Outlook 2008: Media Agencies

NEW YORK If the writers’ strike extends past February, it stands to wreak havoc with the plans of major TV advertisers. Marketers and agencies, of course, are already working on alternate plans.

But the labor dispute, now entering its third month, is just one of the key issues for media shops going into the new year.

Another worry: the shaky economy and what that will do to ad budgets. Also on the agenda: digital integration plans at media agencies, a key element of which is recruiting hard-to-find talent. Other factors, including the new commercial ratings system and continued viewer erosion, have already significantly reduced the number of available gross rating points needed to fulfill client media plans. Some networks, including NBC and The CW, have taken the radical step of refunding cash to clients. A prolonged strike will force the networks into early rerun mode in 2008 and possibly even stall the production of new and returning shows for the 2008-09 season, further depressing the availability of GRPs, buyers say. (See Network TV, page 16.)

“If this carries on into March, I don’t think the networks would be able to do an upfront,” says Antony Young, president of Optimedia U.S. “It would be a lot harder to present a product to advertisers. Everyone’s trying to figure out their contingency plans.”

Agencies are now huddling with clients behind closed doors, trying to come up with alternative plans. The likelihood that magazines will get some boost seems likely, while cable also is expected to benefit. The Web also stands to profit. “[The Internet] has the inventory, and agencies will look to tap into it,” Young says. “Advertisers could be forced to reappraise mass reach as a media strategy for a number of their brands.”

Further complicating plans for the coming year is the prospect of a recession. Projections point to sluggish ad spending in the U.S., although the Olympics and political campaigns are projected to offset that softness. Media agencies are not necessarily taking “a depressed view of business,” however, says Bill Tucker, CEO of MediaVest USA.

Much of that optimism has to do with the continued, explosive growth of the digital space. “It’s no longer a test and learn, but really a cornerstone of any media plan,” says Scott Neslund, president and CEO of MindShare North America.

As digital continues to dominate center stage, media agencies are acting accordingly. “We are creating units to exploit the Internet and the whole digital arena,” says Steve King, worldwide CEO of ZenithOptimedia.

But what does the focus on digital mean for the other channels? “Unless traditional media start to figure out how to demonstrate to marketers that there is a significant return on investment, they are going to continue to suffer,” says Bill Koenigsberg, CEO of Horizon Media.

Media agencies are emphasizing data management to help drive client business. As they branch out into multiple media channels, quantifying the success of each one is becoming more challenging.

“The CMOs are asking very good questions, and we are on data-overload in terms of identifying what those metrics are,” says Koenigsberg. Although consumers have become harder to pin down, the exec says, “we’ve got a lot of tools out there now to tell us where they are hiding and how to reach them.”