Screens collide in clash over advertising

In the war for advertising dollars, the digital video disrupters are selling themselves as the industry they are fighting to disrupt.

"Hulu is TV," Peter Naylor, head of ad sales at the ad-supported streaming service, told a packed room of advertisers last week.

The event was one of nearly three dozen presentations that make up the annual "newfronts" gathering in New York. It is the digital world's answer to television's "upfront" season, in which media companies such as Viacom and CBS sell about two-thirds of their commercial inventory to major brands, ahead of their new season of TV shows.

TV still commands the lion's share of US marketing budgets at about $66bn, but internet advertising is catching up. Video in particular is capturing buzz and accelerated investment: US digital video ad spending will grow 30 per cent this year to $7.8bn, according to the research group eMarketer. In contrast, Magna Global projects TV spending will fall 3 per cent.

"The competition for advertising, if anything, is more prevalent this year than I've seen it in the past," said Dave Morgan, chief executive officer at Simulmedia, an ad targeting company. "The belief is that a lot more television brand dollars are available and have to be fought for."

Digital media companies like Hulu (owned by Comcast, Walt Disney and 21st Century Fox), YouTube, AOL and Yahoo are going after those budgets by showing off their ability to reach audiences of a size and demographic profile that television cannot, and promising a better return on investment.

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At YouTube's session, Susan Wojcicki, chief executive, boasted that the Google-owned video site reaches more 18 to 49 year olds - the prime advertising demographic - than any cable network, and does so on mobile alone.

The company brought out Josh Goldstine, head of worldwide marketing at Universal Pictures, who said the studio had used targeted YouTube ads to drive up awareness of some of its new films among their most likely viewers, while "spending less than we ever thought possible".

Escalating competition from digital viewing has in turn spurred many TV networks to use their own upfront pitches to showcase data and new abilities to target viewers in the fashion of their online rivals. They are also striking deals to share content and distribution with online outlets.

"TV is moving towards where Hulu is now," said Mike Hopkins, chief executive of the service. Hulu announced exclusive agreements with Sony, to show all nine seasons of Seinfeld, and with AMC Networks, to be the exclusive streaming home of all future AMC shows, including the forthcoming spin-off of the popular zombie drama The Walking Dead.

Comcast's NBCUniversal appeared with AOL to unveil a new partnership that will see programmes from TV channels including NBC, Bravo and Telemundo appear on AOL's digital platforms. The two companies will also co-produce new content - and sell advertising space across mobile, desktop and TV screens.

Industry executives say they are seeing a shift in how advertisers think about video on screens of all sizes, as they catch up with consumers who already make little distinction between programmes they watch on their devices, set-top boxes and connected TVs.

"I think there's a real acceptance that there's significant scale behind video that's not just via a television screen," said Sarah Baehr, managing director of digital strategy at Carat USA, the media buying group owned by Dentsu Aegis.

"I don't know of any client that has more money to spend on advertising," she added. "If I have a finite budget, I am going to diversify that differently. I have more options."

One company presenting as part of the digital newfronts line-up used the opportunity to announce an expansion in the world of traditional TV.

Vice Media, which has remade itself from a Canadian counterculture magazine into a youth-focused brand spanning YouTube channels and HBO programmes, announced it had 20 shows in the works for "a new channel" coming this fall.

Vice, which reportedly expects revenues of nearly $1bn for this year, would not confirm reports that it has a deal with A&E Networks, one of its investors, to rebrand one of A&E's cable channels as Vice.

Chief executive Shane Smith said that while Vice had become well known for its news-focused TV programming on HBO, it has also built large audiences for its coverage of travel, food and music.

"Now we're going to do TV for the other stuff," he said.

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