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Stack of Books

oil on canvas
22 x 20 in

Penny Machines
oil on canvas
23¾ x 29¾ in

Stack of Books
oil on canvas
30 x 24 in

Seven Suckers
oil on canvas
19 x 23 in

Twin Jackpots
oil on canvas
30 x 46 in

oil on canvas
20 x 26 in

Cake Slices
oil on canvas
20 x 16 in

The rise of marketing services

While Advertising and Media Investment Management – which historically has concentrated on traditional areas such as television, radio, newspapers, magazines, outdoor and cinema – has thrived in recent times, its overall share has declined. In its place, supposedly less sophisticated, less global and less-developed marketing services have gained as a proportion of our total business. These areas are Consumer Insight, Public Relations & Public Affairs, Branding & Identity, Healthcare and Specialist Communications – particularly direct, interactive and internet communications.

Marketing services have grown more quickly for two reasons. First, network television pricing has risen faster than inflation, to the disquiet of big advertisers. Procter & Gamble, the world’s biggest advertiser, Unilever, Coca-Cola and American Express have all registered voluble protests in recent times. They are sick and tired of paying more for less and hence their laser-like focus on value in the recession.

Although the pressures on US network television intensified in 2006, network cost per thousand probably rose by 4-5%, still faster than general price inflation of 3%. In 2007, network cost per thousand again rose faster than general price inflation and, even with the acute economic pressures of 2008, US network television may have increased in cost relatively. 2009 was the only weakening in the trend, as network pricing probably fell for the first time for a long time by approximately -3%. In the UK, ITV pricing may have fallen back to prices achieved as much as five or 10 years ago, the biggest bargain for a long time.

Nevertheless, the trend is clear. Imagine what would happen in the car industry if the price of steel rose consistently by 10% against general price inflation of 3%. Manufacturers would use less steel or find a substitute. That is what is happening in our industry, too. Marketing services, digital and even other traditional media such as radio, outdoor and cinema advertising are becoming more acceptable substitutes.

Don’t expect network television, however, to disappear any time soon. It will remain important. If we were starting a multinational packaged goods company from scratch, we would still use network television to influence the largest number of people in the shortest time at the lowest cost. Clients still need reach, but it isn’t what it was. In the US, for example, primetime network television used to claim 90% of households. A few years ago it was 50%; today it is perhaps only 33%. There are, of course, still programs with significant global or national reach, such as the World Cup final (500 million); the Olympics (400 million in a normal year – but an audience of over two billion for the opening ceremony in Beijing in 2008); the Super Bowl (106 million); and the Academy Awards (42 million).

The largest regular live event audience, however, is none of the above. It is the Chinese New Year Gala on CCTV in China, Asia and elsewhere, watched consistently by more than one billion. These events remain in relatively fixed supply, while the pools of money chasing them are stable or growing. As a result, their prices are bid up. That’s why a 30-second Super Bowl advert still costs around $2.8 million and an Academy Awards slot around $1.3 million.

This is not a situation that can last, particularly when significant segments of the viewing population seem to go missing. Phenomena such as the disappearance of young American men on Monday nights – perhaps to gaming on the internet or watching sport in bars – and the defection of housewives from soap operas have prompted changes to the way audience figures are compiled.

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