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Chapter 10

Broadcast and Interactive Online Media

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Learning Objectives

Learn about television, radio, and Internet in terms of the overall trend, advantages and disadvantages as an advertising medium.

Understand the reality of Internet as an advertising medium.

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The Structure of the Television Industry (Fig. 10.1)

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Cable is Firmly Entrenched Worldwide and Is Still Growing

Cable is Firmly Entrenched Worldwide and Is Still Growing

Battle Raging Over Who Will Control Digital TV Technology

Battle Raging Over Who Will Control Digital TV Technology

Network TV’s Viewership Has DeclinedNetwork TV’s Viewership Has Declined

Television is Now a Fragmented MediumTelevision is Now a Fragmented Medium

Changes in Broadcast Television

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Television Advertiser’s Media Choices (Fig. 10.3)

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Forms of Television Advertising

SponsorshipsAdvertiser assumes the total financial

responsibility for producing the program and providing the commercials.

ParticipationsAdvertisers pay for 15, 30, or 60 seconds of

commercial time during one or more programs.

Spot AnnouncementsAppear in the breaks between programs, usually

local buyers.

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AudimeterAudimeter

Records When The TV Set is Used

& Which StationWatched

Viewing DiaryViewing Diary

Provides Data OnWho is Watching

Shows

People MetersPeople Meters

Which TV Shows Are BeingWatched, Number of

Households Watching, & Which Family

Members AreViewing

A.C. Nielsen Provides the Most Commonly Used Measures of National and Local TV Audiences:

Measuring the TV Audience

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Pros and Cons of Broadcast TV Advertising

Mass coverage

Low cost

Some selectivity

Impact

Creativity

Prestige

Social dominance

High production costs

High air-time costs

Limited selectivity

Brevity

Clutter

Zipping and Zapping

Pros Cons

Pros and Cons of Cable Advertising

Selectivity

Audience demographics

Low cost

Flexibility

Testability

Limited reach

Fragmentation

Quality

Zipping and zapping

Pros Cons

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Medium’s Influence on Consumers’ Taste and

Perceptions is Pervasive

Medium’s Influence on Consumers’ Taste and

Perceptions is Pervasive

Reach a Large Audience in A Cost-Efficient Manner

Reach a Large Audience in A Cost-Efficient Manner

Use of Sound and Moving Images Creates a Strong

Impact

Use of Sound and Moving Images Creates a Strong

Impact

Advantages of Television

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HighCost of

Producing&

RunningCommercials

HighCost of

Producing&

RunningCommercials

HighLevel

OfCommercial

Clutter

HighLevel

OfCommercial

Clutter

TelevisionIs

Nonselective

TelevisionIs

Nonselective

SuffersFrom aLack of

FlexibilityIn

Scheduling

SuffersFrom aLack of

FlexibilityIn

Scheduling

Disadvantages of Television

Infomercial Watchers

Exhibit 9-4

Page 290 SexMale 57% 8.0% 20.0%Female 54 9.0 19.0Age18-24 70 4.0 19.025-34 63 9.0 19.035-49 58 12.0 20.050-64 55 10.0 26.065+ 33 3.0 13.0Income ($)under $15,000 53 4.5 22.515,000-20,000 52 11.0 24.020,000-30,000 62 8.0 21.030,000-40,000 63 9.0 25.040,000+ 60 11.0 16.0RegionNortheast 65 7.0 24.0North central 52 9.0 14.0South 57 8.0 21.0West 55 10.0 17.0Total 55% 8.5$ 19.0%

Seen oninfomercial in the past year?

Ever purchasedanything using atoll-free numberat the end of aninfomercial?

Ever purchasedanything in a storebased on information provided in aninfomercial?

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AM Radio

Web RadioWeb Radio

FM RadioFM Radio

Cable & DAB RadioCable & DAB Radio

Structure of RadioRadio Can be Classified According to Transmission and Power.

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Network Radio is a Group of Local Affiliates Connected to One or More National Networks Through Telephone Wire and

Satellites and Has Increased in Popularity Because of:

Complete Market CoverageComplete Market Coverage

Consolidation That Produced4 Major Networks

Consolidation That Produced4 Major Networks

Increase in Syndicated ShowsIncrease in Syndicated Shows

Radio Advertising

Emergence of Unwired NetworksEmergence of Unwired Networks

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Radio is a Highly

Fragmented Medium

Radio is a Highly

Fragmented Medium

Radio Fans

34%, Listen to Four or Five Stations With No Preference for One Station.

Radio Fans

34%, Listen to Four or Five Stations With No Preference for One Station.

Music Fans

11%, Listen Exclusively for the Music Being Played.

Music Fans

11%, Listen Exclusively for the Music Being Played.

News Fans

Choose Stations Based on a Need for News and Information.

News Fans

Choose Stations Based on a Need for News and Information.

The Radio AudienceStation Fans

46%, Clear Preference for One or Two Stations, Listen Up to 8 Hours a Day.

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Measuring the Radio Audience

Measure of the number of people listening to a particular station at a given time: Station’s coverage, which is the geographic area that can

pick up the station clearly. Better measure is circulation, which measures the

number of homes that are actually tuned in to the particular station.

Arbitron is an audience rating service. RADAR is another rating service. Birch/Scarborough-VNU conducts random phone

interviews asking listening preferences.

Pros and Cons of Radio Advertising

Reach and Frequency

Selectivity

Cost-efficiency

Timelessness

Immediacy

Local relevance

Creative flexibility

Limitations of sound

Segmented audiences

Short-lived and half- heard commercials

Clutter

Pros Cons

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Target AudiencesTarget Audiences

FlexibilityFlexibility

AffordabilityAffordability

Mental ImageryMental Imagery

High Levels of Acceptance

High Levels of Acceptance

Advantages

InattentivenessInattentiveness

Lack of VisualsLack of Visuals

ClutterClutter

Scheduling & Buying Difficulties

Scheduling & Buying Difficulties

Disadvantages

Lack of ControlLack of Control

Radio

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Interactive MediaInteractive technology (media) is a new form of broadcast media.Estimate that Internet will capture 50 million users by 2000.Formats for delivering ads: Web page, Banner ad, E-mail.

Adoption Curves for Various Media

1922 ‘26 ‘30 ‘34 ‘38 ‘42 ‘46 ‘50 ‘54 ‘58 ‘62 ‘66 ‘70 ‘74 ‘78 ‘82 ‘86 ‘90 ‘94 ‘98 Est

120

80

60

5040

20

0

Mil

lio

ns

of

Us

ers

Radio TV Cable Internet

Years to reach 50 MM users

Radio 38TV 13Cable 10*Internet 5**

The Internet is the fastest growing medium in history

* Launch of HBO in 1976 was used to estimate the beginning of cable as an entertainment/ad medium.** Morgan Stanley Technology Research estimate (Chart shows the Internet beginning as an entertainment/ad medium in 1994 because its earlier use was restricted to governmental activities)

Who Values the Internet’s Offerings?

Community services

Banking

Buying & selling

Entertain-ment

Advertising & marketing

Education

Communica-tions

Information access

0% 10% 20% 30% 40% 50% 60% 70% 80%

50 and older

30 to 49

Under 30

Consumers’ Use of Interactive MediaTypes of Use Percent

Respondents making interactive purchases

within one year 58%Of these:

Number who shopped via online service 86 Of these, number who used credit card 83

Number that shopped via Internet 43 Of these, number who used credit card 70

Number that switched to 800 number 16 Number that shopped via e-mail 8

Number that shopped via CD-ROM 5 Number making 2-4 purchases in last 6 months 47 Number making 5-10 purchases in last 6 months 12 Number who spent $26-$50 on each interactive purchase 46 Number who spent over $100 on each purchase 11

Types of products purchasedBooks, music CDs, and videos 57Computer related equipment 55 Flowers 20Clothing 18 Travel 14

Respondents also making purchases from catalogs/TV shopping Channels 50

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Cost of the Medium

Cost of the Medium

Ability to MeetAdvertisingObjectives

Ability to MeetAdvertisingObjectives

Advertiser Should Ask About:

Broadcast and Interactive Media Strategies

Ability toAccommodate the

Style ofMessage

Ability toAccommodate the

Style ofMessage

How TargetedThe

Audience Is

How TargetedThe

Audience Is

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Online Products Mix in 2000

Other 5%Food and drink 5%

Gifts and flowers 10%

Apparel 5%

Entertainment 19%

Computer products 32%

Travel 24%

Pros and Cons of Internet Advertising

Truly Interactive

Enormous audience

Immediate response

Affluent market

In-depth information

Rapid-growth industry

Business-to-business

Advertorials

Virtual storefront

Untested medium

Targeting costs

Slow downloads

Net yet mainstream

Ad may be placed inappropriately

Unproved security and privacy

Global marketing limitations

Pros Cons

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Internet Advertising: Pros

Truly Interactive

Enormous audience

Immediate response

Affluent market

In-depth information

Rapid-growth industry

Business-to business

Advertorials

Virtual storefront

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Internet Advertising: Cons

Untested media

Targeting costs

Slow downloads

Net yet mainstream

Ad may be placed inappropriately

Unproved security and privacy

Global marketing limitation

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Internet Advertising: Reality

Advertising spending (Advertising Age 2001)1999: $2.8 million (1.3%)2000: $4.3 million (1.8%)

61% of AA’s top 100 megabrands online (Forrester Research)

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Internet Advertising: Reality

Advertising spending (Advertising Age 2001)1999: $2.8 million (1.3%)2000: $4.3 million (1.8%)

61% of AA’s top 100 megabrands online (Forrester Research)

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Various Forms of Internet advertisingBanner ads (55%): average click-through

rate 0.3 to 0.5%Sponsorships (27%) Interstitials (4%): Rich media – average

click-through rate just below 6%Email (2%)Others (12%)

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Performance-based advertising predicted to make up 50% of all revenues by 2003 (Forrester Research)

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Challenges

Can we go beyond current banners to create ads that are exciting, fun, and dynamic?

Can we increase ad impact through contextual relevancy?

Can we combine entertainment with brand equity?

Can ads be intrusive without being annoying?

Can ads communicate product superiority?

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Review

Learn about television, radio, and Internet in terms of the overall trend, advantages and disadvantages as an advertising medium.

Understand the reality of Internet as an advertising medium.