Is advertising at the crossroads?
Some interesting statistics in the current issue of Business Week point out that advertising has become a smaller part of our economy since it peaked in 2000. Internet advertising is rapidly growing -over 25 percent higher this year than 2006, which translates to $21 billion.
…but ad agencies are still relying heavily on :30 TV spots for their income. With the explosion of new media advertising in recent years, the traditional production model catering to advertisers simply no longer works. Each passing month clients spend less money on television spots -(budgets are down 1.5 percent from last year, to 46 billion), want their TV ads to tie into larger marketing campaigns or even turn completely to the Internet to get their message out.
This is going to be an interesting situation for the very high-end ($600+/hr.) post-production houses, as pretty much everything they do can be emulated in a tricked-out desktop computer. How are they going to compete with the $150/hour post houses, anyway? The word “dinosaur” comes to mind…
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March 19th, 2008 at 3:38 pm
I think the agencies will be knuckling under in favor of direct response advertising soonish. The idea of branding the general publics thoughts will have to give way to asking for action. Imagine if Coke and Nike have to actually make offers or have discounts. A different world for them.
March 19th, 2008 at 4:19 pm
I agree, Chas. At some point, large advertisers are going to stop handing big agencies huge budgets to innundate the general public with thousands of messages. Some of those thousands of impressions are certain to stick, although I think most agencies don’t have a clue which ads and which media are really effective, and they certainly can’t provide ROI data on most of what they do on behalf of the advertisers. Hey. I was there. I know how it works.