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					KEY AD CATEGORY TRENDS

                         Jon Swallen
                         TNS Media Intelligence
Outline

• An economic focus centered on ad expenditures
    – Spending levels and growth rates
    – Where the money is going (media mix)
    – Outlook



                   • Automotive 
                   • Telecommunications
                   • Retail
                        Department Stores
                        Home Improvement
                   • Local Services
Methodology

• All ad expenditure figures come from the TNS MI database
    – 18 media types and 3.2 million products
    – Spot TV based on 101 DMAs
    – Local cable not included


• For 2009, actual figures from January-June (H1) were used

• The notation “2009 (e)”
    – An estimate: applying H1 2009 growth rates to year-end 2008 actuals
    – “Pacing”
Benchmarks

                % Change in Ad Spending vs. Prior Period



                                                                   -4%
All Media
                                                    -17%

                                                                          2008
                                                                          H1 '09
                                                                   -3%
 Spot TV
                           -27%


       -30%       -25%         -20%          -15%     -10%   -5%     0%

            Source: TNS Media Intelligence
Telecommunications
Background

• Continuing consolidation

• Convergence and competition

• Battle for market share

• Cost-conscious consumers
Ad Spend Is Rebounding

                               +11.7%
               10.0                                                       +9.2%
                                                -6.1%
                 9.0                                            -5.5%
$ Billions




                 8.0           $9.56
                                                                         $9.26
                                              $8.98            $8.49
                 7.0

                 6.0

                 5.0
                               2006           2007             2008     2009 (e)
             Source: TNS Media Intelligence
                                              Total Ad Spend
Segment Ad Spend

                               Total Ad Spend     Spot TV Ad Spend
                             2008       H1 ’09     2008     H1 ’09
       Segment
                            ($MM)      % Growth   ($MM)    % Growth
    Wireless Svc             5,127      +13.5%     362      +2.5%

    TV Services              1,218      +21.3%     369      +6.8%

    Bundles                   585       +14.8%     415      -21.0%

    All Other                1,556      -16.6%     315      -21.6%

    TOTAL                    8,486      +9.2%     1,461     -8.8%

    Source: TNS Media Intelligence
Where The Money Is Going
Total Category


         National TV                   Newspapers
      2006: 38% share               2006: 22% share   (-)
       2008: 42% share               2008: 17% share



            Spot TV                     Internet
       2006: 14% share              2006: 8% share
                                                       (-)
        2008: 17% share              2008: 6% share



    Source: TNS Media Intelligence
Wireless Products

• The Big Four – 93% of total segment ad spend
    – Annual spend per wireless subscriber is tracking at $18-$22


• National TV and Newspapers still have 75% share of total spend
    – But a 10 point shift towards TV since 2007


• Over 50% of segment Spot TV spend comes from Verizon & AT&T
    – A presence in all of the Top 101 DMAs


• Prepaid wireless providers a growing niche
TV Service Providers




              Satellite   Cable   Telco
TV Services

                          Total Ad Spend      Spot TV Ad Spend
                         2008       H1 ’09     2008      H1 ’09
                        ($MM) % Growth        ($MM) % Growth
    DirecTV               371        +5.4%     83      -10.2%

    Echostar              272        +75.6%    25      -13.7%


    Comcast               207        +38.3%    75       +6.2

    TW Cable               79        -15.3%    32       +22.6


    Verizon                84        +50.9%    48      +67.9%

    AT&T                   79        -45.9%    78      -36.3%

    Source: TNS Media Intelligence
                 H1 ‘09     2010 goal                     H1 ‘09        2011 goal

HH Passed       10.3 mm     18.0 mm     HH Passed        18 mm           30 mm

HH Subs         2.2 mm     3.6-4.5 mm   HH Subs          1.6 mm          6-7 mm
                 (23%)      (20-25%)                       (9%)         (20-25%)
# DMAs w/                               # DMAs w/
                   23                                       49
Spot TV ads                             Spot TV ads
GRPs per DMA                            GRPs per DMA
                 12,000                                   7,000
(median)                                (median)
        Primary territories                       Primary territories
   • Boston to Norfolk corridor              • Midwest and Southeast
   • Texas, Southern California              • California, Texas
Competition Spurs Ad Spend


                       TV Service Providers - H1 '09:
                   Spot TV GRPs Per Advertiser Per DMA
           6,000

           5,000

           4,000
 HH GRPs




           3,000

           2,000

           1,000

               0
                          1               2            3               4
                                    # of Advertisers Per DMA
             Sources: TNS Media Intelligence; Nielsen Media Research
Outlook
TV Services
• Expanded competition driven by telco TV rollout

• Marketing emphasis on price, bundles, programming and features

• DBS vulnerability remains its narrower product offering

• Advertising: battleground markets
Retail
Background

• Retail sales and consumer spending are weak
    – Rising unemployment
    – Diminished wealth
    – Consumer psychology


• Low-price sellers leading the way
Retailers Have Cut Back On Ad Spending

                                +2.0%
               20.0                            -4.2%

               18.0                                             -6.1%
$ Billions




               16.0                                                      -16.0%
                              $18.96          $18.16
                                                           $17.05
               14.0
                                                                         $14.32
               12.0

               10.0
                               2006           2007             2008     2009 (e)
             Source: TNS Media Intelligence
                                              Total Ad Spend
Major Segments

                               Total Ad Spend    Spot TV Ad Spend
                             2008      H1 ’09     2008     H1 ’09
       Segment
                            ($MM)     % Growth   ($MM)    % Growth
    Dept. Stores             4,672      -5.9%     223      -37.7%

    Food/Beverage            1,188      -12.3%    282      -15.9%

    Home Improve             4,299      -23.8%   1,230     -28.8%

    Apparel                  2,315      -24.3%    228      -22.8%

    CATEGORY AVG                        -16.0%             -25.6%

    Source: TNS Media Intelligence
Department Stores

• Sales in decline since 2000

• Mergers and consolidation – 7 major national chains
    – Over 85% of total Dept. Store ad spend
    – Reallocating budgets towards national media


• National TV and Newspapers are 70+% share of total spend
    – But moving in opposite directions


• Spot TV: < 5% share of ad spend
Major Segments

                               Total Ad Spend    Spot TV Ad Spend
                             2008      H1 ’09     2008     H1 ’09
       Segment
                            ($MM)     % Growth   ($MM)    % Growth
    Dept. Stores             4,672      -5.9%     223      -37.7%

    Food/Beverage            1,188      -12.3%    282      -15.9%

    Home Improve             4,299      -23.8%   1,230     -28.8%

    Apparel                  2,315      -24.3%    228      -22.8%

    CATEGORY AVG                        -16.0%             -25.6%

    Source: TNS Media Intelligence
Home Improvement Retailers

• Defining the segment

• Correlation with housing market

• 2009 retail sales pacing at 2003 levels
    – Down 20% from 2006 peak
    – Less discretionary spending on big-
      ticket projects


• Advertising:sales ratios contracting
Home Improvement Retailers


             6.0       +6.0%          -3.0%
                                                      -11.7%

             4.0                                                 -23.8%
 $Billions




                     $5.02
                                     $4.87
                                                  $4.30
             2.0                                                $3.28



             0.0
                     2006            2007         2008         2009 (e)
    Source: TNS Media Intelligence
                                     Total Ad Spend
Segment Ad Spend

                                   Total Ad Spend     Spot TV Ad Spend
                                   2008     H1 ’09     2008     H1 ’09
        Segment
                                  ($MM)    % Growth   ($MM)    % Growth
 Home Centers &
                                  1,438     -20.0%     142      -32.1%
 Hardware Stores
 Furniture Stores                 1,530     -22.2%     649      -26.4%
 All Other (Bed, Floor,
                                  1,331     -30.2%     439      -31.3%
 Carpet, Appliances)
 GRAND TOTAL                      4,299     -23.8%    1,230     -28.8%


 Source: TNS Media Intelligence
Where The Money Is Going

                Allocation of Media Spend: 2008
                                 Home                  All
                                          Furniture
                                Centers               Other
        Total Spend               100%     100%       100%

        National TV               39%        4%        1%

        Spot TV                   10%       43%       33%

        Newspaper                 23%       39%       42%

        Radio                     15%        6%        8%

        All Other Media           13%        8%       16%

        Source: TNS Media Intelligence
Does the housing market affect ad spending
     by home improvement retailers?
Fewer Home Improvement Stores Are Advertising

             # of Active Advertisers: H1 ’09 vs H1 ‘07

            By Region                     Select Markets
    •   Northeast: -9%               •   Hartford: -12% 

    •   Midwest: -11%                •   Milwaukee: +7% 

    •   South: -16%                  •   Atlanta: -51% 

    •   West: -25%                   •   Phoenix: -35% 
Retailer Ad Spend Lagged The Housing Downturn


                                                   % Change vs. Prior Year

   REGION                                2006           2007          2008     H1 ‘09

                Homes Sold              -4.5%         -14.6%          -19.3%   -8.2%
   SOUTH
                Spot TV Ad $            +9.8%          -5.5%          -5.9%    -27.5%


                Homes Sold             -20.4%         -24.6%          +0.2%    +6.9%
   WEST
                Spot TV Ad $           +10.4%          +3.3%          -26.2%   -30.4%

  Sources: TNS Media Intelligence; National Association of Realtors
Ad Spend Contracting Faster Than Retail Sales

                              Measured Ad Spend As % of Sales:
                                  HH Furnishing Retailers
 3.0%
 2.9%
 2.8%
 2.7%
 2.6%
 2.5%
                   Retail sales +20%
 2.4%
 2.3%
 2.2%
                                                           Retail sales -25%
 2.1%                                                      A/S ratio -20%
 2.0%
            2003         2004         2005         2006        2007    2008      H1 '09



Sources: TNS Media Intelligence; US Bureau of the Census
      PLUS…….
Home & Building Services
Home & Building Services


    Contractors

    Fuel, Plumbing, HVAC

    Cleaning Services           Private Businesses and
    Moving & Storage Services
                                Franchise Operations

    Security Systems

    ……et al
Another $1.3 Billion of Ad Spend


                                    2008 Ad $ (millions)
                                      Total     Spot TV

       Home Improvement Retailers      4,299      1,230

       Home & Building Services        1,278        338    25%
                                                           share

       GRAND TOTAL                     5,577      1,568
The Service Sector Has Recently Faltered


                                     2006 vs   2007 vs   2008 vs   H1 ’09 vs
                                      2005      2006      2007      H1 ‘08
                                                                   $1.72
                    Home Retailers   +6.0%     -3.0%     -11.7%    -23.8%
     Total Ad
      Spend
                    Home Services    +13.2     +6.6%     -4.7%      -26.5%



                    Home Retailers   +9.1%     -2.5%     -8.6%      -28.8%
     Spot TV
    Ad Spend
                    Home Services    +16.0%    +6.7%     -5.9%      -31.2%


   Source: TNS Media Intelligence
What’s Happening?

• The # of advertisers has been growing modestly
    – Nearly 18,000 in 2008


• 35% of the spend goes to newspapers; 25% to Spot TV

• Top 5% of advertisers = 75% of total ad spend
    – Over one-half of these larger advertisers use Spot TV
    – Of these larger Spot TV advertisers, 1/3rd were active in 5+ markets


• The long tail
Outlook:
Home Improvement Category

Key Factors:
• When spending revives, how will consumers prioritize their deferred
   discretionary, big-ticket purchases?

• Consumer priority: maintenance or improvements?

• Housing market variables
    – Sales of single-family homes
    – Declining rates of home ownership


• Turning “green” into “greenbacks”
Local Services
Local Services
Major Segments

                                 Total Ad Spend    Spot TV Ad Spend
                               2008      H1 ’09     2008     H1 ’09
         Segment
                              ($MM)     % Growth   ($MM)    % Growth
     Medical Services          1,952      -14.2%    487      -15.1%

     Housing                   1,278      -26.5%    338      -31.2%
     Events &
                               2,494      -13.2%    419      -20.2%
     Amusements
     All Other                 2,766      -13.9%    585      -8.2%

     CATEGORY AVG              8,490      -15.7%   1,829     -17.3%

      Source: TNS Media Intelligence
Medical Services

• Nearly $2 billion in total annual ad spend
    – Physicians; Hospitals & Clinics; Optical Services; Medical Study Recruitment


• Spending flat in 2007 & 2008; down 14% in H1 09
    – Spot TV and newspapers each have 25% of total spend
    – Skewed towards DMAs 26+


• Over 25,000 different advertisers in 2008
    – 6,500 used Spot TV….and about 850 of these spent >$100k per year
    – And 650 of the 850 were active in just 1-2 TV markets
    – A broad mix – hospitals, specialty clinics, research studies
Outlook

• America is not getting healthier

• Continuation of an insurance-based medical system that is incentivized to
  provide revenue-generating treatments

• An increasingly crowded and competitive market of medical service
  providers

• A need for providers to establish competitive differentiation
KEY AD CATEGORY TRENDS

				
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