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12/04/2007

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 L�vy, 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 L�vy. 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.�


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