Advertiser Abandons TV

Australian brewer Fosters said it is pulling the plug on all US TV ads... and plans to focus its advertising on Internet campaigns, including at the entertainment site Heavy.com. Foster's spent about $5M last year on TV in the U.S., which is small compared to the top advertisers.

According to a WSJ story on Foster's, look for Foster's video ads at other sites (YouTube and college-pranksters Break.com would be my guesses) as well as viral campaigns.

To me, seeing an established mainstream advertiser like Foster's (and its agency, Ogilvy & Mather) flee TV is clear evidence that the model for broadcast networks is in doubt due to disruption by the Internet and new media services. Although Foster's ad spend is relatively small, the ad category for beer, wine & liquor represented about $2.2B in U.S. advertising last year, according to AdAge.

Foster's ads typically go heavy on humor and have been racy in some countries. Look for Foster's to push the boundaries when the ads go online. Here are a few sample ads from Foster's past:

• Germany;
• UK;
• Australia.

**Updated March 2007**
Johnson & Johnson sharply cut its overall ad budget by 20% last year, with TV spending down further at 25%. J&J is now investing its efforts online in dozens and dozens of its own medical information sites, says the Wall Street Journal's Healthblog.  Implications...

** Other Views**
Donatacom shows the problem faced by most media companies in a series of 5-year stock charts, most of which look dismal: "Wall Street is plenty nervous, and here's why... It pays to be a diversified group, such as McGraw-Hill and Meredith, but overall, the picture is pretty dismal. This is why I am so passionate about moving broadcasters to multimedia business models."

CNN Money.com reports on the decline of TV advertising, as shown by the decline in annual 'upfront' network ad sales, which typically represents about 75% of prime-time ad sales, saying advetising buyers "are in control".

AdAge has an audio interview about the third year of decline in upfront TV ad sales."Its definitely a worrying trend for the broadcast networks... It could be the beginning of the end," says AdAge correspondent Anne Marie Kerwin.

Comments

[BrianPhipps]

Michael,
I think your observations are right on target. In fact, I see Foster's move as part of a disruption that extends far beyond the TV network broadcast model. It extends to brands themselves, which for the last 50 years have been heavily predicated on TV advertising modalities. Brands have tremendous capacity to create customers--in Peter Drucker's original sense--but not when they're hobbled by the top-down, one-way broadcast model.

Fosters is not alone in its new media direction. The move from TV to interactive media coincides with a reinvention of brands as tools for collaborative innovation and value creation. We will soon see "disruptor brands" that will accelerate this process, leaving only the laggards (and losers) bound to TV.

http://tenayagroup.com/blog/