Web Pulls Ad Buyers From TV
More than 1 million people saw a Buick commercial before watching the antics of "Desperate Housewives." So why should broadcast television executives be nervous?
Because the Buick ad was on the Internet.
After years of siphoning ad dollars from newspapers and magazines, the Internet is starting to chip away at the biggest and most powerful medium of all: television.
Commercials for Land Rover, the Army and Staples Inc. run before music videos and TV clips on Yahoo. General Motors Corp. cut commercial orders on some broadcast networks but agreed to pay $4 million to sponsor an America Online music service, expanding a campaign that placed Buick spots before AOL's recaps of the hit show "Desperate Housewives." Microsoft Corp.'s MSN.com recently landed blue-chip advertisers such as American Express Co., Volvo and Sprite.
"Our business is probably coming more from television, especially broadcast television, than from any other medium," said Wenda Harris Millard, chief sales officer for Yahoo Inc., which sold $3 billion in online ads last year. "Brand marketers have finally recognized they cannot ignore the shift in media consumption patterns."
As the six broadcast networks hold the annual "upfront" spring advertising drive in New York this week, they have plenty of concerns, including the economy and the financial health of big advertisers such as GM.
The Internet has become another dark cloud on the horizon, threatening to shrink the $60-billion-a-year market for broadcast network, cable and local TV ads. Online ad revenue surged 33% to $9.6 billion in the United States last year and is expected to grow as much this year.
A recent study by Forrester Research found that people spend 34% of their mediaconsumption time, including both home and work, on the Internet. That's slightly more than the amount of time they spend watching TV. Still, only 6% of advertising dollars go to the Web.
"What we're now seeing is a disproportionate shift [of advertising] to the Internet, because marketers are playing catch-up," said Rex Briggs, managing partner with Marketing Evolution, a New York-based consulting firm.
Some broadcast executives discount the threat. Broadcast networks reach more than 98% of the estimated 110 million homes with TV sets in the United States, and marketers say most online ads can't stir up consumers' emotions like the traditional 30-second spot.
