The year 2008 promises challenges on many fronts for advertisers and agencies as they work to address a number of cross-currents in the marketplace, including:
- Continued media fragmentation with more choices to listen to, read and watch;
- Audiences who are increasingly empowered to choose DVR or satellite radio to provide them the choice of when, where and how they get their media;
- Economic turmoil in real estate, credit and energy markets, with subsequent impact on disposable income and marketers’ ingredient and transportation costs;
- Politicals, the most highly-contested Presidential election in our history and continued aggressive issue advocacy campaigns;
- Beijing Olympics will heat-up sports marketing and affect media consumption patterns, particularly for TV.
Advertisers must realize high levels of productivity from their media investments, and media planners and buyers must be diligent in planning ahead to optimize negotiation and stewardship of client media schedules.
Get Ready to Rumble…
The industry’s adoption of new tools of the trade has been selective, with strategic market rollouts that have allowed buyers to better understand the effects of the changes before the general adoption of new ratings. This will not be the case with general elections and the Olympics, which will impact ALL markets at a given time. Agency planners and buyers must get up to speed and do all they can to mitigate risk for advertisers as they wrestle with the one-two punch of an incredibly active political
advertising year and the Summer Olympics in August.
Upcoming elections represent the first primaries since 1928 in which no incumbent will be in the running for the U.S. Presidency. The resulting field of candidates is huge by nearly all standards. Spending behind individual campaigns, party money and other advocates, not to mention active competition for Senate and Congressional seats, is expected to be brisk (USA Today estimates $2 billion will be spent overall) (1). The key question is whether earlier-than-usual spending will keep up as candidates seek to fill campaign coffers faster than they spend (2). Political advertising is doubly challenging for local market advertisers, as inventory is constricted with the onslaught of campaign and advocacy spending, and stations that are legally obligated to offer candidates the lowest available rate during political protection periods. During the protection window (45 days prior to elections), it’s common to find rates for commercial advertisers rising and previously purchased schedules bumped as the crowded market causes preemptions to occur more frequently. With even earlier spending, these problems may well occur prior to the protection windows.
Tight buy management is key to mitigating risk. Gaining and keeping control of the process will serve to limit negative consequences and to better assure that clients achieve their marketing communications goals. Business as usual, hoping stations will look out for you is not the best course.
Beijing Summer Olympics are scheduled August 8 – 24, 2008, to be broadcast on NBC, which paid $3.5 billion for exclusive U.S. television rights to the 2000-2008 Summer and Winter games. With a number of highly watched events planned for primetime, including swimming and gymnastics, the Summer Olympics provides an outstanding opportunity for advertisers interested in sports marketing, though those spots tend to come at a high cost. Group M forecasts $1 Billion in U.S. spending behind the Beijing games (3). Major sponsors are already on board, including Lenovo and Adidas, while McDonald’s reportedly secured a Hamburger QSR exclusive. While opportunities for advertisers during the Olympics are obvious, having 16 days of dedicated programming to the games is sure to impact available television inventory on NBC stations. It also results in lower viewing levels (less audience available) on non-NBC stations. This will put added pressure on costs as advertisers who find Olympic pricing too rich or not well suited to their targeting objectives turn elsewhere. Again, the key is to plan ahead:
- If you are not leveraging Olympics coverage, you may wish to de-emphasize the 3 week period altogether;
- As with politicals, buying early is to your advantage. Annual buys can help to increase leverage;
- Expect shares to be depressed on non-NBC stations, particularly in Prime. Solid audience estimates are key to avoid overpaying or unrealistic plans;
- Minimizing short-notice changes can help to avoid predatory pricing as the market tightens during the Olympics period.
Success in the 2008 media marketplace will likely come to those who plan ahead. Just as the candidates and athletes striving to win their races will do so largely through careful preparation, so too must advertisers and their agencies. Last-minute planning and buying can result in significant premiums, which reduces the effectiveness of advertising spend at a time when the market will be flooded with political and Olympic ad spending.
1 USA Today, “Fight is on for campaign TV ad dollars”, 8/8/07.
2 Witness The Washington Post, February 7, 2007 headline “In Campaign 2008, Candidates Starting Earlier, Spending More”
3 Group M Global Ad Forecast as reported by MarketingCharts.com