4A's Conference

TV Network Execs Take on Digital Video at 4A's

Discuss Monetizing Video Content And Whether This Is the Year of a Multimedia Upfront

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As he introduced a conference session about TV and the web, moderator and TargetCast Chairman-CEO Steve Farella first spelled out what the conversation would not cover.

"This is not about social TV, growth of hardware, consumer-generated video," Mr. Farella told the room, running down the list of subjects that typically dominate these discussions. "It's not about cord-cutting or privacy or virtual MSO and smart TVs."

Instead, the topic was perhaps more basic, and perhaps more important: the transformation of TV into digital video and the questions of content strategy that involves.

Investment in both long- and short-form video will continue growing but needs to better account for advertisers' and consumers' needs, according to the panelists: Michael Biard, exec-VP of distribution for Fox Networks; Edward Erhardt, president of global customer marketing and sales for ESPN; Jim Lanzone, president of CBS Interactive; and J.B. Perrette, chief digital officer of Discovery Communications.

"As a pure-play cable company, we're trying to work with traditional distributors and make sure content is available to provide a model to invest in more content," said Mr. Perrette. That has meant boosting Discovery's content spending to $1 billion from $500 million, and "we want to continue that investment," he said.

Discovery's goal is to "provide access to all content in a digital environment," Mr. Perrette added. The next steps are to focus more on "promotionally driven, longer-form video" and "drive engagement with brands for ad partners by extending story lines" with shows such as "Gold Rush," he said.

Discovery is also looking at making "digital, truly original content," Mr. Perrette said. "We're starting to see an appetite from ad partners and an audience appetite to consume that in a major way," he said.

Mr. Lanzone agreed that the desire is creating opportunities for digital through web and mobile platforms, as well as competition between digital video and concepts like DVR. "We monetize through advertising," he said. "It's no longer about digital pennies. Making money [through digital video] is similar to broadcast at this point."

Evidence that digital is expanding networks' user base is likely to drive further integration between TV and digital, the panelists said. And TV and online don't need to be mutually exclusive.

"We have stats that say [digital video] drives people to watch more often online," said Mr. Lanzone. "TV and online are growing at the same time. Nothing is cannibalistic. People are watching more video online during the day -- the only thing being cannibalized is their time. Our stats show that over 60% of consumers having that available online causes then to watch more often on broadcast," he said. "We want as big an audience as possible. Consumers can't skip ads, which is also good for advertisers and us."

What's prompting TV brands to rethink digital video could also change buying strategies during the upfronts, according to Mr. Erhardt. "We say we're ready for a multimedia upfront -- I think this is the year it's actually going to happen," he said. "We talk to clients and they're all telling me, 'I'm asking my agency for video strategy at this year's upfront. Can you help them help us think of a strategy that breaks down the silos?'"

Mr. Erhardt said that "we can deliver long-form on any device anywhere in the world in real time" now. "Advertisers can take better advantage [of this opportunity], instead of adding GRPs to the end of TV buys. We are at a place we have to get better, and we need more innovation from the advertising side to take advantage of that ."

Jason Kilar, CEO of Hulu, spoke later about the future of digital video. "Right now we have short clips and 22 -minute episodes," he said. "In the future, we'll see more experimentation and pitch-perfect formats," he said.

He also talked about Hulu's targeting capability and concepts meant to "solve the relevance issue," such as an opt-out tool that asks consumers whether an the ad is relevant to them. "Not everyone answers, but when people say 'no' we feed it into an algorithm," he said. Then, the next commercial comes from a different category.

"We need to make the experience come to life," Mr. Kilar said. "Now it's absent the vitality it should have."

Mr. Kilar is speaking at Ad Age 's Digital Conference in April.

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