If advertisers, in a “Star Trek” kind of world, can beam marketing messages directly to a consumer through a Web-capable cellular phone, a Palm Pilot or a targeted program on interactive television, why would they stick with the dinosaur mode of buying 30-second spots on traditional networks?
The truth is, marketers have already filtered into every available medium, from automated teller machines and hand-held gadgets to movie popcorn bags and supermarket floor tiles. But nothing reaches as far-or grabs as much eyeshare-as television.
As the advertising and media-buying communities gird for the annual upfront, the period in which the networks usually sell the bulk of their commercial time for the next TV season, there’s perhaps only one common opinion across the advertising frontier: TV reigns supreme.
“Television is still the prime avenue for most advertisers, and it still commands the lion’s share of dollars,” said Lyle Schwartz, senior vice president and director of media research at WPP Group’s The Media Edge agency. “People still believe it’s paying back on their investment. There are really no indications that would say advertisers will take their money out of TV and put it into other media.”
That said, there’s considerable debate-this year more than ever-about how much advertisers are willing to shell out. In upfront markets during the past decade, the broadcast networks have been able to secure double-digit increases in ad prices despite dwindling viewership. Overall, advertisers committed about $8 billion last year, a 14 percent increase from the year before.
But this year is different, and there are a number of reasons that advertisers hold more of the bargaining power than they have since the last recession. Potential actors and writers strikes are looming in Hollywood, meaning original, compelling programming could be tough to come by during the latter part of the September-to-May TV season, and the soft economy is causing many advertisers to closely watch their bottom line.
“It’s a buyer’s market in which advertisers have more leverage than the networks,” said David Miller, entertainment and media analyst at Los Angeles-based Sutro & Co. “There’s more supply than demand.”
On the network side, there has been talk of trying to correct that situation. A concept has been floated by Mel Karmazin, chief operating officer of Viacom, parent of CBS, who said publicly that the network would consider holding back much of its ad inventory in the face of the current market. What would sell in the upfront would be closer to 55 percent or 60 percent, rather than the normal 75 percent to 85 percent, he said.
Some industry watchers have wondered aloud whether that’s posturing for the sake of Wall Street.
“The media buying community has generally laughed that off,” said one analyst. “They think it doesn’t necessarily reflect what will happen.”
But it might.
“Maybe they’ll hold back inventory so analysts like me won’t be able to make direct comparisons from year to year,” Mr. Miller said. “If you only sell 50 percent in 2001 and you sold 80 percent in 2000, the numbers won’t be comparable. It’s not apples to apples.”
Bob Igiel, president of the broadcast division of The Media Edge, said there are strong business reasons to buy in the upfront-advertisers get a better pick of shows, a schedule where they need it, cancellation rights and a guarantee that protects the downside. And there are equally compelling reasons for networks to get those commitments.
“It’s not practical to hold back huge chunks,” Mr. Igiel said. “It’s a natural reaction, but it’s posturing. This is posturing season.”
Analysts predict the upfront market will move slower than it has in years and that advertisers will be more deliberate about how they spend. In general, analysts expect marketers to spend less and to look for more value for every dollar.
Some networks and dayparts will benefit from such an approach. Hyper-targeting, as Mr. Miller calls it, will pick up steam, with networks like Women’s Entertainment (part of the Rainbow Media stable and formerly known as Romance Classics) and the Spanish-language Univision becoming more popular targets for ad spending with marketers trying to reach women and Latinos, the fastest-growing consumer group.
Marketing heavyweight Johnson & Johnson recently inked a deal with Rainbow for a raft of advertising on Women’s Entertainment that will highlight its female-skewing health and beauty aids.
Behemoth media companies won’t exactly be left in the lurch, analysts said, especially the ones like Viacom that can successfully use synergy to help draw in advertisers and make their dollars work harder for them across a stable of channels.
A concept that has made a resurgence on both cable and broadcast television of late-product integration into a program’s content-could become more prevalent as advertisers demand more exposure than traditional spots.
For example, a recent agreement between Ford Motor Co. and AOL Time Warner’s WB network will make Ford sport-utility vehicles stars of an unscripted series called “No Boundaries.” The name of the show, not so coincidentally, mirrors the ad tagline for Ford’s SUVs.
Ford will pay the series’ production costs and supply vehicles for the outdoor adventure show. Thirteen hour-long episodes, which will air in prime time on the teen- and young-adult-skewing network, are planned for next fall.
“We’re challenged constantly to deliver value for our clients,” said Mr. Igiel, whose agency roster includes AT&T, Campbell’s Soup Co., Colgate-Palmolive, and Glaxo-Wellcome.
As examples, Mr. Igiel points to an H&R Block-sponsored week of ABC’s “Who Wants to Be a Millionaire” in which the advertiser paid the taxes on the winners’ booty. Another blue-chipper, AT&T, has taken up permanent residence since the show’s inception as the lifeline sponsor. And CBS’s “Survivor: The Australian Outback” has followed the same path, integrating sponsors such as Target, Anheuser-Busch, Reebok and Cingular into the show’s weekly content.
“As long as it’s organic, product integration can work,” Mr. Igiel said. “And I think we’ll see a lot more of it.”