You've probably heard some variation on the old joke about the guy whose doctor tells him that his illness is terminal. "Hold on, doc," the man says, "I want a second opinion." The physician replies: "OK, you're ugly, too." In some ways, such a scenario applies to the state of TV advertising spending for the 2009 upfront season: There's bad news and, if you'd like, there's more bad news.

The initial bad news, of course, is the recession. Consumers, fearful of losing their jobs (or the 8.5 percent of the populace who's has already lost them), have curtailed their spending dramatically. Then, of course, it gets worse: Brands hurt by that reduced spending decide that they either can't afford to buy as much advertising or, with consumers' wallets frozen shut, wonder if those ads would justify the cost, anyway.

While our latest annual look at ad spending in major consumer categories is full of predictable bad news that follows this trickle-down effect, keep reading. The fact is, while a rosy picture is hard to find, there are glimmers of hope in many segments. While it may be true that Big Pharma has decided to cut much of its ad spending (Americans who've lost their jobs are also, the reasoning goes, losing their health benefits), other categories are -- albeit cautiously -- buying air time.

For example: Though high-tech firms are moving to Webvertising in significant numbers, many consumer electronics brands are sticking with the good-old family TV set, reasoning that items like computers and cell phones have become essential purchases (especially for job hunters) and banner ads simply lack the "wow" factor. Beverage giants are maintaining their ad spending levels, as is the movie category, simply because television's sight, sound and motion qualities still deliver the best approximation of the in-theater experience.

What's more, the recession seems to have had a beneficial effect on some industries, leading to heated competition and, as a result, invigorated ad spend. Uniquely equipped to deliver a full meal for just a few bucks, fast-food chains are faring comparatively well in these recessionary times, with the result that $684 million-plus was spent last year on TV spots.

It'll probably be a while before we see the stratospheric spending levels of, say, 2007. But we'll give it to you straight: The truth is that TV ad spending still has a steady pulse, and the diagnosis isn't fatal.

--Robert Klara, Features Editor


Contents:

AUTOMOBILES

BEVERAGES (INCLUDING BEER)

CONSUMER PACKAGED GOODS

CREDIT CARDS

DRUGS (PRESCRIPTION)

FAST FOOD

MOVIES

RETAIL

TECHNOLOGY





AUTOMOBILES

With two-thirds of the Big Three on life support, is this any time to talk ads?

By Todd Wasserman


It's no secret that most automakers are hitting the brakes hard on ad spending. The only question is, how long will the skid continue?

For carmakers, 2008 was an annus horribilus, and 2009 looks to be, if anything, more horribilus. It all hinges on the fates of General Motors and Chrysler-fates yet unknown at press time. GM CEO Rick Wagoner is home polishing his resume after the Obama Administration pink-slipped him on March 30, giving his company 60 days to submit a turnaround plan. Sound harsh? Chrysler has only 30.

And so, the lights burn round the clock at 300 Renaissance Center and 1000 Chrysler Dr. -- but, without hard information from either headquarters, predicting how the industry will execute buys during the upfronts is a fool's errand. For instance, though Ford Motor looks comparatively strong compared to other domestic nameplates, if GM and Chrysler go under, some predict that the network of suppliers that the Big Three keep alive will also disappear, leaving Ford without parts -- in effect, without cars -- for as long as a year. (This doomsday scenario is disputed by others including Todd Turner, principal at consultancy Car Concepts, Thousand Oaks, Calif., who points out that "whenever there's a vacuum in the market, someone fills it.")

For its part, Ford (which according to Nielsen cut its network TV spend 25 percent in 2008) is planning seven launches this year and "it doesn't really lighten up next year," according to John Felice, general manager for Ford/Lincoln Mercury.

Though Ford's push for its 2010 Mustang was notably light on TV spending, the medium will still be a big part of the marketing mix, according to Felice. "This is going to be an interesting upfront because one of the themes is uncertainty," he says. "The economy is a challenge and no one knows exactly when it will turn." (But, he adds: "It will.")

Meanwhile, outside the Big Three, there are a few companies that plan to exploit the current economic conditions by increasing their marketing spends. Hyundai is one of them. Its outlay for TV network advertising rose about 20 percent last year and seems to be modeling its recessionary strategy on what GM did during the Great Depression, when it captured the leadership position from Ford via aggressive marketing. "Traditionally, brands that have taken advantage of down times like this have done well coming out on the other side," Joel Ewanick, Hyundai vp of marketing, told Brandweek in April.

Will Hyundai help make up the ad-spend gap left by the ailing GM? Not even close. Hyundai's network TV spending in 2008 was $182 million; GM dropped $636 million for the same period.

What about Toyota? The marque cut its network TV spending by 10 percent in 2008 to $326 million. Toyota is in a much stronger position than GM, but the company is still hurting. In December, the automaker posted its first yearly loss since 1938. The company launched only one 2009 model, the Venza. Company reps declined comment.

Turner expects Toyota will keep a low profile this year, playing the role of underdog. "They don't want to appear to be too aggressive," Turner says. "It's the way they operate." (Volkswagen, which doesn't have the capability to increase its production in the U.S. much anyway, is likely to take the same tack, Turner adds.)

Given the likely implosion of GM and Chrysler and the lack of companies following Hyundai's damn-the-torpedoes marketing stance, the auto industry, then, is a sure bet to be the biggest laggard among all the segments at the upfronts this year. Hence, returning to the question: How long will the skid continue? The easy answer is: At least through June, when the last upfront deal is closed.




BEVERAGES (Including Beer)

Recession be damned! Coke and Pepsi battle it out. A-B, not so much

Kenneth Hein


Perhaps people just aren't that thirsty any more? Maybe that's why for the first time in recorded history beverage volume actually declined -- by 2 percent, per Beverage Marketing.

More likely, recession-weary consumers are rediscovering the virtues of tap water. Undeterred, both Coca-Cola and Pepsi believe this is a problem that can be solved by advertising. Both have committed to new, aggressive marketing campaigns. Coke is trying to convince consumers to "Open happiness" while Pepsi wants us to "Refresh everything." Both campaigns launched at the Super Bowl and have continued to air during prime-time broadcasts.

"Companies are looking for ways to invigorate their business in a very soft economic environment," says Gary Hemphill, managing director at Beverage Marketing. "They are looking for ways to give consumers better value and create excitement around trademarks and brands."

Happily for the networks, prime-time TV is still a major weapon for both. "It's a very competitive category. If you're not doing it, your competitor will," says Hemphill of TV advertising. "The stakes are very high and there is a lot to lose if you are not continually keeping up with your customers."

Pepsi, in particular, has vowed to spend $1.2 billion on marketing over a three-year span to kickstart its sluggish North American soft drink sales. While Coke and Pepsi battle on a number of fronts, including the never-ending Powerade/Gatorade duel in noncarbonated, Dr Pepper Snapple Group has been similarly aggressive, recently launching Dr Pepper Cherry, via Deutsch/LA, with the help of Gene "Dr Love" Simmons. Its campaign regularly taps celebrities like Julius "Dr. J" Erving and Kelsey "Dr. Frasier Crane" Grammar to endorse its products.

The beverage giants will "maintain their spending commitments in a recession that may steer more consumers back to their brands as affordable luxuries," says Gerry Khermouch, editor, Beverage Business Insights. "Pepsi, in particular, concluded that it can get the biggest lift by slowing the decline of its core carbonated soft drinks, so I expect a heavy emphasis there."

So far, so good. But while the ad spending outlook for nonalcoholic drinks seems rather effervescent, beer looks to be somewhat flatter even though the companies may claim otherwise. "Overall spending is being reduced because of both the economy and questions about the efficacy of mainstream media," says Benj Steinman, editor, Beer Marketer's Insights.

For instance, Anheuser-Busch InBev said last year it would maintain its spend, but "they're already doing a nip/tuck on the local levels," says Steinman. One of those nips was at Goodby, Silverstein & Partners. The shop that created the iconic Budweiser Lizards was dropped after nearly 15 years with the brewer.

At competitor MillerCoors, CMO Andy England says his company doesn't intend to trim its budget: "As we promised when MillerCoors began its combined operations nine months ago, we will be investing more into our brands, our business and our people to create the best beer company in America."

Evidence of MillerCoors' focus can be seen in the company's pending relaunch of its lime-flavored Miller Chill, the introduction of the 64-calorie MGD 64 and a recent reboot of its Miller Lite campaign which focuses on the brand's long-standing "Tastes great" equity. The brewer also will maintain Coors Light's "Rocky Mountain Cold Refreshment" message that has helped the subbrand grow for 15 consecutive quarters. Says England: "We will continue to push the pedal to the floor with the successful launch of MGD 64."




CONSUMER PACKAGED GOODS

Recession, digital are the latest twists in long-running soap opera

By Elaine Wong


Marketers like Procter & Gamble, Kellogg and Kraft have been pitching value messages -- like our paper towel is actually cheaper in the long-run than those no-name brands -- to their customers since the economy went south. Now it's their turn. These companies are going into the upfronts looking for bargains.

"I think they are going to expect upfronts to be at much lower prices versus what they used to be, roughly in line with some of the scatter rates going forward," says Ali Dibadj, a senior analyst at Sanford C. Bernstein who covers P&G, Kimberly-Clark and Colgate. "Our companies are talking about per-unit media cost coming down globally in the 15 to 20 percent range." The economy exacerbates a subtle pullback in TV spending for the category. In 2004, advertisers like L'Oréal, Nestlé and Mars, among others, doled out a combined $2.8 billion to catch prime-time viewers' eyeballs; in 2008, that figure was $2.4 billion as digital soaked up more ad dollars.

Loran Braverman, an equity research analyst at Standard & Poor's, says those companies had been increasing their overall spends until the recession took hold: "In a different world, where advertising costs were down but there weren't other pressures, packaged goods companies would still be increasing the amount of dollars spent," but the current recession, coupled with the softer ad market, has allowed marketers to "cut back without hurting their brands." In other words, a falling tide lowers all boats.

Then, there's competition from online. Household products company Reckitt Benckiser, for instance, last month announced it was shifting $20 million from TV in favor of digital. The maker of Lysol and Mucinex last month launched its first major online campaign for Clearasil, a mixture of rich media and interactive Web videos.

It's not like CPGs are swearing off TV. But they do want more "flexibility" -- i.e., being able to shuffle ad dollars across network platforms, says Unilever North America media director Rob Master. "Flexibility is what's new. It's something we're a lot more focused on in this upfront than in the past," he says, adding that the sour economy and changing consumer media consumption habits are driving factors. "Media companies who don't see the reality as much as [their clients] get left behind."

Master says he wants more bang for his buck. Unilever cut its prime-time network TV spending by 2.4 percent last year ($202 million to $197 million, per Nielsen). Rival P&G, slashed spending by 16.8 percent ($543 million to $452 million). Part of that went to scatter, but P&G is actively exploring the online front, including organizing a "Digital Hack Night" for key social media and Web advertising executives at its Cincinnati headquarters in March.

ConAgra Foods, which saw sales rise 6.1 percent in its latest quarter, is focused on scoring media deals that "make sense for our brands," says Fernando Arriola, senior director of media services. One such example is the Orville Redenbacher's logo that pops up right before the NBC show Friday Night Lights. (Entertainment and popcorn, anyone?) The food maker also recently tapped Seinfeld alum Julia Louis-Dreyfus to star in a new campaign for Healthy Choice's relaunch. Marie Callender's, which is building distribution for its newly rolled out Pasta Al Dente offering, also has new product news and marketing initiatives in the works.

Arriola, for one, remains optimistic about upfront advertising, despite the rough economy. Ad dollars will go where the opportunities are, he says, adding that such advantages may lie in local markets, which have been hit harder than the national realm. For advertisers like ConAgra, that have been pushing value messages at consumers, it's time to practice what they preach.




CREDIT CARDS

By T.L. Stanley

Spending tightens, messaging changes as issuers adjust to new frugality


It's a rough world out there, with spiraling unemployment, a flood of toxic assets, failing corporations and rising prices. How about some reassurance amid this economic morass from a familiar face? No, not President Obama -- your credit card company. The country's largest credit card marketers are taking a cue from the well-worn Friends theme song and telling consumers, "I'll be there for you." They're stressing stability, security and even -- gasp! -- responsible spending during the worst recession in 60 years.

"The messages coming have to match the tenor of the times and be consistent with consumer sentiment," says Jon Swallen, svp, research at TNS Media Intelligence. "The ads acknowledge the larger forces at play right now."

Discover, for instance, has been running a TV campaign that tells consumers about its "paydown planner," a tool to chip away at debt, along with a "spend analyzer" that lets customers keep track of where their money goes. As part of its "bright idea" theme, the marketer is rewarding those who pay on time six months in a row.

Separately, there's a new Web site, backed by MasterCard and several card issuers like Citi, Discover, Bank of America and Capital One, that says it's trying to get consumers back on track to financial solvency. The site, dubbed Helpwithmycredit.org, sets forth some basic education and information resources but has drawn darts from critics who say it's little more than a public relations stunt at a time when Washington legislators are debating far-ranging industry reform. "The credit card companies are all trying to figure out how to maintain a good relationship with us," says David Robertson, publisher of The Nilson Report. "When things settle, they want to be on our good side."

Those in the credit card industry are as concerned these days, maybe more, with holding on to current customers and not as focused on scouting for new business. In fact, they're pickier than ever about whom they'll approve, since defaults have risen sharply and late payments have topped record levels.

Against this backdrop, marketers have been reining in their spending, with the category overall showing an 8 percent decrease in advertising in 2008 from the year prior. Category leaders Visa, MasterCard and American Express dropped a collective 25 percent from $1.2 billion in ad spending in '07 to $900 million in '08. Individually, third-ranked American Express (12 percent market share) dipped the most from year-to-year, 28 percent, while market leader Visa (at 46 percent share) spent 17 percent less and MasterCard, with its 36 percent market share, doled out 13 percent less on advertising, according to TNS.

Spending on prime-time network TV, a broad brush that often features image advertising that's likely to be trimmed during a recession, fell to $444.4 million last year from $507.1 million in 2007, per Nielsen. Millions of Americans continue to lose their jobs and tighten their belts-nationally, the unemployment rate stands at about 8.5 percent, but in hard-hit areas like Detroit and Southern California, it's edged over 11 percent. Borrowing on credit cards dropped 9.7 percent in February, the biggest decrease in dollar terms since federal records began in 1968. "Unemployment is the bane of the credit card industry," Robertson says. "As long as job losses continue, the credit card companies will continue to get socked in the gut."

There are 160 million adults in the U.S. carrying plastic; on average, five different pieces of it. The U.S. Census Bureau says there were 1.5 billion credit cards in use in the U.S. in 2006. Marketers want that coveted first-in-wallet position, and to get there, they're using the behavioral data they gather and targeting consumers based on their habits. Going forward, that will mean more partnerships between credit card companies and their vendors, accompanied by more direct marketing to prequalified consumers. Since your card company knows you like certain goods, they'll send you special offers to build your loyalty to the merchant and the card.

TV and other mainstream spending is expected to rebound with the economy, but industry analysts don't think that will happen for another year. Current and future ads may continue to rely on back-to-basics rather than free-spending aspirational messages, in keeping with the austere national mood. And there's more pressure on the industry, thanks to a reform-minded Congress.

New rules from the Federal Reserve aimed at stomping out high finance charges, interest rate hikes and other practices deemed deceptive take effect in summer 2010. Meantime, Sen. Christopher Dodd's (D-Conn.) more restrictive bill, called the Credit Card Accountability Responsibility and Disclosure Act, recently passed the Senate Banking Committee. Among other provisions, it limits marketing credit cards to college students and young adults who often start amassing a lifetime of debt during those years.




DRUGS (Prescription)

As niche drugs replace the old blockbusters, TV's not the cure-all anymore

Jim Edwards


The collapse of the Golden Age of prescription pharmaceutical ad spending is illustrated most dramatically by Lunesta, the insomnia pill whose ads were so ubiquitous on TV, it was nearly impossible to pass an evening without spotting its trademark iridescent moth fluttering across the screen. Back in 2006, Sepracor spent $331 million to advertise Lunesta in its war against Sanofi-Aventis' Ambien and Ambien CR brands. It was the largest drug advertising budget -- ever. In 2007, the company dropped another $294 million.

But then sales reached a plateau, and last year Sepracor slashed the budget in half, to just $111 million. In the first two months of this year, the company has spent nothing -- zero dollars -- to advertise Lunesta on TV, according to Nielsen. The moth flutters no more.

While most companies have not curtailed ad spending as dramatically as Sepracor has, the pullback has been sharp and widespread. Now, drug marketers are predicting an even bleaker scenario for the rest of 2009, at least as far as TV ads go.

It's been a downward trend for some time already. From the record peak of $5 billion spent on all media in 2007, pharma ad spend tumbled 17 percent to $4.2 billion last year. Aside from Sepracor, the companies that withdrew the most from the market include Johnson & Johnson, whose Rx spending declined 38 percent to a 2008 figure of $37 million. (Just like Sepracor, however, J&J spent zero dollars on TV in the first 60 days of 2009.) GlaxoSmithKline cut 22 percent of its budget in 2008, then cut a further 38 percent of its TV-only spend in January and February of this year.

Brands pulling back on 2009 TV spending are, of course, likely to cite the recession (specifically, unemployment leading to an inability to afford prescription drugs). But that's only part of the issue. Many of the industry's biggest brands -- Pfizer's Lipitor, for example -- are losing patent exclusivity. When generics enter the picture, name brands generally stop or reduce their marketing.

In addition, yesterday's leviathan drugs are being replaced by specialized niche medicines, particularly in diabetes, HIV and cancer. For those drugs, mass TV advertising is neither appropriate nor efficient. "The days of multiple huge blockbuster drug introductions are behind us," says Saatchi & Saatchi Consumer Health and Wellness managing director Jim Joseph. "A lot of the brands that had very large audiences are hitting the end of their lifecycle. The new drugs coming on board are definitely more specialized. The audience is smaller, more targeted. Mass television is a lot less relevant." Adds Kathy Magnuson, managing director of New York agency Brand Pharm: Among consumers, "there's a huge backlash against healthcare advertising in general."

It's not all bad news, of course. A number of drugmakers are taking advantage of the open TV slots created by retreating brands. There's Amgen, which has increased its TV spend on Enbrel recently, and Abbott Labs, which has upped its TV budget for Humira.

Going forward, the TV that does get bought is likely to be more strictly scrutinized by clients. "There's a lot of dynamics going on with TiVo and viewership, and more broadly, the spend between TV, print and online. Online is winning that battle, hands-down," says Leana Wood, a former director of marketing for Botox at Allergan. She's currently an evp at MedAccess, an agency in La Jolla, Calif. As Wood explains, TV doesn't offer the granular level of data that online does, which is prompting some makers to ask if they really need to put money into the tube. "Not necessarily," Wood says. "I'd like to see the TV industry step forth with some really good metrics."

But some, like Saatchi & Saatchi's Joseph, have more sympathy for the old medium, which will remain a viable vehicle for drugmakers. "Fundamentally," he says, "television still has the largest ability to reach audiences quicker and on a more mass basis."




FAST FOOD

What recession? So long as people still have appetites, TV will have ads

By Kenneth Hein


Plenty more Whopper Freakouts, women swooning over baby burgers and cameos from long-forgotten stars like Hootie (formerly of the Blowfish) are in store. Burger King has pledged to boost its media budget by as much as 25 percent in 2010. The No. 2 burger chain has not eased off the accelerator: It raised ad spending by 30 percent in the first two months of this year. Last year, it spent more than $270 million, per Nielsen.

Hold on. Hasn't anyone told these guys there's a recession going on? Actually, unlike its battered advertising brethren in the auto and finance fields, the quick-service restaurant category has remained largely unbruised. If anything, hungry Americans in search of cheaper eats have meant a boon for fast-food chains, especially those with dollar menus.

"Yes, ad spending is down, but it's not down as much as in other areas," says Arjun Sen, president of Restaurant Marketing Group. According to Nielsen, spending in prime time for the category was off only slightly, at $684.3 million in U.S. media compared to $735.8 million last year and $727.1 million five years ago.

While many fast feeders are staying aggressive with their ad dollars, they're becoming even more aggressive with their ad messaging, as brands slog it out for what the food biz refers to as "share of stomach."

"It's a dog-eat-dog world," says Sen. "I've never seen so much comparative advertising. It's Domino's fighting Subway, Dunkin' Donuts fighting Starbucks, McDonald's going after Starbucks. Everyone is trying to steal share and protect their turf."

Punching the competition in the stomach has been one way of doing that (recent ads from Dunkin' Donuts ask, "Why wait?" -- an obvious jab at Starbucks' infamous long lines). Another way is broadening the menu, something Domino's recently did with its oven-baked sandwiches that rep Tim McIntyre calls "a new window of opportunity." Jeff Davis, president of restaurant market research firm Sandelman & Associates, predicts, "You'll continue to see people look for ways to broaden their menus. They're saying, 'If we can do dinner, why can't we do lunch or try breakfast?'"

New products are the engine that drives the fast-food category and are often the centerpiece of new ad campaigns. KFC is putting substantial media dollars behind its new Kentucky Grilled Chicken, aimed squarely at fat-conscious eaters. It'll be tough to draw traffic from Subway-the "healthy" fast-food joint in the minds of many consumers -- which is readying "a pipeline of innovative products" of its own, according to Jeff Moody, CEO, Subway Franchisee Advertising Trust Fund. (Subway's media investment "will remain equal to or go up, given our strong sales growth over the past year," Moody says.) Meanwhile, Burger King has promised extra-thick burgers, bone-in-ribs and new varieties of grilled chicken sandwiches.

For its part, McDonald's -- which has kept its ad spend strong throughout the fiscal slump -- will debut a one-third of a pound Angus burger, even as it continues to focus on its coffee. Much like Dunkin' Donuts, McDonald's has successfully poached coffee drinkers from high-priced gourmet java chains, even though its McCafe concept "is not working in a lot of places [and] some franchisees are not happy," says Ron Paul of Chicago-based foodservice consultancy Technomic.

No matter what the fast-food chain is advertising, however, one message will be paramount in these budget-conscious times: value. Fortunately for them, years of selling four-dollar value meals have already cemented that association in consumers' minds. Even so, says Sen, "Every brand is trying to promote how many dollar menu items they have."

Which means, of course, every brand will continue to drop money on TV ads, especially in prime time. Because, recession or no, anyone can appreciate a cheap lunch. "This is a category that responds very well to ads," Paul says.




MOVIES

TV still gets folks into theaters, but integrations and other media help

By T.L. Stanley


Movie marketing can make for some strange bedfellows. In the case of Universal Pictures' Land of the Lost, those cozy new friends are comedian Will Ferrell and survivalist Bear Grylls, who will rappel down frozen waterfalls, tandem-abseil off a helicopter, drink their own urine and eat reindeer eyeballs for 48 hours in subzero northern Sweden. They do actually sleep together, but no doubt that's for the body heat. It just shows that Ferrell and the studio are willing to go to extremes to open this summer adventure flick, a big-screen remake of the campy '70s TV series.

That they're doing so by way of an integration into Grylls' popular Discovery Channel show, Man vs. Wild, indicates how it's not enough anymore to parade the stars on late-night chat shows and pour tens of millions of dollars into traditional ad campaigns. Hollywood studios are increasingly looking to get in front of consumers in ways that are more meaningful and memorable than a paid ad spot.

The Man vs. Wild appearance is part of a larger deal between the studio and the cable network to integrate movies into relevant series. "We need mass awareness, so the 30-second spot is still the primary driver," says Suzanne Cole, Universal Pictures' evp, media. "But integrations and on-air promotions are essential extras."

Network television has become a more expensive buy, even as defection to cable, the Internet and other options has thinned the audience. But, it doesn't seem to have weakened studios' commitment to it, with ad spending on prime-time network TV up in 2008.

Movie advertising on TV -- or, as studios like to look at it, a sight-sound-and-motion sampling opportunity -- will continue to be a strong category, especially for summer and holiday releases. That's when the studios pull in the majority of their annual haul. Studios spend, on average, $36 million to market a film, according to the Motion Picture Association of America, with that number dramatically increasing for event movies like next summer's Iron Man 2 and a Sex and the City sequel.

So far this year, there's reason to believe the money spent on TV is working, with box office grosses up a hefty 17.3 percent to $2.9 billion and attendance, a truer barometer of success, up 15.6 percent.

There's a continued and marked shift away from newspapers, even the alternative weeklies, and toward media like online social networks, digital billboards, taxi toppers, gas pump videos and other nontraditional real estate. On-air vignettes, limited commercial-interruption sponsorships and brand integration are also increasing. A recent episode of CBS sitcom How I Met Your Mother had posters visible in several scenes of the upcoming action flick, X-Men Origins: Wolverine. And a few characters got into a play battle with razor claws similar to Wolverine's adamantium appendages. Scripted shows are still more difficult for brand integration deals, though studios are figuring out ways to surround the entertainment with sponsored billboards and two-and-a-half minute ad pod takeovers. Reality series remain a favorite because of their immediacy and creative flexibility.

New methods of reaching out to consumers, particularly tech-savvy young crowds that are frequent moviegoers, will continue to develop, as evidenced by Overture Films' use of Twitter this spring to give updates, behind-the-scenes bits and talent musings from the set of the horror remake, The Crazies.

But advertising for so-called four-quadrant movies-those aimed at young, old, male and female, which is, essentially, everybody-have to go for tonnage. The average production cost is north of $100 million for tentpoles, which is at the heart of most studios' strategies.
 
"If you don't spend everything you possibly can, you're taking a big risk and you'll be open to a lot of criticism," says Russell Schwartz, president of Pandemic Marketing and former marketing chief at New Line Cinema.




RETAIL

It's a really rough time to be a retailer, except for that Bentonville chain

By Becky Ebenkamp


After four years of successive spending increases on commercials that run on prime-time network TV, retailers are cutting back -- way back. Everything must go! Including TV!

Talk about your price slashings. In 2008, the fourth highest retail spender, Sears, allotted about 14.5 percent less to prime-time network TV ads ($107.6 million) versus 2007 ($125.8 million), per Nielsen, which is a reduction of $18.2 million. The Home Depot, the No. 7 spender, was down 27.7 percent (from $118.6 million to $85.7 million, a $32.9 million difference). Gap fell 31 percent. And so on.

Of course, 2008 was the year of wine and roses compared to now, when the upfronts look somewhat dicier. "A year ago, it was still a relatively healthy economy, and you had some other things going on last year that made people be aggressive about spending; the Olympics were coming in August, you had the election -- both of which took a lot of inventory out of the marketplace," says Peter Gardiner, partner/chief media officer at Deutsch in New York.
 
"The fear was that there was less supply and you didn't want to be on the sidelines as the last to buy. Then it was like, the Olympics happened, everyone was happy, the world was great, and the second the Olympics were over, the shit hit the fan, and the shit hit the fan in the TV marketplace, too. By and large there's just a lot less money in the marketplace now than there was this time last year. As we progress toward the upfront timing, people are cautious."

The good news is about half of the top 20 retail brand spenders increased their budgets last year and those that advertise are seeing ROI.

Take Macy's. The chain's fourth quarter sales fell 7 percent, but in this economy that's pretty decent. Marshal Cohen, chief retail analyst for market research company the NPD Group, Port Washington, N.Y., says we should expect to see more retailers follow Macy's lead.

For the last year or so, the department store has stressed its emphasis on exclusive collections in its TV work created by JWT, New York, and Macy's Corporate Marketing. Spots feature star/designers Martha Stewart, Usher, Tommy Hilfiger, Jessica Simpson, Sean Combs, Emeril Lagasse, Kenneth Cole and others scurrying around readying their departments for store openings in comic vignettes. Macy's approach seems to be the best way to avoid just advertising price.

"That made an impact," Cohen says. "It worked for them. They were able to outpace some of the other department stores for awhile and they didn't get some of the same declines the others did. Nothing breeds success like success itself."

Still, the real stars in retail can be found on the low end. Walmart, which is taking the opportunity to beef up support for its private label brand as it continues to convince consumers that it's greener now than in the past, has a pretty ambitious advertising agenda.

While Wal-Mart can afford to take such initiatives, Target is on the defensive. The chain, which was 2008's largest network prime-time ad spender, is for the first time stressing specific price messaging in its commercials in response to Wal-Mart's truckload of tubesocks for $10 tactics. Target allocated $177.8 million to network prime time last year, a 9.7 percent increase over 2007 (up $15.7 million).

"Target [traditionally] went for the aspirational with the assumption of value in the messages, but now they are adding value to the equation," Cohen says. "Value can't be an unspoken message right now. Wal-Mart is automatically a value option, and anybody who wants to compete with them has to play that card as well. You can no longer just go with brand power."




TECHNOLOGY

The Web charms many IT advertisers, but TV still delivers the big picture

By Todd Wasserman


If there's any industry that's especially susceptible to charms of Internet advertising, it's tech, which, of course, has the most tech-savvy audience. After all, if your target consumer is already online, why waste money on old-fashioned TV?

That's the conventional wisdom, anyway. But spending trends over the past few years make it clear that high-tech companies still see value in the frumpy family TV set. Indeed, if you lump in telecoms like AT&T, Verizon and T-Mobile, the segment has been on an upward spending trend with television ads since at least 2003. Or at least it had been. Things really slowed down last year when network TV spending for the category rose just 2.7 percent and cable fell 27 percent.

This year looks even shakier. Forrester Research expects IT spending to drop 3.1 percent and, while it looked for a while like tech was weathering the recession pretty well, the industry has been shedding jobs at a rate not seen since the dot-com bust of 2001-02.

It's worth noting, however, that the industry is losing far fewer jobs now compared to then. In the first quarter of this year, the high-tech industry issued 84,217 pink slips, but that's minor compared to the bloodletting of seven years ago, when 145,467 jobs vanished every quarter, according to executive recruiting firm Challenger, Gray and Christmas.

While the flat-to-somewhat-down trend would seem to foretell the industry's upfront spending, there are a few other factors to take into account. For one, the tech industry's newcomer status (it's only been around 20 years, after all) has allowed it to accept that every new whiz-bang product will be obsolete in a year or two. Media fragmentation, therefore, doesn't scare your average tech CMO. Ask Hewlett-Packard's Michael Mendenhall. "While traditional outlets are still important," he says, "HP is focused on executing its strategy towards online and digital media."

But that leave-TV-behind sentiment is balanced out by the old medium's true believers, such as Apple and Microsoft. Though Apple cut its network TV spend by 6.3 percent last year, the company still drops more cash on the boob tube ($200 million-plus) than any other consumer-focused tech firm. Is it working? Though Apple's share of the consumer PC market still hovers around 10 percent, rival Microsoft-which has most of the rest of that share-has deemed it necessary to spend lots of money (early estimates pegged the value at $300 million) on a new campaign arguing that Windows-based machines may not be as cool as Apple's, but they're are a better value (see photo, this page). "Normally, the No. 1 brand doesn't have to take the time to acknowledge the existence of the No. 2 brand," concedes David Webster, general manager of brand marketing, "but we felt reminding them [of] the advantages that our side has would be a good idea."

Telecom, meanwhile, looks to be in better shape than the rest of the tech industry and overall spending-including TV-continues to be strong. "So far we're not seeing a sign of change in the wireless market," says Ehtisham Rabbani, vp of product strategy and marketing at telecom handset maker LG. "It's one of those affordable luxuries that people don't want to live without."

For companies with a large b-to-b focus, the picture's murkier. Years ago, Oracle and Sun Microsystems used to do lots of TV advertising, but that's no longer the case. The companies have apparently surmised they're better off reaching CIO customers online. Diane Dudeck, director of corporate marketing for Cisco Systems, still sees a lot of appeal in TV for Cisco, which offers both consumer and b-to-b products. "It's very clear that TV is an effective medium for us," she says. "It drives more search traffic than anything else." Marilyn Mersereau, Cisco's svp, corporate marketing, agrees: "There's something about video on a big screen," she says. "It's hard to get that kind of emotional attachment from a banner ad."