Smiling at uncertainty: Auto ads + value deflation

With much the US auto industry now firmly in the surreal world of Washington, DC, it should come as no surprise that advertising is feeling the impact of the industry's troubles.

According to the Television Bureau of Advertising, local TV advertising from the automotive category--usually the strong number one local advertiser--was down a remarkable 52% from the same period last year (here). Only Food + Consumer Electronics categories were up among the top 25 advertiser categories (reflecting a back-to-basics move of twittering while eating, perhaps).

Back in January, I posted that one of five marketing trends we'd see was ad deflation among the pay-per-impression models online (here)...those pressures would seem to be accelerating in the traditional ad channels now, even as last summer foretold the decline in automobile advertising as imminent, if not quite present (here).

So What?

As ad reps now pursue landscapers, pawn brokers and plastic surgeons who have traditionally seen TV advertising prices as out of their league (here), it begs the question: what is the value of TV advertising?

The answer it seems, is that it is much less than the current market price. With local ad rate cards running at $6.66 to $27.29 cost per thousand impressions (depending on day part), effective rates are much lower for local dentists and plumbers now being courted by tv ad sales reps.

As marketers, we all undertand the importance of rationalizing advertising decisions using established goals and the means of measurement against them. But not every ad channel can deliver a directly measurable (i.e, causative) return on investment...in spite of years of rhetoric saying it could...the choice of channel may depend primarily on one's willingness to accept the very real uncertainty of not knowing the outcome of an investment before it comes out.

For local TV broadcasters, though, the auto industry's decline is contributing to a larger, more certain outcome in the pricing model: value deflation.

For a look at some 'legendary' auto advertising, harkening to a past that will of course remain there, check it:

GMC trucks (commercial)
by svarten

As seen on TV: Big branding. Sort of.

Google, one of the biggest brands to never have done a TV spot, finally can't resist. Of course, these masters of all media have a reason: Google TV Ads service.

Here's the ad, a repurposed 'video' that some folks in the Japanese office threw together to promote the Chrome browser:

So far, more than the home cooked ad has been seen more than 2 million times on YouTube. But starting last weekend, it's supposedly airing on regular TV.

So What?

Like so many other Googleys, Google TV ads is all about driving out the middleman. Or rather, replacing multiple middle-earthlings (middlings?) with a superior Google machine form.

In this case, Google TV ads makes you the media planner and buyer, enabling you to select demographic qualities of your target and match that with cable programming and schedules. Then, Google connects you with 'Ad creation suppliers' (the middlings formerly known as 'agencies'), many of whom list their standard creation price.

Don't need custom advertising tied to objectives? Create your own advertising using Google's Spotmixer...a template + stock solution.

But wait, there's more! You get to set your bid for maximum CPM and daily budget costs...interestingly the minimum bid for one thousand impressions is $0.50. And finally, you get to steward your media buy with daily data on what ran, where, and how many impressions were actually delivered.

See the whole product demo here. See prior posts on soon-to-be-Google's lunch DIY ad solutions here and here.

Of course this may not be the solution for a big brand that needs the thoughtful, objectives-driven advertising that we've come to love and adore. Then again, there's nothing like a little deflationary pressure (one of our five themes for 2009) to make what was once laughable, serious...sort of...like Google on TV.

Truths + Facts: Belief systems being challenged

Facts and truths don't really have much to do with one another - William Faulkner

One of the truisms in an age of self evidence is that everyone is entitled to their personal truths. Sometimes, we actually use facts to support our positions, often times we use data. And in other situations, we just hold some things to be self evident...like what I just typed.

For marketers, we've relied on the best available data to discern that facts that support the truth about our advertising efforts. Neilsen ratings, market research, market development data...all provide proxy support for the truths we hold to be self evident: that the campaign we created is reaching the right person in the right way with the right impact at the right time. Put another way, we believe it was noticed, we beleive it worked. And in the general truthiness of the statement 'more often than not', we are right.

But what if we really wanted to know the facts? The best available data on TV viewing is about to get realtime and real betterer: TiVo has announced that they are going to sell realtime data on what viewers watch...and skip...in all but the smallest of the country's 210 markets. (see here).

So what?

TiVo's universe of 3.3 million subscribers is, of course, self selecting and not entirely representative of all demographic groups...except the one defined merely as 'human'. But beyond that, the TiVo announcement may mean the following truths become self evident using the facts:

1. Neilsen's quarterly local data on 400 households, three or four times a year, may seem as quaint and incomplete as a single candle on an 80 year old's birthday cake.
   
2. Marketers may know the facts surrounding a program's viewer habits, such as timeshifting, program browsing and viewing duration, as well as the inevitable ad skipping.
   
3. Media planners and buyers may get to explore a host of new facts challenging assertions by reps on topics like dayparts, must-see TV and program ratings.
4. Advertising agencies will have access to facts about behavior that can inform audience insights and creative approaches in a test-evaluate-retest model more common in the online and direct response spaces.
   

 

Of course, whether these truths turn out to be self evident will depend on what the facts actually say...and one's willingness to believe them. 

177 million channels and nothin' on: Domain masters

Verisign, the domain registrar, reported (here) that the number of domains at the end of 2008 was 177 million. That's up 16% over the number in December 2007.

So What?

Consistent with one of our five 2009 marketing themes (here), the continued growth in online destinations (i.e., inventory) bodes ill for those who would hope for pricing power. Ad deflation would seem the inevitable outcome of an expansion in places for people to spend their time...for those who seek a place to invest their time, it's like having a TV with 177 million channels...on demand.

For those whose value is sold in cost per thousand impressions, 177 million is a big universe to target (of course they are not all ad sites, but you get the point).

For those who may appreciate the irony of a 57-channel TV overload lamentation (now 16 sweet years old), YourToob takes you back in time to...Bruce:

But wait, there's more! Direct response goes primetime

I don't watch a ton of TV, but is it just coincidence that I seem to be seeing more of the looks-like-it-was-shot-with-a-FlipVideo camera commerical for 5-hour energy ? Or the creepy and uber-annoying Sham Wow whammy of a shammy? Or Snuggie, the blanket with arms? Apparently not. I am seeing more of these direct-response ads...

We've posted before about the relationship between deflation and ad inventory (here) and the impact of auto and financial services exodus from brand advertising markets (here). But now, it's even hitting primetime. Direct response marketers are availing themselves of ad space that used to be called primtime for a reason: prime ad rates.

As the NYTimes confirms, the lack of primetime-paying advertisers has left the major network and cable outlets with inventory...and direct response marketers are in a position to take advantage of the opportunity.

The money advertisers spent declined 7.5 percent on network TV, and 5.5 percent on cable, from 2007 to 2008, according to TNS Media Intelligence.

The money direct marketers are spending on primetime space is sometimes a tenth of what the space went for just one year ago.

Recessionary pressures and increased emphasis on revenue-generation among advertisers is creating a perfect setting for direct response marketers to redefine primetime advertising. We can all expect more of the slightly amusing, certainly annoying, wonder-product advertising into the forseeable future.

Consistent with an Increasing Discomfort Index (one of our 5 marketing themes for 2009), it appears that primetime is a comfort zone no longer...Subprime time has arrived...the question remains whether 'As see on TV' means anything special to anyone but the advertiser.