According to some in the tech startup community, television is dead, or should be.
Instead of striking fear in the hearts of executives at the major television networks, it probably brings a smile to their faces. After all, year after year they count billions of dollars in revenues from upfronts as it rolls in.
It’s enough money to make major players in the digital video space jealous. And for good reason: while consumers are consuming more and more video online, turning eyeballs into large amounts of cash is still a tough proposition.
So some of the biggest companies in the online video space are taking a page from the television strategy book and planning their own upfront.
According to The Wall Street Journal, Google, Yahoo, Hulu, Microsoft and AOL are teaming up to run a two-week digital upfront called “Digital Content New Fronts” during which time “each company will take a different day to woo advertisers by presenting different marketing opportunities such as revealing plans for coming video programming.“
Today, thanks to sophisticated web analytics tools and DSPs, advertisers have the ability to optimize their campaigns, shifting budgets and resources to maximize ROI, in real time.
This makes a meaningful digital upfront a questionable proposition, since upfronts would necessarily limit this sort of real-time flexibility. Given this, digital upfronts will probably always be limited to integrated campaigns and media buys that involve inventory across multiple channels (digital and traditional).
As I noted at the time, “Although television upfronts are sexy, digital players should be differentiating themselves from their television counterparts.” Unfortunately, the largest players in online video seem to be going in the opposite direction. As The Verge observes:
YouTube is trying to “channelize” itself, Hulu Plus is doing its level-best to ensure it can offer apps on as many types of screens and platforms as possible, and Microsoft is trying to turn the Xbox into an online video and television hub. Online video is looking more and more like regular television in nearly every way but one: the price of advertising it can command.
The fact that online video is looking more and more like “regular” television isn’t necessarily a bad thing in every respect; it’s simply a reflection that consumers don’t fundamentally change their content consumption preferences simply because they’re in a different channel. At the same time, upfronts arguably limit some of the advantages digital players have in selling advertising against that content, and companies like Google, Yahoo and Hulu should be careful in pursuing them.