Below, Ad Age spoke with those in the trenches of the buying and selling of media about what they expect marketers to do as consumers tighten their belts.
To date, the networks have been able to stay on track. "People are paying the market and are going to keep on paying in the near term," said Michael Nathanson, media analyst at Sanford C. Bernstein. That's because ratings shortfalls mean advertisers have to buy more time -- known as "scatter" -- to reach the same amount of people. "The question is: Can the ratings weakness be offset by the tough scatter? So far it has."
But clouds are hanging over the retail and automotive sectors -- two big supporters of the medium. While spending on network TV will grow, that growth could slow noticeably, said Bruce Goerlich, exec VP-director of strategic resources at Publicis Groupe's ZenithOptimedia. The firm sees overall "down" spending in the automotive, telecommunications, financial-services and personal-computer categories, while consumer package goods and pharmaceutical advertisers could spend more in the months ahead.
The recent writers strike has made media buyers and planners reconsider their commitments to network TV. Cable has started to gain share in prime-time ratings, said Mr. Nathanson, while Charlie Rutman, CEO of Havas' MPG North America, noted that "media like digital, outdoor and cinema are getting a seat at the adult table, as is mobile, in the last 18 to 24 months and going forward." Media buyers said syndication also is gaining more notice from advertisers. Sarah Fay, CEO of Aegis's Carat, said when there is a recession, marketers often feel the pressure to work with efficient forms of TV buying, so they are "really starting to look hard at the Long Tail of TV or having cable play a bigger role."
Search marketing, because it's so closely tied to sales, more often is thought of as a cost of goods sold rather than a marketing and administration expense. Therefore, it is assumed to be the most recession-proof of all marketing channels. David Kidder, CEO of search-technology firm Clickable, calls search "a unique insight into a consumer's wallet."
But don't forget that its success is tied to people's ability to purchase products and services. "E-retailers have been successful in search marketing because they can capture a specific moment of intent and convert it into real dollars," he said. "If the people who are searching aren't spending money, the value of that moment of intent goes down. The effectiveness of search marketing is tied to the economic value of the searchers."
Carat's Ms. Fay notes that economic strife may give marketers the license to experiment with new forms of media -- such as mobile -- because it doesn't cost that much to add to their marketing mix. "There are elements you can add to a media buy where it is not a huge media investment, but it has the potential to really increase the involvement of the community," she said.
Rex Conklin, media director of Wal-Mart Stores, said Wal-Mart already has started using radio for more efficient media spending in the wake of economic recession. "Particularly in a down economy, the advantages of radio are significant in that it's very local and very flexible, which is incredibly important, especially when you're talking about pricing." "
One hope for magazine publishers: web sites that can attract ad revenue even in tough times, partly because of low rates and partly because digital remains sexy to advertisers. "You have to look at it as a brand," Ms. Steinberg said. "What may fall out in one area, they may gain in another."
"On the other hand," Mr. Klein added, "for certain categories that need to promote sales in the short term, some of the retail categories may be picking up spending." Soft TV ratings lingering from the writers strike may even collude with retailers' more pressing need to push up newspaper ad sales a bit, he said. But media buyers aren't that optimistic. "I don't know, necessarily, if someone's budget is cut, that their choice will be to go to newspaper, because newspaper is very expensive to buy," said Paula Hambrick, president of Hambrick & Associates, a media-buying service. "When you start looking at how many people you're reaching and how much it's costing, it's an expensive medium to use."
Coupon distribution has grown steadily since the last recession ended in 2002, notes Charles Brown, VP-marketing for NCH Marketing Services, a coupon clearinghouse owned by Valassis Communications, one of the two leading distributors of newspaper freestanding coupon inserts. But while distribution has steadily risen, redemption has fallen in recent years, as marketers have moved to shorter expiration periods and looked to use coupons more as advertising than promotion. While both coupon distribution and redemption rates rose in the recession of the early 1990s, they rose less so in the last recession in 2001 and 2002, he said.
Despite recent projections by industry executives that they'll spend more on advertising in the months ahead, Sunil Garga, global president-business and consumer insights for Information Resources Inc., says he's already hearing of plans by major package-goods marketers to cut, or at least tighten, media budgets. Nevertheless, he expects shopper and online marketing to see continued strong double-digit growth for package-goods players despite, or even because of, recession, because they're more accountable than other media and better at conveying promotional messages.
"As consumers get more frugal, CPGs will shift their media to things that have a more immediate return on investment," Mr. Garga said. "Shopper marketing is a captive audience in the store with an immediate effect. ... Online is a medium, too, that supports more value-oriented messages."
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Reported by Andrew Hampp, Nat Ives, Abbey Klaassen, Megan McIlroy, Jack Neff, Brian Steinberg