The R-Word
So. Mervyn King has dared to use the R-word. However, having heard the Prime Minister speak today at WACL’s 85th anniversary lunch, I’m following his advice and resisting calling this a recession until the facts catch up – or not – with predictions.
Either way, it’s not going to be much fun running media companies next year. Part of predicting the future for TV inevitably entails looking at the immediate future; we’ve all got to get through 2009 and the decisions people take next year will have significant influence over the longer-term shape of the TV industry. The restructurings begun, investments made, and collaborations struck will take place in a climate of caution.
But, as the esteemed MediaGuardian noted this week, there is a silver lining to this dark cloud: people will be watching more TV because they will be staying in more. And there are proven opportunities for brands in this climate to keep spending and steal market share very cheaply, so that they come out of the bad times in fantastic shape and ahead of the competition.
Yesterday morning we staged an event called “Upside to Downturn” which fielded some of the biggest brains in brand econometrics and marketing consultancy. Andrew Sharp of PwC, Professor Paddy Barwise of the London Business School, Karl Weaver of Data2Decisions and Peter Field, co-author of Marketing in the Era of Accountability delivered up an overwhelming body of evidence between them that should help Marketing Directors make the case for maintaining, or even increasing, their advertising spend in a downturn. Case after case study, and various research projects looking at the issue from a variety of angles, all reinforced the broad message that companies who can keep spending end up making far more profit than the short-term saving that cutting ad budgets yields.
But Paddy Barwise emphasised that we should remember the art of the possible; sometimes cuts just have to be made. And in those circumstances, the two original pieces of work commissioned by us from PwC and D2D showed that TV spend deserves to be increased for three reasons: a) it delivers the highest return of any medium – 4.5 times the investment – b) increases and decreases in TV spending produce positive and negative results respectively very quickly and c) TV investment delivers across a broader range of metrics than other media and uniquely can combine quality and value messages.
This point was vividly brought to life by Richard Warren from DLKW who demonstrated how TV had helped Morrisons improve perceptions of their food quality without losing their value positioning, contributing hugely to sales, profit and share growth across 2008.
The question we would ask you is, if TV companies have to prioritise spending next year, what should be at the top of the list? And anyone who wants to share how they have successfully persuaded CFOs to maintain marketing budgets will be very popular.
Yesterday’s research showed that TV was a very reliable investment. Who isn’t looking for a safe haven right now? And with TV CPTs at 1992 levels it’s the best media bargain in the UK.
Tags: Andrew Sharp, CFO, Chief Financial Officer, cost per thousand, D2D, Data2Decisions, DLKW, Gordon Brown, Karl Weaver, Marketing in the Era of Accountability, Mervyn King, Morrisons, Paddy Barwise, PricewaterhouseCoopers, PwC, recession, Richard Warren, WACL, Women in Advertising and Communications London
October 30th, 2008 at 12:30 pm
If TV is such a prudent and effective investment, why doesn’t Thinkbox run any TV ads? Placed in the right environment they might even attract new or lapsed advertisers.
October 30th, 2008 at 7:59 pm
@jezwaspsrule: a very fair, if slightly difficult, question to put to us, particularly as our colleagues at the RAB, IAB and NMA are all benefiting from advertising in their respective media right now. Here is the explanation of why it is extremely complicated for us to use broadcast TV advertising ourselves, which might just interest you if you are the anal sort, but equally might send you to sleep.
The rules governing broadcast TV advertising and promotion are extremely rigorous. TV companies can only use promotional time for messages that relate to the audience as viewers. Advertising time must be sold to any company at a fair market rate, including to Thinkbox, despite them owning us. So we would not be allowed to have free, or even discounted, airtime. And because the TV market has a fixed supply (of minutes) any advertising by a TV company owned subsidiary is open to the accusation from ISBA and the IPA of hardening the market, unless there is a clear market imperative for them to use TV. Mind you, with TV prices at 1992 levels it might be considered a bit churlish if they did so! There are other very cost-effective ways of using TV, such as sponsorship, but whatever route we chose we would of course have to operate transparently and squeakily-cleanly.
Then there is the small matter of the large slice of the ad budget that the government would take in the forms of various taxes and levies – unique to TV advertising – in the process. And, as the marketing body for commercial TV, it would be a bit embarrassing if we didn’t lead by example with fantastic creative work.
None of the above totally precludes us from advertising on broadcast TV, but the case would need to be very robust and it would be very complicated to resolve. Then again, we do like a challenge…
However, we do use televisual communication whenever and wherever possible. You’ll see that our website is full of TV content and we also make TV ‘programmes’ that we distribute on DVD. So, we like to think we are using the newer TV platforms in engaging ways, if that doesn’t sound too weaselly!
October 31st, 2008 at 3:53 pm
No, that makes sense – but how annoying that you are hamstrung by what look like rather excessively restrictive regulations. How about some AFP though? There must be a production company out there with a smart idea that would link in neatly with Thinkbox’s mission.
The Home Office has managed to make something watchable with the Beat: Life on the Streets series. But then, I suppose, that you’d run into problems of which channel to run it on.