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TV Ads Less Effective, Budgets Shifting Online

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More than half of advertisers (62%) say traditional TV advertising is less effective than it used to be, and many plan to shift their attention––and budgets––away from traditional TV to social media, online video ads, and branded advertising, according to a survey from Forrester and the Association of National Advertisers (ANA).

Advertisers plan to spend on average 41% of their media budgets on TV ads in 2010, the same level reported a year ago, but down 17 percentage points from the 58% allocated in 2008.
Below, other findings from the report, TV Advertising Budgets are Under Siege.

The 30-Second Commercial

Overall, advertisers say less clutter and better targeting would improve TV ad effectiveness: 69% of advertisers would like fewer commercials per pod to gain better visibility.


Yet advertisers still have confidence in the 30-second TV ad: only 19% say the 30-second TV spot will be dead in 10 years, up from 28% who said so in 2008, and most don't see shorter ads as a viable option.


Meanwhile, over three-quarters (78%) say they would be interested in the ability to target consumers more precisely, but only 59% would be willing to pay a premium for it.

Advertisers Want More Detailed Measurement

Advertisers want to accurately measure the impact of commercials: 82% say they are interested in ratings for individual commercials, as opposed to entire pods.

Nearly all advertisers (93%) say the TV industry needs new audience metrics beyond reach and frequency, while under half (49%) say the quality and accuracy of Nielsen ratings will improve in the next few years, down from the 67% who said so in 2008.

Similarly, only 37% say Arbitron will create more accurate TV ratings measurements, down from 59% who said so in 2008.

Advertisers Embrace Web-Connected TV

In 2010, most advertisers plan to move budget dollars away from traditional media to social media (77%), online advertising (73%), and search engine marketing (59%).


By contrast, only 15% of advertisers plan to increase spending on traditional outdoor advertising, 13% will increase magazine ad spend, 11% radio ads spend, and 7% newspaper ad spend.


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Many advertisers want to explore new forms of online video: 46% plan to spend more on online video ads as an alternative to the 30-second TV spot.

Of those investing in online video ads during the year, most plan to use pre-roll ads (38%), followed by banner ads adjacent to online TV show video windows (32%).

Interactive Media and Branded Entertainment Benefiting from TV's Decline

In addition to online video ads and traditional sponsorships, advertisers are seeking new avenues to build awareness: 80% of advertisers agree that branded entertainment will play much more of a role in TV advertising, and 38% plan to spend more on branded ads in 2010 as an alternative to the 30-second spot.

Three-quarters of advertisers (75%) say interactive TV will be an effective source of lead generation, but only 28% plan to spend more on interactive TV ads in 2010.

Advertisers agree that tomorrow's advertising leaders don't necessarily have deep roots in the business: 63% say Google will be the one to gain the biggest share of advertising dollars, followed by cable operators (53%), and cable networks (47%).  Near the bottom of the list of predicted winners are the broadcast networks (9%).

Other survey findings:

  • The DVR is not perceived as an imminent threat to TV ad effectiveness: 40% of advertisers say they are not worried about DVRs because consumers already skip commercials, and 21% don't feel strongly one way or the other.
  • 66% of advertisers say DVRs will destroy or reduce the effectiveness of the 30-second TV spot; that's in line with 2008 responses. However, 29% also say TV spots will evolve in ways that preserve their effectiveness despite the rise of DVRs.
  • Media agencies are best-equipped to help advertisers navigate the changes in TV advertising:  52% of advertisers cite their media agency as their best source of guidance, while 45% cite their digital agency, and 42% cite their creative agency.

About the data: Forrester Research and the Association of National Advertisers (ANA) surveyed 104 US advertisers across 21 major industries representing nearly $14 billion in measured media budgets from Dec. 2009 to Jan. 2010. The survey results will be presented at the ANA's TV & Everything Video Forum in New York on February 11, 2010. 


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