NEW YORK (AdAge.com) -- Reckitt-Benckiser will cap off its fifth straight year of organic sales growth with a new recession-approved media strategy: moving TV dollars to online video.
The company plans to shift an estimated $20 million in TV ad dollars to the web for more than 15 of its brands, including Lysol, Air Wick, Mucinex, Finish and Clearasil. The strategic shift is significant for the company, which has traditionally spent upward of 90% of its $475 million measured-media budget on TV, and less than $1 million in measured spending on the web in 2008, according to TNS Media Intelligence. Even though its 2008 internet advertising through the first half was already double its full-year internet spending in 2007, it was still only 1% of media spending.
Planting roots online
The effort goes into effect April 1 and will include partnerships with over a dozen video ad networks such as Glam, Tidal TV, YuMe and BrightRoll.
Marc Fonzetti, Reckitt-Benckiser's media manager and internet specialist, said the company has dabbled in social media and e-mail-based consumer-relationship-management promotions in the past but had yet to plant any major roots in online video until now. "We've seen a fundamental shift in consumer consumption and media habits migrating over to digital video. Obviously YouTube started it, but we want to aligned with professional content," he said. "With broadband getting to the scale that it has, the shift has happened. The integration of traditional and digital media is here now."
Reckitt-Benckiser's spending shift from TV to online has been in the works for more than a year but was accelerated by a need to find more efficiency in the cost to reach 1,000 viewers, or CPM, said Adam Kasper, senior VP-director of digital media for the marketer's digital media agency, Havas' Media Contacts. "The CPM was the driving factor here. We needed to make it compelling from a buying standpoint in terms of how these CPMs related to TV CPMs, and we had to deliver the impressions more efficiently than TV did," he said, by reaching a more targeted audience.
That's why the company opted for ad-serving networks over TV network sites such as Hulu, ABC.com, CBS.com and NBC.com, as the latter often charge significantly higher CPMs than ad networks. Mr. Kasper said Media Contacts and Reckitt-Benckiser pushed hard for CPMs that were "well into the single digits" to get more bang for the marketer's newly digital bucks, and described the results as a first for online video. "To have a big TV advertiser take such a big portion of their TV budget and put it into online video, and to do so with such an aggressive goal from a pricing standpoint, really shook up the industry."
Focus on ROI
It's a still-nascent industry, however. Scott Ferber, CEO of online video ad network Tidal TV, said the main factor that has prevented major consumer-package-goods companies such as Reckitt-Benckiser and others from investing heavily in online video has been the volume of inventory required to buy TV-equivalent audiences. The CPMs took a hit for networks such as Tidal TV, because "when you buy volume, you have to buy cheaply, because volume costs," he said. With the recession also driving pricing down, Mr. Ferber said he expects online CPMs to reach a more stable level in the next three years.
"Everything is ROI-focused and needs to be accountable," Mr. Fonzetti said. "That's why this program has taken us so long to develop. We want to make sure everybody is comfortable behind this."