The Upfront’s Biggest Loser? The Web

While various pundits will debate whether Fox or CBS or ABC fared better during this year’s broadcast upfront, there’s no doubt who the Biggest Upfront Loser was: the Web.

Harsh — maybe? But the numbers bear it out. Despite years of proclamations that the Internet is going to steal share from the $70 billion TV ad market, thanks to shifting attention to the Web, most estimate that the networks will command 8 to 10 percent spend increases during this year’s upfront. That heavy demand is moving briskly and could wrap up the upfronts in a week. You know that digital media veteran who’s constantly crowing about how TV is dead, that network executives are dinosaurs and it’s all going digital?  He’s quiet this week.

So what happened? It sure seems like there’s a fundamental problem with the Web — brands still don’t have any idea what it does for them. The industry can whine all it wants about time spent and mass reach, but brands sure don’t seem to be buying those arguments. And brands vote with their dollars.

“TV still provides the best mass audience,” said Wenda Harris Millard, president at MediaLink. “It’s a huge issue. The digital business still doesn’t know how to measure, evaluate or value its advertising. For example, if I get 10 million likes for my business on Facebook, how do I value that? TV knows how to value things. It’s consistent. And nobody is going to take a flier on spending $10 million online and cross their fingers.”

This is not to say that the Web is in deep trouble; in fact, the online ad market has bounced back nicely from a rough 2009, with both search and display advertising surging.

“Online is still growing more than TV,” said eMarketer analyst David Hallerman. “What we’ve been seeing for a whie is that where the share shift is happening is with paper. Print, directories, etc. That’s been true for a while.”

But five years ago, when Millard (as head of sales for Yahoo) and her portal counterparts would frequently appear together at panels, the talk would often turn to “I’m not really competing with these guys, I’m competing with TV.” And many believed that it was just a matter of time before the Yahoo’s of the world were pulling dollars from the tube.

Instead, Yahoo is competing with Facebook and YouTube and upteen ad networks and exchanges. A glut of display inventory became worse over time.

And while a slew of technology companies emerged promising to unearth the value of online impressions through technology and data (DSPs, SSPs, data exchanges, etc), the truth is that much of what these companies do is dress up unwanted ad inventory. If big traditional brands thought online ad exposures were worth much, these companies wouldn’t have much reason for being. As former ShortTail Media CEO David Payne put it at an IAB event in 2009, “The market is speaking to us pretty loudly: ‘We’re gonna treat [the Web] like a performance vehicle and not look at the front end for awareness.”

Not much has changed over the past two years. Brands simply don’t believe in display ads for creating awareness, launching new products, conveying emotion — all those things that TV is good at. “Display doesn’t have the effectiveness,” said Hallerman.

Millard wouldn’t go that far, but she did decry the lack of proof points for the Web when it comes to brand impact. “That’s absolutely so critical, and it’s really holding it back.”

Surely, TV’s inertia is holding back the Web as well. It’s doubtful that during this past week’s upfront negotiations that many buyers threatened ABC sales executives with “If you don’t bring your CPMs down, I’m taking all my client’s dollars to Glam Media!”

But there is hope — albeit for one sector of the market. According to Steve Farella, CEO of TargetCast and veteran of multiple upfronts, “The idea that digital is going to take money from TV is still strong and a real idea, but the time is not now,” he said. “Digital video needs to strengthen its metrics. Then you’ll start seeing TV dollars siphon off.”

Notice that Farella didn’t mention display — he specifically cited online video as a growth opportunity. Even there, metrics are another huge hindrance. Both Farella and Millard cited the industry initiative Making Measurement Make Sense, a joint effort between the IAB, the 4A’s and the ANA, as being crucial towards solving some of these challenges.

But Farella’s solution won’t please many digital die-hards. His advice to the Web: get more like TV. “We need to change our language,” he said. “There are so many different things we can measure on the Web. But what we’ve seen so far is a migration of dollars a little bit here, a little bit there. What everybody is waiting for is for metrics that match up with GRPs, reach and frequency. Then you’ll see stronger growth.”