The Advertising People Wait For No One

Michael Hedges May 17, 2010 Follow on Twitter

Advertising people see change and immediately begin jumping up and down. Emerging from noughties gloom the sellers of spots and space, brands and images have even more to sell and more to sell to. Watching all this horizontal motion can be tiring.

The planet’s greatest salesmen suffered during the ending years of the last decade. Bankers, stock traders and others made off with the big money. The advertising people waited for the next big change.

“We've just seen what we call our flash numbers for April, which did show that change from what we saw in March,” said WPP chairman Martin Sorrell, “so we are starting to see for the first time growth in our business on a worldwide basis.” Sorrell was speaking in Moscow at the International Advertising Association conference (May 13). WPP’s first quarter revenue, reported a month earlier, was down 1.8% compared with the same period 2009. Revenues for its digital divisions were up nearly 10% year on year.

The ad people began shifting their focus to digital media a decade ago. These are the catalysts for “bright, shiny objects” as much as “blue smoke and mirrors.” Technology provided both. Media consumers are ready to move on.

Digital shift for the traditional advertising people meant selling new platforms, new ways of getting messages in front of people. The Web’s arrival as a serious entertainment platform, different from television and print, let the ad people go wild – something they’ve always liked. That buying Web space for ads costs significantly less was the bonus worth waiting for.

“I think in the next 5 to 8 years 30-50 percent of the media is going to be consumed on the web,” said Google President of Global Sales Nikesh Arora to Reuters (May 13), “and if you look at the advertising proportion of the Internet versus the overall ad market, we are still under 10 percent.”

Ad spending shifts to online “follow industrial marketing logic,” said Arora to the Telegraph (May 15) ahead of Google’s annual Zeitgeist conference in the UK. “You have to go where the eyeballs are, where the customers are.”

New media’s relationship with the traditional advertising people is growing more strained. When Google bought mobile ad platform AdMob, WPP’s Martin Sorrell cried foul. He wants “rigorous” anti-trust examination in Europe and the US. Apple’s iAds service for mobile media advertising is certain to worry old-line ad sellers, keeping lots of control over ads and a big percentage of the spending.

“Apple is not treating agencies right," said Publicis Group’s Alexandre Mars at the OMMA Mobile conference in New York (May 12) "Long-term, this is not the best way to interact with anyone. You can't work like this.”

Right or not, the traditional advertising people might find digital media - “long term” – every bit a challenging as traditional media people discovered. The advertising people depend on clients – sellers of good and services – having confidence that the money spent exceeds the “50% wasted” rule. For huge global advertisers of the Procter & Gamble (P&P) variety media-mix decisions are based on pure science.  The 80% of advertisers that spend their money more tactically can’t waste 50%. Google has spoken their language. Much to the distress of traditional media buyers, Google (and others) believe ad buying, too, will continue to move to digital platforms.

Television continues to drive ad spending. As overall ad spending rebounds, television – platforms now more diverse – is more than holding its own. Net TV advertising – after discounts – should rise 3.7% in 2010 reported forecaster Informa Telecoms (May 14). All those new digital channels “has led advertisers to question the rates that they were paying to the established players,” said the Informa statement. “These channels have had to show greater price flexibility to retain advertisers.”

“We will definitely see an improvement this year,” said Informa analyst Simon Murray, who pointed to double-digit TV ad spending increases in Argentina, China, India, South Africa, Turkey and Vietnam. "However not every country will record an improvement and TV advertising is forecast to fall in 10 countries - Czech Republic, Finland, Greece, Hungary, Ireland, Netherlands, Norway, Puerto Rico, Romania and Taiwan - in 2010."

Total TV ad spending won’t reach the 2008 “peak” until 2012, he opines. By 2015 TV ad spending in the Asia Pacific region will eclipse Western Europe though spending in North America will remain unchallenged for the foreseeable future.  It is a “shift geographically that is extremely fundamental to us,” noted WPP’s Martin Sorrell. WPP recently announced acquisition of digital ad agencies in Brazil. The BRICs – Brazil, Russia, India and China – are still on everybody’s radar.

Google has long has its eye on developing regions, difficulties in China notwithstanding. "We are seeing growth in early stage markets where more people are going on the internet, and markets with large populations are wonderful places," said Google's Nikesh Arora. “Over the past five years we have tripled the number of broadband customers, more than doubled the number of internet connections and more than doubled mobile connections.”

Even the most entrenched actors in the media and advertising universe are finding new reasons to jump up and down. The outdoor ad people have fully embraced 3D visuals. Even 50 year old Playboy magazine is offering 3D (you’ve got to wear the glasses). Smartphone apps are the 21st century equivalent of magazine subscriptions.

It this respect little has changed. Ad people reflect a zeitgeist as they need it. Media people need to stay a half-step ahead, which is difficult when so much horizontal motion is confused for progress.

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