ANA Marketing Maestros

Procure This!

By Bill Duggan

ANA’s Advertising Financial Management runs Sunday-Wednesday in Florida. For the first time ever, this annual event is sold out. 400+ people will be in attendance and many of these attendees will be client procurement/sourcing people.

One of the conference sessions is entitled, “Procurement: The Good, The Bad, and the Ugly” and will debut results of a survey among (a) client procurement; (b) client marketing; and (c) agencies on the state of marketing procurement.  We can’t reveal the juicy stuff until the conference, but in the meantime, here are the survey findings that cover information such as the background/level of experience of procurement professionals and reporting structure.

• Marketing procurement has been in existence, on average, for 10 years. 
• Meanwhile, a marketing procurement professional has an average of 7 years in marketing procurement and 12 years total experience as procurement professional.

A common critique is that many procurement professionals lack proper marketing training—but the numbers above show that marketing procurement is still in its infancy (at many companies) and the fact that there is 7 years average experience in marketing procurement versus 10 years average existence for the department is impressive.

The backgrounds of marketing procurement people are pretty equally divided:

• 43% were previously in another procurement role, non-marketing
• 38% were previously in a marketing or agency role

A debate we’ve heard – “Is it better to have a procurement person go into marketing procurement or a marketing person go into procurement?"  There is no clear answer but it’s an interesting debate. 

Finally, here’s where procurement reports: (percentages add to greater than 100% due to multiple reporting structures):
    Supply Chain Management or Strategic Sourcing: 38%
    Finance or Accounting: 30%
    Stand-Alone Purchasing or Procurement Group: 20%
    Advertising, Marketing and/or Marketing Communications: 12%
    Operations: 8%
    Corporate Services: 7%
    Other Groups: 3%

Stay tuned as there’s more to come!

New Plans for Local Ratings Unfair to Advertisers

By Bill Duggan

Nielsen, last week, formally announced its plans to eliminate the reporting of live-only local TV ratings to advertisers and its local station clients. Now, advertisers and local stations will only have overnight access to data for three different data streams: live program plus same day time-shifting of programming, live plus three day time-shifting, and live plus seven day time-shifting. Going forward, live-only data will only be available in custom reports, on a delayed basis.

Advertisers and agencies are disappointed. Nielsen has made it clear since this issue arose in 2009 that it could make three data streams available. Advertisers and agencies have been consistently adamant regarding the need for the live-only stream and have been willing to concede to the local stations the choice for the other two streams.  But now all available streams for local TV ratings will be “plus” and therefore include time-shifting.

On the national level, the evolution from program ratings to average commercial ratings has been a positive step and C3 takes into consideration three day time-shifting. But it is important to point out that on the local level program ratings continue to be used. Therefore, all the “plus” streams do not take into consideration commercial skipping in DVR playback. As a result, local commercial viewing would clearly be overstated—some agencies estimate that this change will result in an instant 7 percent viewership boost to local TV stations. Overstated rating could then lead to overstated ad rates.

 

This situation is unfair and unfortunate. Again, there are three local ratings streams available. One of those streams should be live-only as the majority of agencies and advertisers have consistently told Nielsen as well as the local stations. Remember, it’s those advertising dollars that ultimately fund the local stations and well as Nielsen’s ratings services. Why has the opinion of advertisers and agencies been disregarded?

Census Time!

By Bill Duggan

I mailed back my Census form today.  When the results are fully tallied, it will be exciting and enlightening to see how the demographic profile of the country has changed. Our population has likely reached a tipping point. In 2010, births to Hispanic, Black, and Asian women are projected to account for 50 percent of all births in the nation and that percentage will continue to increase going forward. The Census Bureau estimates that minorities will constitute a majority of the nation’s overall population in about three decades and a majority of Americans under age 18 in only one decade. The implications to marketers are now clearer than ever before—multicultural markets are no longer niche or “add on” segments. Rather, ethnic is the new mainstream and marketing as well as work-force diversity must reflect that.

 

Smart companies such as McDonald’s, General Mills, Coca-Cola, and State Farm are taking note and “leading with ethnic insights” (a line used by the CMO of McDonald’s at a recent ANA conference). It’s hard to believe that there are still companies either ignoring multicultural audiences or targeting these groups with only token spending. Just look at the numbers!  The Hispanic population is projected to grow 20 percent between 2000 and 2020 while the non-Hispanic population will grow just 12 percent. And the median age of Hispanics is almost ten years younger than the non-Hispanic population.  Plus, household sizes are much bigger—Hispanic households have 5+ people versus only 12 percent for non-Hispanics. 

The new Census info should be a game changer. Marketers are encouraged to be prepared rather than surprised by taking a hard look at the demographic data and projections available now. 

A Fight on the Value of Television Advertising

By Bill Duggan

A fight broke out at the recent ANA TV & Everything Video Forum. The “contestants” were David Cooperstein, Vice President, Research Director at Forrester Research and David Poltrack, Chief Research Officer at CBS. 

David Cooperstein had just finished presenting research from a joint ANA/Forrester survey that asked national advertisers about their attitudes towards television and video advertising. Highlights of that presentation included advertiser responses that spending in television was down and that the medium had become less effective. But the research also pointed to opportunities in areas including branded entertainment, addressable TV, and online video. ANA members can get the full survey report here.

In the Q&A session that followed, David Poltrack commented, “The frustration is just great. Essentially all morning long we heard about all the great things we're doing with advertisers to create new and exciting ways to use television (comment: those presentations were from Subway, Kraft, Cisco, and Pepsi), and then we get this report that is totally contradictory and inconsistent with what we know.”

ANA tries very hard to program events with a fair and balanced perspective. So allow me to provide some observations about television.

Television viewing is at an all time high. The average U.S. viewer watches 4 hours and 49 minutes of television per day—up 20 percent from a decade ago, according to Nielsen.

Television provides advertisers the opportunity to build mass reach quickly (arguably better than any other medium). Super Bowl XLIV (this year’s game!)  was the most watched television program of all-time with 106.5 million average viewers.

However, the abundance of television viewing options has greatly fragmented the audience. American Idol was the top rated program of the 2008/2009 broadcast season with an average household rating of 15.1.  Ten years ago, ER was the top rated program of the 1998/1999 broadcast season with an average household rating of 17.8. Twenty years ago, The Cosby Show was the top ranked program of the 1988/1989 broadcast season with an average household rating of 25.3. Marketers can target audiences more narrowly given all the options, but audiences are generally smaller than ever before. 

Consumers are increasingly multitasking when the television is on. A generation ago we’d simply watch Happy Days or Dallas. But today, kids are on the computer and other mobile devices, which are distractions from viewing, although there has been some recent buzz in the industry that some social media can complement viewing. Remember that Nielsen reports “opportunity to see” and not engagement or true viewership of individual commercials.

Sixty-two percent of the marketers in our survey believe that television is becoming less effective. Only seven percent stated that television is becoming more effective while the remainder believe that it’s no more or less effective. So advertisers, and a lot of them, have the perception that television’s effectiveness is declining.

And then there’s the issue of spending on television—which was part of the “David versus David” debate.  Per MAGNA, total television ad spending has declined from $55.6 billion in 2008 to $48 billion in 2009—that’s almost a 14 percent drop. In the defense of television, however, other most other media had even steeper declines in 2009 so television share of spend actually increased. In 2010, television spending is expected to rebound somewhat to $50.5 billion but that’s still well below 2008 levels.

 
Meanwhile, opportunities for television indentified in our survey include:

• Eighty percent of advertisers agree that branded entertainment will play much more of a role in television advertising.
• Seventy-eight percent of advertisers are interested in addressable television to target consumers more precisely.
• Forty-six percent of advertisers plan to spend more on ads in online video/online television shows in 2010.

Plus, television is increasingly available via the web “on-demand” and on mobile devices providing consumers more options to watch.

Television is alive and well and the current times are both exciting and challenging for the medium. This is a blog so your comments are not only welcome but appreciated. David and David—anyone else—please jump in!

The Path to Brand-Specific Commercial Ratings

By Bill Duggan

Nielsen recently announced that this past Super Bowl (XLIV) was the most watched television show of all time with 106.5 million average viewers.  Also, Nielsen provided a special report on the viewership of individual Super Bowl commercials.

Of course, ratings for individual national commercials are not yet available.  The current C3 metric that Nielsen provides for national ratings refers to the ratings for average commercial minutes in live programming plus three days of digital video recorder playback.

ANA and Nielsen have been collaborating on an initiative to increase the granularity of ratings that could indeed lead to individual commercial ratings.  Advertisers deserve such granularity to answer the question, "How many people actually had the opportunity to see my spot?"  

The just-released white paper, “The Path to Brand-Specific Commercial Ratings,” has details of the work Nielsen and ANA have done.

By the way, a Doritos commercial featuring two men in a gym being attacked for stealing someone else’s Doritos was the most watched commercial of Super Bowl XLIV (and also the most watched commercial of all time!) with an estimated 116.2 million viewers. 

Nielsen’s full rundown of the most watched commercials of Super Bowl XLIV is here.

Opportunities & Key Threats for TV and Video

By Bill Duggan

For the fifth time since 2002 ANA has partnered with Forrester Research on survey work to better understand advertiser perceptions and use, both now and expected in future, on television and video.  Forrester has summarized the key research findings and provided their perspective on the results in their report titled TV Advertising Budgets Are Under Siege. Meanwhile, the following provides a topline from ANA’s point-of-view.

Overall:
The death of television has been greatly exaggerated. While it’s true that television budgets have been reduced (per the title of the Forrester report), those reductions are more a reflection of broader economic conditions impacting all media. The reductions in television spending have, in fact, been less severe than most other media. 

From the broadest perspective, when asked to “comment on the value of TV advertising for the specific needs of your company” representative responses were:
• Pro: “Television is essential for building broad reach and brand awareness.”
• Con: “Television’s effectiveness/value is diminishing.”

The ANA/Forrester survey helps point to many opportunities, as well as some key threats, for television and video.

Opportunities:
• Branded entertainment: Eighty percent of advertisers agree that branded entertainment will play much more of a role in television advertising. Thirty-eight percent plan to spend more on branded entertainment in 2010 as an alternative to the traditional 30-second TV spot.
• Addressable television: Seventy-eight percent of advertisers are interested in the ability to target consumers more precisely—by demographics, zip code, or purchase behavior. However, advertisers don’t expect to pay much of a premium for such targeting.
• Interactive television: Seventy-five percent believe that interactive television will be an effective source of lead generation, but only 28% plan to spend more on interactive ads in 2010 as an alternative to the 30-second TV spot. Advertisers may want to see the interactive television advertising landscape further develop before they increase spending.
• Brand-specific commercial ratings: An overwhelming 82% are interested in having ratings for individual commercials (also called brand-specific commercial ratings) available for analysis.  
• Online video ads: Forty-six percent of advertisers plan to spend more on ads in online video/online television shows in 2010 as alternatives to the traditional 30-second TV spot.
• Place-based video: Sixty-four percent agree that place-based video in stores, elevators, and other locations will become increasingly important.

Threats:
• Overall effectiveness: Advertisers believe that television advertising is not as effective as it used to be. Sixty-two percent of respondents think television advertising has become less effective in the past two years.
• Clutter: Sixty-nine percent of advertisers would like fewer commercials in a pod in order to gain visibility.
• DVRs and video-on-demand: Sixty-six percent think that DVRs and video-on-demand will reduce (61%) or destroy (5%) the effectiveness of the 30-second television commercial.
• Shifts to other media: Advertisers plan to spend more on various forms of non-television media including social media (77%), web advertising (73%), search (59%), email (46%), and mobile (46%).

ANA members can download the complete report at www.ana.net/thoughtleadership.

2010 ANA Key Findings Report--ANA Recession Survey 4th Edition

By Bill Duggan

ANA recently fielded the fourth wave of what has become known as our “recession survey.”  Over the past two years ANA has polled our members at six month intervals to determine how marketing and advertising budgets are being impacted by economic conditions. 

The recession may be officially over, but it appears that marketers have reset their expectations and a greater degree of frugality has set in. Cost savings and reductions may be the “new normal” even as the economy improves. However, the deepest cuts are likely to have already been made.

Highlights from the most recent survey:

• Marketers are still being pressured to reduce their costs and spending in light of the economy, though reductions are less severe than were reported in the three previous surveys. 
• The top four ways marketers are reducing costs and spending:
  1.  75 percent are challenging agencies to reduce internal expenses and/or identify cost reductions.  
  2.  73 percent are reducing departmental travel and expenses.
  3.  53 percent are reducing advertising media budgets.
  4.  50 percent are reducing advertising production budgets.
• Though the majority of marketers forecast no change in spending for the balance of 2009, predictions about advertising budgets in the next six months suggest some degree of optimism since the last survey.
  1.  59 percent expect budgets will stay the same.
  2.  22 percent forecast that budgets will be reduced (versus 39 percent, 49 percent, and 53 percent respectively in the last three surveys).
  3.  19 percent are hopeful budgets will increase.   
  

Full survey results are available at www.ana.net/recessionsurvey.   

Live Is Good!

By Bill Duggan

ANA continues to advocate for a “Live Only” data stream for local television ratings. Nielsen is making three data streams available to the industry and has decided that all streams should be “plus” streams to including viewing in DVR playback: Live + Same Day, Live + 3 Days, and Live + 7 Days.

It’s critical to recognize that local ratings are based on program ratings and not commercial ratings (national ratings are commercial ratings).  All of the “plus” streams include program viewing in DVR playback but do not recognize commercial skipping in DVR playback.  Ratings would be significantly overstated as a result.  And prices charged to advertisers could potentially (and unfairly) increase as well.  With DVR penetration over 30 percent this is already an issue which will intensify as DVR penetration grows further—an increasingly number of viewers will skip commercials in DVR playback. 

Given that three local reporting data streams can be produced by Nielsen, it is reasonable for buyers to request that one of these streams be Live Only.  To have all three streams be “plus—”including DVR playback of programs but with no recognition of commercial skipping—seems unfair and unnecessary. 

On January 15 ANA and the 4A’s conducted an industry meeting to discuss local television ratings.  Read more about that at www.ana.net/localratings

ANA Television Advertising Committee Point of View On Local TV Ratings

By Bill Duggan

Nielsen recently announced its decision to modify the reporting data streams made available in local television markets, with plans to eliminate the Live Only data stream from overnights and electronic data files and replace that with the new Live + Same Day stream.  The ANA Television Advertising Committee strongly opposes the elimination of the Live Only stream and has requested that it be retained.

On the national level, the evolution from program ratings to average commercial ratings has been a positive step, but it is important to point out that on the local level program ratings continue to be used.
Therefore, the Live + Same Day stream does not take into consideration commercial skipping in DVR playback. So local commercial viewing would clearly be overstated.

Further, many advertisers and agencies negotiate local market deals with the media using Live Only ratings as their currency, and the removal of the Live Only stream obviously impacts such negotiations.
The Live Only stream is especially important to certain advertisers, including direct marketers, retailers, and those with a daypart-specific message (e.g., coffee in the early morning).

The ANA Television Advertising Committee has been a strong advocate for greater granularly in commercial ratings and encourages the industry to find a mutually beneficial solution for local ratings for advertisers, agencies, and the media.

Magazine Bleed Charges - Why Do They STILL Exist?

By Bill Duggan

I’d like to share a letter I wrote to the editor of Ad Age, printed in the September 28th issue:

 

Publishers should cut ‘bleed’ fees

Regarding "Condé Nast Execs to make Big Cuts, Insiders Say" (AdAge.com, Sept. 14): It would be terrific if McKinsey's analysis went beyond cost controls and also included a review of Condé Nast's pricing policies to ensure those policies are in alignment with marketplace realities. One such policy under scrutiny from   advertisers is charging an incremental fee for bleed ads. Once upon a time, publishers may have had real costs associated with the production of bleed ads. But today's printing and production technologies no longer require the press stoppages and plate changes that resulted int hose real costs. Condé Nast is one of the few remaining major publishers (Hearst is another) that has not eliminated these obsolete bleed charges, and ANA strongly suggests that the time has come to do so (end of letter to the editor).

 

More on bleed charges in the one page white paper – Are Magazine Bleed Charges Legitimate? ANA and 4A’s have reached out to Condé Nast on this issue numerous times since we published this white paper in January and all those requests have been completely ignored. Not even the courtesy of any response or acknowledgment. Meanwhile, Hearst’s response has been, “At the advice of our counsel, we will not discuss pricing policies in a group setting. So, we will take a pass on this.” 

 

We encourage advertisers and their agencies to discuss bleed charges with these respective publishers (and any others that have such fees). Not only are bleed charges no longer justified, but they actually cost advertisers additional money as sometimes two versions of creative are prepared (bleed and non-bleed) and the agency time and resources spent developing that extra creative and negotiating reduction/elimination of the bleed fees leads to higher agency compensation costs to advertisers. Finally, if publishers have a legitimate reason to charge for bleed, let’s hear it—after all this is a blog and the dialogue would be appreciated.