Revenge of the TV Buyers

Free TV on the Web seems increasingly doomed, as the broadcast networks are rapidly taking back control of their online content distribution. Meanwhile, Nielsen is pushing TV-like measurement for Web campaigns. Soon, many believe, TV networks will be able to provide total audiences numbers for their top shows, which include both TV and Web viewing.

The combination of these two trends is leading some to speculate that the premium online video market may become the domain of TV advertisers and traditional media buyers — leaving digital agencies on the outside looking in at a seriously shrinking pool of high CPM inventory.
Take Fox, for example. When this fall rolls around, viewers looking for recent House episodes will find that their options have dwindled. The show won’t be available on Hulu or for non-Dish subscribers (i.e., most people). Fox will have reasserted control over its Web audience. What if it starts treating that Web audience as simply part of its TV audience? That’s where many industry executives see things going for the networks. Might Fox start selling to advertisers total GRPs for House, Family Guy and The Simpsons? (The CW actually started this trend last year, as few recall.)
All of a sudden, TV dollars start soaking up online video impressions — not digital budgets. That could have serious ramifications for the digital ad market. Could an agency war be brewing? Maybe. For now it seems that digital buyers could see their hard-fought seats at the upfront table suddenly vanish. TV buyers are thinking, “Thanks, but we don’t need your help crunching view-throughs anymore. We’ll take it from here.”
“I’ve been railing against the premium CPMs we’ve seen in digital video for years,”’ said Dave Campanelli, head of national TV buying at Horizon Media. “I very much believe we should follow users wherever they go. And I understand that Hulu has a smaller ad load. But these $60 demograpic CPMs never made sense. So it’s a huge win to have a TV-centric video philosophy.”
Among the many benefits Campanelli forsees is that TV buyers could schedule their brands’ new spot during an episode of Glee that runs on the air, on Hulu, at VOD all at the same time — without three different sales forces. But an even bigger impact would be felt in the online video space when there is no longer a distinction between on-air TV viewing and online TV viewing. The rest of online video — short form and ad network inventory — becomes “more for DR brands,” said Campanelli. “Just like the DR market for TV.”
Theoretically, that could result in online video buyers seeing their roles relegated to direct-response jockeys. And the bifurcation between premium pricing and everything else could deepen, which could damage online video ad networks’ businesses.
Not so fast, said Brent Horowitz, vp, business development at FreeWheel, which powers video ad decisioning for many top media companies, like ESPN and Turner. While he agrees that networks are taking control of their wares and are likely to incorporate Web viewing into their audience estimates, any contraction of online video inventory will be short lived.
“If these companies all pull back their shows, yes, that does contract inventory,” he said. “But when authentication takes hold, all of a sudden the number of avails goes way up.”
That’s because Horowitz predicts that broadcast and cable networks, which have been cautious in how many shows from their libraries they put online, will now feel more protected by paywalls. So many more shows will end up online. And plenty of content will be available outside of the immediate eight-day first-viewing window that networks like Fox are imposing.
Online buyers will have plenty to buy under that scenario — assuming the networks look to package this non-first-run inventory with library content and even data. And, of course, online buyers are not about to cede the gains they’ve made in the video world to TV executives. They believe the medium is still undervalued and warrants far more sophisticated buying options.
“We have witnessed that Web video generally returns greater ROI than traditional TV due to the interactivity and immediacy of digital channels,” said Jordan Bitterman, svp of media at Digitas. “However, many brands have not been comfortable shifting large tranches of dollars from the tried-and-true, proven medium of television. Today roughly $70 billion is spent in TV advertising to address 300 million Americans. Web video is consumed by about 150 million people in this country, yet it’s only a $2 billion business. The math doesn’t work.”

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