The Future of TV Advertising

Tracks trends in traditional television ad sales and the impact of new technologies, new competition.

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Proven senior level executive with over 25 years of leading turnarounds and startups of software companies in media, finance, energy and business intelligence. See more at Linked In.

Monday, June 26, 2006

Local TV Responses to Sliding Revenues

The New York Times reports today that some internet ad rates are up 33%!!

Online Spending, according to Media Post, will reach $20B this year! (with $9B from Google, as I reported last week), exceeding that of all local television!

While on-line soars, television is lucky to grow revenue, and is finding it very difficult to raise prices. Advertisers like the customer connections they can create in an on-line experience. The decline of television ad spending is expected to continue, according to Booz-Allen's exceptional report. Most frightening to TV executives, has to be the conclusion that auto advertisers overspend on TV by as much as 44%!! See "Waste in the Auto Advertising Media Mix.", page 43

Auto represents a whopping 22.6% of local TV ad dollars. A 44% reduction would have a monumental financial impact on local TV as we know it.

So what can TV do?

I know that many top TV ad sales executives in local TV are digging deeper into their local markets. Smaller advertisers who traditionally only advertised in door-to-door coupon rags such as PennySaver, are being offered low cost ad packages on local cable and broadcast TV. But the "stick rate", the likelihood they are customers in a year, is abysmally low, less than 20% versus the 70%-90% local TV has learned to enjoy. (Why? -- later.) The impact is that the costs of sales rise as revenues slide!! (Gosh! the idea must have been created by the sales team!)

What can they do? I'll look at a few other approaches they are taking in later blogs, and will make some suggestions. In the meantime, TV ad execs should look at the resurgence of "newspapers".


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