comScore, Inc. has released a report called “Surviving the Upfronts in a Cross-Media World,” which it says is an actionable guide for success in navigating the cross-media landscape during this said Judy Bahary, SVP, Marketing Solutions at comScore.comScore examines the maturation of the online video market as a supplement to traditional television advertising and the effectiveness of cross-media campaigns in television programming.
Rather than one robbing the other, “Our research shows an incredible synergy between TV and digital video formats when used together in cross-media campaigns, driving effectiveness levels higher than either medium used on its own,” said Judy Bahary, SVP, Marketing Solutions at comScore.” As the online video market continues to develop, we should see it evolve from its current supporting role to an essential part of media planning in the annual upfronts.”
The annual television upfronts are a familiar process for buyers and sellers of television advertising. Now in their second year, the digital upfronts are shaking up the industry in making the case for digital video advertising in long-form TV programming and short-form online video. But the concept of online TV audiences is relatively uncharted territory for most buyers, who are uncertain how to effectively allocate dollars across both TV and digital media.
In a simulation conducted using comScore’s cross-media databases, which contain media usage from multiple platforms for the same households, comScore discovered that the use of online video can build reach and effective reach when advertising dollars are invested in both TV and digital platforms. Reallocating 10% of an ad budget from TV to video boosted a campaign’s reach by 5%, and raised effective reach by 16%.
comScore also measured consumer response (e.g., a visit to the advertised brand’s website) following exposure to TV ads alone versus both TV and digital platforms. It found that consumers who were exposed to one ad on TV and one online were 28% more likely to visit the brand’s website than those exposed to one ad on TV alone. In fact, the impact of two exposures – one on TV and one digital – was almost as high as the impact of two exposures, both on TV. “This reinforces the wisdom of overlaying a digital plan on a TV campaign to boost reach without sacrificing persuasion—especially when one considers that digital is generally less costly than TV,” says the report.
Advertising research firm BIA/Kelsey projects that U.S. companies will spend $136.2 billion on local advertising, between traditional, online and mobile ads, in 2012, reports eMarketer. That number will climb toward $151.3 billion by the end of 2016.
As we reported yesterday, BIA/Kelsey chief economist Mark Fratrik told Media Life that digital with its lower cost-per-thousand impressions (CPMs) makes sense for smaller businesses, as well as with its more targeted reach: a print ad in a local paper, or broadcast ad on a local news station, cannot target the 12-mile radius that a plumber may wish to reach, but targeted digital ads can.
Traditional spends will grow but in the low single digits, versus in the teens for digital. Still, with its lower percentage of overall spend, the overall spends will grow annually between 1 and 4%.
Though total U.S. local ad spending should grow slowly over the next four years, digital ad spending will grow by double digits, driven largely by social, mobile and video advertising. By 2016, the firm projects that local digital ad spending will tip the scales at $38.5 billion, more than 25% of total local ad spending, up from 16% in 2012.
“From 2010 to 2011, we saw a 2.4% decline in local ad spending,” said BIA/Kelsey CEO Tom Buono at the ILM-East conference in Boston on March 26. “We were projecting a decline originally, but it’s a lot more severe than we expected because of the economy. Therefore, in our projections moving forward, we’re less bullish than we were.”
Local TV stations are integrating with advertisers, and extending their coverage and conversations with viewers, through social media, reports Ad Age. The magazine was reporting from the American Association of Advertising Agencies (AAAA) Transformation Conference in LA, and on a panel called “Socializing Local TV.”
As an example, President Valari Staab of NBC Owned Television Stations described how Facebook helped a local NBC affiliate dominate coverage of Hurricane Irene in its market. Viewers engaged about the hurricane on the affiliate’s Facebook page, which provided enough content and interest that the station’s news broadcast went on-air live at 3 P.M. versus 6 P.M. “We slaughtered our competition on the coverage,” as Staab described.
Local advertisers can benefit from a station’s social extensions, remarked panelist Dunia Shive (president-CEO of Belo Corp., a Dallas-based owner of 20 broadcast stations and two cable stations). Still, Shive believes the connection between advertising and breaking news is tenuous. Belo plans to introduce a mobile streaming product later this year in 32 U.S. markets. " We'll have to see how consumers react to that launch and how content is used, and then build digital-ad opportunities,” said Shive.
Local advertisers will likely latch on, for the lower cost-per-thousand (CPM) impressions alone. Local ad spending fell 2.4% in 2012, according to analyst group BIA/Kelsey. The group expects local advertising to bounce back this year, and continue through 2016 with a compound annual growth of 2.6%. BIA/Kelsey chief economist Mark Fratrik told Media Life that “Online/interactive/digital probably wasn't hit as much [in 2011] because it's new and exciting and it tends to be lower-priced CPMs…There's sort of a movement from higher-priced media to lower-priced media.”
The good news, according to Fratrik, is that smaller and medium-sized local businesses can now afford digital and interactive ad vehicles. He raised the example of a plumber in the suburbs who can taret paid search in a 12-mile radius, which newspapers find difficult to do and local TV finds impossible.
A new study from the Pew Research Center’s Project for Excellence in Journalism (PEJ) finds some bright spots in the newspaper industry. A few—but just a few—are achieving success with their cross-media revenue models.
“In general, the shift to replace losses in print ad revenue with new digital revenue is taking longer and proving more difficult than executives want,” wrote Pew authors Tom Rosenstiel and Mark Jurkowitz. They described the rate of contraction among newspapers as “alarming,” but chalk it up in part to “cultural inertia.” Most newspapers have put no significant effort into monetizing digital revenue categories.
PEJ surveyed 38 newspapers from six publishers, charting digital revenue and sales efforts. PEJ ensured that it covered papers of various sizes; because the majority of papers in the U.S. are small, PEJ included 22 papers with circulations under 25,000; seven with circulations between 25,000 and 50,000; and nine of over 50,000.
Of those 38 papers, seven reported declines in digital revenue. Among the laggards, one paper saw digital ad revenue decline by 37%, and another by 25%.
But one saw digital ad revenue gains of 63%, and print revenues by 8% over one year, while a second paper gained 50% in digital advertising. One of the top gainers chalked its success up to “smart ads” that targeted customers by online behavior—a practice that was rare among the remaining 37 papers. A second paper build a multi-million dollar advertising and marketing consulting practice. It sold not just advertisements, but ad expertise.
PEJ reported that the newspaper industry as “mature and monopolistic,” adjusting poorly to digital models. Digital is newspapers’ highest area of growth, but still provides nominal revenues. That is due in part to a lack of bandwidth in creating digital strategies. “We have all these [new] products we are working on that we believe are going to deliver results that are part of our sustainability," one executive told PEJ, "But we need to eat today."
So, companies that are struggling find themselves risk averse. "There might be a 90% chance you'll accelerate the decline if you gamble and a 10% chance you might find the new model," one respondent said. "No one is willing to take that chance."
Among other key findings:
- The papers providing detailed data took in roughly $11 in print revenue for every $1 they attracted online in the last full year for which they had data. That nowhere near made up for the 9% decline in print ads revenue.
- Only 40% of the papers say targeted advertising is a major part of their sales effort, despite the fact that targeted digital advertising is expected to dominate local digital revenue by 2014.
- The majority of papers focus their digital sales efforts on conventional display and digital classified, which are the largest categories but low-growth categories.
- Daily Deals accounted for 5% of digital ad revenue in 2011.
- Advertising on mobile devices accounted for only 1% of the digital revenue in 2011. Executives have faith in this meteorically-growing medium, but have yet to take advantage.
- Almost half (44%) are trying to develop nontraditional revenue from, for example, events; consulting; and selling new business products, but revenues are typically under $10,000 per quarter.
- Among the papers that provided data, the number of print-focused sales representatives outnumber digital-focused reps by about 3-1. This reflects the fact that print ad revenue, which is shrinking, still makes up the bulk of the overall revenue (on average 92% in our study's sample).
So as PEJ describes, newspaper execs are “still caught between the gravitational pull of the legacy tradition and the need to chart a faster digital course.”
One consideration: if digital advertising is so nominal a revenue source, advertisers may find they can negotiate for large contracts at medium-sized campaign prices. Newspapers are likely to respond positively to “walk-in business,” and willing to negotiate for the immediate cash influx.
Flurry, the mobile app analytics and ad platform provider, believes that ad spends are badly mismatched, compared to where consumers spend their media time; and are underutilizing mobile to reach the affluent and largely female mobile consumer.
Flurry compared the ad spend across numerous media to the time consumers spend on those media, based on its own and publicly-available data.
TV and media command the highest ad spends in the U.S. in 2011, with 43% and 29% of the total, respectively. Web, Radio and Mobile channels garner 16%, 11% and 1%, respectively.
Compare that to media consumption, where TV leads with 40%, followed by mobile at 23% and Web at 22%. Print is dead last in consumption, at 6%.
Thus, concludes Flurry, “Despite the fact that mobile advertising is growing, the platform is far from getting rational levels of spending compared to other media.” Likely this is because of the rapid evolution of the mobile app platform: the iOS and Android app economy are just three-and-a-half years old. It is difficult to quantify and measure, and less mature than the Web. Mobile inventory is more difficult to purchase in volume, and standards are still evolving for ad serving, tracking and settlement.
The Mobile Audience Demographic
Flurry then measured the audience segments that best respond to mobile advertising, using its own AppCircle ad network and publicly-available data. Flurry took a sample of 60,000 active daily iOS users, and calculated the effective cost per thousand, or eCPM earned by publishers.
Women aged 25–34 fetched the highest eCPMs at around $13, based on high click-through and conversions rates. Women led all of the target segments, aged 25 and older.
Measuring eCPM by household income, the income ranges from $60,000 to $100,000 are the most valuable. The eCPM for a $60k-$80k household commands the highest eCPM at $8.33, and $80k-$100k with an eCPM of $8.25. For households under $35k, the eCPM is just $1.98.
Finally, in terms of education, bachelor-level consumers command the highest eCPM, at $7.92, with master-or-greater consumers second at $6.51.
Flurry’s analysis is that females and males between 25 and 34 years old, who have higher levels of disposable income and a bachelor’s degree or higher, more strongly interact with mobile ads. These largely self-directed individuals are typically attorneys, physicians, engineers, professors, scientists and so forth.
The good news to mobile advertisers is that the most highly sought demographics already interact strongly with mobile ads, which of course is poised for radical growth. It is up to the advertisers to meet the consumers halfway: they are waiting.
An elite group of marketers will pay hefty prices to be associated with the 84th Academy Awards broadcast on February 26th, and reach a mass audience dominated by women. So reports brand intelligence provider Kantar Media, which summarized some key metrics for this year, and historic trends.
“Big-scale, high visibility television events continue to draw large audiences and the Academy Awards comes just a few weeks after the most widely watched Super Bowl in history,” said Jon Swallen, SVP Research at Kantar Media North America. Coverage is still centered around the network TV broadcast, but digital platforms and online content offer more ways to target brand messages at an engaged audience.
The Price of Advertising
The average price of a 30-second commercial in the Academy Awards has increased modestly the past two years but remains firmly below the peak levels achieved between 2006 and 2008.Ads in the 2011 telecast fetched an average $1.55 million per 30 seconds for a total revenue of $74.4 million. Higher pricing is expected in 2012, about $1.70 million per :30 unit.
Spending By Top Advertisers
A small number of blue-chip marketers dominate the rankings of top spenders in the Academy Awards. Last year, 40% of total ad revenue came from three companies: Hyundai, JC Penney and Coca-Cola. Hyundai has been the exclusive auto advertiser since 2009 and will have a major presence again this year. JC Penney has been a continuous sponsor since 2002 and will use this year’s broadcast to promote a major repositioning of the brand. A few other well-known advertisers stand out for their loyalty and longevity. McDonald’s has appeared in the program every year since 1992 and American Express since 1993.
Hyundai and JC Penney will each spend more than $10 million in advertising on the 2012 broadcast. By comparison, a majority of the films nominated for Best Picture (including Descendants and War Horse) spent less than $10 million on advertising to support their theatrical release and generate ticket sales.
First Time Advertisers
Throughout much of the past decade, the Academy Awards had a stable core of perennial sponsors. The low turnover coupled with stiff limits on the total amount of commercial time made it difficult for new marketers to gain entrance to the program.
The ad recession of 2009 led to sponsor withdrawals and a downward drift in audience ratings has further contributed to advertiser defections. This has created an opportunity for other companies to buy ad time. In the 2011 show, 31 percent of the marketers were first-timers. The freshman class of 2011 included Amazon, Best Buy and Living Social.
Low Ad Clutter
The Academy Awards runs against the general trend of stuffing more ad content into TV programming and offers marketers a less cluttered environment. In granting broadcast rights to the program, the Academy limits the amount of commercial time.
Over the past decade, the show has consistently averaged 8-10 minutes per hour of national commercial messages. This includes paid ads plus promotional plugs from the network for its own programming.
The comparable level for the Super Bowl is about 13-14 minutes per hour and for network prime time programming it is typically 14-16 minutes per hour.
TV Ratings Are Eroding, Digital Picks Up Slack
Household audience ratings during the live broadcast of the 2011 Academy Awards were the second smallest in history. Viewing levels have slipped 23 percent in the past decade and 15 percent from just five years ago.
In an effort to attract audience and boost interest, ABC has been integrating online elements into its coverage. The 2011 show was streamed live, providing expanded coverage of red carpet activities, press room interviews with winners and other backstage activities. Social media and mobile applications were also utilized to help make the event more immersive and appealing to younger audiences.
Although the Academy Awards is predominately a TV advertising event, there are a range of digital marketing programs that capitalize on the event and target Oscar enthusiasts.
ABC is the most active player, using digital media to generate audiences for both its TV and online productions which it can then monetize through advertising sales. ABC places rich media and display ads on targeted web sites in the 3-4 weeks leading up to the Academy Awards to promote and build interest in the TV broadcast. The network also executes a paid search ad campaign to direct traffic to the Oscars.com web site, which it operates. Not surprisingly, the primary root keywords it buys are “Oscars” and “Academy Awards”.
ABC sells a variety of display ad formats on Oscars.com and some of the companies buying spots in the TV broadcast also purchase digital ads on the web site to extend and amplify their offline campaign. In 2011, Hyundai was the top spending advertiser on both the ABC telecast and the Oscars.com site.
Other web publishers create content around the Academy Awards which helps support their ad sales efforts. For sites that cover the entertainment and celebrity industry, popular approaches include announcements of the nominations, predictions and fan voting for winners, red carpet activities, critiques of celebrity fashion, and coverage of post-Oscar parties. Food-oriented web sites have gotten into the game with articles on hosting an Oscar-themed party at home and recipe ideas.
Apple is dropping the minimum charge for ad campaigns on its iAd mobile system, reports Ad Age, and is raising the percentage it pays mobile app developers.
Advertisers will now pay just $100,000 for mobile campaigns running through iPhone and iPad apps—a $400,000 drop from the previous threshold, and $900,000 from 2010 when iAd was launched. AdExchanger laconically observed that Apple has given itself “a haircut.”
iAd was a “compelling idea when it made its debut,” observed paidContent, and mobile ads hold excellent potential. Still, “Ad formats created for other devices don’t necessarily work on the small screen found on the iPhone.” Video and rich graphics simply don’t play as well on the screens as do “quick and dirty” ads (e.g., from Google AdMob), with their far lower costs.
App Revenue Shares now 70%
App developers will now take 70% of ad revenues from iAds running on their apps, a boost of 10%. And, Apple will now chare per 1,000 ad impressions, and do away with pay-per-click.
Ad Age observes that Apple has been steadily losing share in mobile ads. In last year’s $630 million market for mobile display ads, Google took 24%, up from 19% in 2010. Millennial Media took 17%, and Apple, 15%.
Ad Age is predicting a pretty good, if not stellar 2012 in which digital and TV spends will be up, but magazines down.
Vincent Letang, who is executive VP and head of global forecasting at Magna Global, attributed what growth there will be—about 10.9% across all media—largely to 2012 being both an Olympics and an election year. Without them, “Some would have predicted probably a worse outlook” for 2012. But with those two powerful drivers, TV ad revenue should increase by 6.8% this year. Time will tell, with upfront spending just getting going. Thusfar only General Motors (GM) has canceled upon a significant percent of its commitments, at just shy of 50%.
TV ad revenue should increase 6.8% this year, once again, attributable once election season and the Olympics have their effect, according to Magna Global's forecast on Jan. 23. The past several weeks have been strong, but the second-quarter scatter market will ultimately provide the best indication for upfront spending, said Mel Berning, exec VP-ad sales at A&E Networks.
Ad pages fell about 8.4% in January and February issues, year-over-year (YOY), and magazines overall can expect a 5.2% decline in 2012 ad revenue, Magna Global predicts. But there are signs of health in the digital quarter, with at least one media provider (Complex Media) projecting firth-quarter revenues doubling over Q4 2012. So while print journals will see a decline, their digital properties—and they all have them—are likely to help them tread water.
From 2002 through 2011, the Super Bowl game has generated $1.72 billion of network advertising sales from more than 125 marketers, reports Kantar Media.
Leading the pack is Anheuser-Busch InBev with $239.1 million in ads. The company has advertised in every Super Bowl for the past decade, as have two other top spenders, PepsiCo and Walt Disney Co. The top five advertisers of the past decade collectively spent $636.6 million, for 37% of total advertising revenue.
The average rate for a 30-second ad during the Super Bowl increased 40 percent over past decade, for $3.1 million in 2010. NBC is asking $3.5 million for a 30-second unit in 2012, but the price will vary based on when the ad runs and if the advertiser opts for a larger package that includes spots in the pre-game and/or post-game coverage.
Kantar Media bemoans the rise in “clutter,” as the volume of commercial time has crept up. The Fox broadcast of the 2011 Super Bowl included 46 minutes of network ads, second only to 2010 with 104 minutes. That commercial time included paying sponsors, NFL messages, commercial messages from the NFL and Fox ads promoting its own shows.
About 20% of advertisers are first-timers, but in 2011 that dropped to 14%, with only four new marketers (Best Buy, Carmax, Groupon and Salesforce.com). Only three first timers have confirmed ad slots for 2012, being Century 21, Dannon and Relativity Media, a film studio.
Interestingly, the Super Bowl is attracting not just giants like PepsiCo and Disney, but smaller marketers as well. In 2011, nearly one-third of advertisers spent more than 10% of their full-media budgets. Careerbuilder spent $3.1 million, for 31% of its budget, and Salesforce.com spent 23%.
Google CEO Larry Page in a Thursday analyst call reported that its display ad business has doubled since 2010. Display ads include network and YouTube ads, which has reached a $5 billion per year business. The ramification according to AdAge is that Google is becoming less dependent on search advertising alone.
Google went on to report that its DoubleClick ad exchange had reached year-over-year (YOY) 130% growth, driven in part by its precise category targeting (e.g., hybrid car buyers and adventure travelers). Brand advertisers are flocking to YouTube’s TrueView format, which emulates the pay-per-click model of AdWords AdSense. Three of those brand advertisers are Ford, GM and L’Oreal.
Bloomberg BusinessWeek observes that Google’s expansion into new markets and onto mobile devices, where it charges less per click, contributed to an 8% drop in its average pay-per-click.