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Ad Dollars Continue Drift from TV

9/23/2005 8:00 PM Eastern

New York— There’s no stopping the migration of ad dollars from television to nontraditional media, a panel of Madison Avenue executives said Thursday.

Several participants in the “Media Buying Chiefs” panel, sponsored by the International Radio & Television Society Foundation, said that anywhere from 5% to all of their clients’ budgets are now being allocated to nontraditional media.

The ad agency chiefs also voiced concerns about the impact of spiraling oil prices and nose-diving consumer confidence on ad spending.

Charlie Rutman, CEO of MPG North America, said he feared rising oil prices will increase the cost of manufacturing and distribution, prompting a cutback in corporate marketing.

But a good portion of the discussion focused on new options, with several panelists outlining how their clients were dedicating more of their budgets to nontraditional media.

“Ad spending is not flattening out, but we see television in the bigger picture flattening out,” said Tim Spengler, Initiative’s executive vice president and director of national broadcast. “Right now, the increase in dollars is going to other platforms.”

Alternatives include movie theaters, shopping malls and even pizza boxes, according to Bill Koenigsberg, president of Horizon Media.

“At minimum, we are moving right now 10% to 15% of our ad dollars into other nontraditional media,” said Koenigsberg, pointing out that even “bricks-and-mortar” retailers like Ikea and Ace Hardware are now running Internet ads.

“The money follows the consumer,” Rutman agreed, estimating that 5% to 20% of his clients are redirecting their budgets to non-traditional ad outlets. “I actually don’t think it’s a lot. I actually think that this is going to increase.”

Donna Speciale, president of U.S. broadcast for MediaVest, said spending on non-traditional media varies “brand by brand.” In some cases, advertisers with products aimed at young consumers are earmarking all their budgets to nontraditional media.

Moderator Tom Wolzien, of Wolzien LLC, asked about Comcast Spotlight’s highly targeted ad options. Spengler said he liked the technology, but complained about cost.

As for new-media options, Rutman was bullish on wireless and cellular, saying that’s “the next big explosion.”

Koenigsberg didn’t see it that way: “I think the upside is much bigger on the VOD and [digital video recorder] side,” with “a huge potential there down the road.”

Speciale warned against annoying consumers with ads on platforms where people don’t want to be interrupted.

 

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