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PMG Digital Made for Humans

The Digital Media Upfront Disruption

4 MINUTE READ | March 9, 2017

The Digital Media Upfront Disruption

There was a media strategist for a growing, independent digital agency. Let’s call him Bill.  Bill had joined the independent agency early on after having left a career in a global advertising agency network. Bill was asked to join one of his clients, a head of digital marketing for a CPG brand, at a media upfront event.  Having spent time in traditional media, Bill was excited to participate for the first time in a digital upfront event.

On his way out of the office, Bill was asked by some of his digital marketing colleagues what an upfront was.

His answer, “Well, it’s actually what it sounds like. It’s when publishers and large media entities sell their media opportunities up front as opposed to on demand.” Noticing the perplexed faces inferring “why would you do that?”, Bill followed up with the fact that upfronts were born in the age when TV ruled and scarcity was a very real thing. He likened it to the Super Bowl in that there were only a certain number of spots available and, based on the demand of advertisers that want those spots, the network would sell in advance.  A non-advertising example would be pre-ordering consumer technology such as an Apple iPhone or a Tesla Model 3 or waiting in line for the new Yeezy’s.

Having explained that to his colleagues, Bill created some confusion in his own mind about how that analogy would play out in digital and if scarcity had the same effect.  After a few days of meetings and presentations with publishers and conversations with industry colleagues, Bill came to realize a few things that made him skeptical of a digital media upfront.

  1. Scarcity – The concept of scarcity is becoming less of a factor in digital.  Programmatic, on-demand media was democratizing media in a new way.  Access to open exchange inventory and access to unique publisher opportunities via programmatic was opening up cost savings and inventory for advertisers.  While there is still scarcity in terms of premium inventory, that scarcity can typically be addressed by the media cost and the volatility of that media cost.  Publishers have also made steps to create their own scarcity models in the form of header bidding and automated guarantees to drive up the cost per impression.  Still, inventory exists and advertisers will pay for the return they forecast or actually get.

  2. Who reaps the benefit – While committing to upfront media buys can yield “discounts”, how these discounts are transferred to advertisers can be a bit murky. After a few cocktails with digital media buyers, it was clear that size and scale could play a role in media rate negotiation. However, their size and scale coupled with a black box approach to media cost and margin actually puts a lot of those savings into their bottom line and not their clients. While not a mystery to those in the industry, there is a lot of pressure on this practice, as evidenced by the recent P&G transparency initiative which addressed not only media cost transparency but also performance metrics such as viewability.  This has become more important to the holding companies as their margins get squeezed and high-growth business units in the programmatic media space have to pay for struggling business units in more traditional media markets.

Bill did find that the upfront process had value in one area. The ability to co-create experiences with publishers. As digital media becomes noisier and more fragmented, it’s important to not just focus on reach, frequency and the cost of the media, but also the impact you can generate with each impression. Co-creation and integration are what can turn the ordinary into the extraordinary. Memorable experiences can actually reduce the frequency needed, thereby driving media efficiency to get the same lasting effect on the consumer.

At PMG, much like Bill, we have learned that media buying is in a period of disruption. A period where the democratization of media rewrites the rules. Under PMG’s mantra of transparent media buying, utilizing media upfronts as a means to help the agency’s bottom line and not the advertiser’s is simply not right and it will only create more skepticism in the industry.  The upfront process should be used exclusively to provide clients with meaningful customer experiences and to create a technology first-mover advantage across a variety of digital and traditional media channels.

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PMG believes in upfronts…we just believe in a revised definition. Call it the “New Upfront.” More to come on that later.


Posted by Dustin Engel

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