Fascinating article in the Sunday New York Times about the recent shift in ad dollars. We've heard lots of anecdotal evidence about this - the decline in ad dollars going to traditional media - but the Times article spells bad news for the ad industry and media companies as a whole.
... many large marketers are taking huge chunks of money out of their budgets for traditional media and using the funds to develop new, more direct interactions with consumers â€" not only on the Internet, but also through in-person events.
Adventurous companies like Nike have been experimenting with these alternatives since the 1990s. But now, even the most conventional marketers are making these alternatives a permanent â€" and ever bigger â€" part of their advertising budgets.
Last year, Johnson & Johnson decided to boycott the so-called upfronts, an annual event when advertisers get together with television executives to negotiate for commercial time. In August, General Motors said that 2008 would be the last year for its longtime sponsorship of the Olympics. In May, A. G. Lafley, the chief executive of Procter & Gamble, told financial analysts that the company would spend less on traditional media and more on its Web site, in-store advertising and promotional events.
"If you step back and look at our mix across most of the major brands," Mr. Lafley said, "it is clearly shifting."
Add it up, and the money flowing out of the traditional media is huge â€" even at a time when ad budgets in general are growing, advertising research shows. The 25 companies that spent the most on advertising over the last five years cut their spending last year in traditional media by about $767 million, according to Advertising Age and TNS Media Intelligence. And in the first half of this year, those companies decreased their media spending an additional 3 percent, or $446 million, to $14.53 billion, according to TNS Media Intelligence.
I took the opportunity to ask SAP's Costanza Tedesco, vice president of global advertising and branding for her take on the NYT's story. This is what she had to say:
It's not that "traditional" media is no longer relevant... those channels are still a very important part of our media mix. We have detailed campaign performance data that tells us we get the greatest impact from campaigns when there is an integrated mix of multiple "traditional" and "new" interactive media channels.
But now that we have more choice of relevant media vehicles, and a greater ability to assess the performance of each, we are shifting the mix of our media investment.
In 2003, we had basically 100% of our media investment in "traditional" vehicles. Now, we have more than 25% of our media investment in interactive media. And the percentage will continue to grow.
Where are the dollars going? Well, it's no surprise that some of the money is going to social media (e.g., communities). But the overall trend - which transcends social media, as we know it - is direct-to-consumer marketing. That's a trend worth watching for all communicators, whether they are in advertising, PR, or other any other discipline.
Technorati Tags: Nike, Johnson & Johnson, GM, Proctor & Gamble, SAP
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