Everything Old Is New Again1 May, 2009 By: Jacqueline Renfrow Response
Media buying in a recession means taking another look at the power of direct response.
You've heard the buzz: Lower viewer ratings. Mass cutbacks on TV ad buys. Ad cancellation rates of more than 10 percent. Massive loss of automotive and financial market dollars.
But should the industry really be bracing for doom and gloom? Will the economic recession have long-term effects on the way television, and now digital, media buying is executed? And will networks bounce back after a difficult 2008 and first-quarter 2009? In the midst of the television upfront season — a time when a network typically sells between 75 and 80 percent of its ad inventory for following fall season — the industry is concerned with whether it will be business as usual in second quarter or if opt-outs will continue to increase throughout the remainder of 2009.
According to industry experts, television ad sales still remain strong for many niche cable networks and will bounce back for those in broadcast and cable news. And in fact, the cycle of the industry has only helped bring the importance of direct response media to the forefront, making it a stable and integral part of network and marketing revenue. The trends in media are bringing the industry back to the basics of advertising by measuring the success of products and services through DR methods.
Media Buying of the Future
Buyers Be Aware
There is no doubt that media is somewhat affected by the fluctuations in the economic market. But as buyers and sales representatives will tell you, the impact is anything but unilateral across the media spectrum. "Broadcast networks have seen an increase in options being released from upfront inventory," says Bob Yallen, president and COO of Inter/Media advertising agency and member of the Response Editorial Advisory Board. "Some cable networks have experienced similar cutbacks, while others have had less reduction. The effect has been to release more inventory back into the marketplace, which provides more opportunity for DRTV."
According to an early look at the second quarter of the fiscal year, the Cable Television Advertising Bureau (CTAB) says that that the ratings for viewers aged 18-49 in cable were up 5.1 percent (down 8.3 percent in broadcast). In response, going into the second quarter, media buyers have pulled back between 12 and 14 percent of options for buys (a typical cancellation rate is between 3 and 5 percent). Further cancellations are predicted for third quarter and ad spending will remain flat or increase only slightly in 2010.
Media rates are impacted by demand, which is impacted by the economy, so some spots, especially those for short-form, have been adjusted accordingly. DRTV may see less adjustment in rates because the marketplace has not fluctuated as much and available inventory is near customary levels, says Yallen. "It's a battle of marketers trying to get all the added value into their schedules while the TV networks look to get the most for every unit they sell," he contends. "In each case, they are asking for value-added bonus weight so as not to cancel their cash buys."
However, beyond adjusting rates for traditional 30-and 60-second spots, the price points of products sold via DRTV are being adjusted. DRTV still offers price-conscious alternatives to working out at the gym or eating out. Along with a lowered price, "a great product with a unique solution will hold its own," says Peggy Gobel, vice president/director of cable media at Cannella Response Television. "Products that don't fit into problem solutions may not be airing as much and so it's opening up slots."
But as far as buying time for DRTV spots, Gobel says that it is pretty much business as usual. The economy may affect the consumers' response, but not media's ability to buy.
Demand from vendors is down, reports William Holba, vice president, director, national broadcast at Initiative. The marketing and digital agency reinvented itself during the past two years, moving from buying agency to a strategic-thinking marketing company — trying to always stay a half a step ahead of the trends. Holba is concerned that numbers are not looking positive for second quarter because the vendors just don't have the budget to buy as much time as in the past.
"That sets a psychological trend on how they want to approach the marketplace," says Holba. "Until now, things haven't really been lax, the marketplace has kept steady, but I think we're about to see things change." He points out that, while as a buyer he is still on the frontlines of looking for good deals, it's hard when the networks have such an upper hand.
What will get the balance of the buying and selling of ad space back on track? Money coming back into the marketplace — until then, demand is not going to be there. But Holba says the industry is not at the point of no return. And in tough times, Initiative has looked for ways to transform the media mix, including moving some spots to cable, or buying in the scatter and looking for last minute deals. But Holba warns that clients must still retain some presence on broadcast because it is still has the biggest reach.