Chapter 10

Broadcast and Interactive Online Media

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.

The Structure of the Television Industry (Fig. 10.1)

Changes in Broadcast Television

Cable is Firmly Entrenched Worldwide and Is Still Growing Battle Raging Over Who Will Control Digital TV Technology

Network TVs Viewership Has Declined

Television is Now a Fragmented Medium

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Television Advertisers Media Choices (Fig. 10.3)

Forms of Television Advertising

Sponsorships

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

Spot Announcements

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

Pros and Cons of Broadcast TV Advertising

Pros Mass coverage Low cost Some selectivity Cons High production costs High air-time costs Limited selectivity Brevity Clutter Zipping and Zapping

Impact
Creativity Prestige Social dominance

Pros and Cons of Cable Advertising

Pros Selectivity Audience demographics Low cost Flexibility Testability Cons Limited reach Fragmentation Quality

Zipping and zapping

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

High Cost of Producing & Running Commercials

High Level Of Commercial Clutter

Television Is Nonselective

Suffers From a Lack of Flexibility In Scheduling

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Infomercial Watchers
Seen on infomercial in the past year? Sex Male Female Age 18-24 25-34 35-49 50-64 65+ Income ($) under $15,000 15,000-20,000 20,000-30,000 30,000-40,000 40,000+ Region Northeast North central South West Total 57% 54 70 63 58 55 33 53 52 62 63 60 65 52 57 55 55% 11.0 7.0 9.0 8.0 10.0 8.5$ Ever purchased anything using a toll-free number at the 9-4 end of an Exhibit infomercial?

Page 290
8.0% 9.0 4.0 9.0 12.0 10.0 3.0

Ever purchased anything in a store based on information provided in an infomercial? 20.0% 19.0 19.0 19.0 20.0 26.0 13.0

4.5 11.0 8.0 9.0 16.0

22.5 24.0 21.0 25.0

24.0 14.0 21.0 17.0 19.0%

Structure of Radio
Radio Can be Classified According to Transmission and Power.

AM Radio

FM Radio

Web Radio

Cable & DAB Radio

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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

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The Radio Audience

Station Fans
46%, Clear Preference for One or Two Stations, Listen Up to 8 Hours a Day.

Radio Fans

Radio is a Highly Fragmented Medium

34%, Listen to Four or Five Stations With No Preference for One Station.

Music Fans
11%, Listen Exclusively for the Music Being Played.

News Fans
Choose Stations Based on a Need for News and Information.
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Measuring the Radio Audience

Measure of the number of people listening to a particular station at a given time:

Stations 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.
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Pros and Cons of Radio Advertising

Pros Reach and Frequency Selectivity Cost-efficiency Timelessness Immediacy Local relevance Creative flexibility

Cons
Limitations of sound Segmented audiences Short-lived and halfheard commercials Clutter

Radio
Advantages
Target Audiences

Disadvantages
Inattentiveness

Flexibility
Affordability Mental Imagery High Levels of Acceptance

Lack of Visuals
Clutter Scheduling & Buying Difficulties Lack of Control
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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.

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120 Millions of Users 80 60 50 40

Adoption Curves for Various Media

Radio 20 0
1922 26 30

TV

Cable

Internet

34 38 42 46 50

54 58 62 66 70 74 78

82 86 90 94 98 Est

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)

Years to reach 50 MM users Radio TV Cable Internet 38 13 10* 5**

Who Values the Internets Offerings?

Information access Education Advertising & marketing Buying & selling Communications 50 and older 30 to 49 Under 30

Entertainment Banking

Community services 0% 10% 20% 30% 40% 50% 60% 70% 80%

Consumers Use of Interactive Media

Types of Use Percent
58% Respondents making interactive purchases within one year Of these: Number who shopped via online service Of these, number who used credit card Number that shopped via Internet Of these, number who used credit card Number that switched to 800 number Number that shopped via e-mail Number that shopped via CD-ROM Number making 2-4 purchases in last 6 months Number making 5-10 purchases in last 6 months Number who spent $26-$50 on each interactive purchase Number who spent over $100 on each purchase Types of products purchased Books, music CDs, and videos Computer related equipment Flowers Clothing Travel Respondents also making purchases from catalogs/TV shopping Channels

86 83 43 70 16 8 5 47 12 46 11
57 55 20 18 14 50

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

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Online Products Mix in 2000

Other 5% Food and drink 5% Computer products 32%

Gifts and flowers 10%

Apparel 5% Travel 24% Entertainment 19%

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Pros and Cons of Internet Advertising Cons Pros

Truly Interactive Enormous audience Immediate response Affluent market Untested medium Targeting costs Slow downloads Net yet mainstream Ad may be placed inappropriately

In-depth information
Rapid-growth industry Business-to-business

Unproved security and privacy

Global marketing limitations

Advertorials
Virtual storefront

Internet Advertising: Pros

Truly Interactive Enormous audience Immediate response Affluent market In-depth information Rapid-growth industry

Business-to business
Advertorials Virtual storefront
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Internet Advertising: Cons

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

Advertising spending (Advertising Age 2001)
1999: $2.8 million (1.3%) 2000: $4.3 million (1.8%)

61% of AAs top 100 megabrands online (Forrester Research)

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Internet Advertising: Reality

Advertising spending (Advertising Age 2001)
1999: $2.8 million (1.3%) 2000: $4.3 million (1.8%)

61% of AAs top 100 megabrands online (Forrester Research)

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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%)

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

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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?
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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.

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