WHY THIS MATTERS
Digital video gives advertisers an alternative to TV, offering quality content and data targeting.
Related: Buyers Downplay Strong Scatter on Eve of Upfront
As the major upfronts approach, broadcast and cable sales executives are talking about digital dollars coming back to TV.
You won't hear that kind of talk at the NewFronts, where digital video companies big and small try to attract the attention of media buyers and advertisers. The annual jamboree is set for various New York venues May 2-13.
While a 3% to 5% gain would represent success in the TV advertising market, eMarketer forecasts that digital video ad revenue will be up 28.5% to $9.59 billion in 2016. The biggest part of that gain comes from mobile video, which is forecast to show a 47% gain to $4.08 billion, while desktop video grows 13.2% to $5.19 billion.
Media agency ZenithOptimedia, a division of Publicis, forecasts digital video spending to increase 18% in 2016 and 17% in 2017. The agency notes that there are concerns about digital video-starting with viewability, which affects the likelihood that a viewer will actually see the advertiser's message.
Unfortunately, ad viewability is just one of the many factors that have increased the complexity of online advertising. While ad viewability, cross-platform measurement, and non-human traffic concerns are not new to agencies and brands, ad-blocking issues have also emerged for online video, the ZenithOptimedia report says. We are already seeing new ad opportunities from online video partners who have developed new creative formats, such as embedded videos that live within related editorial content such as articles or slideshows and interactive choice-based video ads that offer consumer incentives.
The issues with digital video appear to be a fairly small bump in the road to the NewFronts.
We have as many clients attend NewFronts as upfronts, says Dave Penski, CEO of Publicis Media Exchange. So they're very important to us.
Nearly 40 companies will make New-Front presentations over two weeks. Some high-profile companies have pulled out of the NewFronts, either because they feel like they've outgrown the event like Crackle, or their digital video strategies have shifted, like Yahoo and Facebook.
The biggest company in digital video is You-Tube, one of the original NewFront partners.
From our standpoint, the NewFronts remain a great time and place where a lot of buyers are concentrated on the market, so it's a great time to connect with them, says Tara Walpert Levy, managing director of agency solutions for YouTube.
Walpert Levy says YouTube is seeing more interest in negotiating upfront deals earlier than if the past, and that agencies seem to be looking to spend more.
The online video ecosystem is exploding, she says, with more attention being paid by both advertisers and viewers as watch time rose 50% year-over-year for three straight years.
Google's Preferential Treatment
YouTube has been pushing Google Preferred, which puts advertisers into videos from the top YouTube creators only, ensuring that commercials will be adjacent to quality content and not homemade cat videos.
From a reach standpoint, last year we talked about how in the core TV demos, adults18-34 and adults 18-49, we had more reach than any cable network, Walpert Levy says. And this year, incredibly, it's actually more than any TV network, whether it's broadcast or cable.
And that's just for mobile, not counting desktop. Our strength in mobile continues to drive a lot of the growth, and yet YouTube viewing on the living room TV is actually up and going, Walpert Levy says. We're having a dialog about reaching connected people from the handset to the TV set.
Walpert Levy says the number of brands using Google Preferred has doubled year-to-year and that among top advertisers, spending on YouTube is up 40%.
That spending is having an impact. We've been seeing an 80% increase in ad recall and a 17% percent increase in brand awareness for Google Preferred campaign, she says.
Google has been offering real-time measurement for campaign metrics, such as favorability and purchase intent. That allows marketers to optimize campaigns as they run rather than getting feedback after the campaign is completed.
And while YouTube talks about reaching 18-49-year-olds as TV, it is able to offer more precise audience segments that advertisers want to spend against.
We find it's primarily our digital buyers who take advantage of custom segments and all of the different ways that you can cut audiences based on interests, based on content, based on activity, based on a number of things that digital is just fantastic for, Walpert Levy says.
Hulu Makes Big Tent Bigger
Hulu, another NewFront tentpole, says its event will be bigger than ever.
The streaming video subscription service is moving to the Theatre at Madison Square Garden because the Hammerstein Ballroom has gotten too cozy, according to Peter Naylor, executive VP of ad sales.
Naylor says he likes the atmosphere of the NewFronts. It's a great opportunity to tell everybody what we're up to and show the world we're healthy and vital, thriving, investing, growing, he says.
But Hulu calls its event the Hulu upfront. I make that distinction because we're more like TV than we are like anything else, and we absolutely transact in the TV marketplace, says Naylor. We're NewFronts' founding partner and love being part of the NewFronts; I just do that subtle language change because we look like television.
Naylor says that the delineation between TV and digital video continues to evaporate and that the market is healthy. We're seeing a lot of year-over-year growth.
We're seeing a lot of demand for what we do, he says.
What Hulu does is
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