Will the major digital media companies succeed in creating a springtime advertising sales market on par with TV’s long-dominant upfront? At least one prominent research firm doesn’t believe so.
In his firm’s weekly briefing to media investors, Sanford Bernstein senior analyst Todd Juenger said premium-video-focused companies like Google (s goog), Yahoo (s yhoo) and AOL (s aol) lack the essential ingredients to sell out big portions of their commercial inventory at one time, a la traditional TV’s upfront.
While the Newfronts are a laudable attempt to draw attention to the hundreds of millions of dollars being spent on premium content, we believe they will fail to create a buying/selling dynamic like TV (at least for now), because either there is no scarcity, or the medium isn’t important enough to advertisers that they care if they get shut out, or both. (There is certainly no scarcity of ‘non-premium’ Internet video or traditional display inventory.)
“Does any advertiser really believe they need to commit now to their AOL spend for the year, so they can grab the inventory before it’s gone (and the price goes up)?” he added. “Or, if the AOL inventory does evaporate, will that hamstring their marketing plans for the year? We believe most advertisers will continue take their chances in the scatter market.”
On May 2, Google’s YouTube closed out a two-week bonanza of presentations to advertisers and their agencies by digital media companies called the Newfront. With the broadcast and cable television networks finishing their yearly dog and pony shows on Madison Avenue last week, it is the hope among digital media companies that in the ensuing weeks, when negotiations begin and advertisers start spending dollars on video inventory, they will enjoy a greater share of those media plans.