the october meeting of the Association of National Advertisers is our congress of kings. This year the royal buzz was angry. Advertisers wanted to know why, in a recession, broadcast TV prices were so high. For an answer go back 200 years to a different king and an angrier buzz. Think "Les Miz." ("The people cry for bread, but there is no bread.") Bread was then, as broadcast TV is today, a "Giffen good."
Sir Robert Giffen, the nineteenth century economist, studied price elasticities. The normal pattern is when price goes up dollars go down as money flows to cheaper substitutes. Except in Giffen's odd case. It concerned products whose value is so central to life that there is substitution only when the price is low.
Giffen discovered this property in bread, the staple of the French peasant's diet. When the price was low, people had money left to buy meat. When the price increased, all the money went to buy bread. And when the price of bread was high, people starved.
TV ad time appears to be a "Giffen good." As its price increases, it absorbs more ad dollars from rival media. According to Taylor Nelson Sofres' CMR, spot and network broadcast TV picked up 1.6 and 0.7 share points in the first nine months of 2002. But is TV really still the bread of advertising? That's doubtful. In the most recent five-year period, prime-time ratings fell by a third, costs rose by a third and commercial time is up 20%. Yet advertisers do not move dollars from TV to other media.
Advertising has few "laws" we can count on. One of the best is "diminishing marginal returns to media concentration." That means no matter how much more cost effective TV is at the start, there comes a crossover point where that next ad dollar should go elsewhere.
Econometric modeling of the sort used by big advertisers says we're past the crossover point. With typical media plans, where considerably less is spent on print than TV, print dollar returns on investment are often superior to TV. The models say dollars should shift from TV to print. It's not happening. (The same is true for radio and likely true for other media.)
Reluctant to move from TV
Why seems obvious. Advertisers are reluctant to move from TV because they do not understand other media as well. You can see it in the planning. There are four pieces to media effectiveness. Let's compare TV with print.
* Targeting. TV doesn't really target. It plays old, young, male and female. Network guarantees based on broad demographics cement this limitation into media plans. Compared to TV, print is a laser and can target product users, but most advertisers think TV and plan demographically.
* Reach. Best practice says reach is good and frequency bad because most ads skim markets to get to those elusive consumers ready to buy. TV is planned as a reach medium. Print is not. But that's the advertiser's fault. A typical TV plan runs 60-plus gross ratings points a week, over many different programs and two-dozen-to-three-dozen suppliers. A typical magazine plan runs at 25% of TV's minimum weight and concentrates among fewer titles and suppliers. Compared to TV, both print budgets and buying strategies limit reach. (Radio has a similar problem.)
* Timing. Tracking research teaches advertisers to use controlled continuous advertising. But advertisers do not attempt to plan the lay down of print exposures as they routinely do with TV. They assign a magazine's audience to the date of issue and disregard when readers actually see the message.
* Message. Message is the reason TV dominates. Meeting with a major advertiser, I suggested print as an alternative to costly TV. The startling response: Print was not an option because "we know a great deal about how to construct TV commercials. We've been testing them for years. We haven't a clue about what makes an effective print ad."
That is, perhaps, the biggest obstacle. Advertisers haven't paid as much attention to other media. That has created the vicious circle we're in. Small budgets do not justify top-line creatives or copy testing; but without effective ads, budgets remain small. Advertisers need to move to a mix of media. Think "Les Miz": If they continue to treat TV as the bread of advertising, many will starve.
Erwin Ephron is a partner in Ephron, Papazian & Ephron, New York, a media consultancy (www.EphronOnMedia.com).