As the broadcast TV upfront presentations take place this week, iSPOT is interested in the role Internet TV will play in the process. With the growth in full scale episodes and other content offerings by the networks, they will seek to sell more broadband advertising at this year’s upfront. Jack Myers, editor and publisher of the Jack Myers Media Business Report and MediaVillage.com, a former consultant and TV sales executive, provides background on the situation, including projections of the amount that will be sold and the sales strategies of individual networks.
iSPOT: How much online advertising was sold in past upfronts and what will happen this year?
Myers: Last year, there was under $500 million spent by advertisers on online opportunities offered by cable and broadcast networks and the vast majority of dollars were toward ESPN and MTV. This year, we’re projecting the number will double but it’s still a drop in the bucket in terms of total dollars spent. All the networks are putting digital opportunities out there at this point, but the video availability continues to be very limited. NBC News Corp’s new network is not yet up and running although they’re selling it in the upfront, CBS has Innertube, ABC has its deals and Fox has programming on MySpace, but the actual inventory is extremely limited.
iSPOT: Can networks sell advertising on other sites, such as CBS which recently launched the Internet Audience Network to play its content on other major sites?
Myers: For the most part, the networks have limited interactive groups. Most of the networks have sales departments that are primarily responsible for TV and the available online inventory is so small they only put a limited amount of resources against it. Some of the networks have more sophisticated interactive efforts but those are mostly banner ads at this point and a limited amount of search engine inventory. They can bring other networks in but they’re not in the business of being rep groups for other web sites, they’re in the business of selling their TV inventory. To the extent they can extend that inventory to other platforms and generate revenue fine, but they’re not in the business of selling internet banners and pay-per-click models and negotiating network deals.
iSPOT: Will the networks sell different ad formats?
Myers: MTV, ESPN, Turner and Scripps are being aggressive in offering a wide variety of alternative lengths and approaches but for the broadcast networks it’s pretty much :30s and :15s, pre-, post- and mid-rolls. For the most part the focus is on traditional media. They’ll do their best to sell online extensions, but there’s so little inventory they can sell it out very quickly and even selling it out at high premium value, it’s not generating that much money so it’s not enough to make a difference to their upfront strategies at this point.
iSPOT: What is the significance of selling online inventory during the upfront? Does having another revenue stream help the networks or does it detract from the value of TV?
Myers: Long term, the more multi-platform extensions they can create with web video, the better it’s going to be for them. It’s going to be critical to their long-term future. They have to be able to generate revenues as they take programs across multi-platforms. Now they’re moving audiences to online to mobile to iPod and revenues aren’t commensurate with the audiences that are being generated. But it’s a credit to them that they recognize the need to be proactive and get ahead of the curve.
iSPOT: How do the networks sell integrated packages of TV and online?
Myers: It’s different for every network, how they package up the inventory and where it resides. CBS has done a deal with Joost. CBS sells the inventory and Joost gets 10 percent of the revenue. NBC is packaging it up as a special opportunity for premium advertisers. Some networks on the cable side are developing their own digital sales organizations, like CNN. ESPN is selling all its assets under a single sales team. It varies from network to network and agency to agency. Some agencies buy digital only, so you have to go out and sell them the digital. Some buy TV and don’t have the authority to buy digital. Others buy it on an integrated basis. The agencies, the advertisers and the networks. It’s a really complicated and confusing market right now, compounded by the fact that there is little broadband video availability.
iSPOT: What can the networks do to increase the amount of inventory?
Myers: Increase audiences because it’s a reflection of not just units but gross rating points. Then, figuring out models to integrate advertising into sponsorships and promotions with the broadband. But it’s still only $700 million to $1 billion between broadcast and cable, so it’s still done mostly as an adjunct to a network buy.
Stay tuned! Next week’s iChat will feature interviews with major players in this year’s upfront negotiations, from network executives to media buyers.
