WPP Plc (WPP) and Publicis Groupe SA (PUB) are racing to expand their Web and mobile-phone advertising businesses to catch consumers’ attention. Microsoft Corp. (MSFT) says they shouldn’t forget a much more traditional route: television.
There has “never been a better time for TV advertising to seize the moment,” Microsoft Advertising and BBDO Worldwide, a unit of the world’s second-biggest ad company Omnicom Group Inc. (OMC), said in a study released today. The survey among 1,500 consumers in the U.S., China, Russia, the U.K. and Saudi Arabia shows that “TV is a rich, powerful medium and advertisers should continue to be making great ads for it.”
The call by the world’s biggest software maker, which spent $1.6 billion on advertising last year, is targeted at top marketing executives gathering this week along the Cote d’Azur in Cannes as they find the right balance between traditional print and TV advertising and newer platforms such as computers, tablets and mobile phones.
While digital advertising has the fastest growth rate, TV is able to stay relevant because of new technology such as digital video recorders and surround sound, as well as rising viewership in developing markets, says ZenithOptimedia, the research unit of the world’s third-biggest ad company Publicis.
“TV is by far and away the largest advertising medium,” Jonathan Barnard, ZenithOptimedia’s head of forecasting, said in an interview. “It has strengthened and is continuing to do so.” He estimates that TV ads will account for 42 percent of the $216 billion ad market by 2013, up from 37 percent in 2005.
TV is especially powerful in countries such as Spain and Italy that have been slower to adopt Web technologies, said Marc Bresseel, vice-president for global marketing at Redmond, Washington-based Microsoft’s advertising unit.
The annual Lions advertising festival in Cannes, which started yesterday, is the industry’s largest gathering. At lavish parties, ad agencies including Ogilvy & Mather, Leo Burnett and Saatchi & Saatchi will schmooze with the marketers such as consumer-goods companies Procter & Gamble Co. (PG), Unilever and Coca-Cola Inc.
Speakers in Cannes this year include Eric Schmidt, executive chairman of Google Inc. (GOOG), whose Android operating system is the fastest-growing platform for smartphones that allow users to surf the Web and download music and videos. Also present are Martin Sorrell, CEO of the world’s biggest advertising company WPP, Publicis CEO Maurice Levy, Time Warner Inc. (TWX) CEO Jeffrey Bewkes, AOL Inc. (AOL) CEO Tim Armstrong and Nestle SA CEO Paul Bulcke.
Marketers are increasingly using the Web for campaigns such as German health insurer DKV’s “hotel check web guerrilla.” Created by WPP, it embeds videos of vacation disasters on a travel website to convince consumers to take out a policy.
Contactless payments and coupon services such as those provided by Groupon Inc. are also helping advertisers to lure consumers are adding a new layer of targeting to mobile advertising, which is growing faster in some emerging markets than in the U.S. and Europe. Mobile advertising in China will more than double to $1.16 billion in the next three years, according to EMarketer Inc.
With television defending its place and Internet and mobile-phone marketing campaigns on the rise, the loser is likely to be print advertising, analysts say.
Digital Spending Spree
Online advertising will replace print ads as the second most popular form of advertising by 2013, ZenithOptimedia’s Barnard said. Web-based ads will be worth $94 billion by 2013, compared with $91 billion for print.
WPP will spend more than 200 million pounds ($324 million) this year on acquisitions, double its typical annual budget, to expand in digital and emerging markets, CEO Sorrell said in an interview last week. Dublin-based WPP is owner of ad agencies including Young & Rubicam, Ogilvy & Mather and the Grey Group.
Publicis said today it agreed to acquire Genedigi Group in China in a deal that would make the French company the largest public relations agency in China.
Last month, the owner of the Leo Burnett and Saatchi & Saatchi ad agencies agreed to buy Rosetta Marketing Group LLC for an initial $575 million in cash to broaden its digital operations. Rosetta will join the French company’s digital- oriented brands such as Digitas and Razorfish, part of a strategy of expanding that segment to 35 percent of revenue in 2013 from 28 percent last year.
Advertising companies are bolstering spending as they’re benefiting from increased investments by companies and consumers following the economic slowdown. Still, worldwide ad revenue may be recovering more slowly than previously forecast, as sales at U.S. retailers missed analysts’ expectations and, in Europe, industrial output in Germany slowed, MagnaGlobal, a unit of U.S. advertiser Interpublic Group of Cos., said June 16.
TV advertising will still grow an average of 8.3 percent through 2016, according to MagnaGlobal.
Microsoft and BBDO say the effectiveness of TV advertising is not only backed up by quantitative research and numbers. For their survey, the two companies analyzed consumers’ “emotional” connections with TV, personal computers and mobile devices.
While wireless gadgets are the “most personal device and something users feel close to,” TV has the advantage that its audience is receptive and “waiting to be entertained and humored,” the two companies said.
Even some of digital advertising’s most fervent advocates are convinced of TV’s permanence as a key marketing channel. In a speech in Cannes today about the changing online media scene, Huffington Post co-founder Arianna Huffington paused to refer to an ad for Chivas whisky she had seen recently and admired.
“I was sitting in a hotel room watching TV,” she said. “Even I still do that.”
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