Digital Newfronts Poised to Rake in $1 Billion in Ad Deals

Web Upfronts No Longer About Simply Video as Players Like Zynga, SpinMedia Jump In

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Does the internet need a TV-like upfront? Conventional wisdom was no -- unlike TV, there's no scarcity on the web, and little to buy six or nine months in advance.

But agency execs and clients cast that thinking aside at the first Digital Content Newfronts last year, packing theaters around New York City to witness glitzy sales pitches. YouTube treated them to Jay-Z, and AOL's Tim Armstrong gave away a car.

Last year's Newfronts not only featured stars like Jay-Z, but also helped deals get done.
Last year's Newfronts not only featured stars like Jay-Z, but also helped deals get done. Credit: Jason Kempin

And beyond the show, upfront business actually got done. Buyers realized that while there's an inexhaustible supply of online banners, the content that really matters -- high-quality video and exclusive sponsorships -- is limited.

Like TV's upfronts, it's difficult to tell how much inventory was sold, but the deal flow was in the hundreds of millions. This year, agency execs expect it to cross $1 billion, partly as a hedge against shrinking ratings and higher prices in the TV market. "The only way to reverse that trend is think about video in a different way and move dollars across screens," said Universal McCann Chief Media Officer David Cohen. "Is this the year we see a billion moving into the market? Could be."

But just as digital-media companies have forced their way into TV's spring dance, a controversy is brewing over what, exactly, these Newfronts are. Last year's guiding principle was about having premium video at scale. This year's Newfronts, managed by the Interactive Advertising Bureau, include a host of new entrants -- many not known for video at all, such as troubled gaming giant Zynga and blog network SpinMedia.

IAB CEO Randall Rothenberg believes that video alone is too narrow. "The internet and digital environments are not about singular formats; you can do it all, which is the beauty of the complexity of it," he said. "That is why the Newfronts are about content and not just about video."

The Newfronts, originally founded by Digitas to introduce clients to digital video, expanded industry-wide last year with a group of "founding partners": Digitas, Yahoo, Microsoft, AOL, Hulu and YouTube.

To some, the Newfronts have grown too broad. "My sense is the Newfronts should still be video-driven," said Amanda Richman, president, investment and activation for Starcom USA. "There are opportunities to talk about other elements, but video should still be at the core, or at least storytelling."

"Now it looks more like a free-for-all in terms of digital companies showing their wares across their entire portfolios," said Mr. Cohen.

Media-company opinions tend to follow what they have to sell. CBS Interactive, which joined the Newfronts this year, thinks the definition can be broader. "For the most part, they'll be about video for us, but they could be about other things you have to offer as long as they're unique and somewhat surprising," said CEO Jim Lanzone. NBCUniversal participated in last year's event, even though it talked mostly about online display (it has a network that talks about video, after all). This year NBCUniversal dropped out of the Newfronts and is throwing its own digital event.

Newfront organizers surveyed 250 buyers to determine which of ComScore's top properties that produce original content they'd like to hear from, inviting companies at the top of that list to participate. "I don't want me or [a small group] to be the arbiter of taste," Mr. Rothenberg said.

Some players are conspicuously absent, including video giant and major YouTube partner Machinima, which was invited to participate but declined. It will host its own event in New York. At the same time, the IAB has added some intriguing new partners to the mix such as Condé Nast Entertainment, the digital division of the magazine company now run by veteran TV exec Dawn Ostroff.

Mr. Rothenberg sees the IAB's long-term role regarding digital video akin to what the Cabletelevision Advertising Bureau does for cable TV. He'd like to use the funds generated (a participant pays $30,000 to make its event an official Newfront) to fund a center for video excellence.

Despite the debate, YouTube sales chief Suzie Reider said it's important to present an organized, united front to the buying community. "This is about "We've grown up,'" she said. "We're not a ragtag group of digital sites."

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