ANA Marketing Musings

An Update on Network Integration Fees

An update to my last post on the network integration fees charged by NBC, CBS and ABC. TargetCast, a NYC based media independent media planning and buying agency, recently informed us that they have calculated that advertisers last calendar year spent between $110 -$125 million on these fees alone! TargetCast used TMS-Media Intelligence/CMR data to crunch this number.

Revisiting Network Integration Fees

Earlier this year the ANA conducted a survey of member marketers on the issues and challenges they face in TV advertising. A resounding 74% of the 140 major advertisers we surveyed said the integration fees the major TV networks charge are unfair. Here is a sampling of some of the feedback we heard:

"The fees are a legacy charge that no longer have a justifiable purpose. We're better off taking the money and improving the measurement capability of the industry." "Integration fees are a thing of the past, when there was a 'physical' reason to charge. With new technologies, etc., there is no reason. It's basically money in their hands.

"Integration fees were put in place years ago when a person used to have to manually have to place the commercial in sequence. Today everything is done on computer."

"The notion of integration fees is antiquated. Its real reason for being was back in the days when a human being was required to be in the studio to manually insert commercials in programming. With the advent of technology, a human is no longer needed. Therefore, we should not be charged for this. This is just another example of how the networks have figured out a way to rip off advertisers."

The ANA gets the message: advertisers are outraged over network integration fees. In their view these fees represent an old surcharge that has nothing to do with today's television production and trafficking realities. This survey indicates that the networks and advertisers need to revisit the issue. I urge our colleagues in the media to think hard about this issue.

How the ANA's Enhanced TV Initiative Will Work

Recently, I blogged about the ANA's Enhanced TV initiative and why we are undertaking this project. To wrap this up, I thought I would share with you actually how this will project will work. The test and related meetings are only open to those ANA members who have elected to participate in the project.

Our test will run approximately one year and consist of two cycles. The first cycle will include the launching of the project, testing the different enhanced television advertising propositions (video on demand, Tivo, etc.) and analyzing consumer interaction. The second cycle is an integral element to the success of the initiative because it allows the participating advertisers to modify their approach based upon the initial discoveries and re-test the propositions. To track their advertising assets, participants will utilize Ad-ID.

Although we are still determining which specific technologies and will be included in the initiative, we can generically delineate what we hope will be gleaned from the experimentation. As an example, in the ad supported video-on-demand (VOD) realm we hope to answer some of the following questions:

• Do viewers forego watching real time programming to watch VOD where one may extricate commercials from the programming via VCR functionality/fast forwarding?

• Do households that access an ad supported offering also view the cable network?

• Do VOD households show any other kind of programming genre affinity?

• What is the amount of time users spend on the ad supported offering viewing (daily and weekly) as well as the amount of sessions (daily and weekly)?

• If VCR functionality is available as part of the VOD offering, how does it impact viewer behavior, i.e. fast forwarding through commercials (front and back), programming and so forth?

• How will the programs be packaged: by network brand (MTV on demand), by genre (news, children’s, sports), or by cable or broadcast service (basic or expanded basic on demand)?

• Will on demand product cannibalize ratings and ad revenue?

Keep an eye on this space and www.ana.net for updates in the months ahead.

Renewed Interest in Advertising Careers is Just a Start

One of my great concerns for the future of advertising and marketing is the quality and quantity of talent coming into our industry. A few years ago, in the throes of the advertising recession, agency employment withered, college students shied from marketing majors, and many client side marketers were “restructured” out of meaningful positions.

While the growth in industry employment has been “less than robust”, the industry’s attractiveness has seemingly recovered. In a recent Euro RSCG Worldwide study, "No less than 22 percent of respondents overall said they would definitely pursue a career in advertising / marketing and another 16 percent said they probably would. The percentage is even higher among those with family connections in the industry: 49 percent."

For me, this is exceptional news. And it seemingly gets better. Last month, The American Advertising Federation held its annual college competition at their Dallas Annual Conference. One observer remarked that it was one of the most spirited, lively and high quality competitions he had ever seen. Humorously, this individual remarked that if he competed, he would have been trounced by the superb demonstrations of innovation, intuition and pragmatic marketing.

How do we build on this momentum? As marketers, we strengthen the future of our businesses when we engage academics and young consumers in an open dialogue about the issues and opportunities of advertising. One such opportunity is with an industry “jewel” I’ve recently become familiar with -- The Advertising Educational Foundation (AEF). Created in 1983 and supported by ad agencies, advertisers and media companies, the AEF links academia and the ad industry by initiating dialogue and providing perspective about the role of advertising in society, culture, history and the economy. A visit to the AEF Web site, reveals the breadth of advertising educational information, materials and programs, which AEF offers.

AEF’s Inside Advertising Speaker's Program places senior marketing executives in college classrooms to engage students in the critical issues of the day. Students and professors are fascinated to hear about the process by which companies create and leverage advertising. They wrestle with gender and lifestyle portrayals, ethical quandaries, the challenge of positioning brands in a global marketplace, and a host of other relevant, substantive subjects. This is such a great program and I encourage marketing, agency and media executives to do all they can to participate.

Although nothing in our industry is guaranteed, at least it now feels like it is pointed in the right direction. Perhaps, with the infusion of new talent, the application of new technologies and the spirit of creativity and innovation, we will get this industry back to the healthy state we all need it and want it to be.