Playing It Safe at the NewFronts

The word “premium” gets tossed around a lot during the NewFronts, as digital media companies seek to continue to attract video advertising dollars that were once earmarked for TV.

Digital advertising has been growing, while TV ad revenue has been largely flat, and video is one of the fastest-growing digital categories. That growth was pinched when major advertisers found their ad running next to questionable content on Google’s YouTube.

Digital content companies have responded by emphasizing their premium video. Premium content is something that’s hard to define, but as the Supreme Court once said about pornography, you know it when you see it.

Dani Benowitz, executive VP and director of investment at Magna Global, said premium video meant long-form, well-produced content, but a second definition has more recently been added.

“I think now premium video includes a brand-safe environment where you’re not worried about your association with the content you’re running in, where there are processes in place to ensure the safety of our advertisers,” he said.

Most presenters at the NewFronts offer at least some premium video, Benowitz said, adding she expects safety issues to be addressed. “I think everyone’s going to talk about it. Certainly, the Google folks will talk about it on Thursday [May 4].” Also shaking up the online gold rush were questionable metrics from outfits such as Facebook and more general concerns about viewability and fraud. Those issues helped contribute to what appeared to be a flow of cash back to TV from digital.

According to Standard Media Index, digital ad-spending growth was just 6% in the first quarter, down from 19% a year ago. And though it’s the first time digital growth has been in the single digits since SMI began measuring it, it still beats TV ad growth. SMI CEO James Fennessey said the stunted growth reflects “the impact of quality and viewability issues for digital,” although pure video sites were up 28.2%

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“Long-lingering concerns around fraud, brand safety, measurement and other issues held by a subset of the industry [have] now emerged as mainstream issues for the industry,” Pivotal Research Group media analyst Brian Wieser added.

These concerns have spread to all levels of management.

“We remain firmly convinced that a substantial number of senior decision-makers within large marketing organizations were either oblivious to the downsides of digital advertising — primarily because they have had other, more important issues to manage, or have been willfully ignorant,” Weiser said. “It’s nearly impossible for marketers to be either of these things now.”

Many of the key companies presenting at the upfront are pushing their chips all-in on premium video.

“We have probably the most premium content. We even had a nomination for an Academy Award this year,” Condé Nast Entertainment president Dawn Ostroff said. “Our content is probably the highest in terms of premium quality, and we are also in a safe environment because we sell our own content. So when an advertiser buys our content, they know what they’re getting, not only in terms of content, but where it’s going and I think that really does set us apart.”

Soothing Sponsors a Priority

Reassuring sponsors about the environment and the reach of ads is a priority. “We’re in a time of digital skepticism and people are concerned about a lot of the ecosystem in areas of viewability and measurement and controversial content and by and large Hulu is one of the places where you largely don’t have to worry about that stuff,” Hulu senior VP of ad sales Peter Naylor acknowledged.

Hulu’s environment is brand-safe because it’s all broadcast and cable, high-quality original television. “And if people don’t want, for example, TV-MA [rated content], I can exclude it with a push of a button. I don’t have to worry about [user-generated content] or some of that other stuff,” Naylor said.

“As I talk to CMOs and chief investment officers at agencies, what’s on their minds around video is they have this challenge where they want high quality, and that bar has never been higher. “But they also want scale and they feel like they have to make the choice between the two,” Twitter VP of global revenue and operations Matt Derella said. “Premium video is very, very scarce, and when you start going into the scale business, the actual quality goes down, the fraud goes up.”

At the NewFronts, Twitter will tell clients it offers both quality and scale. “They love that we’re bringing the premium, safe, high-quality content and then delivering it at scale to all of our users, and using all of the rich targeting they’ve come to know from Twitter,” Derella said.

“We are doubling down on premium products and video and that actually enables us to be able to be a bit inoculated from the parts of the internet that all of us could do without,” Chris Berend, cofounder of Great Big Story and senior VP for CNN Digital Video, said.

Newfront Pros and Cons

While some digital companies have jumped out of the NewFronts as a means of communicating with media buyers and advertisers, others still see it as way for digital video companies to grab the spotlight while media buyers and clients are watching.

Yahoo, AOL, BuzzFeed, Fullscreen and Studio71 have pulled out or scaled back their NewFronts participation. Some media buyers, such as Publicis Media Exchange CEO Dave Penski, have said the NewFronts have overexpanded. “Just as consumers have a finite attention span, so do media buyers, so I think they are going to struggle with attendance,” Penski said.

But Benowitz said the presentations are worthwhile. “More and more viewing is shifting and I’m excited to see what else I can watch,” she said, adding that she’ll be interested to see if anyone addresses the potential Writers Guild of America strike.

Despite criticism, all of the NewFront slots have been filed and those in the lineup are enthusiastic.

Last year, Great Big Story, a startup that is part of CNN Digital, used the NewFronts as a coming out party.

“It was a pivotal, big moment for us because it was a brand new company we had just launched the previous fall. It really was a way for us to say hello and showcase it,” cofounder Berend said.

In the two weeks after the NewFronts, Great Big Story saw “a flurry of activity from the brand side, from advertisers,” Berend said.

This year, CNN Digital parent Turner will put on a bigger show, featuring Great Big Story; the CNN Premium brands CNN Politics, CNN Money, and CNN Tech; plus sports-minded Bleacher Report.

“I think what you’ll see from us this year, this isn’t about us getting on a stage and running through a keynote or a PowerPoint; it’s very much actually experiencing and touching what we’re doing,” Berend said. “We have a lot to communicate and a lot to get into the minds of people and this is a way for us to have people get really up close to it.”

Added CNN Digital senior VP of premium digital businesses Ed O’Keefe: “I can’t think of a more appropriate time to talk about the future of CNN Politics and CNN Money than this period. We’re going to be announcing a number of different new series and a number of different video-led initiatives, events and really defining how in this particular moment, CNN Politics and CNN Money are in the most advantageous position to not only reach a very large audience but to reach a very premium audience as well.”

Video is the biggest piece of Bleacher Report’s content business, president Rory Brown said. “Bleacher Report always had a mobile-first content approach, so it’s been a big priority for us, and I think what’s exciting for us now is not just creating video at scale but really honing in on some premium video offerings that we think you sports fans are going to be pretty excited about.”

Brown pointed to productions like the National Basketball Association-themed Game of Zones and the football-flavored Gridiron Heights. “By the end of 2017, I’d expect a handful, probably in the seven to 10 range, of premium video offerings. Some of them will be expanded version of things that we’ve tested in the past.”

Turner Steps Out

Twitter is taking part in the NewFronts for the first time this year. The social messaging service has been signing premium live content partnerships, Derella said. It has also invested in third-party measurement and made ads easier to buy.

“2016 was all about setting in those big bests, and now we want to have this NewFront be a big launch of us pulling all three of those together for the marketplace,” Derella said.

Twitter’s Amplified program works with “over 200 of the most premium publishers in the world,” Derella said, including Fox, NBCUniversal, CBS and Viacom. On top of that, Twitter has close 40 live partnerships with more than 8,000 hours of live programming in the last quarter, he said.

For example, Twitter worked with Billboard during the Grammy Awards, delivering 5.1 million viewers, which is “a sizable audience for brands that are trying to connect contextually with a younger, hard to reach audience,” Derella said. It also got 3.4 million covering the presidential debates in partnership with Bloomberg.

Last year, Twitter had a deal with the National Football League to stream Thursday Night Football games live. That deal to simulcast CBS and NBC telecasts is moving to Amazon this season. But Twitter also has deals covering tennis’ Wimbledon tournament, Major League Baseball, the NBA and the National Hockey League.

“I think what separates Twitter from everyone else is you’ve got the premium live video, a really elegant experience on Twitter, and you have that live conversation that’s happening around it that you can only get on Twitter,” Derella said. “We sometimes say to advertisers, ‘You come to watch the live video, you stay because of the live conversation.’”

Changing Spots

Digital companies put an emphasis on being able to involve sponsors in content, as opposed to just selling 30-second TV commercials.

“This isn’t just about us running a bunch of pre-rolls for them. It’s actually about us going into partnership with them in a lot of different ways so that we can showcase their brand and their values next to ours because they line up quite well.” Great Big Story’s Berend said. “The amount of information we have around engagement and what people did with it and [sharing] it and the emotions they express around it is so infinitely incredible and barely tapped. In our minds, that really overcomes some of the noise that’s out there that legitimately should bother marketers.”

Added Bleacher Report’s Brown: “Turner is really supportive of Bleacher Report blazing a trail to find new paths to monetization, specifically social monetization. We’re really trying to lead the charge, and not just for the well-being of the Bleacher Report business, but so Turner can then apply those learnings to other properties.”

Bleacher Report last year worked with Nike to create Small Ball, a 14-episode series featuring Nike athletes.

“The brand was looking to capitalize on buzz around the NBA playoffs, where you don’t know what the storyline is going to be,” Brown said. “[Nike] wanted to partner with someone who was able to pivot quickly and create content with their messaging that capitalizes on those storylines.”

Condé Nast’s Ostroff said digital video is the way advertisers can reach younger viewers — the millennials and Generation Zers who no longer watch traditional television. She pointed to a Google study showing that most young viewers consume three hours a day or more worth of video on their phone. “That’s almost like a new primetime, when you think about it,” she said.

Ostroff said she considers Condé Nast a “next-gen” studio and a “next-gen” network.

“Not only do we know how to make content for every platform and really scale significantly, but we understand how to start to migrate content across all the different platforms,” she said. “So for all of those reasons, the advertisers look at us and say not only do I want to have my ads in that environment and attached to that content and being seen by that audience, but I want them to make my content.”

Condé Nast, home to shows such as Vogue’s 73 Questions, will be announcing that several of its content franchises will be renewed. The company, which Ostroff said did the first scripted virtual-reality series, plans to do more in that format.

Brown said Bleacher Report can get the 15-yearolds who are developing their sports habits. “They’re not watching SportsCenter, they’re not watching last night’s highlights for hour on end, like honestly like I did growing up,” he said. “We still see a lot of opportunity there to tell really good stories and relay really good information to folks in video form that’s more scalable for sure, so you’re not talking about hundreds of thousands of dollars going into every video here, but doing it in a way that’s fun, on brand and that’s interesting to young people and built for the platforms that they’re already spending a lot of time on, whether that be Facebook, Twitter, Instagram or through our Snapchat Discover Channels.”

Made to Measure

Measurement is another key issue in the NewFronts. Research from Twitter shows that the contextual relevance of its environment is good for advertisers, Derella said, increasing brand perception or driving sales.

“In a world where there are 6,000 messages bombarding every consumer, just finding an environment that’s premium and [where] you have a really engaged user is really powerful when you’re trying to build a brand or sell a product,” he said. “And we deliver that as well as anybody in the industry.”

CNN’s Great Big Story also has a measurement initiative.

“We are going to be announcing a couple ways in which we’re going to be helping brands measure the engagement that we deliver. We’re going to be announcing a pretty significant partnership — content and event partnership — with an outside entity which we think will be really attractive. And then we have a few programming initiatives that we think are going to deliver even bigger and more impactful millennial audiences to advertises,” Berend said.

“When it comes to measurement, I’m working hard, hard, hard with Nielsen on living-room measurement,” Hulu’s Naylor said. Nielsen has announced a measurement initiative with Roku, but Roku makes up a fraction of Hulu’s living-room watching between other connected devices and smart TVs.

All of that data and the ability to target streaming homes via their IP addresses is enabling Hulu to do “tens of millions of dollars’ worth of advertising informed by data,” Naylor said. “It’s good to be the advertising guy at Hulu.”

That’s even though two of Hulu’s owners, 21st Century Fox and Time Warner Inc., are also backing Open AP, which is aimed at making it easier for buyers to do audience buying on traditional linear networks.

“I applaud the efforts like Open AP and others that are using data to make those investments work harder and I believe that we are continuing to be in a really beautiful place because we are connected TV,” Naylor said, noting that eventually all TV will be digital and addressable. “It’s probably a little later than sooner, but with Hulu that pretty much is what we do today.”

Hulu is getting closer to launching its new service, which will include live networks. Hulu will sell the local inventory that other MVPDs usually get as part of carriage arrangements. There will also be advertising opportunities in the new Hulu interface as well.

A big part of Hulu’s business is already local, because it is able to geo-target its ads in order to serve regional supermarket chains and regional quick-service restaurants, Naylor said.

“That’s one of the nice things about IP is that we can do that kind of targeting pretty effortlessly,” Naylor said. “We’re absolutely in the addressable space in the minds of some of the buyers out there.”

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.