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14 mint candy Mentos. During MayJune 2007, the Mentos brand to assess the effectiveness of TV advertising on Metropoli- ran an outdoor campaign in select Cincinnati metro counties tan Atlanta Rapid Transit Authority (MARTA) buses. Three comprising "bus wraps, billboards, posters, gas station dis- hundred randomly selected riders were asked to recall four plays, mall kiosks and street teams." The campaign endured different specific commercials on an unaided and aided basis. for four weeks at a 75 showing, i.e., the ad had an opportunity The recall rates were very high, at an average of 59%, with a to be seen by 75% of the target audience (11). 35% recall rate for unaided recall. These results compare very Measuring consumer awareness of the brand and its adver- favorably to traditional media such as broadcast TV, which tising both pre- and post-campaign, the researchers found that has an unaided recall rate of 13% (13, p. 10). Both transit TV unaided brand awareness increased 62%, and total brand and billboards have more than double the recall rates of any awareness (unaided plus aided) remained constant because the other advertising medium (13, p. 26). Please note that the pre-campaign awareness level was already very high (93%). research team for TCRP B-33 did not independently verify The percentage of respondents that recalled seeing the Mentos these research findings or the comparative data presented, ads used in the out-of-home campaign was 32% (11, p. 5), a and that Carroll Media Services appears to be a provider of relatively high recall level, generally speaking. The researchers local media, not a market research company. concluded that "The Mentos campaign was successful in its ability to move awareness for all key measures other than total Perceptions of Local Advertisers. A 2005 study pub- brand awareness, which is to be expected, given Mentos' high lished in the Journal of Media Economics also sheds light on the familiarity in the pre Wave" (11, p. 2). perceived effectiveness of transit advertising (14). Four Uni- versity of Georgia researchers surveyed 130 advertising deci- The Starbucks Study. The second field study was con- sion makers located in six northern Georgia counties, all of ducted on the Starbucks brand and reported in June 2003 at the whom advertised in the nearest large city, Athens. This study Advertising Research Foundation's Out-of-Home Conference is relevant to the topic at hand because the vast majority of the in Los Angeles. Starbucks is famous for eschewing television 6000+ transit systems in the United States (8, p. 8) depend pri- advertising of any kind in favor of local communications marily on local advertisers to purchase their advertising space. approaches. The 2003 research measured the number of new Also, of the 13 transit agencies from medium to small media purchasers generated for each 1 cent spent on advertising for a markets in TCRP Synthesis 51, nine (69%) reported that 90% variety of advertising types. The media varied--TV, magazine, or more of their advertising revenue comes from local adver- radio, billboards--as did the advertising used in each medium. tisers (1, p. 13). The results showed that, of 24 ads across the media, three of the The media available in the Georgia study included broadcast top five ads were billboards. Again, the measurement was the TV, cable TV, radio, two daily and one weekly newspaper, one number of additional purchases generated per 1 cent of city magazine, three coupon books, three outdoor compa- advertising by those having noticed the ad. The study con- nies, and three transit companies, including Athens Tran- cludes that billboards can be comparable to traditional media in terms of producing desired consumer behavior. The study sit, offering 17 bus routes. Respondents were asked to rank also highlights billboards' cost effectiveness in reaching the order 14 types of media based on "advertising-delivery effec- target audience: it reports that, among the four media, bill- tiveness." The study concluded that "no medium dominated boards accounted for 27% of the ads recognized and only the local decision makers' effectiveness ratings" (14). However, 18% of the advertising expenditures (12). No other medium two media received the most top rankings: daily newspapers showed close to this leverage. (34%) and radio (27%). Transit was one of two media (along Finally, the research also explored complementarities with preprinted inserts) not selected by any respondent as most among media. Among respondents not reached by Starbuck's effective. Aside from top rankings, no further data were pro- traditional media (TV, radio and print), billboards reached vided on the rankings. For example, the frequency with which the greatest number of consumers. The study draws a conclu- a medium was selected to be within the top five most effective sion about overlapping media: since overlap tends to be great- might lend a different hue to the results. est among traditional media types, adding out-of-home to a mix of traditional media will make the greatest contribution in terms of consumer impact (12). Media Industry Overview The "New Media Environment" Transit Advertising Effectiveness Much has been, and is still being, written about the water- Transit TV. The research team located one report on the shed changes in the U.S. media landscape and what they effectiveness of transit TV advertising. Carroll Media Ser- mean for advertisers. Essentially, the advent of cable televi- vices, Inc, a company providing auditing services on behalf of sion, the Internet, and digital technology, all within the past out-of-home advertisers, conducted this study in early 2007 20 or so years, has been the driver of the media landscape's

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15 significant transformation. Whereas 20 years ago, advertisers few--has put outdoor media, now known more generally as could count on reaching a large portion of their target audi- out-of-home, once again on the media map. ences via broadcast television, radio and print media, today advertisers need to think about reaching a multitude of more tightly defined target audience sub-segments with a portfolio Demand for Media of media options. Although there is no definitive source on the size of the U.S. Cable's and satellite's introductions of multi-channel media market, a solid estimate is roughly $230 billion (4). This capabilities opened up the possibility of tailoring a channel reflects declines in the market of 0.7% for 2007 and roughly 3% to more specific target audiences than broadcast television for 2008. This comes on top of a 2006 growth rate of roughly and radio ever dreamed of reaching. And in doing so, they 4%, which was described at the time as a slump. were able to meet the needs of advertisers, who want to Universal McCann, a source of widely respected media and reach specific target audiences with the greatest efficiency possible. Home improvement retailers can now advertise advertising industry forecasts, attributes the slowdown to on the home improvement channel, where do-it-yourself "economic performance and less-than-highly optimistic busi- enthusiasts remain transfixed for the evening; products tar- ness expectations as contributing to the cautiousness and tight geted to Latino audiences can now advertise on Spanish controls on most forms of communication spending" (17). language radio and television, with the confidence that their Also offered as a reason for the slowdown, however, is the intended targets are in the audience. While not the death behaviors of advertisers, themselves: "Big business has been knell for broadcast vehicles, cable and satellite have cer- cutting every expense they can as they focus on improved pro- tainly taken a toll. ductivity, profit growth and the buildup of cash. [New forms Also taking a huge toll on traditional broadcast vehicles is of media] have violently impacted many established media as the Internet as a source of both information and entertain- the appeal grows for marketing tactics that are closely tied to ment. Seen from this perspective, consumers' laptop comput- an immediate consumer transaction" (17). In other words, ers, as well as any other hooked-up personal device, are advertisers are shifting spending to whatever they identify as in direct competition with television. What observers of the having the ability not to make a consumer feel good about the major network companies have long seen is the direct threat brand (as traditional advertising is intended to do), but to posed by the Internet and its ability to provide news, entertain- make that consumer head straight for the nearest point of sale ment and--something television doesn't provide--endless for that advertiser's products or services. Additional discus- up-to-date sources of information to consumers wherever they sion of trends among advertisers appears in "Marketing and are at the moment they desire it. Consumers are paying atten- Advertiser Trends," later in this chapter. tion to more screens than just their home television screen, and According to Universal McCann data, despite an overall advertisers are taking this into account when they allocate their slump, several sectors in the media market grew in 2007. Top- advertising budgets. Not surprisingly, Internet advertising, ping the list is Internet spending, increasing by roughly 16%. including display ("banner") ads, search engine marketing and Out-of-home is the second fastest growing media sector with email marketing, is the fastest growing sector of the media expenditures increasing by roughly 7% in 2007 (1). market in the United States and the world (15). The previous paragraph essentially describes the advent of so-called digital advertising onto the media landscape, and Major Trends in the Media Industry this is, without question, the most significant change to have Decoupling of Advertising Services come about. The other major change to the media landscape, from Media Services most would agree, is the resurgence of out-of-home advertis- ing. Though not a "revolution" in the sense of digital media's Up to the 1990s, it was fairly standard for advertisers to hire entrance, it is still a major development, and of course pertinent one advertising agency to handle all of their communications to this project. needs. Within the advertising agency were creative services, The word "resurgence" is commonly applied because bill- the art directors and copy writers who created advertising; boards, the original outdoor advertising medium, are con- media planners, who developed media plans; media buyers, sidered the oldest form of advertising known. The advent of who specialized in getting the best media placement and prices digital billboards, though still roughly only 8% of the total for clients; production specialists, like directors of television U.S. billboard market, is generating a lot of excitement in the commercials; and account people, who managed all of the advertising world (16). More importantly, the appearance of efforts and served as the primary contact with the advertiser. innumerable new forms of out-of-home advertising media-- Since that time, advertising has taken on many more forms taxi tops, telephone booths, movie theaters, grocery check- than television commercials and print ads. Advertisers now hire out lanes, coffee cup holders and pizza boxes, to name but a a cadre of agencies, each specializing in an area of advertising

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16 development. Thus, interactive advertising agencies and direct recognized as full-fledged areas of knowledge and expertise marketing agencies now coexist with the so-called "traditional" unto themselves. advertising agencies. Once this breakup happened, advertisers Thus, the global advertising agencies are either creating an no longer saw efficiency in having their advertising agency also out-of-home advertising division or actually spinning off an handle their media planning and buying. Thus, media planning out-of-home advertising company. Smaller general agencies and buying has now become a standalone specialty, as well. are sometimes appointing an out-of-home specialist. Also on In attempts to retain their business, the traditional adver- the rise are independent out-of-home media planning and tising agencies have turned themselves into global advertising buying agencies. Among these are some that are gaining large agency holding companies that comprise the full spectrum of and prestigious national advertisers as clients. communications services. Omnicom, WPP Group, Interpub- How this looks in terms of where the decisions about media lic Group (IPG), Publicis, Havas and Dentsu are the six largest are happening is as follows. Some advertisers ask their general global advertising holding companies today. In addition to advertising agency to prepare an out-of-home media plan as owning several advertising agencies, each owns one or more part of their overall media plan. The account executive at the media planning and buying agencies. To a large extent, the top agency then delegates media planning to the head of media, tier global advertising agencies, like McCann (IPG), DDB who delegates responsibility for the out-of-home portion of Needham (Omnicom), and Saatchi & Saatchi (Publicis), no the media plan to their out-of-home department, subsidiary longer have media services in house. They have sister agencies or sister company. If there is no out-of-home media organi- that specialize in media [for example, Universal McCann zation, just a general media planning organization, that media (IPG), OMD (Omnicom), and StarCom MediaVest Group planning team is likely to have an out-of-home specialist and Zenith Optimedia (Publicis)]. among them. Other advertisers go directly to their out-of- In contrast, many regional and local advertising agencies, home advertising agency. even those owned by the global holding companies, have kept The emergence of out-of-home as an area of specialization their original combined structure. This structure could be in is nothing but positive for transit media and its growth poten- tial. It means that more media planners are motivated to recognition of a preference by the smaller advertisers that this spend more time getting to know out-of-home media in inti- class of advertising agency attracts. mate detail. This presents a great opening for transit media to tell its story to its best advantage. Advent of Out-of-Home Specialization Specialization within branches of the media world is the The Outdoor/Out-of-Home Media Market natural outcome of the explosion of new media types. Firms Despite the anemic growth of U.S. media overall over the last specializing in advertising on the Internet probably constitute couple of years, outdoor advertising performed well. Figure 3 the fastest growing segment in the advertising industry. But shows that, in 2006, total outdoor advertising rose roughly 8% there has also been, over the past 10 years, significant growth to $6.8 billion, and in 2007, it grew another 7% to $7.3 billion in firms that specialize in out-of-home media and advertising. (2). However, because of a very weak fourth quarter, outdoor There are a few reasons for this growth. First, out-of-home advertising sales dropped 4% in 2008 (18). is a local medium. Meaning that, although "national" out-of- home campaigns exist, each city included in that national buy is purchased at the local level because the out-of-home adver- Segments of the Out-of-Home Market tising inventory varies so greatly from location to location. So, OAAA organizes out-of-home media into four segments. while the advertiser might want subways in New York City, The largest segment is billboards, accounting for 66% of all billboards might be the optimal medium to suit the advertis- out-of-home media dollars, up from 64% in 2006. Transit ing objectives in Los Angeles. media--including buses, subway and rail, airports, truck sides, In addition, the number of types of advertising that taxi displays and wrapped vehicles--represented 11% of all are being classified as out-of-home is exploding. By some out-of-home media in 2007, down from 12% in 2006. Street accounts, there are well over two hundred types of out-of- furniture--including bus shelters, convenience stores, shop- home media, including everything from billboards and sta- ping malls and kiosks--was 7% in 2007, and alternative out-of- dium signage to coffee cup sleeves and pizza boxes. Finally, home--including arena and stadium advertising, interior there are widely believed to be unique creative issues asso- place-based, airborne, marine, resorts and leisure, and exterior ciated with delivering effective out-of-home advertising. placed-based digital media--represented 16% in 2007. Expertise in creative development for out-of-home vehicles As Figure 4 shows the billboard segment accounted for is another driver of out-of-home specialization. The bottom roughly $4.8 billion in revenue, transit media for $800 mil- line is that out-of-home advertising and media have become lion in revenue, street furniture for $510 million in revenue

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17 $8 10% $7.28 $7 $6.81 8% $6.30 $6 $5.83 $5.50 $5.24 $5.19 $5.23 6% $5 $4.83 $4.41 Out-of-Home ($ Billions) $4 4% Percent $3 Change vs. 2% Prior Year $2 0% $1 $0 -2% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Outdoor Advertising Association of America (2). Figure 3. Out-of-home advertising revenue, 19982007. and the alternative segment for $1.2 billion in revenue. Note Innovation in Out-of-Home: Emergence that OAAA's transit category includes airport advertising, of Digital Technology truck sides and taxi displays, making this definition broader than the concerns of this study: the transit media owned by Digital and liquid crystal display (LCD) technologies are public transit authorities. widely believed to be the most significant trends in out-of- Alternative out-of-home advertising is the fastest growing home advertising today. The advent of these moving, intensely segment within out-of-home. The alternative segment grew colored technologies is refreshing the image of older, static about 28% in 2007 (compared to total out-of-home growth media, particularly billboards and subway posters. Though of 7%). For 2008, it was forecast to grow at a slightly slower only a small portion of billboards and subway posters are dig- rate of 23%. One industry observer is forecasting that alter- ital at this time, there is a widely held sense that digital for- native media will generate 50% of total out-of-home media mats will eventually dominate, as they already do in some sales in 2012 (19). major cities overseas. Alternative $1,165,234,056 16% Transit $801,098,413 11% Street Furniture $509,789,899 7% Billboards $4,806,590,480 66% Source: Outdoor Advertising Association of America (2). Figure 4. Four major segments of out-of-home advertising.