Buying Time

There will still be commercials every 12 minutes or so for a long time
to come. But the agencies buying spots are beginning to think the television
advertising model is a waste of time and money.

"They're beginning to lose confidence in the medium," confides Ray
Warren, managing director of OMD USA, the largest TV buying agency in North
America, about his peers in the ad business. Rapid acceleration of new
technologies such as digital video recorders and video-on-demand, coupled with
questionable audience-research practices, have marketers fundamentally
rethinking the way they look at TV as a part of their advertising mix.

Still, television advertising spending continues to rise—but that's
mainly because new categories of advertisers are filling the time with
commercials for products or services that either didn't exist before or didn't

That's found money that won't always be there.

B&C's ranking of the top 10 TV
buyers of 2003 comes as the advertising industry and clients are asking pointed
questions about the efficiency of TV advertising and the measurements of
success. And expectations are changing as fast as the technology itself.

The acceleration of TiVo-like DVRs is an advertising time bomb. In fact,
a Zenith Optimedia report estimates that, even under the relatively modest
current DVR penetration of only 3.5 million U.S. TV households, users are
already zapping about 2% of all commercials.

But it's more than just TiVo. Advertising plans once began with devising
a TV campaign and then filled in around it. That's changing.

"In the old days, we were told what we were going to buy based on the
creative strategy," explains Rino Scanzoni, chief investment officer of
Mediaedge:cia, a WPP Group unit that currently spends more than $2 billion on
TV advertising buys. "Now we're being brought in to develop a communications
plan that will engage [a client's] consumers. If radio is going to do that,
we'll buy radio. If it's a mix of radio with the Internet, that's what we will

Advertisers and their agents want to know what they're getting and what
to expect. "It's all about accountability and ROI," says Warren, using the
acronym (for return on investment) that has become Madison Avenue's
media-planning mantra.

How to actually define ROI may be another matter entirely. "Does it mean
that you want to make sure your spots have actually run?" Warren asks. "Or does
it mean that you want to show that your sales have gone up? Of course, it's
both of those things. And in the end, it's our job to make sure advertising

While few would argue that advertising—especially television
advertising—doesn't work, the medium is under acute pressure from major
marketers. They're shifting away from the classic "reach"-based approach of
media planning, in which buys are prized for delivering as many consumer
eyeballs or eardrums as possible. In the new world, "communications planning"
seeks to "engage" and motivate consumers to actually do something—presumably,
to buy the products.

Nowhere was that point brought home more dramatically than in Procter
& Gamble's decision to review its media-planning account and transform it
into a "communications-planning" assignment that eventually was split between
Starcom MediaVest Group and Carat. With that move, P&G, the nation's
largest advertiser, told the world it was abandoning the status quo of
conventional media planning.

While it's still too early to understand exactly how P&G will shift
its media strategy, the marketer has said that an important part of the change
is to wean itself off the kind of cookie-cutter media plans that begin with TV
as their base.

But as the P&G move indicates, the underlying metrics of TV media
plans are changing: The business won't be about how many viewers saw the
commercial but about how many consumers bought the product.

"We're talking about engagement," says John Muszynski, who has
deliberately imbedded the e-word into his official title: executive vice
president and managing director of investment operations engagement for
Starcom, an agency that spends more than $2.7 billion on TV.

TV's not out of the picture altogether, not by a long shot. "Despite all
the nontraditional media spending and all the talk about communications
planning, broadcast venues remain strong, and network television within that,"
declares Andy Donchin, executive vice president and director of national
broadcast at Carat. "Reports of the death of network television have been
greatly exaggerated."

Media buyers say demand continues to build from new brands and
advertisers, some in entirely new categories, like most pharmaceuticals. The
number of brands using television jumped to 32,313 in 2002, the most recent
year measured by the Television Bureau of Advertising, up from only 11,086 in
1992. The number of advertisers buying TV during that same period jumped to
5,836 from 2,019.

"I look at my budgets in the television world over the past couple of
years, and I can tell you, without a doubt, they are not up. Yet the industry
as a whole is up," says Starcom's Muszynski. "What's driving this is new
advertisers, new brands and new categories that have come into the

So even as so-called "alpha" marketers like Procter & Gamble and
Mitsubishi rethink their TV advertising mixes, enough newer and emerging brands
are demanding TV time to more than make up for the cutbacks by majors like
American Express, which now has only 30% of its ad budget in TV, down from 80%
five years ago.

But those decisions to cut back, or at least rethink, TV spending
shouldn't be lost on buyers, sellers or advertisers.

Lately, OMD's Warren, whose clients include Apple Computer, General
Electric, McDonald's and Visa, has adopted a sarcastic new slogan for thinking
about the future of the TV ad business, where he spends over $5 billion a year.
"Change is not necessary," says Warren dryly. "Survival is not mandatory."

His ominous meaning: Television and advertisers don't have to change;
they will just go out of business.

Buyers are putting their money elsewhere, to be sure. Muszynski and his
Starcom colleagues have placed millions of dollars in broadband video ad buys
on MSN, Yahoo! and and have been encouraging other Internet
providers to develop broadband video programming.

Muszynski likens the current shift to the early days of cable TV: "The
only difference is that broadband is much more effective at delivering us some
kind of measurement for what we got, and it's also much more targeted than
cable is."

Buyer restlessness is just starting, these executives believe.
Advertisers are changing marketing strategies because, Muszynski notes,
"consumers have more choice and more control than ever before."