Defining the big issues in digital video

The Digital Content Newfronts kick off later this month with nearly two dozen companies slated to present to media buyers, a new record for the three-year-old event. But there are issues looming even as the companies make their case for investing in web video. A big one is buyers’ desire for their buys being based on gross rating points, which would allow them to compare viewership of online video with TV. For their part, online companies think dealing in GRPs could help them get a bigger share of media budgets. Another big issue is the need for better technology to zap click fraud and other deceptive practices on the internet. Some of the companies at the Newfronts will address these issues in their presentations, hoping to reassure buyers that their money is being spent smartly. Scott Ferris, general manager for TV and video advertising group at Microsoft, talks to Media Life about the biggest issues in online video, why the Newfronts are valuable, and what buyers don’t want to see in presentations.

What are three important trends in the digital content/video world to keep an eye on?

I’d say the first is being able to measure viewership of premium content in measurement terms that agencies and advertisers are most familiar with, and with video it’s the gross rating points.

It’s being able to measure content on our platforms in the context of the gross rating point that is associated with TV viewership. So then advertisers can marry that with linear television.

Even as prolific as the internet is, from a marketing budget standpoint it’s still less than 10 or 12 percent of a total media plan. Sixty to 70 percent still goes to linear TV. So the first thing would be to have GRPs in online video to map back to TV

The second point is, back to the proliferation of content-what tends to happen in the mid and long tail of viewership where there’s YouTube, user-generated-content and short-form tonnage of viewership, there tends to be a lot of malware and fraudulent activity that might exist.

So here’s another case where Microsoft as a technology company, we employ state-of-the-art technology to detect fraud, so advertisers don’t have to worry about paying for a view of a video that’s not a human. So technologies to ward off any fraudulent activity, mostly in those lower-quality experiences.

The third development is the ability to measure that viewership.

Where is a consumer viewing? How are they engaged with it? For how long? What are their interactions with the video? This is all anonymous, so no personal information. Just looking at how long they’re viewing, how they are viewing it, etc. So viewability and those kind of metrics would be the third thing.

The attraction of digital is you can do more granular targeting, and also measurement.

Why is having an upfront-like event such as the Newfronts valuable to online video companies?

I think the primary purpose of the Newfronts is to afford media publishers the opportunity to present to brand advertisers and agency clients, as well as the buying community, what is on the docket in the way of premium video content.

As you probably know, video on the internet has proliferated with the advent of broadband, 4G on mobile, smartphones, tablets, consoles, over-the-top type boxes like Roku and others-there’s this proliferation of devices and fragmentation of how consumers are consuming video, and there was clearly not an organized venue or forum for which brand advertisers and agency partners could come and efficiently get a review of what’s on the docket.

Piggybacking on the TV upfronts, that was sort of the initial idea. And obviously this is the third year, and it has evolved and changed and there has been a lot more investment by media publishers. So the event has gone up a level in terms of production value and importance.

What sort of feedback generally have you heard from media buyers about the Newfronts? What do they find valuable and what are they less interested in?

I think what they find of value is to hear from the companies. With Microsoft, we’re a bit different in that we have a robust and connected portfolio of media properties and a new way to reach these consumers, so what they like to hear is a little about the strategy. In our case, what’s our strategy around connecting our screens? What is the multi-screen proposition?

They also want to hear the content strategy, what they can expect in the way of premium content across devices and services.

I think what we’ve heard consistently year over year is it’s less about the party and more about the strategy and the details of what content is available, and how it’s all tied together. The TV upfront over the decades has become a little bit of an entertainment show unto itself.

I think with the Newfronts, there is an element of that but what we’ve heard from clients is we’re not going to really sort of make judgments or have perceptions based on what talent you have on stage, it’s more about what your strategy is and what you have to offer.

The number of companies participating in the Newfronts has grown very quickly. Are all of them making actual deals, or is some of it just the importance of getting their products before media buyers?

I can’t comment to what actually transpires in terms of meaningful business, but what I’d say is [behind the growth is] because of the fragmentation of viewership-there have been more Silicon Valley-type companies that have cropped up and their future in the video business in their minds might make them feel they need to be a part of this event. And of course the IAB can’t restrict it, so there have been weeks added.

What we’re trying to do, we’re a technology company in the digital media business through our properties, but we’re really in it for the long haul. The approach we’ve taken is we need to hire the right talent to join Microsoft to basically guide us in terms of the best marriage of content and technology.

How do we bring TV to the next level with the interactivity we can bring with the Xbox experience? It allows you to interact using gesture and voice, so how do we marry that with premium, high-quality content that gives audience a creative viewing experience that enhances the content and allows them to engage wherever they’d like to?

We’re in it for the long haul so we hired [former CBS Entertainment president] Nancy Tellem, who’s a luminary in the broadcast world, to sort of build a studio, Xbox Entertainment Studios. We’re looking to her to provide the leadership, which will be revealed in some of the early production of what she’s been working on for the past year or year and a half.

When buys are made, what exactly are they covering? Is it just online video or is there more to it?

Typically what happens is we’ll go through the Newfronts and go through our multiple screens.

We have this portfolio of products that allows brands to capture consumers when they’re most susceptible to engaging with the brand and receiving a commercial. In essence, it’s the ability for us to partner with brand advertisers and agencies and go forward in this next broadcast calendar and do the right media placements with the right interactive experience, and then we can test and learn what we’re doing, from the creating of content to where the consumer will engage with it. And making sure we’re connecting the two as best as possible.

We really want to capture these consumers and reach these consumers who come to our platforms and services in more mindsets, in their world-work, life and play-so we can sort of make that whole experience of advertising and consuming content much more receptive to their relevant life and work experiences.

So it’s really a matter of we get through the Newfronts, it’s a series of discussions and negotiations about securing placement, and then we basically get to a commitment, if you will.

The TV upfronts is about where brand advertisers want to show up, and here we make a commitment to advertisers and work with them to secure placements for the next year, and then go together to harness the content.

Do you ever envision a point where a significant portion of online ad purchases for the year are made during the Newfront, as they are for network television in the upfront?

You know, this year they project there to be about $6.5 billion in video spend in the next year, let’s say. A subset of that is the premium video category, but it’s not a significant portion. It’s a meaningful portion I would say, but it’s the minority of the total spend projected.

Do you see premium video’s share of total online video spending becoming the majority in the next five or 10 years?

I think what’s really going to happen more is the lines between linear TV and digital video are going to blur. The multi-channel operators today are also internet providers and telephone providers, and they’re going to be delivering every experience in video in a digital format. So it’s really a question of what happens to over-the-air television, analog television-I think everything will go to IP distribution, and then it’s a question of how the audience is parsed out across the various distribution channels and devices. Wherever they gravitate to, the brand advertisers will want to follow and put commercial messages.

We have such breadth and depth across the lives of digital consumers and can capture them at more moments, whether it’s on TV with the Xbox, whether it’s their Windows phone, their PC or tablet throughout the day-some of our target [audience] changes devices up to 27 times an hour. So that’s an example of how our multi-screen offering will be very differentiated.

Tags: Digital Content Newfronts, digital video ads, digital video advertising, new media, newfronts, online advertising, online video ads