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TV Advertising Budgets Are Under Siege

A joint ANA (Association of National Advertisers) and Forrester Research Inc. survey of more than 100 national advertisers illustrates marketers' continued lack of confidence in the effectiveness of television ads. And while they still express faith in the future of the 30-second spot, advertisers feel that the fundamentals to support their use is in need of an overhaul. Specifically, they express dissatisfaction with the current measurement techniques, an interest in more targeted ads, and a desire for less ad clutter and more relevance.

Respondents to the Association of National Advertisers/Forrester study of national advertisers said their TV ad spending will remain flat this year. They also reported allocating only 41 percent of their media budgets to television last year versus 58 percent in our 2008 survey. Other findings include:

- A lack of confidence in TV ad effectiveness. Sixty-two percent of respondents think that TV ads have become less effective in the past two years. Clutter is the main challenge to TV ad effectiveness: 69 percent of advertisers would like fewer commercials per pod.

- Renewed faith in the 30-second commercial. Only 19 percent of respondents believe that the 30-second spot will be dead in 10 years, down from 28 percent a year ago.

- A desire for more targeted TV ads but reluctance to pay for them. Seventy-eight percent of respondents say they would be interested in the ability to target consumers more precisely, but only 59 percent would be willing to pay a premium for it.

- Dissatisfaction with measurement. Nearly all advertisers who responded think that the TV industry needs new audience metrics beyond reach and frequency. Eighty-two percent of respondents would be interested in ratings for individual commercials.

- High interest in branded entertainment and interactive media. Eighty percent of advertisers agree that branded entertainment will play much more of a role in TV advertising, and 38 percent plan to spend more on branded advertising in 2010 as an alternative to the 30-second spot. Seventy-five percent of respondents believe that interactive TV will be an effective source of lead generation, but only 28 percent plan to spend more on interactive TV ads in 2010.

"As the overall marketing landscape is in the midst of a massive shift, so is the iconic medium of television," said ANA President and CEO Bob Liodice. "The standard methods of delivery and measurement need to adapt to what marketers today need: more specificity, greater effectiveness, and more detailed measurement. ROI is one of the most crucial aspects of marketing today, and the processes behind TV must be held to the same scrutiny as marketers."

"CMOs need to prepare for television's digital future by forcing change upon the TV advertising ecosystem," said Forrester Research Vice President and Research Director David M. Cooperstein. "We recommend that advertisers get ready for the future of television by preparing to deliver targeted commercials, delivering true branded entertainment experiences, and embracing the connected TV."

Respondents to the Forrester/ANA survey include 104 advertisers across 21 major industries, representing nearly $14 billion in media budgets. The survey was conducted from December 2009 to January 2010.

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