Advertisers are changing channels as the cost of reaching mass TV audiences rises
THE FIRST advertisement to appear on network television was broadcast by
NBC in New York on July 1, 1941. It was a 20-second spot for a Bulova clock, and cost $9. Since then, spending on television advertising has risen to more than $100 billion a year worldwide, and life without the commercial break seems almost unimaginable.
Yet the future of mass-market advertising on network television is more uncertain than at any time in its history as advertisers mull the implications of changes in viewing habits and the soaring cost of television airtime.
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Big advertisers have watched in dismay as cable, satellite and digital television channels have proliferated, leaving fewer viewers for the old-established. network television channels that reach mass audiences.
Worse, the cost of advertising on network television has been rising at a rate far in excess of inflation. The paradox is explained by the fact that, as audiences shrink, advertisers are having to buy ever-increasing amounts of airtime to reach the required number of viewers.
Consumer goods companies have made little secret of their frustration over the growing cost and waning influence of network television advertisements. Among the most outspoken critics has been Niall FitzGerald, co-chairman of Unilever, one of the world's biggest advertisers.
Every company has put resources and energy into improving manufacturing efficiency, into reducing overheads, into optimising the supply chain and generally reengineering their businesses, he told Market Leader, the journal of the Marketing Society. 'Yet what remains the largest cost in the business is how we communicate with our consumers and persuade them to buy our products." "It's not that I want to cut it down. I want to do the opposite. I want to get much more bang for this particular buck, and grow a lot faster."
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