Facebook, Twitter, Google, Yahoo, Microsoft, AOL and five other big names in digital media in the UK are rallying together next week as they bid to steal share of advertising dollars from TV broadcasters — by replicating the same tactic TV broadcasters use to sign huge “upfront” deals with advertisers.
They’re hoping to shift tens of millions in spending their way.
Next week the UK will host its first “Digital Upfronts”, a week-long event where digital media owners will tout their wares to advertisers and agencies in the hope of signing major deals. There will be 11 presentations in total, some glitzy parties and celebrity appearances as the digital titans battle it out to woo advertising executives away from traditional media (you can find the full calendar and all the companies appearing here).
The idea is taken from the US in 1962, when TV network ABC began premiering all its most attractive programming in one week in the Fall but sold advertising for those shows in the Spring — hence “upfront.”
The advantage of the Upfront, for media sellers, is to create a short, quick window for ad sales in which advertisers will feel forced to lock in the best deals they can. In general, the system has kept prices for TV advertising high (even though advertisers feel they’re locking in discounts because they’re buying in bulk).
The vast majority of TV advertising across the world is now sold in this way: far ahead of time and accompanied by Upfronts events held by the broadcasters to showcase their programming and ad opportunities for the forthcoming seasons. But digital media tends to be bought much closer to when it actually appears, and it can often be a bit of an afterthought in the campaign planning process.
The digital media industry wants to change that and hopes the Upfronts tactic will gloss up their display and online video ads as more premium offerings akin to TV so they can book in more revenue ahead of time.
One source from one of the big digital media companies involved with the Upfronts next week told Business Insider they expect “tens of millions of pounds” worth of deals to be struck over the course of the five days.
Other companies involved have told Business Insider the first year of Digital Upfronts in the UK will be less about immediate upfront commitments being signed, but more about showcasing what is on offer to raise understanding among advertisers.
But they do say that will change over time. In the US, where digital “NewFronts” have been running for seven years, major deals are now announced at each annual event. It just takes time for advertising buyers to change their habits.
It may take longer for that muscle memory to grow in the UK. As digital marketing website Digiday explains, the event this year is dominated by US technology platforms, which reduces the likelihood of new content or product announcements for the UK audience.
We don’t know know the exact cause-and-effect relationship between the US NewFronts event and digital advertising deals and it’s difficult to estimate just how much business the UK event will pull in.
But what we do know is that the digital advertising pot is growing and, as Omnicom Media Group admitted the other day when it revealed it is telling clients to shift as much as 25% of their TV budgets to online video, at least some of that growth is to the detriment of TV.
The digital media industry is now hoping to take TV on at its own game to in the hope of stealing even more of that advertising share.
That said, digital still has a long way to go. TV had a 40.2% of the $US532 billion global advertising market in 2013 while internet advertising had a 20.6% share, according to a report from Publicis Groupe’s Zenith Optimedia.
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