Advertisers Embrace the Nontraditional

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New York -- There’s no stopping ad dollars from continuing to migrate from television to nontraditional media -- not just the Internet, but options such as movie theaters and in-store -- a panel of Madison Avenue executives said Thursday.

Several participants in the “Media Buying Chiefs” panel here, sponsored by the International Radio & Television Society Foundation, said that anywhere from 5% to all of their clients’ budgets -- depending on the specific advertiser -- were now going to nontraditional media.

During the breakfast session, the ad-agency chiefs also voiced concerns about the impact of spiraling oil prices and nose-diving consumer confidence on ad spending.

For example, Charlie Rutman, CEO of Media Planning Group, said he feared that rising oil prices will increase the cost of manufacturing and distribution, prompting companies to cut back their marketing to compensate.

But a good portion of the wide-ranging panel discussion focused on new options for advertisers, with several panelists outlining how portions of their clients’ budgets were increasingly being dedicated to nontraditional media.

“I think the bigger issue is whether television as a medium is flattening out,” said Tim Spengler, Initiative’s executive vice president and director of national broadcast. “Ad spending is not flattening out, but we see television in the bigger picture flattening out. Right now, the increase in dollars is going to other platforms.”

Those alternatives include options such as movie theaters, shopping malls and even pizza boxes, according to Bill Koenigsberg, president of Horizon Media Inc.

“At minimum, we are moving right now 10%-15% of our ad dollars into other nontraditional media,” Koenigsberg added, pointing out that even “bricks-and-mortar” retailers like Ikea Systems B.V. and Ace Hardware were now doing Internet ads.

His co-panelists, like Rutman, agreed. “The money follows the consumer,” Rutman said, estimating that 5%-20% of his clients are moving money to nontraditional ad outlets.

“I actually don’t think it’s a lot,” he added. “I actually think that this is going to increase.”

Donna Speciale, president of U.S. broadcast for Starcom Mediavest, told the audience that spending on nontraditional media varies “brand-by-brand.” In some cases, advertisers with products aimed at young consumers are allocating all of their budgets to nontraditional media, she added.

Moderator Tom Wolzien of Wolzien LLC asked the panel what it thought about the highly targeted ad options that Comcast Spotlight was now offering. Spengler said he liked the technology, but he complained about local cable’s cost.

“The local cable side, though, the pricing is so out-of-whack to the value,” he said. “I’m just not so sure how much more quickly local cable is going to grow. The costs are already exorbitant versus your national options.”

In terms of new-media options, Rutman was particularly bullish on wireless and cellular, describing the upside there are “the next big explosion.”

But Koenigsberg didn’t see it that way. “I think the upside is much bigger on the VOD [video-on-demand] and PVR [personal-video-recorder] side,” he said, with “a huge potential there down the road,”

Speciale warned about the danger of “pissing off” consumers by interjecting ads into platforms where people don’t want to be interrupted.

Part of the panel discussion focused on this year’s upfront and whether or not ABC’s strategy of accepting single-digit CPM (cost per thousand homes) increases in exchange for expanding its market share was a smart move. The consensus of the panel was that ABC played its cards right.

“ABC was very strategic how they handled the upfront,” Speciale said. “They had a very lofty goal that they needed to hit … The only way that ABC was going to make their goal was to take share from another network, and they did exactly what they should have done.”

Rutman added, “The upfront is a high-stakes poker game. It’s seller against seller. It’s buyer against buyer. It’s buyer against seller and, if you blink, you’re dead … The notion that somebody would take a dive is ridiculous."

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