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Friday, March 24, 2006

Industry: Ad Agency Deathwatch: "No Confidence"

US Marketers Declare Loss of Confidence in TV Ads

Growing doubts among America's top marketers as to the effectiveness of TV advertising were revealed at the TV Ad Forum in New York this week.

Held under the aegis of the US Association of National Advertisers, attendees were briefed on the ANA's poll of 133 major advertisers with an aggregated advertising budget of around $20 billion (€16.54bn; £11.44bn). The results were not music to the ears of the main TV networks.

Quizzed by Forrester Research (on the ANA's behalf) about their attitudes toward TV advertising and how new technologies such as digital video recorders and VOD will impact on their TV ad budgets, 78% said they have less confidence today in the effectiveness of TV advertising than they did two years ago.

Moreover, some 70% of advertisers believe DVRs and VOD will reduce or destroy the effectiveness of traditional 30-second commercials. Instead, they seek alternatives such as branded entertainment within TV programs (61%), TV program sponsorships (55%), interactive advertising during TV programs (48%), online video ads (45%) and product placement (44%).

80% of the marketers interviewed also intend to spend a higher proportion of their advertising budgets on web advertising, and 68% responded in similar vein about search engine marketing.

In an address to delegates, Forrester vp Josh Bernoff revealed that current DVR penetration in the US stands at 10%. Not only is he "very confident" about that figure, it is poised for significant growth as cable and satellite operators promote the use of set-top boxes and reduce the prices.

Bernoff estimates that by 2010, 43 million households - forty percent of all US homes - will have DVRs. He described advertisers and agencies as "hard-nosed and focused on data", opining that while the advance of DVRs doesn't spell the end of 30-second TV spots, it will drive change.

However, there appears to be a dichotomy between what marketers say in an interview and their knee-jerk reactions, an anomaly highlighted by on-the-spot research conducted by Bernoff during his presentation.

Using an instant electronic polling system, he asked his audience what they believed might be the most promising video advertising vehicle of the future.

Interactive TV topped the poll with 31%, with regular TV as runner-up at 22%. In third place with 21% was internet video, followed by cable VOD with 16%.

Data sourced from; additional content by WARC staff

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