With the economy in turmoil and putting heavy stress on just about everybody’s business, this year’s gathering of the American Association of Advertising Agencies is certain to have a more serious tone. The group’s CEO describes how the ad business is being affected as well as other challenges–both in the marketplace and in Washington.
The American Association of Advertising Agencies’ annual Media Conference, which opens a three-day run at the Hilton New Orleans Riverside, has been the place where media companies can soften up execs of the media buying agencies and talk about trends and opportunities.
With the economy in turmoil and putting heavy stress on just about everybody’s business, this year’s gathering is certain to have a more serious tone with executives desperately looking for efficiencies and new sources of revenue.
In this interview with TVNewsCheck Editor Harry A. Jessell on the eve of the conference, AAAA President and CEO Nancy Hill talks about how the advertising business is being affected by the downturn and some of the challenges it faces in the marketplace and in Washington.
An edited transcript:
So how is this economy going to affect attendance at the media conference, which drew around 1,300 last year?
I think we’re going to be a little bit more than half. In years past, agencies and media companies would be sending, six, eight, 10 people. Now, they are sending one, two or three people and that’s where you see the big drop off. You don’t see the drop off of a company completely. They’re just rethinking how many people actually need to be there. Now the good news is that we’re going to end up with a much more intimate, senior and focused audience.
How is the economy impacting the ad business in general?
That is a big question. Certainly, anybody who’s got large automotive, large financial services, any of the small-to-midsize agencies that have clients who depend on the lending dollars flowing through the pipeline, they’re all being impacted in terms of revenue. So it’s a huge time for correction from the standpoint of the number of people in agencies. Everybody’s taking a look at their staffing and making the hard decisions where they have to make it.
Are you seeing any consolidation or failures on the agency side?
Not yet, but part of what we haven’t seen yet is what the final numbers are going to look like for 2009. One of the hardest things about this particular financial situation is that it’s unpredictable right now. Everybody’s trying to figure out how bad it’s actually going to be and nobody seems to have the answer to that.
In my interview with [CBS’s] David Poltrack, he spent a lot of time talking about set-top boxes as a way of measuring TV viewership. Do you see that as the coming thing?
It’s coming. What form it’s going to take I don’t think anybody knows because there’s an awful lot of competing platforms out there. With the possibility of addressable television, you’re obviously going to be able to measure television viewership. At the same time, I don’t think that it’s going to replace Nielsen. I think it’s going to be a complement.
What does the set-top box data do that the Nielsen data doesn’t?
Better accuracy. The one thing you’ll be able to know is who is watching at any given moment. Given the way people are recording and storing television content on their DVRs, it’s hard to say if it was something that they saw once, twice or three times. It depends on how fast we’re going to be able to get that data flowing back and forth.
Is this something you’re trying to make happen? Is 4As actively seeking a Nielsen alternative?
We’re always looking at alternatives, but whether we’re looking for alternatives is another story. There are many different platforms on the horizon and we talk about all of them, but we’re not actively pursuing anything or recommending anything to our members.
Newspapers seemed to be taking the brunt of the recession so far and many may go out of business or emerge much smaller. Who wins when the newspapers lose?
It’s interesting because I don’t think we’ve seen the end of the evolution of newspapers. Certainly, the ones that seem to be stronger are the ones that have moved quickly on to digital platforms, whether it’s the Internet or a Kindle or even a podcast.
So, while they may not be printed on newsprint and delivered to your door every morning, they’ve recognized what they’ve got in content. Now, what’s interesting is really local newspapers deliver content that isn’t available anywhere else. So, you’re going to have the local newspapers thriving right now because they are delivering something that nobody else is.
It would be very easy to say that the Internet or digital is going to be the beneficiary of any newspaper closings. That’s an easy answer, but how people want to consume their news content has yet to be seen in any definitive form.
What are advertisers doing to make sure that the TV commercials that they produce are effective and appealing enough to hold audiences when they know that they can zap them on the DVR?
I’ve been quite fortunate in my career to work for what are considered some of the most creative agencies in the country. What I’ve seen over the past few years are people invigorated by this challenge. It gives them an opportunity to dial up the creativity in what we’re doing and make sure that we get people’s attention.
With DVRs, you’re not really skipping a commercial as much as you’re fast-forwarding it. If you’re used to seeing something iconic like, say, the Geico Gecko or the Mac PC guys, you’re still getting the branding from Geico and Apple while you’re fast-forwarding through the spots. People are getting much better at figuring out how to imprint.
You have a task force that’s going to make some recommendations on the business practices in the buying and selling of spot TV, including, I understand, switching from CPPs to CPMs as the basic currency. The task force is supposed to unveil the recommendations at your media conference in New Orleans this week. Can you give us a preview?
What I don’t want to do is steal their thunder because this group has been working on this very diligently. It has gotten together on average two or three times a month to hammer this out. They have some really solid recommendations with regard to streamlining the buying and selling process.
As I understand it, this is a first step toward a completely electronic process.
That is essentially the goal, but it’s more than that. It’s more than just getting the paperwork out of the process. It’s making everybody’s lives easier. Part of it is getting rid of the manual pieces that go into the buying and selling process on both sides of the equation.
What will be the big issues confronting the industry in Washington in 2009?
Interestingly enough, some of the big issues we had in 2008 are still on the table going into 2009. We haven’t gotten a full understanding of what the administration’s agenda is going to be with regards to the advertising industry, but I think you’re going to continue to see [direct-to-consumer pharmaceutical advertising] come under pressure, you’re going to see obesity continue to come under pressure and it’s likely that one of the next big areas is going to be behavioral tracking and privacy.
I have seen stories on the need for regulating behavioral tracking advertising.
And so we — along with the ANA, the IAB and the DMA — have formed a coalition to put really good guidelines in place so that hopefully we can continue to do the good work that we have always done through self regulation.
What do you mean by “obesity”?
That’s with regard to children and junk food and, I think, to a certain extent with adults as well with regard to claims and ingredients and that kind of thing.
And here we’re talking about restrictions on advertising certain kinds of products that are deemed unhealthy.
Not necessarily restrictions in all of those areas. The industry has had a really good solid track record in self regulation and as long as we continue to adhere to those standards I think we’ll be OK, but I do think that those are the topics that are going to come under scrutiny.
What about the deductibility of advertising as a business expense?
That’s a separate subject. It’s entirely possible that it will come up on a state level. You’ve got states that are having incredible budget problems and it would not be surprising if they started looking at us as a place where they could raise funds.
And that’s driven purely by the need for money for the treasury.
Yes. And you know what? We’ve been through this before and we’ve always managed to keep it under control and we’re hoping to be able to do the same.
Despite the economy, the advertising industry still seems to be under pressure to do something about diversity within its ranks. What do you think you can do in 2009 when nobody’s hiring?
People are always hiring. Whether they’re hiring at the mid-to-senior levels is another story, but there are always jobs open. The shift is obviously moving from what I would say are general advertising practitioners to digital practitioners.
So certainly with anybody that’s got digital prowess or background, it’s going to be easier to get a job. Diversity continues to be a very important issue for us and for all of our members. It’s a good business practice. It absolutely helps the bottom line. So there’s no question in an economy like this that we should be doing everything that we can to make sure that we’re reflecting the population.
You just celebrated your first anniversary in this job. What have been the surprises — pleasant and unpleasant?
I’ll start with the pleasant. The pleasant surprise is just how much the agencies are willing to engage in conversations not just with us, but with other industries with regard to what’s going on with in digital, with what’s going on in behavioral tracking. Agencies want to talk right now.
In years past, when things were great, there was a sense of, I’m going to put my head down and not tell anybody what I’m doing because I might give up some sort of competitive advantage. But I believe right now people are really open to having discussions because everybody’s trying to figure out the answers so they’re willing to talk to anybody and everybody try to sort it out in their own head. That’s been a nice surprise.
The other thing is that our membership wants us to succeed. I’ve had a ton of people raising their hands saying they’ll do whatever it is they can to help. That goes back to what I was saying about this renewed spirit of cooperation.
One of the unpleasant surprises for me and one of the things I had to immediately address as quickly as possible was just how far behind the 4As have gotten with regard to technology. When I say that, I mean our own technology and our own platform in terms of how we work with and deliver content to our members.
It just was not something that the 4As had historically focused on. So I’ve spent the last year making sure that that has been one of our big focuses, because when you get into an economic situation like this one and you don’t have people able or willing to travel as much, you’ve got to provide a way for them to connect that doesn’t require them being out of the office.
Is there anything else the TV station world needs to know about the advertising world in 2009?
What I found fascinating about the Obama campaign is that everybody wanted to talk about the Internet and Twitter and instant messaging and all of the new tools that they were employing. That’s true, but he also spent more money on local television than anybody’s ever spent in a presidential campaign before.
It’s a brilliant mass media environment that we live in. When you’ve got all of those things working for you, it works brilliantly.