Digital giants unite to woo TV advertisers
Editor's note: J.P. Colaco's name was misspelled in an earlier version of this story.
Digital media giants finally are getting the same treatment as the big boys in network and cable TV, and it could lead to a reinvention of the way automakers plan and purchase commercials.
This month six major players in the digital space -- Digitas, YouTube, Yahoo, AOL, Microsoft Advertising and Hulu -- will lead an initiative called The Digital Content NewFronts.
The objective: Attract advertising money away from TV networks and cable companies.
It is being touted as the "upfronts" of digital buying, akin to the annual negotiations in May to decide who will get the prime TV slots in the fall schedule, and at what price. The digital companies hope brands and agencies will reconsider their spending before the traditional upfronts get under way.
The Digital Content NewFronts will be held April 19 to May 2 in New York and will consist of presentations by several significant digital players.
General Motors, Volkswagen, Toyota, Honda, Hyundai and Kia confirmed they will participate but wouldn't say what portion of their budgets will go to digital next year.
Volkswagen has "confidence that the Yahoo and Hulu's of the world inherently know about consumer media habits," said Charlie Taylor, general manager of digital marketing for Volkswagen of America. "As they grow reach and programming quality, they become more attractive to brand marketers."
Last year VW of America spent 19 percent of its marketing budget in digital. "We fully expect to increase that for 2012," Taylor said.
The digital marketing push comes as traditional TV viewing is fragmenting. Although more people are watching overall, the biggest shows reach smaller audiences. Meanwhile, the rising costs of TV commercial time have led marketers to look at digital as a way to cut costs and target audiences.
Just as in the upfronts, digital advertisers will preview prime digital content in an effort to lock in advertisers. But they also will offer opportunities to stick brand messages into original content, says Janet Balis, head of sales strategy, marketing and partnerships at AOL.
In the past year, digital companies such as Hulu hosted their own marketing presentations. But this is the first consolidated effort by several companies.
For automakers, Hulu, the TV and movie content site, is selling its demographic and location-based targeting capabilities. "Local automotive advertisers on Hulu can reach the right person at the right place, at the right time, in the same premium content as national advertisers," said J.P. Colaco, a Hulu vice president.
For the launch of the Sonic, Chevrolet focused on online ads, partnering with Hulu and other digital companies. Joakim Borgstrom, a creative director at Goodby, Silverstein & Partners, GM's ad agency, said online ads are more effective than TV commercials in reaching the first-time car shopper.
Said GM spokesman Tom Henderson: "Digital media will continue to grow in terms of reach to key audiences, and we plan to be there."
Automakers now spend 10 to 20 percent of their ad budgets on digital and 50 to 60 percent on network and cable TV ads, says Brian Wieser, senior analyst at Pivotal Research New York, which specializes in media and communications spending.
According to eMarketer, a company that tracks online ad spending, online U.S. ad spending is expected to grow 23 percent in 2012, to $39.5 billion.
Advertising Age contributed to this report