Telecom companies need to reallocate ad spend


Amidst a volatile economy, companies’ ad budgets are shrinking, creating a unique opportunity for ad execs to evaluate their media plans and gauge which measured media forms get the most bang for their buck. According to Prosper MediaPlanIQ (a consumer-centric media allocation tool from Prosper Technologies), Telecom giants AT&T, Verizon and Sprint Nextel could stand to benefit from a reallocation of media dollars.

Prosper MediaPlanIQ connects data from BIGresearch’s Simultaneous Media Usage Survey (SIMM) with advanced analytics developed by Don Schultz and Martin Block of the Medill Scholl at Northwestern and Prosper Technologies to generate idealized media allocations. The results show that wide gaps exist between how ad dollars have been spent versus what consumers say works best when it comes to buying telecommunications.

Not unlike the cash-strapped Domestic auto industry, Telecom companies and their ad agency partners may be overspending on some media options at the expense of others such as Internet, radio, magazines and outdoor. The amount of Internet consumed, its influence to purchase, combined with lower costs makes it a strong media option, which according to consumers is under-utilized.

Telecom Ad Spend (Measured Media) vs. Prosper MediaPlanIQ

               AT&T           Verizon Comm.  Sprint Nextel  Prosper
Spend Share*   Spend Share*   Spend Share*   MediaPlanIQ**
2.6%           4.3%           3.5%           11.3%
Newspaper      14.6%          32.0%          35.1%          6.0%
Outdoor        4.8%           3.0%           4.6%           13.7%
TV             60.4%          42.3%          43.8%          28.5%
Radio          11.4%          9.6%           7.5%           25.9%
Internet       6.0%           8.8%           5.4%           14.7%

Source: Ad Age Domestic Ad Spending by Category (2007)/Measured Media from TNS Media Intelligence’s Stradegy, Prosper Media Allocation Model
*% of U.S. Advertising Spend in 2007 (Measured Media)
**Media influence weighted by consumption and media cost for adults 18+

RBR/TVBR observation: These numbers are similar to the study Prosper MediaPlanIQ and BIGresearch did recently on the Big 3’s automotive ad spend (RBR 12/16/08 #244). Television, by far, gets the biggest share of spend by the telecom giants. Radio is left in the dust. But when they factor in what consumers say works best when it comes to buying telecommunications, radio comes in a close second to television. We just did a story on how big advertisers are taking their options on television upfront commitments and pulling back hard in Q2–up to 50% (TVBR 2/4/09 #24). That means there’s money on the table, some of which will be looking for a new home. This is the kind of data that might help that new home be radio. For additional charts and more info: