Facebook, Google attack $4bn TV ad pie

Google and Facebook are aggressively ramping up an assault on traditional television’s $4bn advertising business.

Elton John is headlining YouTube’s advertising event.

Google and Facebook are aggressively ramping up a two-pronged assault on traditional television’s $4 billion advertising business as the upfront ad-selling season begins.

The digital ad duopoly are showing a new willingness to strike advance commitments now, before Australian advertisers commit the biggest portion of their budgets on traditional TV networks.

On Tuesday, Google’s YouTube will make a sales pitch to marketers at its Brandcast event to secure bigger ad-spend commitments from media buyers.

In a renewed effort to lure a bigger share of the ad dollars that now flow to the Seven, Nine and Ten networks, YouTube’s event will be headlined by pop superstar Elton John.

The British singer-songwriter will entertain a crowd of 1500 marketers and media agency executives with a live performance at Sydney’s Hordern Pavilion.

Amid concerns about extremist content and fraudulent traffic, YouTube has told marketers it will offer audience guarantees to advertisers that make million-dollar advance commitments, ­according to industry sources.

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While broadcasters have long offered guarantees to advertisers, reimbursing marketers with bonus ad time if ratings fall short of commitments, YouTube hasn’t previously done so at this scale.

Offering undertakings will make it easier for advertisers to feel more comfortable about shifting a larger portion of their marketing budget to YouTube after it issued refunds for ads bought through its Doubleclick systems that ran on websites with fake traffic.

Among the other presenters at Brandcast is National Australia Bank chief marketing officer ­Andrew Knott.

Talks between the commercial networks and buyers kicked off last week with low-key presentations by Ten Network’s sales ­representative Multi Channel Network just days before US media giant CBS Corporation’s takeover bid was backed by ­creditors.

Facebook, meanwhile, is wooing big advertisers and agencies with a charm offensive led by Will Easton, new managing director of Australia and New Zealand.

Like Google, the social network has been beset by a series of scandals about the way it measures ad metrics, with refunds issued to some Australian brands.

Repeated mishaps have prompted top ad-buyers in Australia to slash marketing budgets. While the precise outcome of Facebook’s push is difficult to predict as media buyers are only prepared to brief on condition of anonymity, one said: “Will is working the market and looking for new ways to gain revenue.”

The scale of Facebook’s challenge in Australia is laid bare in the most recent report on media agency bookings from research firm Standard Media Index. Among the top 20 digital ­networks, Facebook’s bookings declined 20.7 per cent to $16 million in August.

One executive, said: “Facebook has been trying to eat a little humble pie at the big end of town because they need to be seen to be doing that.” Facebook did not respond to a request for comment.

Easton arrived after Media obtained a confidential document that explained how Facebook’s technology was able to identify “moments when young people need a confidence boost” and then tailor ads towards them.

Facebook issued an unprecedented apology and opened an internal investigation, admitting that it was wrong to target ­children.

Now, Google and Facebook face an extensive competition probe into their market power under amendments to the media reform bill clinched by Nick Xenophon.

Richard Gingras, head of news products at Google, told Media that the tech giant would work with the Australian Competition & Consumer Commission in the company’s first comments about the inquiry.

“We will engage with what’s in the public policy arena as much as it is desired to make sure we are providing necessary information about how we do business.”

Google was accused of misleading a parliamentary committee over how many billions of dollars in ad revenue it generates in Australia.

Facebook admitted it was still booking revenue from Australian advertisers in tax-haven Ireland, despite a government crackdown designed to stamp out the ­practice.