Look for Hefty Holiday Spending on Local TV

Retailers are booking lots of TV ad time to lure shoppers.
The outlook for consumer holiday spending isn't particularly strong this year, with forecasters predicting growth of 2.5 to 3 percent over 2010, about half last year's growth rate.

But spot television spending should be very healthy despite that lukewarm forecast, ending a string of months of flat or declining spending following a softer-than-expected spring.

The reason is simple.

Shoppers still feeling the pinch of a down economy are looking for the lowest prices, and retailers are competing fiercely to reel them in with gimmicks like midnight openings on Black Friday.

They're willing to use any means to get consumers into the stores.

"Fourth quarter rates are up, and we're anticipating sell-out conditions in some markets," one East Coast media buyer says.

That will be a big change from recent months in spot TV. During the first half of the year spot spending fell 1.2 percent, according to Kantar Media data analyzed by the TVB.

Spending took a hit during second quarter when Japanese auto companies largely suspended advertising in the wake of the earthquake and tsunami that hit their country, leading to production and supply problems.

That led other automakers to pull back as well because they had less competition. The lack of auto advertising meant an excess of inventory of some markets, where pricing flatlined or dipped.

But things are looking better for fourth quarter, especially the final six weeks of the year.

Many retailers, including department and discount stores, have already been advertising their holiday sales for weeks. Pre-holiday sales have also been more popular this year, prompting more spending to advertise these new offers.

Clothing retailers have been particularly active, note buyers, and electronics should be growing as well as retailers battle to offer better prices on holiday must-haves like tablets, smartphones and TVs.

Also helping the fourth-quarter spot outlook is a small influx of political spending ahead of the surge of campaign ads in the first quarter.

Only a handful of states with early primaries will benefit from this spending, but they are important states that will set the tone for the later primary season, including Iowa, New Hampshire, South Carolina and Florida.

In first quarter, when many states will see the start of the lowest unit rate political window, political should pick up for the post-holiday decline in retail spending and keep spot TV spending on the rise.

ZenithOptimedia predicts that spot TV spending will be up 8 percent next year, to $22.6 billion.

Toni Fitzgerald - Media Life

City Living: What 'Urban Boom' Means for Marketers

From Ikea to Zipcar to Walmart, Advertisers Follow Consumers into Metropolitan Areas

Decades ago, people left cities for the suburbs to raise families and to live the American dream. Now we're seeing "bright flight," younger, educated Americans reversing the trend seen in their parents' and grandparents' generations.

Consumers, from yuppies to artists to homeowners unable to sell homes to empty nesters, are clustering in urban areas more than ever before. And marketers stand to benefit from it.

"We're experiencing worldwide the fastest urban boom in history," said Ann Mack, director-trendspotting at WPP's JWT. "As the U.S. population gets more urbanized and cities boom, improving human environments will become a higher priority. We'll see a flourishing of opportunities for brands across multiple categories and initiatives aimed at improving local environments, adding beauty or helping to bring communities together."

According to the U.S. Census, from 2000 to 2010, the nation's 366 metropolitan areas picked up nearly all population growth: 92.4%. The overwhelming majority, 84%, choose to live either in or in the vicinity of a city of 50,000 people or more. In fact, almost 100 million Americans, 32%, choose to live in one of the 15 largest metro areas, each of which has more than 4 million residents. The 50 largest metro areas are home to 53% of the nation's residents, and all of them except five grew over the past decade.

The 2000 Census found 105.5 million occupied housing units, of which 32.8 million or 31% were in central cities. By 2010 that had crept up to 33%, despite the significant late-decade falloff in household creation. And even among first-time homebuyers, Ms. Mack said that 77% say they want to live in an urban area.

Among the sectors seeing opportunity in urbanization are furniture manufacturing, automotive and retail.

Ikea, long known for its apartment-friendly, affordable furniture, has of late been emphasizing its small-space furniture. "The small-space focus has been a global initiative within Ikea, as many Ikea customers worldwide live in smaller, urban areas" said Janice Simonsen, U.S. design spokeswoman for Ikea. She added that the focus on small also "resonates with U.S. customers. Although historically U.S. homes tend to be larger, our customers are looking to use these spaces smarter and more efficiently."

Even so, Ikea stands to benefit from an influx of urbanites in the rental market -- a healthy market in the wake of the housing crisis -- looking for apartments and affordable furniture. Walter Molony, spokesman at the National Association of Realtors, said that vacancy rates for rental units are declining as young people or people uncertain about home ownership rent more and seek roommates. According to the Census, 34.9% of occupied homes nationwide were rented in 2010, up from 33.8% in 2000.

Ikea's doing something right. Sales rose nearly 8% worldwide in fiscal 2010 and are similarly brisk this year.

And in cities, rentals have been going beyond homes and apartments to cars. "There's a trend of people leasing more than buying outright," said Stephen Hahn-Griffiths, chief strategy officer at Leo Burnett. Zipcar, which had its IPO earlier this year but was founded in 2000, is one of the bigger car-sharing services around. It posted a 34% gain in revenue to $61.6 million compared to $46.0 million in the prior year period, for second quarter 2011. During that time, membership increased 29%.

Although car sales in the U.S. were up 6% in the first nine months of 2011 over 2010, according to Automotive News, that doesn't mean car-sharing services, which are more popular in cities, are in trouble.

"In urban areas, people -- especially millennials -- want to find practical solutions that are affordable. They're more environmentally aware than previous generations and they're keen on saving money," said Ms. Mack. She added that if Zipcar is going to feel competition from anywhere, it'll feel heat from similar car-sharing companies, such as I-Go and rental companies like Hertz, which expanded to car-sharing in Manhattan.

Not wanting to miss out, some car manufacturers are taking a more proactive approach. General Motors in 2012 will team up with RelayRides, which lets car owners share their cars with neighbors. RelayRides will use GM's OnStar to allow borrowers to unlock the cars from their mobile phones.

Mr. Griffiths said he expects the rental trend to continue beyond cars and apartments. "I would even expect to see an increase in furniture rental."

Retailers typically known for massive stores are even rolling out smaller formats fit for urban areas. Walmart is rolling out dozens of smaller stores in an effort to fight lagging sales. The chain took its Neighborhood Market grocery format and renamed it Walmart Market and began opening the stores in denser urban areas like Chicago. As of this year, the smaller grocery outposts account for about 200 of Walmart's approximately 4,400 U.S. stores. At the same time, it's working on Walmart Express, a convenience-store format that's even smaller.

William S. Simon, exec VP, president and CEO for Walmart's U.S. division, in a recent earnings call said that the company's neighborhood markets have posted positive same-store sales for 15 consecutive months and that the "Neighborhood Market format is delivering a return at the same level as our Supercenters, which have the best ROI in the company." He added that 180 more are in the pipeline.

Other downsizing retailers include office-supply chain Staples, which this summer said it planned on opening new stores that were about 15,500 square feet, down from the current layout of 18,000 square feet. Best Buy is looking to downsize its current stores, subleasing parts of its space to other retailers.

(Source: Advertising Age, 10/17/11)

Bringing 20/20 Foresight to Marketing

With the explosion of social networks, mobile devices, and micro sites, marketing executives are challenged to gain a truly integrated view of customer behavior across the range of established and emerging channels.

A report from Coremetrics, Bringing 20/20 Foresight to Marketing, is based on an exclusive survey of more than 300 marketing and senior-level executives at large companies ($250M-plus in revenues) in the U.S. and the U.K. Survey respondents were asked about their efforts to meet business goals using online marketing software to manage their programs. The findings provide a glimpse into a fast-paced future fueled by robust and far-reaching analytics data used to manage and enhance the customer experience.

In addition, the study reveals how top performers -- those businesses that rate their marketing technology investment as a world-class differentiator -- take a more proactive and agile approach to marketing. For example, these world-class marketers are three times as likely to track their campaign performance in real time, and more than four times as likely to adjust their campaigns in real time.

KEY FINDINGS

• Marketers' priorities are customer-centric. More than half (52%) cited customer retention as their top current priority, followed by customer acquisition (38%), and customer profitability (29%). These will remain top priorities a year from now.
• Marketing budgets mirror these priorities. About four in ten executives (39%) are dedicating the largest chunk of their funds to customer retention; customer acquisition runs a close second (36%).
• Online tactics will see significant lifts in budgets. Over the next year, 56% will increase their online marketing spend, 54% will increase their social media spend, and 50% will increase their mobile marketing spend.
• Greater emphasis is being placed on data-based decisions. Nearly half of respondents are increasing their spending on business intelligence, and 78% say there is greater scrutiny placed on what works and what doesn't than there was a year ago.
• Marketers are challenged to understand the influence of their campaigns beyond the basic metrics of acquisition and conversion. Top performers are using technology to get at these results and optimize their channels.
• Marketers are not always clear on what tools they need to meet their top challenges. Respondents admit being concerned about their ability to get a deeper understanding of customer interactions or obtain an integrated view of customer behavior. But there appears to be a disconnect in how they solve that issue, as the tools that could help-reconciling multiple online marketing applications and lack on an integrated marketing suite-are at the bottom of their list of concerns.
• Marketing is moving at light speed, but most marketers are not watching or adjusting their campaigns accordingly. Just 9% review their online marketing performance in real time, and only 9% adjust their campaigns in real time.
• Top performers are more proactive in tracking and adjusting their campaigns. Among companies that said their investment in marketing technology was "world class," 27% track their performance in real time, and39% adjust their campaign performance in real time.
• While nearly two thirds of respondents said they segment and target customers based on an integrated view of customer behavior, that view is not necessarily complete. Just 30% have a view of mobile behavior, and just 34% look at social media behavior.

(Source: Forbes, May, 2011)

Wall Street Downgrades Madison Avenue

Major Impact Of Economic Turmoil Will Be On 2012 Ad Budgets

Noting that ad agencies are "proxies" for overall economic growth, a major Wall Street securities firm has downgraded Madison Avenue's prospects following a new spate of macro-economic turmoil. Calling its cuts "pre-emptive," the equity research team at Deutsche Bank said the major impact of a new economic calamity will be in 2012, with only slight downgrades for the remainder of 2011 - due mainly to the fact that most major marketers cannot react "quickly enough" to cut their near-term advertising budgets.

"We did not expect to be dusting down our recession sensitivity scenarios only two years after previously running them," lead Deutsche Bank Wall Street analyst Matt Chesler writes in a quick assessment of the sector in the wake of S&P's downgrade of the U.S.' credit rating, and similar crises rumbling through Western Europe.
 
The Deutsche team said it was too early to tell whether it will result in a "mid-cycle slowdown" or an actual "double-dip" recession, but that whatever the hiccup is, it merits a downgrade in the prospects for the U.S. and global advertising economy. While none of the major agency holding companies have issued any revisions to their own company or the industry's estimates, Deutsche Bank is now calling for "a scenario of 3% organic declines in 2012."
 
"Ad spending has not fully recovered from 2008-09 lows so our assumption is that if there is a downturn, it will not be as severe as 2009," the analysts' report notes. "Agencies have stronger balance sheets now (as do the major brand owners who pay them), and industry headcount has not been rebuilt to previous peak levels."
 
While that outlook is not as bad as some might expect looking at the reaction of Wall Street investors and the media frenzy over the economy, it is a significant downgrade from Deutsche Bank's previous projection of a "5 to 6% organic growth" rate for ad agency stocks next year, which the securities firm now assumes will be more around "1.5 to 2%."