A new study predicts that advertising spending will increase in the new year, with a 6% increase by the end of 2003. “Outlook for Advertising and Media” was released Tuesday by Global Insight Inc. It says the big winners in the U.S. media market in the next four years will be radio, cable television and the Internet; newspapers, outdoor and broadcast TV will see more modest growth. Global Insight principal John Rose says that the turnaround will be led by large corporations that in this recession, unlike others, have been shedding inventory and employees and are now poised to see growth in their corporate bottom lines as the economy improves. They will also lead to more money available for marketing, which according to a Nielsen Monitor-Plus report has already happened with increased media spending from such big companies as General Motors and Pfizer. “They’re really poised to take advantage of any improvement in profit sand sales,” Rose says. Between now and 2006, radio will see a 10% annual increase in ad spending. Cable TV will see a 7% annual rise through 2006 and the Internet will see a 16% increase, Global Insight said. But don’t go celebrating just yet; Rose said the increase will only bring the new media’s piece of the overall ad market from today’s 2% to about 3%. Leading categories include entertainment, wholesale trade and the services sector. In the near term, Rose said broadcast TV would continue its growth led by this season’s upfront and national newspapers would see a recovery in their market following an expected recovery of the financial services industry. Rose said Global Insight predicts the economic recovery will be soft in the first half of 2003 and “the rest of the year won’t be gangbusters either.” But he sees corporate profits improving by 18% next year. “That’s very, very good news for advertising and advertising expenditure,” Rose said. Although Rose said that radio had a tough year in 2002, significant consolidation in the industry has made it much easier to conduct national advertising campaigns and 2003 will be much better. Cable’s growth will be reflected in its new product offerings, which Rose said will allow them to rachet up their CPM rates and bring them a little closer to broadcast. There will be growth in network TV, Rose said, and CPM will creep upward, more a function of supply than anything else.
As media planners and buyers gear up for 2003, a recent Mediapost executive poll finds that consumers are still receptive to good advertising, even though theiy're bombarded with it. "Consumers don't hate advertising. They hate advertising that's boring. We¹re getting that kind of feedback. Consumers understand ads are part of their world," says Cheryl Idell, president of Intermedia Advertising Group, a New York firm that tracks prime-time advertising on the broadcast networks. Idell says that in her firm's experience, the best advertisements entertain as well as tout the benefits of a product. Idell says there should be attention focused on the placement of media, which, while not necessarily more important to an ad's effectiveness than powerful creative, is still crucial. "[Powerful creative] doesn't matter if no one sees it," she says. Agencies are also placing greater insistence on accountability by advertisers who want to know where their money is going and who is seeing their ads. Mark Ingall, chief media officer at Citibank, says the accountability process is key for advertisers. Many are taking it upon themselves to determine whether their ads are working instead of relying on agencies, Ingall says. "It's remarkable that accountability is something people talk about now," says Idell, who notes that accountability should have been an issue 10 or 20 years ago. Driving this move toward accountability is the fact that there are tools today that didn¹t exist previously, she says. "Now, you can't say, I'm not sure." Fallon media director Lisa Seward says she hopes that the human element won't be lost in the drive to measure results. "My fear is that people will build black boxes. Take human subjectivity out of the argument and we'll all be lost," she warns.
AMS Interactive Media, the online planning and buying arm of partner company American Media Services (AMS), is on a mission. Led by co-founder and CEO Mark N. Dorf, AMS Interactive Media is trying to spread its mantra that the Internet needs to be considered a part of all media - not just another distribution system for advertising, like TV or magazines. “It does not help the industry to call it online and traditional media,” says Dorf in explaining why the Internet often gets shortchanged on most plans. “In the ideal world that is, for brands with significant budgets the Internet should be on most every plan. That goes for both branding campaigns and, especially, direct response ones.” Today, AMS Interactive Media accounts for about 10% of AMS's $70 million in media billings, which would rank it in the top 50 of all interactive agencies. “We are a boutique shop,” says Dorf. “Our sweet spot is a $5 million-to-$10 million account.” It is a fairly small shop, with only 10 people in the AMS Washington, D.C., office and two people in the newly opened New York field office. “We succeed because we have seasoned professionals doing the work, not entry-level buyers making buys. We are a media management firm first; we don¹t have creative or tech guys here,” says Dorf. The agency does, however, work with full-service shops like Mullen and The Martin Agency as well as creative shops, freelancers, and its clients in-house teams. As media buying agencies go, AMS¹s billings are certainly on the smaller side compared with heavyweights like Carat, Initiative, and Horizon. But they feel that whatever they may lack in buying clout they make up with buying smarts. A good illustration are the buys that AMS Interactive Media has done for uDate.com, over the past three years. Early on, when uDate.com was a new online dating service and barely known in the U.S. market, AMS was asked to increase brand name recognition and lower the overall cost per acquisition of new registered members. AMS developed a full-scale interactive effort to drive registrations using a variety of portals, networks, and destination sites. Utilizing optimization technology, within two months uDate.com went from 2,000 to 6,000 registrations daily. It dramatically reduced the cost per acquisition by identifying the appropriate sites and continually optimizing the campaign. Consequently, uDate.com has become the number two online dating service in the world. Other current clients include Career Builder.com, Inventors Help Line, Dietwatch.com, Knight Ridder Digital, Tribune Interactive, Precision Tune Auto Care, REMAX Realty for the Mid-Atlantic, and the publishing houses for Tom Clancy, John Grisham, and Michael Crichton.
Thousands of products and hundreds of keywords listed across multiple online marketing channels means one thing: manual campaign management is out of the question. Burlingame, CA’s Web services and marketing analytics firm, Coremetrics, has introduced Marketing Management Center (MMC) in the hopes of alleviating the choice between manual cross-channel campaign optimization and nothing at all. Part of its Marketforce platform, MMC uses “auto-sensing” technology to measure the performance of banners, keywords, portal and affiliate placements, and emails. At pet supply retailer Petco, lack of automation was a major obstacle to implementing a search engine optimization campaign. Comments Heather Blank, director of ecommerce marketing and business development at Petco, “We were looking at SEO for a long time, but one hurdle was how can we track it to the level we need to track?” The company had already been employing Coremetrics’s Marketforce software to track email campaigns when it agreed to beta test the new MMC product. “Marketers have dozens and dozens of choices: banner ads, paid search, affiliate links, product placements, email....“ explains Chi-Hua Chien, director of marketing at Coremetrics. “Every single one of those vendors sends a spreadsheet that has metrics that cannot be benchmarked against one another.” According to Blank, Petco has been using MMC for the past three weeks to automate tracking of “upwards of 8,500 campaigns” and compare them across all channels and vendors. Consider that manual implementation of something on this scale could take around five minutes per campaign, and it’s understandable that Petco deemed it impracticable before. Following a fourth week of running the campaigns, the firm aims to determine which keywords are driving sales of particular products. In other words, what are consumers clicking on and what are they actually buying afterwards? Chances are, initial use of MMC will lead Petco to shift dollars from search keywords and placements that don’t generate significant revenue to ones that do. By capturing and compiling all consumer behavioral data, which is stored in Coremetrics’s servers and owned by its clients, historical profiles of individual customers are developed to help assess their lifetime value and the performance of specific online placements (keyword buys on Yahoo vs. Google, for instance). Clients can query the MMC interface to analyze and sift out customer segments. For example, Coremetrics’s client Eddie Bauer could find out how many people have bought more than $1,000 worth of merchandise in the last 12 months and have viewed the khakis page twice in the past 60 days. Once that segment is isolated, a highly targeted email offer such as a discount on khakis could be sent to them. In addition, product cost information can be embedded and encrypted into the Web source code of individual product pages to better assess return on investment. Although the bulk of Coremetrics’s clients are direct-to-consumer ecommerce companies including Spiegel Catalog, Victoria’s Secret and The Columbia House Company, the three-year-old firm also serves b-to-b clients such as Motorola and Nortel Networks, and is looking to enter the travel services market soon.