CMOs Continue to Consider Reining In TV Spending

NEW YORK Buy cut its TV spending by about 40 percent last year. But instead of pocketing the money, CMO Barry Judge opted to spend it on increasing staff in the company’s stores and on improving the company’s Web site.

Realtor Century 21, meanwhile, is planning to funnel all the cash that it used to spend on TV advertising onto the Web. Red Robin Gourmet Burgers is also completely cutting out TV in its 2009 media mix.

As the upfronts loom, many big brands — like General Motors and Citibank, for instance — are slashing their spending on television advertising out of necessity. But another factor to consider is the maverick CMO who is willing to spend a lot less on TV advertising or cut it out entirely.

Partially, it’s a response to market conditions, but some marketers say the economy is prompting them to take a chance on new forms of marketing.

Susan Lintonsmith, CMO for Red Robin, for instance, said the economy is definitely one impetus for going without TV. “It’s a little of everything,” she said. The brand just started advertising on TV in 2007. Lintonsmith said she thinks brand awareness is where it needs to be. “We’ll be riding the momentum of two years of advertising.”

The economy isn’t always the main reason for cutting back. Judge’s thinking is TV advertising is important, but can be undermined by a bad consumer experience. “The big differentiator is our people,” said Judge. “We invested more in labor. We took a pretty significant chunk out of our marketing budget and allocated that toward having more help in the stores.”

For Beverly Thorne, Century 21’s svp, marketing, excising TV advertising stemmed from the realization that the company had 98 percent brand awareness. “TV is very effective for brand awareness,” she said. “If you’ve got 10 skirts, you don’t need another skirt.” Instead, the company is taking money it would spend on TV and reallocating it to online — namely paid search, display ads and social media. Thorne said research has shown that most potential home buyers or sellers — about 87 percent — go online before making a purchase.

Hewlett-Packard is taking a similar tack. It reduced the brand’s spend on TV advertising by about 34 percent last year, according to data from Nielsen Monitor-Plus. That company’s CMO, Michael Mendenhall, is a big believer in the power of alternate forms of media, like blogs, versus print and TV.
 
Though Bacardi’s TV spend was down in 2008, Monsell Darville, vp, brand/managing director for Bacardi, said the company didn’t cut its overall marketing budget, but decided to put more of its spend into below-the-line media like in-store promotions. “The decision was basically made that ‘Let’s be a little more tactical,'” he said.

Despite evidence that marketers are exploring other options, Brad Adgate, svp, research for Horizon Media, said he doesn’t predict there will be much of an impact on upfront spending. “They say that every year and it never really happens,” he said. Adgate speculated that the down economy might have the opposite effect of prompting marketers to be more cautious and dial back on online marketing experiments.

That appears to be the case with Bacardi and Best Buy. Darville said the brand is planning a new campaign — with TV as the centerpiece — this spring via Young & Rubicam, New York. Judge, meanwhile, said one of the reasons he cut TV spending in 2008 was because he wasn’t 100 percent happy with the creative from Best Buy’s new agency, BBDO, New York.

“We had some learning curve stuff with BBDO and we spent a lot of the first nine months getting to the idea that we got to at Christmastime, which we call ‘True stories,'” said Judge, referring to spots that show employees talking about how they helped customers. “We didn’t feel like the advertising up until ‘True stories’ was really investment grade.”