Survey Finds 63% of Top 100 Advertisers Plan Spending Boost

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CINCINNATI ( -- As new money from dot-com, telecom and direct-to-consumer drug marketers pushed TV ad rates up rapidly in the late 1990s and early 2000, such
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terms as integrated marketing and holistic marketing increasingly gained currency with traditional marketers.

TV comeback
But something funny happened as the "new economy" collapsed and took TV rates with it in 2001. Big advertisers started coming back to TV in a big way. And after a surprisingly strong 2002 upfront, advertisers are expected to spend even more heavily on TV in 2003. A survey by Morgan Anderson Consulting finds an overwhelming majority of big marketers plan to spend more on TV in 2003 than in 2002.

The buzz phrase of the new century may not be "integrated marketing" after all, but rather "Show me the gross ratings points!" Yet, media buyers and industry watchers aren't ready to lay to rest integrated marketing or their concerns about the long-term viability of TV advertising.

63% pf top 100
The Morgan Anderson survey of the top 100 advertisers found 63% plan to spend more on TV in 2003, while only 15% plan to spend less and 22% plan to spend the same.

But Arthur Anderson, managing principal of the consultancy, still believes spending on "below the line" marketing services such as promotion and public relations will continue to grow faster than conventional media advertising in the years ahead.

Part of advertisers' rekindled love affair with TV stems from the weak market in 2001, says media consultant Erwin Ephron. Even with a strong upfront in 2002, those increases came off of a lowered base. He also believes troubled times lead marketers to fall back on the security of TV.

"In extremus, you go with the familiar," Mr. Ephron says. But he also believes many marketers have been disappointed by the hype of integrated marketing.

"Integrated marketing was oversold in concept and undersold in delivery," he says. "But I think integrated marketing is just another word for taking a look at all the options and trying to create a coherent campaign across media and across marketing venues. And that still certainly makes a lot of sense."

Movie studio spending
TV's recent strength may stem more from new money than shifts within budgets of the big players, says Charlie Rutman, president of Aegis Group' Carat North America, a New York media planning and buying agency. "The new money is coming from categories that seem to be showing strength these days," he says. "Movie studios in particular are heavily TV oriented, and they're spending more."

But while he's seeing money coming into TV, Mr. Rutman adds, "I still see a lot of money being spent on very precise media," such as out-of-home media and radio." I see increases at both ends of the spectrum."

Peter Knobloch, president of the R.J. Palmer media agency in New York, believes marketers are shifting some of their budgets to TV. But he believes the entire media market will be up in 2003, just not as dramatically as TV.

Pent-up need to advertise
"I think there's just a pent-up need to advertise," Mr. Knobloch says. "What some of these clients saved last year they're pouring back into media. But I think advertisers are more determined than ever to integrate their media [buys], because they're concerned some of their commercials aren't going to be seen."

Spending more doesn't mean shifting the focus to TV. Unilever increased global marketing spending by a whopping $625 million, or 1% of sales, globally in 2002, but continued a long-term movement to reduce dependence on TV.

Alan Rutherford, vice president of worldwide media for Unilever, told a Merrill Lynch & Co. investor conference last year that TV as a percentage of Unilever's media budget globally fell from around 90% in the late 1990s to 75% in 2002. The same trend is found in the U.S., where TV as a percentage of Unilever's total media spending fell from 84% in 1999 to 73% through the first 11 months of 2002, according to Taylor Nelson Sofres' CMR.

A change in Unilever's marketing planning process has had more impact than any temporary economic conditions. "From the very first meeting now, the advertising agency is in the room with the promotion agency and the PR agency," Brad Simmons, vice president of media for North America, said in an interview last year. "We haven't completely thrown our media mix apart, but we've seen a migration to a broader marketing mix."

Unilever rival Procter & Gamble Co. also worked hard to make itself less dependent on the medium in the 1990s. "Holistic marketing" became one of the most popular catch phrases at P&G's Cincinnati headquarters. Yet, after P&G's TV spending as a percentage of overall media bottomed out at 65% in 2000, it bounced back to 70% through the first 11 months of 2002, according to CMR, the highest level since 1998.

Much of that increase came from integrating the TV-intensive Clairol hair color and Herbal Essences brands last year, Greg Ross, vice president of media, says through a spokeswoman. "Our objective is really to create the right media plan to meet the objectives of any given brand," the spokeswoman says. "To do that, we've got to call on a variety of different media."

Procter & Gamble
The economy may be helping TV and constraining growth in integrated marketing at P&G and elsewhere, says Rich Wilson, former vice president of media at P&G and now a consultant.

"If you're a marketer and you're finding it difficult to raise prices, which I think most manufacturers are, it tends to squeeze the budget," he says. "One of the first things to go, unfortunately, is experimental money. Marketers will always go with the things they have the most confidence in and have experience with, and television would tend to be that."

Interest in experimenting
But current economic conditions don't change marketers' fundamental concerns, Mr. Wilson says. "People continue to be very worried about the future of television, especially with technologies like TiVo. Even though penetration [of TiVo] hasn't been as forecast, ultimately it will. So I think there's still a lot of interest in continuing to experiment with alternative forms of communication. We just may not be in an economic period right now where that's a priority."

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