Commentary

Special Feature: Forecast 2003 - Traditional Media

Economic Instability Will Play Havoc With Media in 2003. You know what it’s like to get a couple of friends to agree on where to go for lunch. If you think that’s tough, imagine getting 150 leaders of the media industry to agree on where advertising is headed in 2003. Well, that’s exactly what we tried to do at our annual Forecast conference in New York this past September. We invited 150 of the top media planners, buyers, sellers, marketers and researchers to debate a series of resolves – on consumer perception, cross-media, sponsor integration, alternative marketing, and the decline of media’s effectiveness – that would help determine the direction media is headed in the next year. Their conclusions – some surprising, some predictable – and their valuable insights are on the following pages, along with commentary from panel moderators and a “By the Numbers” forecast for 2003.

When asked about the media community’s prospects heading into 2003, Mickey Marks sighs and lets out a quick laugh before answering. “Everybody will probably need a cocktail or two after everything we’ve been through,” he cracks. With that quick quip, Marks — president of PHD New York and San Francisco — neatly captures the prevailing attitude of some of the profession’s top minds: Things are tough all over. While most of his cohorts have seen more than their share of recessions and boom periods and emerged from each relatively unscathed, few have endured a cycle of uncertainty and upheaval such as the one they are currently experiencing. For example, one of television’s most viewed programs, The Sopranos, doesn’t accept advertisements; Sony Ericsson has been marketing its T68i cell phone by sending paid actors to bars and instructing them to flaunt it as conspicuously as possible. So what does 2003 have in store for the media community? Given the uncertainty of the overall economic outlook — which may or may not include war with Iraq or another wave of corporate scandals that will further undermine confidence in the economy — it’s impossible to say whether the big rebound to which nearly everybody has tied his or her hopes will occur. The profession remains in almost uncharted territory, with companies and individuals alike browbeaten by the stock market decline and continuing high unemployment rates. Universal McCann senior vice president and director of forecasting Robert Coen has predicted a 5.5% increase in U.S. advertising expenditures in 2003, which might seem wildly optimistic now. But remember that it was widely assumed that such expenditures would decrease by 3% in 2002; ultimately, the year’s numbers should be flat. It says here, then, that ad expenditures will begin to surge at the end of the first quarter of 2003, with positive momentum increasing throughout the year. If that prediction holds, the 5.5% growth could well be realized. However, when asked to give their forecast for 2003, most experts stop far short of slapping a smiley face on the economic morass through which nearly all of them are slogging. Sure, there were a few voices of mild optimism: “Everybody’s speaking like we’re in the last days of a cult, but we’ve been through this before,” quips Erwin Ephron, founder of Ephron, Papazian & Ephron, Inc., and former president of the Media Directors Council and the Agency Media Research Directors Council. “I don’t think anybody should be ordering any coffins just yet.” But by and large the experts see only a glimmer of hope for a sustained rebound during the year ahead. Clearly everybody in the media loop really, really wants to see a rebound, and clearly just about everybody predicts at least some small growth and opportunities for advertisers in 2003. In terms of overall confidence, though, the industry has a lot of work to do. The major overarching problem will remain the economy’s slow climb out of its current recession. Given the continuing belt-tightening by nearly every company in every industry, accountability and return on investment have become even greater priorities for most potential advertisers. This seemingly obvious reaction to the current economic climate worries many observers, who fear that advertisers and agencies haven’t adjusted their expectations accordingly. “With many [advertisers and agencies], it’s like ‘Oh, gee, we’re in a recession,’” says Robert Passikoff, founder and president of Brand Keys Inc., a brand-equity and customer-loyalty consultancy. “My bête noire for years has been that advertisers and agencies don’t have a clue about expectations.” Ducking the accountability and ROI bullets is a thing of the past, leaving the media community to contend with a completely different client mindset than what was seen in the go-go late 1990s and 2000. “Clients weren’t focused on the value of ads,” explains Intermedia Advertising Group president Cheryl Idell. “The ‘why?’ is certainly more important today. You can’t just say, ‘I’m not sure.’ Senior management is paying attention.” Of course, ROI measurements don’t have to be wildly complicated. A recent Arnold Worldwide campaign for Royal Caribbean, for example, could be evaluated by answering two questions: Are we getting younger people on the ship? Are we making money? As simple as it may sound, judging the success of an ad push is no more complicated than that for many companies. As if the economic realities weren’t weighing everybody down enough, the number of potentially complicating factors is staggering. If blame is to be assigned, much of it lies with advertisers themselves. Communicating effectively is harder than it used to be, and often demands significantly more discipline than many brand managers currently have. The problem, some say, is that clients aren’t exactly sure what they expect advertisements to be able to do for their business. Sell more products tomorrow? Establish an emotional bond with their consumers? Confusion on this basic strategic level has spread chaos throughout the entire advertising food chain, leaving media planners and buyers in a state of flux. “The fundamental question is, what are you trying to accomplish with your advertising?” explains Paul Silverman, Pharmacia Corp.’s director of direct-to-consumer media management. “Until people can answer that, things will be difficult.” But don’t let the creative folks off the hook, Ephron counters. “Advertising doesn’t teach anymore. It mostly reminds people of the brands that they’re familiar with at a time when they’re ready to buy.” If the creative is poor, it basically doesn’t matter where you put it. As always, predicting consumer behavior and expectations remains as tricky as catching a fly with chopsticks. Will they revolt against product placements, or sour on certain advertisers due to the pervasiveness of their ads? Nobody knows for sure. After all, it’s not as if consumers sit down and eagerly search for GM’s ad on page four of a given magazine. Of course, a widespread anti-advertising revolt is unlikely: “Consumers understand that advertising is part of their world,” Idell notes. “The goal is to respect them in how we use it.” And since we’re pointing fingers, let’s look at the media itself. Industry experts are starting to question whether the media will emerge from the recession in a vastly different form. “There’s a sense that media is broken, that it’s engulfed in self-doubt,” says Jane Weaver, a senior writer for MSNBC.com. In fact, some go so far as to argue that the biggest threat to a recovery is the media outlets themselves. “It’s not 1960 anymore,” Passikoff argues. “The entire media-consuming universe has been turned on its head … the demographics and psychographics aren’t as clear-cut as they were 20 years ago. Lots of media channels are appealing to the same demographic.” So let’s sum up what the media community is facing heading into 2003: unpredictable consumers, demands for heightened accountability, weak creative, advertisers who don’t have any clue about what they want to accomplish with their ads, and a fractured if not permanently disfigured media landscape. With all this to digest, you’d think that experts would avoid bold predictions as they would the Ebola virus. But many are willing to give broad assessments about a year that they almost unanimously expect to be very challenging. Though he predicts a “fourth-quarter hangover” during the first few months of 2003, Eric Blankfein, vice president/director of media planning at Horizon Media, believes that there are areas with good opportunities. “It’s a good sign for advertisers that overall attentiveness to media has gone up, and it’s a very good sign that media is more willing to deal and to pay attention to the challenges that advertisers bring to them,” he says. Indeed, many marketers are already looking to media for answers, with the hope that they will feel some responsibility to help advertisers figure out how the media works and even fund research and better learning. There is more pressure on media than ever before to explain the value of their eyeballs, and why one set of eyeballs may be more important than others. If a bona fide advertiser-media partnership is ever to be realized, though, it’s going to take more than media outlets’ going out of their way to accommodate would-be advertisers. “You still see buyers who don’t really know much about the client’s overall strategy,” Graceann Bennett, executive vice president/director of brand planning at Arnold Worldwide, observes. “By and large, agencies still see media as a commodity.” So regardless of Coen’s prediction of 5.5% growth in U.S. advertising expenditures in 2003, experts disagree about how and in which categories that growth will emerge, or whether it will emerge at all. The venerable institution of broadcast television will likely rebound slightly, with several executives pointing to the strong upfronts for the 2002–2003 network season as a sign of hope. You may hear all sorts of dire predictions about the death of television, but many people in the business lived through the supposed death of radio. If there is upheaval in broadcast, it won’t be of earth-shattering proportions. Experts note, however, that broadcast television’s overreliance on big events (such as the Olympics) has sent advertisers scurrying to find better, more strategic venues, like cable TV. “When you look at television, you have some big events and then lots of fluffy white stuff that happens between those events,” Marks explains. “Advertisers are looking for options that are more appealing.” Now that cable outlets have overtaken the networks in terms of viewership, the trend of shifting more ad dollars to cable will continue — of course, it has been happening for 20 years. On the other hand, cable lacks the supposed must-buy programming aired by the networks and, given its staggering number of niche channels, has a glut of available ad inventory. “There is little reason for a marketer to make large up-front commitments [to cable] unless there is a price incentive,” Coen writes in his July 2002 Insider’s Report. One thing that network and cable TV have going for them is that advertisers aren’t exactly the most adventuresome tribe. “They feel that they know how to make a TV commercial — they’ve been doing that for 30 years,” Ephron says. “They don’t have the same confidence for print, radio, or the Internet.” But does the increasing number of in-show product placements — excuse us, “sponsor integrations” — illustrate concern on the part of advertisers about the future of the 30-second commercial? While nearly everybody believes that such placements are here to stay, few see them as a legitimate threat to the trusty TV spot. They might be more of a knee-jerk response to the desperation that some advertisers are feeling in this climate. “They’re desperate for something new,” Passikoff argues. “They’ll try anything.” Given the potential for backlash, look for companies to evaluate the placement opportunities on a case-by-case basis. As for radio, there remains a substantial amount of concern that the semi-monopolies enjoyed by media conglomerates such as Clear Channel will increasingly homogenize the medium, thus alienating listeners. On the other hand, it’s not as if radio has traditionally been niche-focused. “Radio hasn’t really changed that much. It’s been formula for a long time. Are we just discovering this?” Ephron scoffs. “Clear Channel and Viacom are not the bogeymen.” If radio becomes less effective and attractive to advertisers, the money will move somewhere else. That said, increases in the 5%-to-7% range in 2003 are probable. While some segments of the magazine sector have shown signs of rebounding — witness recent upticks in the parenting and “lad mag” categories — experts predict that publishers will continue to struggle to find ways to make magazines stand out at the newsstand. “[Magazines] have been brutally punished,” notes MSNBC’s Weaver. Blankfein predicts that magazines won’t recuperate as quickly as either network or cable television: “You’ll see the [magazine] recovery happen category by category.” The best opportunities, then, are likely to be found in magazines that have taken pains to brand themselves over the last few years — think Lucky (shopping, shopping, shopping) or ESPN The Magazine (not your father’s Sports Illustrated). Finally, newspapers will likely endure another year of declining readership and thus lessened opportunities for advertisers. The forecast could brighten, however, if the retail sector makes any kind of sustained comeback. “[Newspapers] are always going to be in the game when it comes to retail,” Blankfein promises. Though the retail revival is probably months away, newspapers will almost certainly exceed their meager 2% gains in 2002. Making any kind of overarching forecast for 2003 is a near-impossible task, and that’s before you account for a host of factors that could have a cataclysmic effect on the overall economy, like war with Iraq. Nonetheless, it’s possible to discern a handful of likely trends and occurrences. At first, the media rebound will be one of ideas and opportunities rather than dollars, which will force advertisers to better define their expectations and media to take an active role in finding ways to help struggling advertisers (“Don’t forget that we want your dollars more than you want to give them to us,” says Marisa Farina, Time Out New York’s associate publisher of marketing). Hence much of the burden will fall on planners and buyers, who will have to serve as a steady go-between for the two parties. Perhaps it is as simple as adopting a more aggressive attitude and evangelizing about ads — and what they can do for a brand — at every available opportunity. Should there be war with Iraq (or anybody else, for that matter), look for consumers to cling to what Blankfein calls “the comfort of television”: network and cable news, Friends, and anything else that celebrates the familiar. Sadly, a sustained war might be the only thing that could reverse the downward trend in newspaper readership levels. Despite the widespread problems of media giants like Vivendi and AOL Time Warner, cross-platform opportunities should thrive. Some already seem to be doing quite well: Witness ESPN’s Internet “quick polls” during its Sunday night football broadcasts, in which a staggering 100,000 viewers have responded online to a question posed on television. Truly interactive TV, often described as the great hope for the Internet, will fail to materialize for another few years, however. Finally, look for the definition of media to be stretched to include stealth or “alternative” marketing efforts. Defined simply, these include any tactic that will grab attention — which means that, in essence, alternative marketing is nothing more than creative marketing. Remember, it used to be that everything except television and radio was considered “alternative.” While some of these promotions might be hard to replicate — a promotion that works in Atlanta may not, for any number of logistical or demographic reasons, work as well in Spokane — there’s no reason why a small part of a campaign budget shouldn’t be set aside for such efforts. It is unlikely that advertisers will ever stop asking “What is going to help me convey my message?” If the answer to this question happens to be alternative marketing, so be it. In the end, the bottom line is maintaining steady growth rates across businesses and industries, and nobody truly believes that this goal can be accomplished without a steady — and smart — diet of media buys. As Erwin Ephron passionately puts it, “The goal of every brand should be to grow, and you can’t grow big brands without big media, period.” n

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