Chapter 10

1. Chapter 10 Broadcast and Interactive Online Media

2. Learning Objectives • Learn about television, radio, and Internet in terms of the overall trend, advantages and disadvantages as an advertising medium. • Understand the reality of Internet as an advertising medium.

3. The Structure of the Television Industry (Fig. 10.1)

4. Changes in Broadcast Television Cable is Firmly Entrenched Worldwide and Is Still Growing Battle Raging Over Who Will Control Digital TV Technology Network TV’s Viewership Has Declined Television is Now a Fragmented Medium

5. Television Advertiser’s Media Choices (Fig. 10.3)

6. Forms of Television Advertising • Sponsorships • Advertiser assumes the total financial responsibility for producing the program and providing the commercials. • Participations • Advertisers pay for 15, 30, or 60 seconds of commercial time during one or more programs. • Spot Announcements • Appear in the breaks between programs, usually local buyers.

7. Measuring the TV Audience A.C. Nielsen Provides the Most Commonly Used Measures of National and Local TV Audiences: Audimeter Records When The TV Set is Used & Which Station Watched Viewing Diary Provides Data On Who is Watching Shows People Meters Which TV Shows Are Being Watched, Number of Households Watching, & Which Family Members Are Viewing

8. Cons Pros Mass coverage Low cost Some selectivity Impact Creativity Prestige Social dominance High production costs High air-time costs Limited selectivity Brevity Clutter Zipping and Zapping Pros and Cons of Broadcast TV Advertising

9. Cons Pros Selectivity Audience demographics Low cost Flexibility Testability Limited reach Fragmentation Quality Zipping and zapping Pros and Cons of Cable Advertising

10. Advantages of Television Reach a Large Audience in A Cost-Efficient Manner Use of Sound and Moving Images Creates a Strong Impact Medium’s Influence on Consumers’ Taste and Perceptions is Pervasive

11. Disadvantages of Television Television Is Nonselective Suffers From a Lack of Flexibility In Scheduling High Level Of Commercial Clutter High Cost of Producing & Running Commercials

12. Ever purchased anything in a store based on information provided in an infomercial? Ever purchased anything using a toll-free number at the end of an infomercial? Seen on infomercial in the past year? Sex Male 57% 8.0% 20.0% Female 54 9.0 19.0 Age 18-24 70 4.0 19.0 25-34 63 9.0 19.0 35-49 58 12.0 20.0 50-64 55 10.0 26.0 65+ 33 3.0 13.0 Income ($) under $15,000 53 4.5 22.5 15,000-20,000 52 11.0 24.0 20,000-30,000 62 8.0 21.0 30,000-40,000 63 9.0 25.0 40,000+ 60 11.0 16.0 Region Northeast 65 7.0 24.0 North central 52 9.0 14.0 South 57 8.0 21.0 West 55 10.0 17.0 Total 55% 8.5$ 19.0% Infomercial Watchers • Exhibit 9-4 • Page 290

13. Structure of Radio AM Radio FM Radio Radio Can be Classified According to Transmission and Power. Web Radio Cable & DAB Radio

14. Radio Advertising Network Radio is a Group of Local Affiliates Connected to One or More National Networks Through Telephone Wire and Satellites and Has Increased in Popularity Because of: Complete Market Coverage Consolidation That Produced 4 Major Networks Increase in Syndicated Shows Emergence of Unwired Networks

15. The Radio Audience Station Fans 46%, Clear Preference for One or Two Stations, Listen Up to 8 Hours a Day. Radio Fans 34%, Listen to Four or Five Stations With No Preference for One Station. Radio is a Highly Fragmented Medium Music Fans 11%, Listen Exclusively for the Music Being Played. News Fans Choose Stations Based on a Need for News and Information.

16. Measuring the Radio Audience • Measure of the number of people listening to a particular station at a given time: • Station’s coverage, which is the geographic area that can pick up the station clearly. • Better measure is circulation, which measures the number of homes that are actually tuned in to the particular station. • Arbitron is an audience rating service. • RADAR is another rating service. • Birch/Scarborough-VNU conducts random phone interviews asking listening preferences.

17. Cons Pros Reach and Frequency Selectivity Cost-efficiency Timelessness Immediacy Local relevance Creative flexibility Limitations of sound Segmented audiences Short-lived and half- heard commercials Clutter Pros and Cons of Radio Advertising

18. Target Audiences Inattentiveness Flexibility Lack of Visuals Advantages Disadvantages Clutter Affordability Mental Imagery Scheduling & Buying Difficulties Lack of Control High Levels of Acceptance Radio

19. Interactive Media • Interactive technology (media) is a new form of broadcast media. • Estimate that Internet will capture 50 million users by 2000. • Formats for delivering ads: • Web page, • Banner ad, • E-mail.

20. 120 80 60 50 40 20 0 Millions of Users TV Radio Cable Internet 1922 ‘26 ‘30 ‘34 ‘38 ‘42 ‘46 ‘50 ‘54 ‘58 ‘62 ‘66 ‘70 ‘74 ‘78 ‘82 ‘86 ‘90 ‘94 ‘98 Est Years to reach 50 MM users Radio 38 TV 13 Cable 10* Internet 5** Adoption Curves for Various Media The Internet is the fastest growing medium in history * Launch of HBO in 1976 was used to estimate the beginning of cable as an entertainment/ad medium. ** Morgan Stanley Technology Research estimate (Chart shows the Internet beginning as an entertainment/ad medium in 1994 because its earlier use was restricted to governmental activities)

21. Who Values the Internet’s Offerings?

22. Types of Use Percent Respondents making interactive purchases within one year 58% Of these: Number who shopped via online service 86 Of these, number who used credit card 83 Number that shopped via Internet 43 Of these, number who used credit card 70 Number that switched to 800 number 16 Number that shopped via e-mail 8 Number that shopped via CD-ROM 5 Number making 2-4 purchases in last 6 months 47 Number making 5-10 purchases in last 6 months 12 Number who spent $26-$50 on each interactive purchase 46 Number who spent over $100 on each purchase 11 Types of products purchased Books, music CDs, and videos 57 Computer related equipment 55 Flowers 20 Clothing 18 Travel 14 Respondents also making purchases from catalogs/TV shopping Channels 50 Consumers’ Use of Interactive Media

23. Broadcast and Interactive Media Strategies Advertiser Should Ask About: How Targeted The Audience Is Cost of the Medium Ability to Meet Advertising Objectives Ability to Accommodate the Style of Message

24. Other 5% Food and drink 5% Gifts and flowers 10% Apparel 5% Entertainment 19% Computer products 32% Travel 24% Online Products Mix in 2000

25. Cons Pros Truly Interactive Enormous audience Immediate response Affluent market In-depth information Rapid-growth industry Business-to-business Advertorials Virtual storefront Untested medium Targeting costs Slow downloads Net yet mainstream Ad may be placed inappropriately Unproved security and privacy Global marketing limitations Pros and Cons of Internet Advertising

26. Internet Advertising: Pros • Truly Interactive • Enormous audience • Immediate response • Affluent market • In-depth information • Rapid-growth industry • Business-to business • Advertorials • Virtual storefront

27. Internet Advertising: Cons • Untested media • Targeting costs • Slow downloads • Net yet mainstream • Ad may be placed inappropriately • Unproved security and privacy • Global marketing limitation

28. Internet Advertising: Reality • Advertising spending (Advertising Age 2001) • 1999: $2.8 million (1.3%) • 2000: $4.3 million (1.8%) • 61% of AA’s top 100 megabrands online (Forrester Research)

29. Internet Advertising: Reality • Advertising spending (Advertising Age 2001) • 1999: $2.8 million (1.3%) • 2000: $4.3 million (1.8%) • 61% of AA’s top 100 megabrands online (Forrester Research)

30. Various Forms of Internet advertising • Banner ads (55%): average click-through rate 0.3 to 0.5% • Sponsorships (27%) • Interstitials (4%): Rich media – average click-through rate just below 6% • Email (2%) • Others (12%)

31. Performance-based advertising predicted to make up 50% of all revenues by 2003 (Forrester Research)

32. Challenges • Can we go beyond current banners to create ads that are exciting, fun, and dynamic? • Can we increase ad impact through contextual relevancy? • Can we combine entertainment with brand equity? • Can ads be intrusive without being annoying? • Can ads communicate product superiority?

33. Review • Learn about television, radio, and Internet in terms of the overall trend, advantages and disadvantages as an advertising medium. • Understand the reality of Internet as an advertising medium.