LISA VALENTINO: One obvious difference is that we're not showcasing a new slate of shows. Our conversation over the last several years has been a consistent one. It's about sports, it's about the value of being "live" on air, it's about multi-screen, and clearly, it's about the connection that viewers have to sports. In addition to emphasizing our new college sports programming, we're going to be talking about our post-season model, which is going to rely on digital, social and mobile heavily woven through that and our other content. One of the comments we got from a customer last year after seeing our upfront presentation was "Did I just see an upfront or a NewFront?"
Is that a positive thing to be asked? Are you worried about blurring the lines between the TV brand and the digital brand?
The fans blurred the lines years ago in sports. Some of the largest advancements in cross-platform programming have happened first in sports, in large part, because so much of our content is live. Where some of the entertainment networks may be looking at digital as a way to recapture some of the audience they missed the first time around, sports programming is about trying to find a way for a fan to access the game. In that sense, mobile is just another channel to see the game, or catch another edition of SportsCenter, or just access scores if the fan isn't at home.
For ESPN, the more screens and devices there are, the more time is spent with us, and the larger our audience is. That's all unique to sports, and ESPN has been unique in its ability to capitalize on that, thanks to the fact that we hold the largest portfolio of sports rights compared to any other global outlet.
How are you expressing the value of the digital business to marketers and media buyers?
Our focus this year is about our commitment to ad innovation. We're on a path to figuring out how to provide rich, robust ads in the mobile space. Everybody's looking for a solution to mobile, and they're particularly looking for answers that can produce scale. We hosted an ad hackathon a few weeks ago and have debuted the winners. There were a handful of ad formats in the mobile space that have found new ways of taking advantage of location and APIs. We've also been looking at better ways to connect the ad experience through content to make the message richer as well.
What was the impetus behind the ad hackathon?
It's the first time we've done this kind of thing for advertising. We've done it for content and on the product side. To have all corners of the company thinking about ads was very special. The idea of the ad hackathon was initially about finding a way to improve mobile. The activity naturally extended to tablets. From there, we began to get ideas about how to improve ad pages in the print magazine as well. It's going to have an impact across all our screens and pages.
Customization brings to mind native advertising. As noted in every conversation we've had on the topic, both positive and negative, native advertising isn't really new; advertorials have been around forever. But when it comes to the way that Buzzfeed and Facebook have integrated marketing and content, is there anything new that an established entity like ESPN can do in that space?
Native advertising is one of the best sales pitches I've heard in the last ten years. We've been doing native ads for just that long. So have the portals. Right now, you have some startups that are doing native ads and trying to make it look new again. The reality here is that we're doing a lot of work with APIs, and that allows clients to be closer to content.
There's a lot more opportunities these days to be smarter about it. If you're advertising within a scorebox, we can take the live data on that page and screen and bring it into the ad so that the spot looks more relevant. But apart from techniques like that, native advertising is not new to us.
One of the issues that publishers have when crafting custom ad units is that marketers worry that it won't provide enough scale. How do you deal with that concern, or does it not exist with ESPN because your traffic is so large?
Scale is ultimately our main focus. That's why clients come to us. But the thing is, we drive scale of individuals. For example, we can say that we have the biggest sports audience of any channel – but in the end, what does that statement mean? With ESPN, it means we provide access to unique slices of our audience. There are aspects of our audience that are young and affluent. There are many millions fans who cut across a wide range of demographics that are Hispanic. And that audience is growing and provides a tremendous opportunity for marketers who want to reach them.
How does your private exchange fit into the traditional direct sales model, particularly at this time, as you begin the upfront negotiations in earnest?
First off, we don't believe programmatic is synonymous with cheap or remnant ad sales. If it were, we would not be in this space. There is a shift happening in the marketplace. There is a need to always do multi-media marketing relationships that can never be replaced by programmatic platforms. We also believe that programmatic can make the process of transacting media more efficient.
The insights that we can glean from programmatic activity is something that can influence our sponsorship business. The more that we can understand our audience composition – how it is segmented, how valuable it is – [the more] that can definitely impact the larger conversations about advertising placement that we're having with clients right now.
How long has ESPN been operating in the programmatic space?
We've been powered by Google AdMeld for less than a year. But we are also always exploring additional technology beyond the Google platform. It could potentially involve managing our data, but that would be down the road. I don't want to be pelted with calls [from ad tech vendors] at the moment we're involved in the upfront. We'll decide when we're ready to have those conversations.
Industry observers have been predicting the "death of the upfront" almost since it began over 40 years ago. How does an upfront stay relevant for ESPN at a time of real-time bidding and programmatic?
The theory of an upfront is predicated on supply and demand: limited supply that drives greater demand. The theory of programmatic is very "anti" what an upfront is about. It's real-time in every sense.
We look at the upfront as a video marketplace, not a TV marketplace. That's an important distinction. While television will be a significant portion of the video marketplace, our video on digital screens is a growing piece of the pie, and it's the fastest growing piece of inventory. The thing about our video is that most of it is consumed live, and the bulk of our highlights and analysis are consumed within 48 hours. So in that sense, we're already as real-time as you can get.