Advertiser Interest in Social Media Unlikely to Lower TV Spending



With the use of social games on Facebook soaring, advertisers are eager to slot brands into them. They’re hungry to find ways to exploit Twitter. In many minds, online video is ripe for more investment. 

The unprecedented interest in experimentation calls to mind comments made by Steve Farella, head of agency TargetCast tcm, several years back: clients may not love TV, but they love video. 

For social-network gaming, Parks Associates says revenues were $1 billion-plus last year, partly due to advertising, where brands such as McDonald’s took advantage. To be sure, it is a promising platform.

Meanwhile, a YouTube viral hit can be invaluable and some Twitter gambits have proven to work as consumers seem to appreciate an apparent authenticity. No matter. TV remains a large advertiser’s favorite child. That’s just not going away.

Providing grist to cast ahead to the upfront – an annual measuring stick for TV’s popularity in marketing -- a report Thursday from Barclays Capital points out some forces that could slow advertisers’ flush commitments.

Auto companies dealing with issues in the supply chain, perhaps due to the Japanese earthquake, are cutting back. Strikingly, the report says Toyota has been canceling ad commitments, while Honda is unsure how aggressive it will be in its investments through the end of June.

Barclays also says many food companies plan on decreasing spending, while others will cut it as a percentage of sales, though their absolute dollars should hold.

Factors such as the rising cost of oil and other commodities could also impact investments by retailers, personal care companies and restaurants, though all have been able to maintain spending through internal maneuvers so far, the report indicates.

There may indeed be some pressure on company earnings that could become apparent over the next few weeks and trickle down to ad spending. Yet, the rough spots should be nothing akin to the depths of the recession.

The prediction here is even as advertisers may want to carve out dollars for new opportunities and may face some financial hurdles, they will indeed line up to buy upfront inventory with the fervor of an early-morning Black Friday crowd. That’s despite any forecasts of the scatter market’s sturdiness over the ensuing 12 months.

With the new platforms, metrics for spots and dots may be harder to trust than the hard data they can yield. Yet, the potential gains from TV’s wide reach is inarguable. Add some sparkling creative and what made TV essential for large brands 40 years ago still holds today.

That breakthrough creative can fuel the new platforms, too. Compelling characters and conceits can be easily transported and exploited elsewhere, maybe even in FarmVille somehow.

Vis-à-vis online video, traditional TV provides advertisers with another benefit they may not be unaware of. It can keep them from hurting themselves.

For some reason, marketers smitten with online video don’t realize or don’t care enough to take steps to curtail how their advertising -- used either as pre-rolls or in streams of full episodes -- may be creating a backlash. For some reason, they allow the same spots to run seemingly incessantly in the same programming, maybe in as short as a 40-minute stretch. By its very nature with top-tier programming, TV won’t allow for that.

Much has been made about TV’s declining ratings. Every year, that’s viewed as a hurdle for networks. Hardly. As long as advertisers continue to believe in TV, lower supply means higher prices. Except for a recession every 10 years, advertisers will pay them.  





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