MediaDailyNews
by Joe Mandese, 5 hours ago
Look out traditional media....TV! The only way to protect your revenue/ budget goals...is to make a sizable investment in Local-Direct. Here's why: Dr. Philip Jay LeNoble, Ph.D.
An influential Wall Street analyst blasted coverage of two developments this week suggesting that Facebook’s new video advertising offering rivals the reach and market value of network TV. In a report sent to investors late Thursday, Pivotal Research Group analyst Brian Wieser said it “overstates the opportunity on hand for Facebook.”
“Headlines this week trumpeted a new study produced by Nielsen and commissioned by Facebook, which indicates they are ‘capable of delivering site reach levels comparable to major TV networks,” Wieser wrote in response to coverage of the study, including stories published by MediaPost.
While the report -- a custom Nielsen study paid for by Facebook -- found the social network reaches more people during the day than certain TV networks, Wieser described it as a “selective way of looking at the industry,” and implied it had little practical application in terms of the way that advertisers and agencies buy media.
“Highlighting Facebook's dominant reach vs. individual networks during daytime wrongly implies that time-of-day is a first cut against which budgets are set,” Wieser asserted, suggesting: “Perhaps they should be, but workflows associated with media buying (not to mention the distinct ways in which different media may influence consumers) dictate that the first cut of planning for large marketers is by medium. Digital media is separate from TV in this regard for many reasons: workflows are different, and lean-forward vs. lean-back environments mean they are generally viewed as different environments (not better or worse, just different); the means of assessment (how a budget is justified and how impressions are measured at the present time) are generally different, too.”
Wieser concluded that the basis of comparisons in the report were “mostly irrelevant,” although it did elicit a significant amount of coverage in trade and consumer press and among bloggers, and social media outlets, including Facebook. Most of the reports also failed to note that Nielsen and Facebook are in cahoots, and that Facebook has licensed a panel of online users to Nielsen that is a major component of its online audience measurement services, and a key component of the cross-media measurement services it is developing that will be used by advertisers and agencies to compare TV and online advertising buys.
But it was the simultaneous news cycle surrounding reports by various publications citing anonymous sources that Facebook is pricing its new video ad units at network TV-like rates -- $1 million to $2.5 million per day -- that seemed to spark real skepticism from Wieser, who implied the circulation of both pieces of news might have been part of a strategic plan designed to influence ad industry perceptions about Facebook’s video advertising reach, impact and marketplace value.
“The news-flow has served to conflate a number of factors,” he wrote. “While our model has long-assumed that Facebook will generate incremental revenue from online video, it will most likely be more modest than optimists might expect, and what they generate will not likely come from television budgets. Instead, we expect re-allocations of existing Facebook budgets or shifts of spending that would otherwise have gone to other media owners with online video inventory.”
Ironically, Wieser concluded that “if Facebook’s... er, Nielsen’s implications were correct, advertisers would be more likely to shift their spending from TV to other publishers with online video inventory than Facebook,” especially Google’s YouTube unit, which Wieser noted does not currently support Nielsen’s online measurement service.
“Or video ad networks,” he continued. “Or homepage takeovers involving video on virtually any portal. There are many ways to reach large audiences instantly on the Web with video.”
Despite the heavy spin factor surrounding this week’s news, Wieser noted that the pricing of Facebook’s new video ad units is, “in a word, significant,” because much the way Apple did with the initial pricing of the debut of its mobile iAds, it creates a sense of TV-like scale and premium market value that most digital inventory has so far failed to conjure.
“Most digital budgets, when discretely negotiated, amount to tens of thousands, and occasionally hundreds of thousands of dollars,” Wieser pointed out. “While a single large advertiser's annual commitment to Facebook may amount into the millions for annual campaign spending, the absolute commitment which Facebook is asking for is well-beyond the scope of what advertisers will pay in a single one-off buy.”
Ultimately, Wieser suggests the units will be sold to boost the value of broader “packages” of inventory bought by advertisers and agencies, much the way TV networks allocate their most prized ad units as part of broader buys.
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