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TV Continues to Be the Big Thing This Year

Jun 21, 2010  •  Post A Comment

By Brian Steinberg
Advertising Age

After spending years complaining about TV, have advertisers embarked on a new love affair with the medium? Marketers have expressed frustration over pricing, effectiveness and nearly everything and anything else having to do with boob-tube advertising, but now they are running back into Big TV’s arms. And they may not want to leave its embrace.

Marketers and media buyers swore just a few months ago they would never capitulate to the low double-digit-percentage price increases TV networks sought in this year’s "upfront" market. But advertisers reversed course and paid what they said they wouldn’t in select cases. Now the trend looks poised to intensify.

"I think there might be a re-examination of television," said Ed Atorino, a media analyst at Benchmark Co.

Indeed, as marketers examine all sorts of new-media options, they may be finding that TV is a better buy for the money. "In online video, if you try to reach the audience you get on national television, it will cost you more" on a per-customer basis, suggested Rino Scanzoni, chief investment officer at WPP’s Group M. "You have to put together a lot of inventory to be able to reach that level" of unique viewers. TV looks dowdy compared to a lot of new technology, but "its underlying value has really sustained itself through a lot of transformation in the media landscape," he said.

Two new studies issued last week see TV growing anew after suffering a period of choppiness.

PricewaterhouseCoopers projects ad spending on total U.S. TV will grow to $80.3 billion in 2014 from $62.1 billion in 2009, surpassing its previous high in 2006 of nearly $70 billion. Meanwhile, Interpublic Group of Cos.’ Magna Global media-research unit sees TV’s share of total media dollars growing to 36.8% in 2015 from 35.5% in 2009.

Last year, marketers pushed back against TV networks, demanding pricing rollbacks and cutting ad commitments. Spending on TV fell 9.5% in 2009, according to Kantar Media, and rose only 0.1% in 2008. In recent weeks, advertisers have been flocking to the medium with enthusiasm. Ad spending on overall TV increased 10.5% in the first quarter of this year, Kantar said.

Marketers have already snatched up the majority of Fox’s inventory in next year’s Super Bowl, well before the summer’s half-way point, and have bought up a significant portion of NBC’s "Sunday Night Football," according to people familiar with the situation. They’ve agreed to pay higher-than-normal prices to advertise in Conan O’Brien’s new talk show on Time Warner’s TBS. And they recently forked over shocking premiums for ad time in the series finales of Fox’s "24" and ABC’s "Lost" — even though both shows have lost viewers over time.

Sure, the web, mobile devices and social networks are taking up more of consumers’ time, but other types of media "don’t negate the fundamental value of delivering a large-scale, cost-effective and cost-efficient audience," said Howard Bass, senior partner, advisory services, global media and entertainment center at Ernst & Young. "You can’t get it elsewhere. That’s the difference between television and various types of online."

TV still has its challenges: Viewers who skip ads with DVRs, or watch their favorite programs at times of their own choosing or watch shows on new screens that have little to do with the traditional ones in their living rooms, continue to resist marketers’ promotional pleas. And the medium has more competition than ever before, thanks to the web, iPhones and video iPods, video-on-demand and video-sharing sites like YouTube.

And the future isn’t certain. The introduction of web-enabled TV sets over the next several years could fracture an audience already sliced down to niches by cable outlets beyond any sort of workable mass, suggested Mr. Scanzoni. "There will be an impact to television usage, I believe," he said.

In the short-term, however, there has been some reversal of sentiment. Online, mobile and social are all capturing added consumer attention, said Mr. Bass, but consumers continue to spend more of their time with broadcast and cable TV.

The TV-ad marketplace is also seeing an influx of money that wasn’t present last
year, thanks to the roiled economy. Automakers and movie studios have moved quickly to secure placement in top shows and in prominent places in ad breaks, according to media buyers — which has spurred other marketers to move in tandem.

Some marketers "came charging in, sucking up all the available time," said Benchmark’s Mr. Atorino. "Certain advertisers may be worried they’re getting shut out, so it’s ‘Let’s get in now when we can.’"

Advertisers still need to reach broad swaths of consumers — a feat that remains hard to accomplish as digital-savvy customers hop along a myriad of websites, Twitter feeds and Facebook friends. Indeed, at a time when media is splintering into hundreds of niches aimed at fans of Chinese cooking, outer space or amateur beer-making, to name just three possible topics, content that attracts large groups from various backgrounds might even warrant a premium in the years ahead, suggested Mr. Bass.

Evidence has also begun to emerge that the very same technology that gives rise to so many new ways of watching TV programs could also help the medium — at least a little bit. The introduction of high-definition TV sets has the effect of getting people to watch more TV programming, according to PwC. What’s more, advertisers looking to blunt the effects of the DVR have begun creating TV ads that are "visually more static," the consultant said, so that "recall rates remain solid even when ads are fast-forwarded."##

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