Big Brands Believe
By: Diane Anderson
The dot-com bomb scared marketers, but the tide is turning and online is the place to be, even for big brand names.
TV commercials and print ads aren't dead yet. Major brands still believe in traditional media. After all, a blockbuster commercial with a catchy jingle can positively boost brand equity. No one cares to dispute the power of a well-placed Madison Avenue ad. But nowadays, marketing teams are increasingly feeling pressure to account for the dollars they spend; they need to show the hard results for money in a real way.
No wonder many marketers are starting to expand their ideas about what constitutes the best-spend blend. While dollars spent on old-fashioned media can positively impact brand image, many major marketers are frustrated by the paucity of accountability in that arena.
Enter the Internet. A decade ago, it was a way to blast banners and burn through a huge amount of cash. Now with access to high-speed connections the norm, and rich-media taken for granted, marketers believe more and more that the low cost, high measurement and constant tweakability make the Internet a magic formula for marketing.
The growth of online ads isn't showing signs of slowing down and traditional commercial markets are feeling the loss. For example, the up-front market, the time period during which TV networks show their fall lineups and try to sell ad space, is losing its luster. This year the Walt Disney Co. network did well during the up-front, selling $2.3 billion in airtime, a $200 million increase over last year. But the final network TV up-front haul came out to only $9.05 billion, compared with $9.1 billion last year.
"This year the interesting thing is it isn't just about TV anymore; there are a lot of other places to be worked into these TV buying deals," says Stacey Shepatin, senior vice president and director of national broadcast at agency Hill Holiday in Boston.
She points out that CBS put the NCAA games on the Web and drew a huge audience. "Content is on the Web, on iTunes and on cell phones. Clients want to be able to reach consumers wherever they are getting their content and for some clients, mobile phone and the Internet make more sense than network TV." Shepatin says the networks will be aware of this shift and work out up-front packages to please marketers.
AD SPEND UP
Beyond anecdotal evidence of the trend, data backs up the new reality. While many industry observers like to speculate, few have actually pinned down hard numbers. But Universal McCann's forecaster, Bob Coen, recently revised his estimates for overall U.S. ad spend downward. However, he's bullish on Internet ad spending and has revised those particular estimates upward. Coen now forecasts that Internet ad spend (excluding search) will amount to $9.705 billion this year, which is a 25 percent increase over 2005.
In December, Coen predicted that online advertising spending would total $8.7 billion in 2006, or an increase of 10 percent over 2004. But in the first quarter of this year online advertising spend increased more than 19 percent from the first quarter of 2005, according to Coen. To give you an idea of the contrast, he now predicts that overall ad spending will increase to $286.4 billion in 2006, a 5.6 percent increase from 2005. In December, he had forecast 5.8 percent growth. The Internet numbers are enough to leave even skeptics believing that this online ad thing has real momentum.
 Other numbers also prove the point. The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers announced that Internet advertising revenues reached a new record of $3.9 billion for the first quarter of 2006. The 2006 first quarter revenues represent a 38 percent increase over the first quarter 2005 at $2.8 billion and a 6 percent increase over the fourth quarter of 2005 total at $3.6 billion.
Some types of companies are quicker to catch on than others. Not surprisingly, high tech companies are among the first to get hip to trending their ad spends toward the online universe. Yahoo's chief marketing officer Cammie Dunaway agrees that a commitment to "performance- based marketing," like the Internet, is more effective than just doing branding on network TV alone. Yahoo has also ventured into getting its brand seen in off-line environments, with a Sheraton hotel deal in which Yahoo sponsors the Wi-Fi lobby Internet connections. Yahoo plans to continue its much-lauded street marketing stunts but will also continue to refine its online and search efforts.
"I really believe in interactive. Soho Square [New York] is our overall agency that pulls in WPP partners," Dunaway says. Yahoo did a lot of promotion for its music product and in addition to buying TV spots on the broadcast of the Grammy's and throwing parties in Miami, it did a lot of online work.
"We had great online creative as well; you could throw Green Day's equipment with your cursor – we had a fun, engaging online element. OgilvyOne [also in New York] handles online, and ours is very extensive. We do so many online campaigns! Great branding makes your search work harder. In 2006, our marketing will be a blend. We're do search engine marketing as well as branding – ad campaigns, buzz marketing and partnerships like Sheraton," Dunaway adds.
Those looking to reach a youth demographic, including large brand advertisers, are spending billions online. Sprite was an early blog advertiser and trailblazed IM ads featuring a hip-hop cartoon personality known as Miles Thirst.
John Vail, director of the interactive marketing group for Pepsi-Cola North America, says the company isn't as much about clickthroughs. To gauge effectiveness, the soda giant is participating in an experiment run by Yahoo and market research company ACNielsen that tracks the online behavior and offline purchases of about 36,000 U.S. families. PepsiCo Inc. doubled its online display advertising spend in 2005, allocating just 2 percent of its total U.S. spending. But Americans spend close to 20 percent of their time online, so there is a gap.
Advertisers aren't really taking advantage of the fact that a fifth of our time is spent online. So there's a great opportunity for even more expansion.
PRINT IS NO LONGER THE KEY
But at least one advertiser has woken up to the reality of the way consumers are currently choosing to view media. Absolut vodka, known for its iconic print ads, is at the cutting edge. It has radically altered its marketing strategy away from print to the Internet. The company says it changed directions because consumers' tastes were changing and many competitors were entering the marketing.
"Online plays a more important role than print. Print is not the key media anymore," according to Patric Blixt, communications manager for new media at Absolut in Stockholm. Continued on Page 2...
Tags:
marketers, blockbuster commercial, paucity, marketing, tv commercials, fall lineups, walt disney co, tide is turning, catchy jingle, magic formula, brand image, ad space, commercial markets, speed connections, brand equity, madison avenue, network tv, print ads, tv networks, airtime,
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