Advertisers Are Still Trying To Figure Out Where They Get The Most Bang For Their Dollar/Pound/Euro. In The US They Are Sliding Away, Again, From Newspapers. In The UK, The Q4 Prognosis For ITV Looks Horrible

What seems to be going on is that advertising budgets per se are not increasing that much from year to year, but in the past few years the number of outlets available for that advertising money has exploded. It’s not just the Internet, there’s digital television, mobile phones, and even outdoors is getting resurgence. Advertising money is moving around as buyers try to determine where they get the most value for their money.

In the US, where newspaper groups are desperate to please shareholders and increase the value of their shares it seems like the old one step forward, two steps back scenario. At the New York Times, for instance, when the company announced recently that it was selling its broadcast division of nine television stations the shares moved up. Last week it announced that Q3 was going to come in considerably under Q3 a year ago and the shares dived 5%. They finished the week at $21.79, just $0.25 cents above their 52-week low.

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There were similar poor numbers being warned by Dow Jones, Belo, Media General, Tribune and the like. And when Internet giant Yahoo announced that its financial and auto ad revenues were down in Q3 that saw their shares take a 12% dive that same day.

Newspapers are getting hit hard from the severe drop in auto advertising and also because Federated Department Stores has consolidated its brands under the Macys label which means now that one newspaper ad spread covers a city whereas when it had several brands in the city it needs several spreads to cover them all.

And the new buzz acronym that should put fear into media everywhere is MBRO – Marketing-based revenue opportunities. There is more and more competition out there for the ad/promotion money available. New York City last year, for instance, signed a 20-year, $1 billion contract with a Spanish advertising company licensing the city’s newsstands, new public toilets and bus shelters; Dr. Pepper in Dallas a couple of years ago paid $3.5 million to be called the official soft drink in its home city. Since budgets aren’t increasing that much and such marketing opportunities are increasing all the time – how long will it be until advertising shows up on parking meters or city trash bins -- something has to give, and traditional media seems to be in the forefront.

Many newspaper companies around the world are racing against the clock to get to where the E.W. Scripps Company already is today – some 13% of the Cincinnati-based media company’s revenues now come from the Internet. Scripps used to be known as a newspaper company (and the owner of United Press International until it sold the news agency down the river in 1982) but now it is in the midst of converting itself into a content company.

It still owns newspapers in 18 markets, and television stations in 10 markets, but its emphasis these days is lifestyle cable TV networks, broadband television, and its comparison shopping Internet sites such as Shopzilla, uSwitch, and UpMyStreet. Whereas the newspaper division grew its advertising revenues by 1.3% in August over a year ago, the Scripps Networks increased their August revenue by 16.5% and forecast a 15% gain for September.

Ken Lowe, president and CEO, says that once the true effectiveness of Internet advertising can be proven to the advertiser then the sector will really bloom!

Nielsen Media Research has just released a report that shows those who believe the Internet is killing television are wrong, at least for now. In fact, over the past year daily television viewing in the US has actually increased by all of three minutes over a year ago. Americans had their household sets on for 8 hours, 14 minutes daily, and that figure compares to 7 hours, 15 minutes just 10 years ago. So television is alive and well.

Go tell that to ITV in the UK. ITV1 is the most popular commercial television channel in Britain, and it used to be watched on average by 45 million people every week, but those numbers have been falling steadily this year. It has the largest program budget of any commercial channel in Europe, around £1 billion. According to two national newspaper reports ITV is looking at a £80 million drop in Q4 revenues over the year previous. The 20% Q4 forecast drop is on top of an 18% Q3 slaughter.

But it’s not all bad news. ITV’s digital stations are forecast to be 33% ahead of what they produced last year so that makes up £10 million of the Q4 shortfall.

Indeed ITV is as good an example as any to advertising spend reallocation. The digital platform has taken off super fast in the UK via the Freeview digital box and ITV has added ITV 2, 3, and 4 to that platform. It is said the total advertising revenue available via the Freeview digital platform now exceeds the main ITV terrestrial channel.

ITV has itself to blame, according to media buyers, who have damned the programming for the past year. CEO Charles Allen resigned over the summer but it looks like another CEO will not be on board until the end of the year, if not Q1 next year. Even so, ITV says the Q4 forecasts are faulty since buyers are expected to make last-minute buys. And company executives are talking up the new Fall season.

But if ever there was a good example of taking the eye of the ball, of cutting costs to the bone and thus programming quality, but also trying to diversify then ITV should serve as good a lesson as any to the media world.