TV’s High Prices Actually Hurting Web Video

Buyers predict slow NewFront market, as clients complain about dollars falling short in TV

TV is hurting the Web video ad market. But not in the way you might expect.

And if you’re waiting for that intense post-NewFront marketplace to start materializing, you may want to temper your expectations.

According to Michael Bologna, GroupM’s director, emerging communications, lower TV ratings and rising prices may actually be preventing dollars from shifting to online video. That’s because clients only have so many dollars to go around, and they're still unlikely to pull significant budgets from TV, where they’re already seeing diminishing returns.

“TV budgets are flat,” said Bologna, speaking at the VideoNuze Video Advertising Summit in New York on Tuesday. “It’s hard to shift budgets when you pay more for less. Clients are saying, 'We don’t have any more money, and everything is expensive.' They’re not likely to increase their budgets by 75 percent.”

Adam Shlachter, svp, media, Digitas, generally concurred. While both executives praised Web video companies for significantly upping the ante during the NewFronts, and both pointed to significant consumption shift among consumers, they predicted Web video to see gradual, incremental spending shifts.

“We are seeing more brands that are channel agnostic,” said Shlachter. “But we still have retail clients who say, ‘Our sales go up when we spend on TV.’ That’s hard to argue with.”

“There won’t be major shifts. I just don’t think we’ll see clients cut 30 percent of their TV budgets for Web video," added Bologna. One big reason: Even though the digital industry is embracing metrics like Nielsen’s Online Campaign Ratings, melding that data with TV ratings is a mess. “We have no idea how to de-dupe those numbers,” Bologna said.