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Home > MyersBizNet Media Business Report > Soft Economy Drives Marketers to Fewer and Bigger Media Partners: JackMyers Think Tank

Soft Economy Drives Marketers to Fewer and Bigger Media Partners: JackMyers Think Tank

March 26, 2008
driverTV.com

Published: March 26, 2008 at 08:50 AM GMT
Last Updated: April 7, 2008 at 08:50 AM GMT

Assuming this week's release of fourth quarter GDP data confirms an official recessionary economy, marketers, media companies, economists and unofficial economic pundits will weigh in with appropriately reactionary forecasts of ad industry doom and gloom.

There are certainly indications that the media community should be concerned. Automotive forecasts are dismal at best and ad spending in this critically important local and national ad category is down. Local political ad spending is not as robust as expected, as politicians have discovered the power and value of free online communications, especially YouTube. Both the financial and real estate industries are being severely impacted and ad spending curtailed, which again is more a print and local issue.

Network TV scatter pricing, strong throughout 2007, has softened. Online advertising requests-for-proposals (avails) are down compared to early 2007. But while newspapers, local television and radio stations, and even television networks cannot look forward to full-year 2008 revenues with a positive outlook, the overall ad economy remains reasonably robust.

2008 will most certainly be a year when the rich get richer. Media companies that have invested in relevant multi-platform capabilities and that can deliver targeted audiences across multiple branded media assets will attract the lion's share of growth in 2008 and into the foreseeable future. Those media companies that have been slow to market, playing the wait-and-see game before investing in new media assets, will suffer from the economic slowdown.

For mega-media conglomerates like News Corp, Time Warner and Disney, pressures to integrate cross-media assets will take on a new urgency as the merger of digital distribution with powerful traditional media brands and reach gains critical importance for expanding relationships with the largest marketers. In this marketplace, the unexpectedly aggressive efforts of the broadcast networks over the past 24-months will reap positive rewards. Although NBC Universal's acquisition of iVillage has been questioned, it ultimately will prove to be a valuable asset for extending the NBCU broadcast and cable networks' advertiser offerings. And while Fox-TV has been slow to develop integrated sales and marketing initiatives with News Corp's Interactive assets, and especially MySpace, integration will be forced by marketers and agencies who are demanding innovative tactics for delivering measurable results for their campaigns.

Similarly, Viacom has quietly cobbled together a valuable portfolio of social networks, gaming sites and virtual world sites that are unmatched in the media world. In the next 12 to 24 months, the pace of acquisitions by major media companies will accelerate as traditional players realize the critical importance of platform extensions. They will also elevate within their organizations those executives who understand and have experience in both traditional and digital media, and who understand the marketing requirements of advertisers beyond reach and media cost efficiencies. Executives with promotion, direct marketing, event marketing and public affairs experience will be essential to the growth of media companies as well as media agencies.

Among the leading online and digital media companies, the dearth of sales executives experienced in the traditional media marketplace will be an albatross, slowing their progress and acceptance. Filling executive roles with skilled network sales executives, who also have proven online sales credentials, will be a priority.

The decision last week by General Motors to allocate half of its annual $3 billion advertising budget to the Internet within the next three years is sending a clear message to all media. Rather than a death knell to newspapers and network TV, it should be a clarion call to all media to accelerate cross-platform initiatives. GM's strange announcement, which was preceded by the departure of long-time GM Planworks' executive Dennis Donlin, suggests there is sufficient relevant inventory to fulfill the auto maker's online objectives. If the company is to increase its online ad spend seven times 2007 levels of an estimated $200 million, more good real estate will be required and it's likely to come primarily on the sites of established media brands. In 2007, GM spent an estimated $1.2 billion on TV ads, down nearly 12% from the previous year. If Cadillac, Chevrolet, Pontiac, Saturn, GM Trucks and other GM brands move too aggressively away from long-established TV franchises and sponsorship rights, especially in sports, other car makers will move in quickly and GM's market share will drop like an anchor, leaving the company dead in the water. It's more likely the company will look to extend their most valued franchises across the digital landscape.

Joel Ewanick, Marketing VP for Hyundai Motor America, says, "Online is getting to the point where it may be more important than the 30-second spot." I disagree. But advertisers will demand more accountability from their 30-second spots, and will look for ways to bring their TV and online budgets together in more measurable and convergent models.

Last week, NBC Universal paid $6 million for a 35% stake in Radical Media's driverTV, which is a perfect example of the type of strategic initiatives traditional media companies will require to increase their market share as more and more marketers demand digital integration and direct marketing infrastructures. The driverTV web site and VOD channel program three-minute videos underwritten by automakers. "There is growing need for the automotive industry to find engaging ways to reach potential buyers with information, and the driverTV model has been very successful in bringing together car companies and those in the market for new vehicles.," said George Kliavkoff, chief digital officer for NBC Universal. Without NBCU's traditional networks, driverTV was another website struggling for credibility. With the promotional clout of NBC, Bravo, Oxygen, USA, Sci Fi and NBC's online assets, driverTV becomes a powerful marketing vehicle for the auto industry. Its why, in a softening economy, the rich will get richer.

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