The State of the Business: The 30 Second Spot Is Dead ... Long Live the 30 Second Spot

ADWEEK 25TH ANNIVERSARYPacked into half a monute or half an hour, the idea remains king as advertisers chase the empowered consumer.The actor appears on screen. The program has just aired, but now he is taking the opportunity to thank a corporate sponsor that helped to underwrite the production. He speaks directly to the camera. More than ever, at 36, he resembles his father, also an actor, who broke into Hollywood in the mid-1960s. But this only feels like 40 years ago. It is last month's season premiere of 24 on Fox. The advertiser is Ford. The actor is Kiefer Sutherland, and he could be particularly grateful to the automaker. Its sponsorship enabled his cult thriller to gain momentum right out of the gate. Ford ran short films before and after the first show of the new season to promote the relaunch of its F-150 truck. The films played off the action/drama formula of the program itself; they featured a character who is under siege by an uncertain nemesis—and who is, not coincidentally, an expert driver of an F-150 pickup. (Jack Bauer, Sutherland's character on 24, drives an Explorer.) The rest of the show aired commercial-free. For Rich Stoddart, Ford division advertising manager, the sponsorship's inventive structure and placement benefited all parties. "We asked, 'What if we could develop content that related to 24's plots, about Jack Bauer's trials and tribulations?' " he recalls. "It really feels like a seamless hour: content rather than an ad." The idea originated with Fox and the Ford Motor Media unit of J. Walter Thompson in Detroit—not at the ad agency proper. "To develop ideas that are bigger than just buying ads, TV spots, banners, you have to build the platform before you know how to create the content," says Stoddart. Ford's deal with Fox is hardly the beginning. With the consolidation of the media industry, rising TV costs, the proliferation of consumer choice and the new digital technologies that empower that choice, the quest for integrated marketing solutions was undertaken years ago. But in the new century, these trends have begun to reach critical mass: Even among the biggest advertisers, the reflex of favoring big, mass-marketing TV campaigns—the unquestioned province of traditional ad agencies—is diminished. No one can know for sure the fate of the 30-second spot, and in a sense it doesn't matter. The important thing is that as many as one-third of marketers believe it is no longer the only game in town, according to Forrester Research. That itself is enough to change the marketing landscape and the fate of the institutions that inhabit it. Barely a month goes by without some new challenge to the potency of television's role in the marketing mix. Its once-unequaled dominance is falling victim to fractured consumer attention and emerging technologies such as the commercial-zapping prowess of TiVo. Even the largest of mass marketers—Procter & Gamble, General Motors and Kraft, to name just a few—are demanding more targeted alternatives. The Yankee Group recently issued a study, "The Death of the 30-Second Commercial," that all but buried the hallowed industry touchstone. Yankee calculates that once PVRs reach 20 percent penetration, some $5.5 billion of the $50 billion spent annually on TV advertising will be wasted. Even though such a development might pare down the clutter and make ads that people do want to watch more effective, a purge is still a purge. One can easily see what might happen when the PVR becomes as ubiquitous as the VCR. Take that, John Wanamaker. The back-to-the-future solution to this dilemma is being sought on the Internet, in sponsorships, product placement and promotions, repackaged under the glitzy banner of "branded entertainment." More than ever, the medium is the message, as Marshall McLuhan said. Most famously, BMW utilized Web films to suggest its technological edge. Other marketers, taking a page from the movie industry, are embracing a new era of convergence of TV content and commerce. Runaway-hit phenomenon American Idol integrates brands including Coca-Cola, AT&T Wireless, Ford and Clairol Herbal Essences into its talent contest format and extensions. Coors, Mitsubishi and American Express signed up for roles in the much-hyped reality show The Restaurant. The concept of agencies linking sponsors to programs is as old as television itself. It's questionable whether traditional ad agencies will play the same role this second time around. But ignore this shift in strategy at your own risk: Mediaedge:cia and Leverage Group project spending for "strategic alliances"—including product placement, sponsorships and cause-related marketing and consulting—to ring up nearly $140 billion globally by next year. "Ultimately, the understanding of these initiatives appears to reside in the minds of senior-level clients and senior- level media executives," says one insider at a branded-entertainment concern. "Maybe part of that lies in the scale of what we are doing. Look at ad agencies: They do big global, national ad campaigns. Maybe [branded entertainment] is not mainstream enough for them. To that I say, 'Wake up and smell the coffee.' " Or taste the Coke. Madison Avenue first got that wake-up call in 1991, when Creative Artists Agency encroached on the turf of McCann-Erickson, the ancestral home of Coca-Cola's advertising. Given CAA's hold on the entertainment world's best and brightest, the move sent shudders along Madison Avenue. While CAA's 30-second commercials for Coke proved underwhelming—creative duties returned to the agency—the talent firm learned from the experience. Three and a half years ago, it hired an in-house marketing group of 15 people who hail from the client and agency sides to make up the gap in marketing savvy. On the other side, ad agencies learned, too—many of them launched entertainment divisions. "We realized the traditional marketing and media world was changing, creating new opportunities," explains CAA brand agent Seth Matlins. "We have access and insight into the world's greatest talent base that can be leveraged to add corporate value. Unlike other people in this space—talent agents—we are brand agents. We are marketers who represent the best interest of brands." The Hollywood firm now counts P&G, Motorola, Nextel, Hasbro, eBay and Avon among its corporate clients. Earlier this year, CAA acquired Youth Intelligence, which attracted marketers including Levi's, Microsoft, Nike, Bank of America and L'Oréal into the fold. Access to Tom Cruise on speed dial isn't the point. In the face of rising network costs and lower efficiencies and viewership, the impetus for these marketers is value for money. Coke's association with American Idol shows the potential of such deals. CAA brought Coke and Fox together with CAA client Simon Fuller, who produces the show in the U.S. with Fremantle Media. The soft-drink marketer got in early during Idol's first season, in 2002, for less than $10 million. That proved to be a bargain, based on ratings that soared during the program's 12-week run, peaking at 23 million viewers. In addition to commercial and radio tie-ins, Coke infiltrated the set itself, which featured the Red Room and fountain cups on the judges' tables. It wasn't long before CDs, Las Vegas specials, stadium dates and teen- targeting mall tours joined the mix. "The receptivity to American Idol was far more overwhelming than we expected," says David Raines, vp of integrated communications at Coca-Cola. "Consumers liked it. It facilitated social connection, access to behind-the-scenes. It was fun, relevant and somewhat organic—it didn't feel forced. It provided branded experience rather than brand exposure." For AT&T Wireless, Idol presented the opportunity to move beyond mere product placement and participate in the show itself. In a country that lags other parts of the world in its embrace of text messaging, more than 7.5 million Americans used their cell phones to text-message their votes and otherwise participate in the frenzy of Idol promotions. Hundreds of thousands of AT&T Wireless customers were introduced to messaging—a development other marketers noticed. Since then, the cellular-service provider has been deluged with inquiries from packaged-goods companies and TV producers eager to use text messages to reach a broader audience. In crafting such multifaceted deals, ad agencies today are up not only against CAA but also William Morris, Endeavor, Universal, Mandalay Entertainment and others who claim the same expertise in entertainment that agencies do in the realm of the 30-second spot. But few can boast the breathtaking success of Fuller's 19 Entertainment Ltd., producer of Idol around the world. 19 partner Charles Garland, who worked as a top account executive at Bartle Bogle Hegarty in London, says: "We consider ourselves a product development company. We think about developing properties rather than just programming. We created multibillion-dollar brands like the Spice Girls and Pop Idol in less than two years, and we never used advertising to do so." Garland hints that English footballer David Beckham and his wife, former Spice Girl Victoria, will feature in 19's next U.S. initiative, within the coming year. The Beckhams recently signed on with 19 in a bid to become a "global brand." The Beckhams' ambitions aside, what's in it for marketers? Garland points to the results of American Idol, which took three years to persuade a broadcaster to air. "Clients want to turn their heavy media spending into commercial results," he says. "The key way to maximize that value is to think about media spending as media investment. We take a more holistic approach, looking at the entire entertainment property and how we can maximize that marketer relationship to the greatest benefit of the client." Even the most traditional ad agencies, avowed believers in the 30-second TV spot, would find it hard to argue with that proposition. But the problem is, they're not usually part of such discussions in the first place. Long used to taking the lead in shaping clients' marketing and reaping the bulk of their budgets, ad agencies now often find themselves in the backseat of integrated vehicles driven by media strategy. The great consolidation and unbundling of media buying and planning that occurred in the late '90s changed the balance of power in the agency world. Not only did unbundling deal the final blow to the commission system, it meant traditional agencies would no longer control the biggest chunk of their clients' marketing investment. Those dollars are now in the hands of separate media agencies. "The investment in media is so enormous," says Irwin Gotlieb, CEO of WPP Group's Mindshare. "Some of these companies spend more on media than they spend on the materials to make their products." Put more bluntly: "Influence comes with money," says Mark Stewart, evp and chief strategic officer at Universal McCann. It's an ironic turnaround for long-suffering media executives accustomed to life at the bottom of the pecking order. While they used to get the last 10 minutes of a new-business pitch, these days the whole advertising process often moves directly from the idea to the media strategy. As the conventional wisdom now has it, media executives are the new creative thinkers. "The balance shift is one of relevance rather than 'power' per se," says Alec Gerster, CEO of Interpublic Group's Initiative Media Worldwide. "We are relevant participants in the game of communication in a way that many ad agencies just aren't. Not that they couldn't be. But think about it: Where is Comcast going to go first to explain all their new communication utilities in their expanding universe of digital homes? How many agencies feel threatened by highly efficient and flexible digital production techniques, as opposed to being exhilarated by it? How many account guys are paying attention to [FCC chairman Michael] Powell and the FCC as they reshape our television lives? How many commercials are being produced in high def or with [widescreen-format] 16:9 aspect ratios?" If agencies are ruing the end of the supremacy of the 30-second spot, their holding company parents aren't necessarily. For the ultimate consequence of the decline of commercials is not less marketing but much, much more: more forms of marketing, more venues. Their corporate portfolios already include promotions agencies, direct response and data firms, and research companies. Some of the newest additions include—what else?—Hollywood assets. WPP's Mediaedge:cia just bought a minority stake in New York entertainment consultancy The Leverage Group. Omnicom Group last year purchased entertainment consultancy Davie Brown. IPG acquired PR powerhouses PMK and Bragman, Nyman & Cafarelli in the past several years. (IPG's Magna Global, which has an ownership position in The Restaurant, brought in Bragman, Nyman & Cafarelli to promote it. Three IPG clients were featured in the content: Coors, Mitsubishi and American Express.) Holding companies like Omnicom, home to many of the industry's best creative ad agencies, now receives 56 percent of its revenue from non-media advertising. Media has consolidated the relationship between marketing communications conglomerates like Omnicom and their equally conglomerated clients. Media agencies are the "marketing partners" that traditional agencies can often no longer claim to be. Consider the research department. Until the '80s, it was one of the industry's great strengths, bestowing an authority on agencies' work. But newly public agencies sacrificed their costly research departments to bottom-line pressures brought by Wall Street. Without unique intelligence to offer, they lost much of their influence on clients' businesses. As the familiar lament has it, the ad agency was moved "downstream," supplanted by outsiders like consultants. The good news is, the research department is back. The bad news for traditional agencies? It's been resurrected within the media agency. While account planning departments within agencies are now putting more emphasis on quantitative skills, the media agencies have the resources to spend on number crunching. Says Universal McCann's Stewart, "We have the cash flow. The amount of assets we invest in proprietary research is enormous. It almost matches the spending on syndicated research." Joe Uva, president and CEO of Omnicom's OMD Worldwide, agrees: "There is no way Omnicom's agencies would have been able to make the investment [in research] on their own. It would have been too expensive." Not surprisingly, this evolution has engendered subterranean tensions. "The rank-and-file troops have by and large accepted it," says one media executive of the shift in power. "It's in the management suite that there's a sense of loss of control. The media is not subject to their control, and there are some who can't believe it's happened." Believe it. Fragmentation of the media is the root cause of the model-changing shifts in the business. "If I had to put it in terms of carts and horses, the change in the media itself is the most horselike," observes Renetta McCann, CEO of Publicis Groupe's Starcom. Fragmentation has given the consumers more power over how and when they can be reached. "While in the short term the 30-second TV commercial still plays a very important role, clearly there are changes on the horizon, and that change is simple: The consumer is in control," emphasizes Coke's Raines. "Over time, we need to respect that and evolve in that environment." Ironically, fragmentation also continues to inflate the cost of network ad time, as demand chases a decreasing supply of mass-appeal advertising vehicles. On the heels of a record network upfront market this year comes the selling of the 2004 Super Bowl, where 80 percent of commercial inventory is sold out three months in advance and commanding an 8 percent premium over last year. But perhaps that is not so counterintuitive. It may hint at a not-so-scary truth: that there remains a great deal of value in a Super Bowl buy, and in TV buys generally, because they still can be the perfect vehicle for all sorts of ideas. The "old" way often still can be the best way. "The more things change, the more they stay the same," argues Bill Katz, president and CEO of BBDO in New York. "Irrespective of technology, irrespective of the proliferation of media agencies, irrespective of holding company organizations, irrespective of consultant encroachment, irrespective of globalization, from my perspective, the creative idea is still king. At the end of the day, that's what moves products. That's what sells brands." As it turns out, when agencies were in charge of "whole egg" integration efforts, their track record was mixed. (To be fair, clients bear their share of responsibility for that.) A consequence of media-first strategy is that agencies are finally providing integrated marketing—although no one calls it that. Integration is a buzzword so worn and hollowed out, so overpromised and underdelivered for so long, that no one dares use it any longer. "Integrated marketing can carry a lot of baggage," says Starcom's McCann. She prefers to describe today's media executives as "contact stewards." Unilever gets credit as one of the first big clients to champion communication channel planning. As testament to its belief that reliance on TV spots had become archaic, the packaged goods giant launched the media strategy on a global scale four years ago. It developed its own proprietary tools and software, consumer insights, modeling and econometrics teams. The concept of communication channel planning, fast becoming standard industry practice, ran contrary to the reality of how media was being planned and bought. For one thing, message creation and message negotiation were traditionally done independently, for the most part, with little interaction between them at the strategic planning stage. "There was a kind of silo mentality within the company, and the agencies worked it out from there," says Brad Simmons, vp of media services at Unilever's U.S. division. "There was no planning process to force the integration. It relied on a brand manager who got it." Critical to making it work, of course, was the institution of a new agency remuneration system. The commission-based systems encouraged a focus on the buying rather than the thinking end of the equation. The new system, largely fee-based, needed to reward outstanding performance as an incentive to pursue broader communications solutions. "We put agencies in a compromising position," says Simmons. "We asked them to think about the best alternatives, only they were being paid as if they were running traditional media plans. The move to fees has really promoted greater objectivity."Clearly, one of the pioneering success stories in the new, media-neutral era is BMW Films, kicked off two years ago. The Internet short films, supported by offline media, generated high-profile buzz, consumer interest and, arguably, sales. "The Hire," which features British actor Clive Owen as a driver for hire in unrelated stories, boasted big-name directors like John Frankenheimer, Ang Lee and Guy Ritchie. The shorts, which feature the German company's cars but carry no overt sales pitch, were created after BMW charged its agency, Fallon, with developing something entirely new. Fallon approached production house Anonymous Content. Anonymous executive producer David Fincher, the director of films such as Fight Club and Se7en, collaborated in developing scripts and choosing directors. Another batch of films followed last year. Fallon president and executive creative director David Lubars says the way to reach the masses in a fragmented media universe is as easy—and as hard—as "creating work that makes the masses seek you out. It's no more us versus them. Everyone understands marketing. People like marketing. But they're saying, 'Don't waste my time. Entertain me, don't patronize me.' " For agency creatives, there is increasing urgency to heed that demand. "Anyone who claims to be a futurist is a fool," Lubars says. "But what we do know is that by 2006, 40 percent of television viewing is going to be on demand. Consumers want choice, choice, choice, and for the first time in the history of the medium, they have a choice. They are no longer victims of the medium." BMW Films make a dramatic case in maximizing value. When the films rolled out in May 2001, the car maker hoped for 2 million hits to justify its investment. By June, it had recorded more than 3 million, and tens of millions more have logged on since. While the correlation to sales is hard to gauge, the luxury auto marketer reported that sales were up 20 percent that June compared with the previous year and 26 percent in July—at a time when the American economy plunged and BMW was doing little traditional advertising. "We said, 'If we do this, can it reach a cost per BMW minute comparable to the cost per BMW minute on advertising on network TV?' " recalls Jim McDowell, vp of marketing at BMW North America. Plus, he says, "we were willing to believe there would be a much greater intensity of viewership."Lubars admits the client's one misgiving was whether the agency creatives could make effective longer-form entertainments. (Two of the three original scripts were penned by Fallon staffers.) No doubt every creative with a screenplay tucked in a drawer would love to try. But in fact, the creatives themselves weren't sure they could. "We're trained to condense," Lubars says. "But to make six-minute films, you have to think about subplots, pacing, time-shifting, characterization." Having pulled it off, he now says to his staffers, "It's about making the most of talent. Don't you want to do that? It's available." Tom Cordner, executive creative director at JWT Detroit, says industry creatives need to take a less defensive, broader view of where that talent lies. For Ford's 24 shorts, he asked four production companies for ideas, giving them complete creative control. He selected director Gary Johns, who happens to be a former Chiat/Day art director. "Ideas can come from anyone in your agency and from outside," Cordner says. "I'm making the world my creative department." Agency creatives work in a business that for four decades has been organized and conditioned to make 30-second TV commercials and print ads. To change that way of working requires an reorganization that would rival the revolution perpetrated at the old Doyle Dane Bernbach, where copywriters and art directors who worked on different floors were put in the same room for the first time. Yet if agency creatives are going to continue to play an influential role, they will have to develop new ways of thinking (see page 81). This isn't lost on media agencies, of course, which are eager to expand their relationships with marketers. Earlier this year, for instance, Starcom MediaVest Group launched Play, a unit focused on finding marketing opportunities in the $10 billion videogame business. No longer just kids' stuff, the industry rivals the motion picture business in terms of revenue and is a key tool in connecting with 12-34-year-old males. Rishad Tobaccowala, evp at SMG, says gaming and broadband are the two fastest-growing media and have attained critical mass already. While broadband growth is in 20 percent of U.S. households, it now accounts for 60 percent of Internet usage, he says. "People are firing up videos from the Web, downloading music, going to film-oriented sites," says Tobaccowala. "Broadband is important because it changes the way people interact with new technology." While PVRs are considered by many to be one of the greatest threats to the 30-second commercial, the Internet is currently much more of a threat to the broadcast status quo. While TiVo just reached 1 million subscribers, U.S. Internet penetration passed the 150 million mark in September, according to comScore Media Metrix. The numbers become even more powerful—or frightening, depending on your point of view—when they are parsed demographically. Consumers age 13-24 now spend more time online per week—16.7 hours, not including e-mail—than they do watching TV, where they log in 13.6 hours, according to a study commissioned in July by Yahoo! and Carat North America. Those surveyed explained their behavior change by saying they like the ability to "personalize and manage the media experience"—a phrase that has to only add to the fears of mass-marketing proponents. But some advertisers are figuring it out, and their solutions lie not just in copying BMW's Web films. Consider M&Ms: The Mars brand has repeatedly used the Web as a virtual polling place, keeping consumers engaged for much longer than 30 seconds. Last year the company put the launch of a new M&M color up for vote globally, with the brand's Web site, created by Grey Interactive, serving as a primary polling place. Word spread through online advertising but also by blog. (Purple won.) Consumers can also order custom-color mixes on the site; pure white M&Ms are a big favorite of wedding planners. That pooling strategy is also being applied, strangely enough, to commercials themselves. Currently, consumers can vote online on which of five streamable M&Ms spots should go back on air. Pepsi and Doritos have used similar strategies. Ford's F-150 may have acquired most of its buzz from 24, but the launch of the redesign also included an Internet roadblock. Ford bought the home pages of AOL, Microsoft's MSN and Yahoo! for a day, for a reach buy that might not be achievable anymore on network TV. TV viewers would have to tune in at the exact time of the commercial roadblock; on the Web, they needed to log on at any time in the day. While 18 million people tune into CBS' CSI each week, more than 100 million log onto Yahoo! every month, according to comScore Media Metrix. Other marketers are reconditioning their retail stores as brand-performance spaces. "Smart marketers realize that everything matters," says Scott Bedbury, a former marketing executive at Starbucks and Nike who founded and runs consultancy Brandstream. "It's not that TV is less effective. It's that every point of contact with consumers must be rethought." As an example, Bedbury points to Niketown, a multimedia brand showcase store inspired by the technology of theme parks and museums. But companies need more than a funky store presence to advertise themselves, and even the most enthusiastic Internet proponents admit that online ads have nothing like the power of TV. It's a running joke in Internet circles: "No CEO is ever going to say to his friends, 'Hey, did you see my text ad on Google?' " And therein lies a truth. The 30-second TV commercial is the sexy, glamorous face of the marketing world. It's also an essential part of the American free-viewing broadcast model. It will not die inasmuch as it cannot die. The consequences of its demise for broadcast programmers and marketers would simply be too catastrophic. If ad dollars were really to begin to evaporate, believes Unilever's Simmons, there would be some kind of intervention—perhaps technological. Big-spending packaged-goods marketers like Unilever and P&G are unlikely to see their brands playing the hero in a must-see Web film. While they are actively pursuing their own Web strategies, the survival of the TV spot is essential. As fashionable as the branded entertainment concept is, then, it cannot replace commercials. Mindshare's Gotlieb points to the amount spent on TV advertising and asks, "Do you think we can replace $25 billion in media with product placements? Can you integrate 16 products into each show? Do you know how much time and effort it takes to put together a promotions deal?" A lot. Mike Malone, development director for music, film and television at Grey Alliance, has been working for a year on a co-promotion linking Pringles to the final installment of The Lord of the Rings. Matters get even more complicated when it comes to making the ads that lie at the heart of many of these promotions. The ad agency is called in last and has to deal not just with the client but with the studio as well. "With the creative, there are a lot of chefs," says Malone. "You've got to manage all the egos. It takes a lot of work and a lot of time." He emphasizes that Grey Alliance takes on that management role: "We're the hub." Intoxicated by the possibilities of branded entertainment, some in the industry imagine special-purpose ad channels, available on the same PVRs that threaten to eviscerate the 30-second spot. But Fred Sattler, vp and executive media director at Doner, one of the few shops where media still resides within the general agency, dismisses this as a fantasy. "The creation of advertising channels is a losing proposition," he says. "We need ambush. There are times when context is important and times when timing is important." For the latter, commercials are essential. "There is an enormous value in product integration well executed," says Gotlieb. "And there's enormous harm in product integration badly executed." To that point, one branded entertainment executive mentions Mitsubishi's role in chef Rocco DiSpirito's The Restaurant and sniffs in disbelief: "Have you ever seen a New York celebrity chef driving around in a Mitsubishi?" Well done or not, commercial placement will never pay TV's bills, and there is plenty of evidence to suggest the golden goose of television—TV commercials—will not disappear. But their role is under constant assault, and their decline—whether greatly exaggerated or not—does not mean less advertising but many alternative forms of it. Ads have jumped from commercial pods to all the touch points of a networked world: the cell phones in women's handbags, the game players in kids' backpacks, the PDAs in executives' pockets, the computers that sit cheek and jowl with the TV set in the living room.Consumers may have unprecedented control in a fragmented marketing environment, but the communications universe they live in is, ultimately, uncontrollable.-with Debra Goldman

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The State of the Business: The 30 Second Spot Is Dead ... Long Live the 30 Second Spot

Noreen O'Leary

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