Affordable Advertising

In today’s market, “affordable luxury” is an overly hyped watchword, but I’d like to throw out a potentially new phrase that might benefit some retailers: “affordable advertising.”

The GM and Chrysler bankruptcies have put Madison Avenue in a tailspin. No longer will too many automotive companies be hording all that prime time advertising space on TV. Their advertising budgets are gone. I predict, with the reliability of my Magic 8 Ball, that this will pressure network TV to substantially reduce their ad rates. One thing’s for certain, it is highly likely that advertising agencies will use the sudden availability of inventory left by the lack of auto spending to get better pricing. That means for you.

GM alone spends about $300 million in a typical upfront media-buying season, but this year's ad expenditures will be determined in bankruptcy court, and TV networks will have to cut deals to cover the difference. This year's “upfront is going to be incredibly difficult," Jessica Reif Cohen, an analyst with Merrill Lynch says. The GM filing, and the recession "will put pressure on everything," she says. She points out that the courts recently slashed Chrysler's request to spend $134 million on ads over the next nine weeks by half.

For those of you “Mad Men” fans, not much has changed since the '50s. For those unfamiliar with the "upfronts," it is a specific selling season, when television networks sell as much as 80 percent of their ad inventory for the coming season. Even before GM's filing, Wall Street had a bearish outlook on this year's rite of spring. Cohen, is forecasting that the five major TV networks will see their upfront take plunge 13 percent to $6.87 billion.

Who will fill the void? Retailers, carpe diem, cozy up with your favorite network executives. I’d much rather see a cute ad with attractive models than see a MB whizzing by the desert or alpine S-curves. What used to be out of reach, is now in sight. Retailers, place your ads on “Ugly Betty,” “Project Runway” and "Gossip Girl"--this isn’t gambling, this is economics and the free market adjusting itself.

--Ron Knoth, Guest Blogger

Comments

[Ron Knoth]

Dear Scott,

Praises to any retailer who appreciates the internet and social networking, not to mention the value of a great campaign to get a free vacation. You're way ahead of many major retailers who are still living in the 20th century.

I don't twitter, I'm not on facebook or myspace, but I do know that the web is under-utilized and under-valued.

Regards,

Ron Knoth

[Scott]

We're just a small wine shop, but we're doing a lot on Facebook & Twitter - we just launched a promotion for someone to win a B&B Dream Vacation along the Blue Ridge Parkway yesterday to see how very small "mom & pops" can use social media to get the sort of results that the big guys like Queensland and Goode are doing. We'll see if people are as competitive to get a vacation as they are to get a job. More info here: http://whyineedabreak.ning.com