Turmoil in Saturation Land

Big changes are coming to advertising:

[A] significant number of TV commercials achieve saturation faster than most advertisers and advertising agencies realize and reach a maximum household audience in just a week or two. . . . [In one company's study,] at least seven new commercials reached 95 to 100 percent of the test's HH audience within the first week of airing. . .

Here's the problem for Madison Avenue. Many ad agencies are stuck in the 1990s when it comes to commercial production. The average budget for producing a 30-second ad is around $400,000. For that, advertisers don't want to hear the ad is only good for a week before it hits its milk-like expiration date. The price is so high because of huge fees charged by big-time directors and editing and production studios. It's also because many creative types argue persuasively for big budget productions to dress up their own sample reels.

Some agencies, though, are learning. One big agency I talked to recently said they were studying MTV's production system because of the huge number of videos and promos the network produces at relatively low cost. And the head of a big media buying firm told me he was looking at starting his own creative department to produce ads at a more affordable price than his clients' ad agencies could.

With the pressure to create more ads that run less frequently, look too for all production to increasingly move offshore to Canada, South Africa and even India where an advanced film industry operates for a fraction of the cost of Hollywood and New York, and production can be controlled via computer link-ups without a lot of agency personnel having to actually fly to Bombay.

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