Why MPG Took a Flyer on an Unproven Idea

Faith in NBC, News Corp. Led Agency to Bring Three Clients Into Joint Venture

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NEW YORK (AdAge.com) -- NBC-News Corp.'s plans to create an advertiser-supported, online-video site showing TV and movies free of charge broke new ground in offering consumers top-shelf content such as prime-time TV shows and current movies, in a variety of venues, including Yahoo and MySpace. And it was apparently the kind of service advertisers were clamoring for, as charter sponsors agreed to sign on even though they were given just a day's notice to decide.
Esurance, one of the joint venture's charter advertisers, plans to use 15-second video units featuring the company's campaign star, Erin Esurance.
Esurance, one of the joint venture's charter advertisers, plans to use 15-second video units featuring the company's campaign star, Erin Esurance.

For Havas' media-buying and -planning agency MPG and digital sibling Media Contacts, which negotiated with NBC-News Corp. on behalf of three of the seven charter advertisers, the joint venture came along at the perfect time. MPG and Media Contacts had just formalized the creation of their new video-integration unit, which is led by executives from both entities. The unit brings together executives with expertise in traditional areas of TV buying and media planning as well as new areas, including digital and online video.

Got the call in L.A.
In fact, two members of the unit -- Carrie Drinkwater, MPG's senior VP-group account director, and Adam Kasper, Media Contacts' senior VP-director of digital media -- took the call from NBC sales rep Lauren Coyne on March 21, the day before the venture was announced, during a business trip to Los Angeles, where they were attending development meetings with network executives.

"She gave us the details on the opportunity. We knew immediately it was a good fit for particular clients," Mr. Kasper said. They hammered out the details via cellphone from a restaurant in Los Angeles' Chamberlin Hotel. "We had less than 24 hours, so we worked fast," he said. Esurance, Royal Caribbean and a third, unnamed advertiser signed up. "These marketers are forward thinking in how they're working with digital."

Online insurance provider Esurance jumped onboard for several reasons. The price was attractive -- marketers signed on for around $200,000 a piece at a $30 cost-per-thousand viewers, according to executives familiar with the matter. NBC wouldn't comment on those figures.

'Fair price for online'
"On a CPM basis, the deal is high by TV standards but a fair price for online," said Bill McOwen, exec VP-director of media investments at MPG, noting that the price for the ad is for a 30-second spot in a show. The theory supporting the premium is that the reduced commercial load, interactive creative components, data capture and viewer-engagement opportunities provide marketing opportunities not yet available on TV.

Darren Howard, media director, Esurance, saw a good fit for its customers because of the innovation aspect. "Our target are internet-savvy consumers who manage most of their transactions online, and live quite a bit of their lives online. ... TV works great for us, but we need to be in places where some of these online consumers are also going."

Right now, Esurance plans to use 15-second video units featuring the company's campaign star, Erin Esurance. "The 15's will most likely run across our various online-video deals, as well as in rotation on our traditional TV schedules," said Mr. Howard, adding that as News Corp. and NBC clarify details about the specific ad units available in their online-video venture, Esurance "may develop some unique content" in-house in conjunction with animation studio partner Wild Brain.

Details in the works
From an advertising perspective, many of the deals' details -- such as length of commercials and available inventory -- are still being hammered out. Eventually, NBC-Fox will sell units for specific psychographic, demographic and genres. "It is a new thing," said Media Contacts' Mr. Kasper. "We had faith in it, for our clients, because of the companies backing it and the content that will air."

George Kliavkoff, chief digital officer, NBC Universal and interim head of the still-unnamed News Corp.-NBC Universal site, said that attitude is what let them to believe the venture would work for advertisers. "Marketers want to be able to connect their message next to reliable content."
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