"Why rock the boat?" your CMO might say when you propose spending more money on interactive. The TV :30s are working just fine.
But the media landscape is changing, and we can no longer rely on traditional approaches to marketing.
TV effectiveness is on the wane -- ratings are down -- yet costs continue to rise. Look at this 2006 data from McKinsey & Co:
- Over the past 10 years, ad spending on broadcast TV has risen 40 percent, while the number of viewers has dropped by almost 50 percent
- Upfront CPMs for TV broadcast spots increased 7.3 percent in 2004/2005 and 2.6 percent in the 2005/2006 season
- The cost of a Super Bowl ad has increased 14 percent between 2003 and 2006, yet the audience shrank.
American Express CMO John Hayes has said, "Where else in the world can you be convinced to pay more for a commodity that's experiencing diminishing returns?"
Decline in the percentage of adult TV viewers who can name a brand advertised in an evening TV show.
Research from Forrester and the ANA predicts that by 2010 traditional TV advertising will be only one third as effective as it was in 1990!
And don't forget about the rise of TiVo and other Digital Video Recorders (DVRs). The ANA study also found:
- 70 percent of (ANA) advertisers feel that DVRs and VOD will “reduce or destroy” the effectiveness of :30 spots
- When DVRs enter 30 million households, 60 percent of advertisers said they would cut back on TV, with one quarter slashing their spending by 25 percent
- 80 percent claimed they would reallocate these dollars to the web
At eMarketer, we predict that the 30-million mark for DVR penetration will occur in late 2008.
Proctor and Gamble CMO Jim Stengel summarized the state of TV in a nutshell: "In 1965, 80 percent of 18- to 49-year-olds in the U.S. could be reached with three 60-second TV spots. In 2002, it required 117 prime-time commercials to do the same."
