TV Ads To Take Hit As Big Brands Anticipate Online Budgets

Big name-brand marketers are fed up with traditional media channels and are threatening to shift the lion’s share of their budgets online, according to Nick Brien, worldwide CEO of Universal McCann.

“If this happens for another year, significant clients will want to walk,” Brien said at an Interactive Advertising Bureau conference in reference to a general climate of discontent due to increasing viewer fragmentation, disruptive technologies, and the resulting decrease in ROI (return on invested capital). Without naming any specific clients, Brien added they are “just waiting to increase their online spend to 50% or 60% [of their total budgets].”

According to eMarketer projections, web advertising as a share of total ad spend will reach 7.4% this year, more than 10% by 2009, and at least 13.3% by the end of 2011. “Shifts among marketers away from traditional media would make U.S. advertising growth flat-line without the Internet,” said David Hallerman, senior analyst at eMarketer.

The increased spending on online ads is coming from a mix of additional allocations and budget shifts from other media, and TV may be in for the greatest losses. Among the largest companies, 42.4% of marketing executives recently told BusinessWeek that TV would take the biggest hit in ad budgets in the next few years.

Brien also took a moment to dispute statements made recently by Maurice Lévy, chairman and chief executive of Publicis, to the effect that the industry was approaching the kind of hyper-inflated economics that led to the so-called dot-com crash in 2000/2001.

“He doesn’t give enough credit to the serious ad dollars being redirected to growing audiences online,” Brien says of Lévy. And at the end of the day, a solid brand is still one of the “most valued and most exciting mechanisms” a marketer can possess, Brien notes.

That notion was seconded by Brad Brinegar, chairman and CEO of Havas’ McKinney, who described a brand as “that most valuable asset.” Brinegar predicts that over 50% of McKinney’s business will be digital in less than two years. “But don’t talk about how interactive [digital] is a way to do something cheap,” he says. “To do it right costs money. It’s just allocated in different ways.”