MARKETERS LOSE CONFIDENCE IN TV ADVERTISING

MARKETERS LOSE CONFIDENCE IN TV ADVERTISING

78% Say Effectiveness Is Diminishing; Clutter, DVRs to Blame

March 22, 2006

By Abbey Klaassen

NEW YORK (AdAge.com) -- Major brand advertisers responsible for $20 billion in ad spending are losing confidence in the effectiveness of TV advertising. More than three out of four advertisers -- 78% to be exact -- said they have less confidence today in the effectiveness of TV advertising than they did two years ago, according to a survey released at today’s Association of National Advertisers TV Ad Forum.

The study asked 133 national advertisers representing more than $20 billion in ad dollars about their attitudes toward TV advertising and how new technologies such as digital video recorders and video on demand will have on their TV ad budgets.

Almost 70% of advertisers believe DVRs and VOD will reduce or destroy the effectiveness of traditional 30-second commercials. Instead, they are looking at alternatives such as branded entertainment within TV programs (61%), TV program sponsorships (55%), interactive advertising during TV programs (48%), online video ads (45%) and product placement (44%).

Web, search marketing
Additionally, 80% will spend more of their advertising budgets on Web advertising and 68% are looking into search engine marketing.

Forrester VP Josh Bernoff addressed the advertisers at the forum, explaining that Forrester is very confident in pegging current DVR penetration at 10%. The biggest news, however, is that it is poised for a rapid growth spurt, thanks to cable and satellite operators’ pushing the set top boxes and reducing the prices. By 2010, 43 million households -- 40% of the U.S. -- will have DVRs.

He described agencies and advertisers as “hard-nosed” and “focused on data” and said that while the advance of DVRs doesn’t spell the end of TV’s 30-second spots, it will incite a change.

Little real change
Yet for all of advertisers’ blustering talk about DVRs and the decreased efficacy of TV, there has been little real change. Even today, when Mr. Bernoff asked advertisers via an instant electronic polling system what they believed would be the most promising video advertising vehicle of the future, 22% thought it was regular TV, making it the second most popular choice. Interactive TV was the leader, with 31%, and in third place with 21% was Internet video. Cable VOD was fourth with 16%.

When instantly polled as to the biggest threat to TV, 48% of advertisers resoundingly called commercial clutter the top threat, followed by 17% who feared DVR ad skipping.

Prove viewers watch DVR ads
Other speakers at the forum echoed Mr. Bernoff’s thoughts about the impact of DVRs. Kia Motors Chief Marketing Officer Ian Beavis, who famously struck network TV from Mitsubishi’s media mix when he was leading marketing at the struggling auto brand, said he’s yet to see proof that viewers watch time-shifted ads.

“Prove to us they really are watching them and we’ll pay for it,” he charged the TV network executives in attendance.

Mr. Beavis also defended his decision to pull Mistubishi's TV advertising spending and blamed the automaker's subsequent sales problems on the product. He held up the Mazda 5 as an example of an auto marketer that achieved sales success without using TV in the media mix.

He urged advertisers to not just talk the talk, but walk the walk. “Don’t get up and bitch and moan and then do the same thing you’ve always done,” he said. “Do the right thing to do for that brand at that particular time.”