Internet sellers mull merits of online upfront

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As several Internet ad sellers explore the idea of an online upfront, a debate is taking shape in the industry over the best way for the medium to snare a larger share of ad budgets.

"An upfront provides an efficient process for people making long-term buying decisions for [inventory] that isn't going to be around," said Greg Stuart, president-CEO of the Interactive Advertising Bureau. The industry trade association is considering whether to organize an upfront market.

"Although there is a lot of ad inventory in the online space, there is scarcity in some categories," Mr. Stuart said, adding that automotive and pharmaceutical marketers have already begun making upfront commitments, and that he expects travel and financial to be the next categories to embrace it.

fluctuations

The premise of an online upfront is that prime real estate, including home pages, section fronts and high-profile sponsorships, tend to sell out quickly so that advertisers looking to lock in must reserve early. Some executives maintain that as much as the industry would like marketers to think that inventory is scarce, in reality the demand levels fluctuate wildly. Others question whether flexibility, a hallmark of the Internet, is compromised by the idea of an upfront.

"We don't need more upfronts, we need better integration," said Peter Gardiner, partner-chief media officer, Interpublic Group of Cos.' Deutsch, New York, whose clients include Revlon, MCI and Novartis.

Interactive industry executives are hard-pressed to put a figure on the size of a hypothetical upfront given elastic pricing and other factors. According to Taylor Nelson Sofres' CMR, marketers spent $5.7 billion in the U.S. on Internet media in 2002, down 11.9% from $6.5 billion in 2001.

too soon

"We've certainly looked at it, but this is a very young medium; we're 8 years old," said Wenda Millard, chief sales officer, Yahoo! Ms. Millard said it's "too soon" for an upfront, citing industry issues including the need to improve upon measurement standards, tune up creative and gain a better understanding of where online fits in the media mix. Yahoo! has dabbled with the upfront concept in the entertainment category where studios book far in advance.

AOL Time Warner's America Online had a mini upfront last year for its entertainment category that raked in an estimated $20 million in commitments from seven studios. AOL sees potential in holding individual upfronts for the auto, computing and personal-finance categories.

Tech publisher CNET Networks conducted a pilot upfront in the fourth quarter 2002 and will do one again this year as tech demand increases late in the year. Online auto marketer Autobytel this year will book 80% of its total media upfront. It began booking upfront in 2002 for 2003 to the tune of $10 million in commitments. "What we found is that each year the media gets a little bit more valuable for the manufacturers as they migrate more money online," said Jeffrey Schwartz, president-CEO, Autobytel.

Weather.com staged a mini upfront in selected categories in fourth-quarter 2002 for 2003 programs where 40% of expected ad revenue was sold, according to Paul Iaffaldano, chief revenue officer.

Adam Gerber, senior VP-director of media strategy, The Digital Edge, New York, agrees with Yahoo!'s Millard and Mr. Gardiner: "In most cases, I would never want to recommend to one of my clients to commit large portions of their general online media during an upfront. Pricing is elastic, ad-unit sizes are constantly changing. ... Where technology is evolving, it's not, in most cases, the prudent thing to do."

"I would suggest that having a separate online upfront in the absence of other media isn't nearly as effective as working simultaneously with other media," said Riley McDonough, VP-sales, ESPN.com. "It's time that the industry conforms more to the cycle of planning and buying that other media adheres to."

"I still feel like the market is a couple of years away from fully embracing" an online upfront, said Greg Mason, exec VP-sales, CNET Networks.

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