that.”
Along with competitors like Google and Hulu, Yahoo is investing hundreds of millions of dollars to develop and produce online video content that approaches the quality level of basic cable TV (and in some cases, premium cable).
YouTube, for example, has famously commissioned $100 million to create 100 dedicated niche-targeted video channels.
But prying ad dollars away from cable wont’ be easy, with the sector reporting a record $9.3 billion in upfront revenue last year.