The Outlook for Advertising AdWatch 2004
TNS Media Intelligence/CMR Advertising and Marketing Intelligence Across Brand, Media, Industry and Market Leading provider of strategic advertising and marketing information Monitoring: $140 billion in ad expenditures 190 million ad occurrences 2 million brands 20 media
The Advertising Outlook Five Year Ad Trends Key Indicators for 2004 Spending Outlook for 2004 and Beyond
The Past Five Years
The Advertising Landscape Annual Multi-Media Expenditure Trends Continued recovery since 2001 Percent change 15 10 14.1% 5 4.9% 6.2% 0-5 -9.1% -10 2000 2001 2002 2003 Based on 14 media
The Advertising Landscape Strongest Media Growth From 1999 to 2003 Spanish Language Network TV Internet Cable TV Outdoor +86.7% +40.6 +38.6% +26.7%
The Advertising Landscape Annual Multi-Media Expenditure Trends Healthy start to 2004 Percent change 15 10 5 14.1% 4.9% 6.2% 9.6% 0-5 -9.1% -10 2000 2001 2002 2003 Q1 / 2004 Based on 14 media
Key Indicators for Spending Advertising Categories New Brands The Upfront
The Advertising Landscape Top 10 Categories Q1 2004 $5.9 Retail UP 7% $2.0 $1.8 Non Domestic Auto UP 10% Domestic Auto UP 7% $1.1 $1.1 $1.1 $973 $958 $955 $917 Transportation and Tourism UP 17% Banking and Investment Services UP 23% Telecommunications Services UP 10% Pharmaceuticals UP 29% Motion Pictures UP 3% Media and Marketing Services UP 17% Restaurants UP 1% Dollars in billions
The Advertising Landscape Top Growth Categories Q1 2004 Pharmaceuticals +29% to $973 Million Banking and Investment Services +23% to $1.1 Billion Media and Marketing Services +17% to $955 Million Non Domestic Auto +10% to $2.0 Billion Transportation and Tourism +17% to $1.1 Billion Telecommunications Services +10% to $1.1 Billion
New Brands Strong First Quarter 2004 Number of major new brands up 16% from Q1/2003 Dollars in millions 140 120 Key Categories for New Brands in 2004: In order of dollars spent Motion Pictures Domestic Auto 100 80 60 111 $841 99 $723 114 $872 132 $945 Audio Video Equipment Pharmaceuticals Health Aids 40 20 0 Q1 2001 Q1 2002 Q1 2003 Q1 2004 New brands spending a minimum of $2.5 million in National media
The Upfront Business as Usual Will the Upfront Be Half Empty, or Full-of-it Upfront Still Thrives as Party, PR Event The Upfront is Not Broken Advertisers, Agencies: Cable Nets Likely to Benefit from Upfront Share Upfront Loses Traction with Autos
The Upfront Business as Usual Upfront Estimates 2000 vs. 1999 2001 vs. 2000 2002 vs. 2001 2003 vs. 2002 2004 vs. 2003 National TV* Upfront Sales 12% -12% 16% 14% 6-8% Ad Spending Q4 Percent Change 2000 vs. 1999 2001 vs. 2000 2002 vs. 2001 2003 vs. 2002 National TV* Media 2% -7% 11% 8% * Includes Network, Cable and Syndication
The Gavel and Baton Politics Olympics
The Political Marketplace Continued Growth $1.5 billion in spending for 2004 $1.5 Billion $840 Million $625 Million $211 Million $124 Million $218 Million $300 Million 1998 1999 2000 2001 2002 2003 2004 2004 dollar amount is estimated
The Political Marketplace Elections $1.3 billion in spending Presidential Congressional Gubernatorial State and Local State Ballot Initiatives $600 Million $275 Million $75 Million $200 Million $150 Million All dollar amounts are estimated
The Political Marketplace Issue Advocacy / Political $200 million in total spending Medicare Prescription Drug Coverage Tribal Gaming Telecommunications Tort Reform $70 Million $40 Million $25 Million $20 Million The leading topics for issue advocacy All dollar amounts are estimated
The Olympics
The Olympics Rights Fees Continue to Increase U.S. Summer Olympic Television Rights Fees Dollars in millions 32% 1200 1000 800 600 400 200 $85 166% $226 33% $300 34% 14% $401 $456 55% $705 12% $793 13% $894 $1,181 0 1980 1984 1988 1992 1996 2000 2004 2008 2012 Moscow Los Angeles Seoul Barcelona Atlanta Sydney Athens Beijing TBD Source: International Olympic Committee
The Olympics Impact on Overall Television Ad Spending The 2000 Sydney Olympics added $750 million in spending 4.0 3.5 3.0 With Olympics TV Ad Spend ($B) 2.5 2.0 1.5 1.0 0.5 Without Olympics 0.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
The Olympics Outlook for Spending Incremental contribution of $850 million in television spending on the Athens games
The Advertising Outlook 1 st Half and Full Year 2004
The Advertising Outlook for 2004 Quarterly Growth Trends 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 9.6% 9.3% 10.9% 7.7% 1 st Half 2004 9.4% 2 nd Half 2004 9.2%
The Advertising Outlook for 2004 Full Year 9.3% Increase - $140.3 Billion in Overall Ad Spending
The Advertising Outlook for 2004 Full Year Growth Estimates by Media B2B Magazines -.1% 15.8% Internet 14.3% Spot TV 11.5% Radio (Network, Spot, Local) 9.9% Cable Network TV 9.8% 9.8% Syndication 8.4% Outdoor 7.0% Spanish Language TV 6.4% 6.4% Network TV Magazines (Consumer, Sunday) Newspapers (National, Local) -2 0 2 4 6 8 10 12 14 16
The Advertising Outlook Beyond 2004 An Industry in Transition
An Industry in Transition Moving from Analog to Digital Analog Digital Passive Push Less Bandwidth Media Silos Targeted Marketing Interactive Pull More Bandwidth Media Convergence One-to-One Marketing
An Industry in Transition Moving from Analog to Digital Increased Media Fragmentation Increased Competition for Attention Emerging Consumer Expectations
The Effects of Fragmentation for Advertisers A View of the Consumer and of Media Choices Consumer Markets More brand choices Less brand differentiation Substitutability Eroding USP
Increased Media Fragmentation More Options in the Marketplace Digital Cable Online Traditional Media Wireless Out of Home
The Effects of Fragmentation for Advertisers A View of the Consumer and of Media Choices Consumer Markets Media Markets More brand choices Less brand differentiation Substitutability Eroding USP More media vehicles Expanded competitive sets Smaller audiences Higher CPPs Eroding USP
An Industry in Transition Moving from Analog to Digital Effects of Fragmentation Increased Competition for Consumer Attention
Increased Competition for Consumer Attention Human attention is evolving as a scarce economic resource
Increased Competition for Consumer Attention Consumer Usage of Media: 1997-2004 The hours, per week that a consumer spends with media increased from 56 to 63 Measured Media 1997 2004 Radio 18 21 Broadcast TV 18 15 Cable & Satellite TV 12 19 Internet 1 4 Newspapers 4 3 Consumer Magazines 3 2 Total 56 63 Source: Veronis Suhler Stevenson Communications Industry Forecast July 2003
Increased Competition for Consumer Attention Multi-Tasking Measured Media More than 70% of consumers use media simultaneously Television While watching: Radio While listening: Newspapers While reading: Online While connected: 74% Read the newspaper 66% Go online 57% Go online 47% Read the newspaper 18% Watch TV 52% Watch TV 50% Listen to the radio 62% Watch TV 52% Listen to the radio 20% Read the newspaper Source: October 2003 BIGresearch SIMM survey
Increased Competition for Consumer Attention Pervasiveness of Multi-Tasking
Competition for Consumer Attention The Economic Paradigm has Changed OLD PARADIGM IS Dollar Centric New PARADIGM IS Attention Centric Total Media Dollars Total Attention Budget Total Marketing Dollars Total Media Attention Share of Voice Share of Mind
An Industry in Transition Moving from Analog to Digital Effects of Fragmentation Increased Competition for Attention Emerging Consumer Expectations
Emerging Consumer Expectations Today s Consumer is Empowered Content Appealing Engaging Informative
Emerging Consumer Expectations Today s Consumer is Empowered Choice Availability Accessibility
Emerging Consumer Expectations Today s Consumer is Empowered Customization Sense of ownership Relevancy
Emerging Consumer Expectations Today s Consumer is Empowered Convenience Portability When and where I want
Emerging Consumer Expectations Today s Consumer is Empowered Customization Choice Convenience
An Industry in Transition For Consumers, Advertisers and Media Fragmentation Attention Expectations Consumers Choice Filtering the White Noise Multitasking and Selection 4Cs Advertisers and Agencies Small Audiences Diminished Returns Apertures of Opportunity Engage the Consumer Accountability Quantify ROI Media Competition Struggle for relevancy Leverage brand equity Evolve
The Advertising Outlook Beyond 2004 An Industry in Transition
The Outlook for Advertising www.tnsmi-cmr.com Steven Fredericks President & CEO