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More proof that the big companies get it

There’s an event in the broadcast advertising business called the Upfront, where the networks get everyone together and get their commitments on advertising for the major part of the year. The time that’s left goes into what’s called the scatter market, where advertising spots are more expensive, and the timeslots end up to be what’s left after the upfront.

This arrangement obviously favors the networks over the advertisers — they sell the best spots first for the most money, since everyone is gathered at the upfront, and whomever wants the best spots had better get their wallets out.

There was an interesting phenomenon at this year’s upfront, starting with Johnson & Johnson, the big health care products company that makes everything from Band-Aids to Accuvue contact lenses. J&J decided that they weren’t going to spend one penny of their $500 million annual tv ad budget at the upfront. This was first reported in the Wall Street Journal, then picked up by Ad Age.

&J’s confidence that it can wait until later in the year to commit seems to be another effect of proliferating advertising options and marketers’ increased desire for precise and efficient spending. [Emphasis added]

Proliferating Advertising Options? Hmmm…whatever could that mean?

Coca Cola is doing something similar at this years’ upfront…they are sending people to watch, but not committing to spend any of their $180 million tv ad budget. I don’t know about you, but I am very curious about where they plan to spend their money. Ad Age did not disappoint:

According to people who have spoken with J&J executives, the company plans to shift more of its marketing spending to nontraditional media — 20% or more of the budget, according to one of the executives. The J&J spokesman declined to comment on that, but said: “As the media landscape changes and consumers adopt new media technologies, we do recognize the need to adopt new media communications strategies to connect with our customers. With that in mind we’re working with our partners in broadcasting and advertising to help develop these new approaches. And it’s really important that all of our communications both online and offline are seamless. And we’re working with our partners to synchronize our messaging across media.”

So that means that J&J is going to spend $100 million on what sounds like Internet- and online-based media this year.

It looks like J&J and Coke actually get it. Here’s some more interesting news from Kagan Research, as reported by our friends at Clickz:

The Internet remains the strongest-gaining sector in advertising, averaging 57 percent growth per year over the past 10 years. In 2005, the channel increased by 24 percent. New channels experiencing the most growth last year include satellite radio (235 percent) and interactive TV (116 percent).

Revenues from more traditional channels experienced lower rates of increase. In 2005, total ad revenue, including traditional and interactive channels, grew by 3.9 percent to reach $240 billion. Ad revenues are expected to reach $400 billion by 2015, Kagan finds.

Looks like we’re all in the right business.

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