This year is only the beginning. That was the essential message Tuesday from Yahoo’s head of video and original programming, Erin McPherson, who told a lunchtime panel audience in Hollywood that presentations to advertisers this spring by Yahoo (NSDQ: YHOO), Google (NSDQ: GOOG) and other big digital companies right before traditional linear television’s upfront ad-sales market is a precursor to their attempt to capture a larger share of TV ad dollars next year.
“We’re gearing up for 2013,” McPherson told us, shortly after addressing the panel, part of the larger daylong “2012 TV Summit,” produced by the Academy of Television Arts and Sciences Foundation and trade magazine Variety. In February, Yahoo, Hulu, Google/YouTube, Microsoft (NSDQ: MSFT) and several other new media companies announced that they would jointly conduct a weeklong series of presentations to advertisers called the “Newfront” in New York next month.
This was intentionally scheduled right before the major broadcast networks conduct their traditional ad-selling event with advertisers — meetings, which include presentations of new shows and typically procede a negotiation period during which broadcasters and cable networks broker the bulk of their commercials through long-term advertiser commitments.
Last year, broadcasters and cable programmers enjoyed record upfront revenue of well more than $9 billion each. And they should be relatively unchallenged this spring, with digital media companies merely setting the table for a larger infiltration into their market share down the road.
The goal for digital companies this year, McPherson said, is to move beyond the digital divisions at Madison Avenue’s top buying agencies and coordinate with the TV buying divisions in a big way for the first time. With digital and traditional TV operations within larger media buying agencies still “bifurcated,” she said, the Newfront is seen as a way of reaching the key TV dollar purse strings.
The payoff? McPherson puts traditional TV’s current share of ad dollars at around $50 billion annually, compared to total video advertising revenue of only around $3 billion for digital companies.
With Yahoo describing itself internally as “the fifth network” — in relationship to ABC (NYSE: DIS), CBS (NYSE: CBS), Fox (NSDQ: NWS) and NBC (NSDQ: CMCSA) — McPherson added that digital companies face a key challenge in going after TV dollars. Advertisers, she said, are used to a structured TV world that includes such seemingly immovable paradigms as pilot episodes, hourlong dramas and half-hour comedies.
The goal for digital companies like Yahoo, she said, is find programming structures that TV buyers can wrap their heads around without looking too much like traditional TV.