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TERENCE SMITH: As networks trotted out stars for advertisers in advance of this fall’s television season, media companies were hoping that the advertising market was finally beginning to recover from the worst slump since World War II. The so-called “up front” market, when advertisers buy commercial television time in advance, in fact proved stronger than expected.
But nationwide, advertising in major media is struggling to recover from an extraordinary 10 percent across the board cut in 2001. The downturn in the economy, the bursting of the Internet bubble, and September 11 all contributed to the spiral, especially in newspapers and magazines. And some analysts don’t project a real rebound until 2003 or even 2004.
SCOTT DONATON: I don’t think we’re really out of this yet.
TERENCE SMITH: Scott Donaton is editor of the industry bible, Advertising Age. He says that advertising, when it does rebound, will be radically different and will affect the newspapers you read and the shows you watch.
SCOTT DONATON: I think that the fundamental change in the business– and we’re right in the middle of it now– has been the switch in power from the content providers, if you will, whether that’s advertisers or programmers, to the end user, the consumer.
COMMERCIAL: There’s nothing like a Coca-Cola…
TERENCE SMITH: In the days before cable and the Internet, national advertisers could rely on three television networks and general interest magazines to get their message across.
COMMERCIAL: And even in boiling water, the Band-Aid plastic strip doesn’t come loose.
TERENCE SMITH: Commercials often became part of the cultural landscape.
COMMERCIAL SPOKESMAN: Excedrin headache number 1040: The tax audit.
MAN ONE IN COMMERCIAL: I take Excedrin when I have A… you know, I’m in a bind or I’m… ( stammering ) I’m on the spot.
MAN TWO IN COMMERCIAL: Is that what’s in that green bottle?
MAN ONE IN COMMERCIAL: Yes, right. That’s Excedrin.
MAN TWO IN COMMERCIAL: You have a headache?
MAN ONE IN COMMERCIAL: I have an Excedrin headache.
TERENCE SMITH: But with new media and the proliferation of cable channels and special interest magazines, the consumer and the advertisers have many more choices.
SCOTT DONATON: Clearly it spreads these dollars across a wider and wider field, and as certain advertising options such as the Internet gain more credibility as advertising vehicles, it’s inevitable that that money will come from other platforms.
TERENCE SMITH: American consumers are bombarded with advertisements throughout their day. Just witness the scene that confronts drivers on Hollywood’s Sunset Boulevard. But executives questions whether their commercial messages are getting through.
JAN VALENTIC: It’s really a battle for glances in the business.
TERENCE SMITH: Jan Valentic is vice president for global marketing at the Ford Motor Company. She says just finding the consumer is a challenge.
JAN VALENTIC: I think the critical factor is, how do you integrate all the different media vehicles that connect in different ways to attract your customer, I mean, be kind of a magnet to your brand?
TERENCE SMITH: Advertisers can no longer assume the public is sitting back, patiently watching commercials.
MARTIN KAPLAN: The idea that viewers are eager and willing partners in this fiscal, social contract to watch the ads, I think that leaves consumers laughing hysterically, and only hysteria in the corporate boardroom.
TERENCE SMITH: Martin Kaplan is associate dean at the University of Southern California’s Annenberg School of Communication. He says networks’ dependence on advertising revenue is more and more of a problem.
MARTIN KAPLAN: The new technology is permitting people to defeat the advertiser-based theory. The advent of devices like Tivo and Replay has meant that people can, at a push of a button, extremely easily skip commercials. And as a result, the future of an advertising-based medium, like broadcast television, is really open to question. The way the networks are reacting to that in some degrees is making products stars of their shows.
TERENCE SMITH: Fearing audiences will skip commercials entirely, advertisers are increasingly looking to be part of the show. Ford Motor Company this summer sponsored the “Lincoln Garage Concert Series” on the “Tonight Show.”
SPOKESMAN: Please welcome No Doubt! ( Cheers and applause )
JAN VALENTIC: Music opportunities really connect with the Lincoln buyer. It’s a perfect example of, how do you leverage entertainment value to build your business? And the benefit from a media standpoint is that type of stuff doesn’t get Tivo’d out, if you know what I mean. ( Laughs ) So, you know, when you’re actually embedded in the program content, you’re engaging the customer in a way that is very different than the way you might engage them in a 30-second increment.
COMMERCIAL: Here come Arthur Godfrey your talent scout indeed…
TERENCE SMITH: Product placement isn’t new. It harkens back to the early days of broadcasting.
ARTHUR GODFREY: This is a most delicious beverage. ( Laughter )
TERENCE SMITH: And in some cases, products may be seamlessly woven into a story line. The Ford Motor Company’s product placement in the upcoming James Bond film, for example, may perfectly suit 007’s urbane image. But some fear that television advertisers and programmers could well cross the line.
SCOTT DONATON: I think it will be a lose- lose-lose for the networks, the advertisers, and the viewers.
TERENCE SMITH: Advertising Age’s Scott Donaton:
SCOTT DONATON: The danger here is that the programmers will create a show first and foremost with a marketing goal in mind: How to sell a product and how to create a show that is friendly to advertising messages. And if that is their first goal, rather than their first goal being to entertain the audience, those shows are going to fail.
TERENCE SMITH: The problem is not confined to the screen. Some magazine editors, desperate to please advertisers, are shaping editorial content to their needs.
SCOTT DONATON: The best consumer magazines have not given in to this pressure. But there are always… there’s a subtle creep that goes on, because they’ll run more “advertorials,” which are special advertising sections, or they’ll create special sections on certain topics or themes that advertisers might be more interested in. And it’s a careful line you have to walk.
TERENCE SMITH: And while the Internet bubble may have burst on Wall Street, the Web is still having an enormous impact on advertising in print media.
JAN VALENTIC: In the automotive business, I mean, you can look at a lot of different surveys, and anywhere between 60 percent and 80 percent of customers use the Internet to gather data to educate themselves about what vehicle to purchase. So how could we not be there?
TERENCE SMITH: Newspaper advertising nationwide fell 8.5 percent last year. Help-wanted ads were down by more than 30 percent. Some portion of that revenue may never return, as classified advertising moves to the Internet, and local retailers, a major source of newspaper advertising, are replaced by national chain stores.
SPOKESMAN: You get a pretty significant discount on your print ad in the L.A. Times.
TERENCE SMITH: Newspaper companies are diversifying to lessen the impact, and deciding that if they can’t beat the Internet, they’ll join it.
SPOKESPERSON: Thank you for calling CareerBuilder. How may I help you?
TERENCE SMITH: The online job recruitment service, CareerBuilder, has been acquired by Chicago’s Tribune Company and Knight Ridder, both giants of the newspaper industry.
MATT FERGUSON, CareerBuilder: Today, a lot of customers, they still just want to do print. Now some customers have moved over and they just want to do online… most want to do a combination of both today, and that’s something that we can provide them.
TERENCE SMITH: Matt Ferguson, CareerBuilder’s chief operating officer, says that print advertising has to find its place in the new media world.
MATT FERGUSON: It’s sort of like in a transition from, you know, radio to television. I think a lot people probably at the time that TV came along said, “radio will go away completely.” I think radio has found its place, and its different than television. And I think that print will be similar in that it finds its place in the marketplace. And online will be certainly the driver of the business from a growth standpoint, but I think there always will be a place for print.
TERENCE SMITH: For print, as well as other media, the final impact of the Internet remains to be seen.
MATT FERGUSON: I don’t think there’s any doubt that the newspaper industry as a whole was late to the Internet game. But I think we’re still in the first quarter, and there’s a lot of this game left to be played, and I think for the most part the industry has awakened to the fact that they need to be aggressive in the Internet, and they are doing that. And so the next three quarters are where the winners are going to be determined.
TERENCE SMITH: What is clear already is that advertising in general is in the midst of profound change. And if there is an upside for the public to that change, it is that advertising will have to be even more creative to capture its audience.