Wall Street Journal: Ad Houses Will Need to Be More Nimble

Ad Houses Will Need to Be More Nimble

Clients Are Demanding
More and Better Use
Of Consumer Data, Web

By SUZANNE VRANICA
January 2, 2008; Page B3

The Web's emergence is forcing ad executives to succumb to marketers'
demands that agencies reinvent how ads are created, and forgo their
TV-centric approach. Clients are even calling for changes in the way ad
firms are structured. But until now, few advertisers have spent more
than 5% to 10% of their marketing budgets online. With the growth of
online video and social networking, ad experts expect that percentage to
jump significantly this year.

Softness in the economy also will likely drive more money to the
Internet, which can be cheaper than other media and has a reach that is
easier to measure, which is attractive to advertisers in slower times.
Merrill Lynch predicts overall ad spending in the U.S. for 2008 will
grow 2.3%, while the portion of that spending on the Web will increase
18%. Publicis Groupe's ZenithOptimedia says it expects the amount spent
on Internet advertising to overtake spending on radio in 2008, and
spending on magazines in 2010.

Amid this transformation of the ad industry, here are five trends to
watch in 2008:

* New structure: The Web has fueled marketers' frustration with the lack
of collaboration inside the ad holding companies that dominate the
industry. Specifically, marketers want more cooperation between the
executives who create ads for TV and newspapers and those who craft Web
ads or perform less glamorous tasks such as researching consumer
behavior.

Many advertisers complain that ad executives too often push agendas that
will most help their own bottom lines and tend to favor certain types of
media, such as TV. Advertisers want a "media-agnostic" approach, one
that picks whatever medium is best for the ad campaign.

Some bigger marketers have taken matters into their own hands during the
past year. Procter & Gamble
<http://online.wsj.com/quotes/main.html?type=djn&symbol=PG> , Dell
<http://online.wsj.com/quotes/main.html?type=djn&symbol=DELL> and
Johnson & Johnson
<http://online.wsj.com/quotes/main.html?type=djn&symbol=JNJ> each have
tried -- working with ad holding companies -- to create new types of ad
groups that blend different functions. In 2008, pressure from marketers
on this issue is likely to intensify, forcing even more change in the
way ad firms are structured.

* Screen wars: As advertisers find it harder to reach consumers in a
fragmented media world, some are turning more often to the outdoors.
Television screens are increasingly popping up in grocery and
department-store aisles, elevators and even gas pumps -- all blaring
clips of TV programs, accompanied by ads. Walt Disney
<http://online.wsj.com/quotes/main.html?type=djn&symbol=dis> 's ESPN and
CBS Corp. each have programming running on 20-inch liquid-crystal
displays at pumps at gas stations around the country. Gas Station TV,
which operates about 5,000 such screens in 300 cities, offers ads from
marketers such as General Motors
<http://online.wsj.com/quotes/main.html?type=djn&symbol=gm> ' Chevrolet
and Sony <http://online.wsj.com/quotes/main.html?type=djn&symbol=sne> .
Last year, CBS inked a deal to have its programming also air in the
waiting rooms of doctors' offices.

* House guest: Over the years, ad makers have tried various methods to
learn about consumers, from focus groups to online polls. But many on
Madison Avenue are skeptical of these methods, believing consumers don't
always share their true feelings in those types of traditional settings.
So a growing number of ad agencies are expected to try a different
approach: having researchers spend long periods of time with consumers
to find out more about how they live.

Some have already tried this. When devising a new ad for J.C. Penney
<http://online.wsj.com/quotes/main.html?type=djn&symbol=jcp> last year,
Saatchi & Saatchi sent staffers to hang out with more than 50 women for
several days. They helped the women clean their houses, carpool, cook
dinner and shop. Rather than pepper them with questions, the agency
employees simply observed the women's behavior and emotions. Their
research became the basis of a new ad campaign; the commercials have won
praise from Madison Avenue's creative community.

"If you want to understand how a lion hunts, you don't go to the zoo --
you go to the jungle," said Sandy Thompson, global head of strategic
planning for Saatchi, which is owned by Publicis Groupe
<http://online.wsj.com/quotes/main.html?type=djn&symbol=13057.FR> .

* Green backlash: Corporate America latched onto environmental marketing
last year, as big companies spent millions of ad dollars promoting their
products and services as eco-friendly. Some people in the ad business
are predicting a backlash this year from consumers who question whether
companies are living up to their promises. "Marketers will be more
intensely scrutinized for their green efforts -- those that don't hold
up will be called out via blogs and elsewhere online, ultimately leading
to consumer skepticism," said Greg Stern, chief executive of the ad firm
Butler, Shine, Stern & Partners.

* The antisocial movement: Privacy issues, combined with the fact that
consumers have only so much free time, could damp the boom in social
networking on the Web. "Nobody has 5,000 real friends," says Tim Hanlon,
senior vice president of Denuo Group, a media and advertising consulting
firm owned by Publicis. "At the end of the day it just becomes one big
cauldron of noise." For marketers, he says, that will mean the sites
will be much more effective as a consumer-research tool than as a venue
to peddle products.