Omnicom Advises Marketers to Move 10% to 25% of TV Ad Dollars To Online Video

Publicado originalmente no site: http://blogs.wsj.com/cmo/2014/10/06

Segunda-feira, 06 de outubro de 2014, 14h52

Suzanne Vranica




As media consumption habits change, marketers are finding it increasingly challenging to figure out where to put their money – and in particular, how much money to spend on traditional media like TV versus online options.

Daryl Simm, chief executive officer of Omnicom Group’s media operations, is squarely at the center of those discussions. His company oversees roughly $54.4 billion in advertising spending around the globe and advises advertisers such as PepsiCo, Visa, McDonald’s and Apple.

His firm has been advising clients to move 10% to 25% of their TV dollars to online video. While that could be somewhat alarming for TV networks, Mr. Simm said that cable and broadcast network-owners are getting a “significant” portion of that money back, since their programming still makes up a large share of the premium online video market.

Mr. Simm spoke with The Wall Street Journal about why ad dollars are shifting, the new pressures advertising holding companies are facing, and why the TV ad market isn’t as strong as some suspect it should be.

Here are edited excerpts from the interview:

WSJ: Are marketers’ beginning to fund digital ad spending with their TV budgets?

Mr. Simm: Those budgets come from somewhere. They don’t just invent themselves. They don’t come from the abyss. They come from the media pot.
Online video ad spending is growing at a considerably faster pace than overall media budgets have been growing. The way we look at it is we have got the TV partnerships that offer full episodes online, we have the Hulu type places that also offer full episodes of network TV shows and then we have partnerships with the premium video providers of the world such as AOL, Yahoo and YouTube. So TV money is traveling to all of those other alternatives.

WSJ: How much is moving?

Mr. Simm: It varies by client. If you are chasing gamers obviously you are moving a disproportionate piece of your budget. If you are a conventional packaged goods company, you are not quite at the average yet. We are counseling our clients to move between 10% to 25% of TV dollar to online video, depending on the target audience.

WSJ: What does that means for TV networks?

Mr. Simm: A significant portion of the dollars are actually going back to TV owners for their online properties.
We look at delivering against segments of an audience. So if you are trying to increase your reach against light TV users, the answer is to move a significant part of the video budget to online video. We council the client depending on what businesses they are in.

WSJ: What has to happen for more money to shift to online video?

Mr. Simm: There is a need for even more premium and relevant content. I do think we have hit the apex and we are moving into an environment where there is more talent—actors, directors, producers and brands–wanting to enter the online video space. That holds a lot of promise for online video. The amount of quality online video is still an issue.

WSJ: The TV ad market remains somewhat lackluster. Why?

Mr. Simm: I think you are seeing, in general, a lower degree of urgency among advertisers. They want to retain flexibly and if we look at the world today, there are more and more options for advertisers. There is a lower level of urgency than there once was when advertisers used to say, “I need to place these dollars right now because it [ad inventory] won’t be there later.” That is not the case today since there are so many more places to go now. I attribute it more to that than a broad scale reduction in demand.

WSJ: What are marketers most concerned with nowadays?

Mr. Simm: I think that we’ve seen a surge in the desire to measure the effects of advertising. The desire for more measurement and accountability is getting higher and higher.
Accountability is an interesting subject as marketers try to balance the desire for immediate sales or transactions versus brand building and association. What does it mean for a brand to be associated with a particular piece of content? And what does that mean for the consideration of that brand by consumers?

WSJ: Some marketers are becoming disenchanted with the way agency trading desks work and some have moved that function in-house. Is this a real threat to ad firms?

Mr. Simm: I got into this business at a big advertiser that did its media in-house. As the world got more complex and the business requires more resources, it just wasn’t a core competency of ours. We just didn’t have enough relationships, enough partners or enough feet on the ground to get the optimal results that agencies could.
So when you look at programmatic now, I kind of see it as a reflection of that. You can learn what programmatic is and the effects of programmatic, but if you look at the scale of your organization and the spending you have in the marketplace and the investment in technology that is required in order to support programmatic buying, it doesn’t seem like part of the core business for most marketers. It’s no more core than having in-house trucking resources to distribute your product. You can’t optimize that.