Marketers Say TV Spending Will Drop. Nets Stay Bullish. Let the Deals Begin

ANA Study Finding 41% of Budgets Will Go to Medium Sets Stage for Upfront Joust

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NEW YORK ( -- Even as major marketers once again threaten to pull back on TV spending -- a new survey indicates they will allocate only 41% of their budgets to the medium this year -- the TV networks are gearing up for an "upfront" ad-sales market they expect will be more robust than in the recent past.

TV spending
In a new Forrester and Association of National Advertisers survey of 104 U.S. advertisers that collectively spend almost $14 billion in measured media, more than half of them -- 62% -- said that TV advertising is less effective than it used to be. While a 2008 survey found advertisers committing 58% of their media budgets to TV, the new crop of respondents indicated they had allocated less than half their budgets to TV in 2009. Moreover, they indicated they will keep that 41% allocation for TV flat this year. The survey results will be unveiled later this week at the TV & Everything Video Forum, an annual ANA conference.

Of the marketers surveyed, 77% say they plan to shift TV dollars into social-media investments in 2010, 73% plan to shift that money into online advertising, 59% to search-engine marketing and 46% to e-mail marketing. Only 15% said they plan to increase spending in traditional media such as radio, outdoor, magazines or newspapers.

"It's not that TV is going to go away, but that the expectations are going up," said Forrester analyst David Cooperstein. "People look at the digital side and say, 'Wow, with one-tenth the budget, we're getting pretty good response.'"

Bickering over TV's viability as an ad medium has gone on for decades, initially built on resentment that TV was the only place to go to make an immediate national splash to millions of consumers in one fell swoop. These days, the same old furrowed brows and rebellious talk are fueled by the rapid availability of cheaper, more-measureable media, including online and mobile. And while the groups of Forrester respondents in 2008 and 2009 are not the same (meaning the comparison of ad-spend intentions comes with caveats), the results do suggest that marketers remain querulous when it comes to TV.

"As we have been moving along into all that is now available in the online world, I guess it becomes a question of what do we consider television, or should we be starting to talk in regard to video?" asked Ed Gold, advertising director at State Farm Insurance. The company "looks at video assets online as another way to deliver a sight-sound-motion message, which is the great thing about television. I think people are looking at other opportunities to deliver a video message."

Yet talk has often been known to be cheap. TV has been enjoying something of a resurgence in the past few months.

Sure, the big broadcast networks took it on the chin in last year's upfront marketplace, when advertisers typically commit to TV's new fall programming slate. With the flow of ad outlays crimped by the recession, the networks saw their tally of upfront commitments fall to between $7.8 billion and $8.1 billion, according to Ad Age estimates, from about $9.23 billion in 2008. But they've been hauling it in through so-called scatter, or ad time purchased much closer to air date. Wells Fargo Securities analyst John Janedis suggested that "cable and broadcast network ad revenues will be up mid- to high-single [digits] for [the first quarter]. If current trends persist, [the 2010-2011] upfront season should be favorable for broadcast and cable nets," in a recent research note.

"Expectations are rising," said Ed Atorino, a media-industry analyst with Benchmark Co. "At this point, I think it's going to be better than expected."

And another forecaster sees national TV's share of mass-media outlays increasing into the not-too-distant future. National TV accounted for 55.4% of expenditures on mass media in 2008, according to Interpublic Group of Cos.' Magna, which sees that figure increasing to 59.2% in 2009 and 65.5% in 2015.

So what's going on here? Can advertisers pare back their TV ad-spending allocation even as TV wins more marketplace share? If TV prices go up and marketers move more dollars into various emerging venues, the above scenario has potential.

Interactive TV
Or might they over the long haul simply return to TV? Forrester's Mr. Cooperstein suggested that so-called interactive advertising that allows marketers to beam specific ads to specific households via use of a set-top box from a cable, satellite or telecommunications concern would prove a big boon to the venerable market for boob-tube commercials.

In the survey, 75% of respondents said they believe interactive TV advertising will be an effective lead generator, but don't feel the medium is mature enough to warrant big ad budgets; 28% plan to spend more in interactive TV ads in 2010.

Meantime, look for TV aficionados to dial up their use of new techniques. In the survey, 80% of respondents believe weaving their products and messages into TV shows has more merit than ever, with 38% planning to spend more on that from 2010's outset as an alternative to traditional 30-second spots.

Either way, the money still goes to TV networks and show producers.

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