By Sahil Patel
The initial 2014 Digital Content Newfronts calendar, which was unveiled by the IAB last week, is interesting as much for who’s joining the annual party as for who isn’t. Maker Studios, BuzzFeed, and Vice Media headline the new crop of Newfront contenders, replacing mainstays like Alloy Digital (now Defy Media) and DECA.
The immediate question to ask is why — why would Maker, BuzzFeed, and Vice (as well as other newcomers like Time Inc. and The New York Times) want to host a Newfront event when many still question the value of the entire program?
One common issue with the Newfronts is that most of the shows presented during the week (or two) don’t get made. Many require advertiser funding to actually happen, which leaves buyers with a feeling that they can buy at any time. TV shows, on the other hand, are guaranteed to launch at a certain time with only a finite amount of inventory available.
This is pretty much what Defy Media president Keith Richman told TheWrap when explaining his company’s decision to opt out of this year’s Newfronts. His comments echo what many industry executives have said to us in the past week. Simply put, if there is no sense of urgency among the buyer set, then would a company spend the time, effort, and money to put together a Newfront? They can be quite costly.
According to industry insiders who spoke to VideoInk on the condition of anonymity, the price-tag to be on IAB’s official Newfronts calendar in 2014 is $25,000 for the first week, and $12,500 for the second week. That’s just the initial cost, and doesn’t factor in all of the other things that go into hosting an upfront-style presentation — from reserving a location in Manhattan to arranging travel and accommodations for the high-profile talent that will be featured during the event.
Overall, based on the information provided by individuals associated with Newfront presenters, event costs have ranged anywhere from $100,000 to half a million dollars.
Even on the low-end, $100,000 is a lot of money to spend for an event at the Newfronts, which have yet to produce the type of deals content owners want or the hit shows that advertisers are clamoring for.
Now, we’re not saying these companies can’t afford these prices. All six of the Newfront founding fathers are deep-pocketed. And looking at the new crop of companies presenting during this year’s slate, no one’s exactly hurting for cash.
News Corp took a 5% stake in Vice last year (worth $70 million), valuing the company at a cool $1.4 billion. Maker Studios’s Series C round alone was north of $60 million. BuzzFeed says it’s already profitable and reportedly was on track to make roughly $60 million
in revenue in 2013, and maybe as much as $100 million in 2014.
But really, the question is about a return on investment.
Because even if a Newfront presenter has a budget devoted to original programming (with our without advertiser support), and guarantees that a certain show would be produced and released by a certain date, they would still have to deal with the spectre of the broadcast and cable upfronts.
As some executives explained to us, another issue with the Newfronts is simply the matter of hosting them during upfront season. Why would TV buyers allocate spend to online without first seeing all that broadcast and cable has to offer? Especially when TV networks are now offering various “multi-screen” packages? By the time upfront season ends, negotiations with networks begin and the online video companies fall by the wayside.
Another problem is the grouping of a wide variety of online video companies into one “Newfront bucket.” Some execs believe that it unfairly puts everyone on the same level. What Buzzfeed does is unlike what Maker Studios offers, which is very different from the content created by Vice Media — all of which can’t be compared to the type of original programming Hulu produces. (In fact, Hulu goes to great pains to call its Newfront event the “Hulu Upfront.”) So why group all of these together? If anything, this devalues some of the content that should be compared to the type of programming screened at the upfronts.
The solution? Unlink the Newfronts from the upfronts, and allow companies to present when it makes the most sense for them.
To be fair, there are many who believe the Newfronts are worth it.
Yes, the primary object of a Newfront is selling ads, but the events are just as important for brand building. This is what a couple of executives at companies presenting at this year’s Newfronts said when asked why their company is participating. As the argument goes: To even begin the process of bringing TV dollars to original online video, the online companies have to act like they belong.
This requires hosting an upfront-style presentation, even if online video doesn’t create the type of scarcity and urgency that television does. That also means hosting them during upfront season, even if any attempt at an apples-to-apples comparison currently won’t go in online video’s favor.
That makes a lot of sense.
As much as most people in the country know what YouTube is and what Hulu is, very few associate them with “original shows” they way they do with TV networks.
What’s more, looking at the MCN space specifically, it’s time those businesses begin to establish brands outside of the channels and content partners they work with. Maker Studios needs to be more than the sum of its parts, as do other companies like Fullscreen and Collective Digital Studio, both of which are rumored to be considering Newfront or Newfront-style events this year.
Many executives we spoke to believe this will be a major trend in 2014 — how well the businesses built on top of YouTube are able to establish their own brands in the minds of advertisers and consumers.
So maybe, in that context, a Newfront is worth it. Even if it functions as a loss leader.
Have opinions on the Newfronts and this year’s slate? Voice ’em below.