2006 AAF Survey of Industry Leaders on

Advertising Industry and New Media Trends

Prepared by Atlantic Media Company

November 2006
Survey Highlights
• Most leading ad executives expect a significant portion of broadcast and cable TV ad dollars to shift to online video by
2010, with 33 percent of respondents predicting that switch will be between 10 and 19 percent. In addition, 2007 budgets
for online advertising are expected to rise by an average of 42 percent over 2006.
• As to the challenge of integrating traditional with online media, broadcast TV is seen as offering the “most innovative”
integration with online media, while magazines are seen as “most effective” for driving consumers online.
• Ad industry leaders utilize a range of online ad targeting, but over half find behavioral targeting to be among the “most
effective” methodology.
• Search was deemed the “most effective” new media option and, not surprisingly, is expected to take the greatest share of
the 2007 media budget.
• Industry leaders feel strongly (71 percent) that the online medium is “very effective” or “most effective” for direct
response advertising, but note that there is difficulty reaching key demographics, particularly older audiences, online.
• Industry leaders rated Dove, Burger King, Volkswagen, Honda and Nike as the most successful recent integrated
advertising campaigns.
• Nearly 63 percent of those surveyed perceive the demands of the advertising industry to be “higher” or “much higher”
than those of other industries.
• In sharp contrast to findings of the past two years, leaders predict strong growth and recovery for careers in advertising,
with overall career appeal cited as the healthiest category.
• The majority of industry leaders cite mentorship as important to their personal career success and a record 42 percent
“always” mentor young professionals, a 68 percent increase over last year.
• The top campaigns of the year were (in order) Apple Mac and Geico (two-way tie); Dove; Budweiser, Target, Mini
Cooper (three-way tie); Apple iPod; and Aflac Insurance.
• Top brands are (in order) Coca-Cola, Nike, Apple, Starbucks and McDonald’s.
• The most respected industry leader was David Ogilvy, followed by Bill Bernbach and Lee Clow.
• The most important factor in achieving success in the industry is “dedication.”

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Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
 Respondent Profile
One hundred and sixty eight leaders from across all sectors of the advertising industry responded to the survey; over 58% have
worked in advertising for 16+ years.

Advertising Industry Sector Years Worked in Advertising Industry

(n=168) (n=168)

Agency
31.7%
34.9%

Advertiser/
Client
6%
Media 23.5%
15%

14.5%
Academia/
12%
Research
9.6%
25.7% Other
21.6% 5.4%

Consultants
Public Relations
Trade Associations 1-3 4-6 7-10 11-15 16-24 25+

3
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
 Anticipated Shift of TV Advertising Dollars to Online Video
A significant share of TV advertising dollars is expected to shift to online video by 2010; as online video advertising grows
increasingly sophisticated, advertising leaders anticipate an even more dramatic shift in the future.

Percent of current spending on traditional broadcast and Determining Factors

cable TV ads expected to shift to online video by 2010
(% responding)
“When online advertising figures out
how to target a market with upscale,
33.3% high quality advertising, it will gain a
larger share with younger audiences.
When it creates info-ads that demand
viewer involvement, its share of
24.8% advertising will increase.”
- Academic
“For clients to be willing to shift
advertising dollars, they expect to see
the ROI based on impressions, which
should be able to be tracked better
11.1% 11.1% with new online tracking technology.”
9.8%
- Agency Exec
5.9% “The determining factor will be the
2.6% sheer volume of online opportunities.
1.3% Will there be a handful of sites that
rise above the fray or will there be so
many sites to chose from that the
Less than 1-5% 6-9% 10-19% 20-29% 30-39% 40-49% More than
media dollars can't possibly cover
1% 50%
enough bases to be effective?”
- Agency Exec

4
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
Online Advertising Comprises a Growing Portion of Media Budgets
The percentage of media budgets allocated to online advertising is expected to rise by 42% in 2007 to an average of 23.2%.

Percentage of media budget allocated Drivers of Online Spending

(or anticipated allocation) to online advertising
(average of all responses) “Audience shift, duh!”
- Association
23.2% “New online web options such as
lead generation programs are offering
great new innovative approaches for
new clients and we are increasing our
16.3% ad spending with the continually
changing Search Engine Keywords
and AdWords options.”
12% - Agency Exec
“The ROI we generate for our clients
7.5% is the highest with online media. We
can demonstrate the lowest cost per
lead and the highest return on
investment. Clients gravitate to the
medium that is most measurable.”
- Agency Exec
2004 2005 2006 2007 “The consumer market is only at the
beginning of acquiring the new
2006 Responses technologies for this marketing.
When Apple’s iPod becomes a video-
capable telephone, then the moment
will have arrived.”
- Agency Exec
5
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
 Targeting a Wide Range of Audiences Online
Older demographics were repeatedly cited as the hardest for advertisers to reach online.

What are your top target audiences for online advertising?

(Write In Responses)

Gender Neutral: Men: Women: Other:

13-18 13-24 13-24 Ad Agencies Real Estate
18-24 18-45 18-49 Auto Recent College Grads
18-34 18-54 18-54 B2B Retail
18-49 18-24 25-54 Professionals Retirees/Seniors
19-25 18-35 25-40 Caregivers Shoppers
19-35 18-49 25-45 Educational/faculty Small Business
21-24 15-49 45-54 Homebuyers Students
25-35 25-54 52-54 Media Buyers Trade
25-32 40-50 55-64 Music Fans Upscale
25-34 45-64 New Business Young adults
25-55 Parents Youth
50+
55+ What are the hardest audiences to reach online?

“Older audiences not familiar with technology” “Women 25-54” “Retirees”

- Media Exec - Agency Exec - Agency Exec

6
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
Volatility In Allocation of Media Budgets
At best, TV can still command an average of 50% of media budgets, but allocations could fall as low as 29% on average;
meanwhile, online advertising could see as much as a 24% share.

Greatest and smallest anticipated allocation of

media budget to each medium in 2007
(average of all responses)
29%

24%

20.4%
18.3%
16.8%
14.1% 13.7%
11.8% 11.4% 11.5% 11.5%

7.9% 8.2%
5.6%

Broadcast TV Cable TV Radio Magazines Newspapers Out of home Online

GREATEST share of media budget

SMALLEST share of media budget

7
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
 Assessing Options for Online Ad Targeting
Ad industry leaders utilize a range of online ad targeting methodologies, but over half find behavioral targeting to be among the
most effective.

Most effective online ad targeting methodologies Reactions to Targeting

(% responding) Possibilities

“The Internet is an information source.

The ability to place ads within a relevant
Demographic 32.9% informational context is potentially very
valuable.”
- Industry Exec
“If you have all those tools and
Geographic 14.6% parameters available it's great.
Availability the key....”
- Association

Contextual 30.5%

Behavioral 52.4%

Other 4.9%

8
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
 What Is Online Advertising Good For?
Industry leaders feel strongly (71%) that the online medium is “very effective” or “most effective” for direct response advertising;
while online is considered a less effective medium for brand advertising, executives still overwhelmingly feel that it is at least
“somewhat” effective.

Effectiveness of the online medium for brand advertising Reacting to Online

and direct response advertising Effectiveness
(% responding)
“Online advertising provides nearly
instantaneous metrics, which has led
60%
most of us to view online as a direct
response medium. We know that
online ads also have solid brand
44% building power, but this is often
overshadowed by TV and other
media that promote brand building
power because they can't claim more
29% measurable results.”
27% 26%
- Agency Exec
“Online is great for Direct Response
advertising because we can use lead
generation programs to target our
5% 4% specific audience and get a great
2% 2% return with very specific contact
0%
details of those seeking our specific
Most Effective Very Effective Somewhat Not At All N/A products and services.”
Effective Effective - Agency Exec

Direct Response Brand Advertising

9
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
 Experimenting With New Online Media
Industry leaders are starting to experiment with new media like blogs and podcasts, but search advertising still dominates.

Percentage of media budget Effectiveness of medium

planned to allocate in 2007 (average percentages)
(average percentages)
49%
Search
22%
Search 27.0%
13%
Blogs
6%
Online Video 14.9%
Social 30%
Blogs 8.4% Networking 8%

34%
Online Video
Podcasts 8.0% 6%

8%
Social RSS
7.7% 3%
Networking
21%
RSS 5.5% Podcasts
2%

Thoughts on 15%
Mobile 5.2% New Media Mobile
5%
“The adoption rate for some
of these new avenues is 20%
Video Games 3.6% Video Games
surprising fast. We are 3%
continually amazed at how
quickly they catch on,
especially with younger Most Effective Very Effective
consumers.” 10
- Agency Exec Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
 Media Integration Efforts Connect New and Old Media
As to the challenge of integrating traditional with online media, broadcast TV is seen as offering the “most innovative”
integration with online media, while magazines are seen as “most effective” for driving consumers online.

Integrating online and other media Greatest/Least Potential for

Significant Growth
(% responding)

26%
“Greatest Growth Potential: Online
Media. Lag Behind: Newspapers”
- Agency Exec
21.7% Direct marketing
18.5% 18.5% Telephone book “The greatest potential growth lies in
17.8%
Jingles the integration of TV broadcast with
16.4%
15.2% Internet promotions and activities…
13.7%
Radio stands to be the media with the
11% most challenges.”
8.7% 8.7% 8.2% 8.7% - Academic
6.8%
“Out of home has the most potential
because it is so dynamic. New uses
and opportunities are being discovered
daily. Newspapers will lag behind most
because of the downward trend of

er
e
o
es

TV
s

readership.”
om
er

th
tT

ad
in
ap

O
e

H
az

R
as

- Academic
ab
sp

of
ag

dc

C
ew

ut
M

oa

Direct mail
O
N

Br

Out of Home has the greatest

potential, with magazines lagging
Most innovative in integrating online media into advertising/marketing
behind.
solutions
- Media Exec
Most effective for driving traffic to advertiser websites, online
promotions/offers, or other Web-based marketing sites

11
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
What Were The Most Successful Recent Integrated Campaigns?
Select Responses to an open-ended question.

Top 5 Campaigns Additional Responses

1. Dove
Saturn Acura Cadillac
2. Burger King
American Airlines Brawny Paper Towels
3. Volkswagen
4. Honda Yahoo Tower Records
5. Nike
Wendy's Monster.com

IKEA Careerbuilder

Altoids Mini Cooper

Apple Wal-Mart

Citi ID theft Nissan Sentra

12
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
Getting a Hold on The Challenges of New Media
Industry leaders are open to a number of different ways to get up the curve on new media; a majority of respondents (56.8%)
thought case studies would be helpful learning resources.

Useful tools in advancing your work in new media

(% responding)

56.8%

41.9% 40.5%
37.8%

Clients
Focus groups of
online users
Industry samples

4.1%

Tutorials by Case studies Online seminars Roundtables with Other

experts insiders

13
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
 Strong Growth and Recovery Seen For Careers in Advertising
After two years of cautious assessments of career opportunities in advertising, industry leaders showed a more optimistic
perspective in 2006; metrics in all three categories rebounded substantially from last year.

Health of the advertising industry in…

(scored on a five-point scale, 1 = facing indefinite decline
and 5 = showing signs of strong grow)

3.0 2004
Attracting and retaining 2005
3.1
talent
2006
3.91

3.4
Long-term career
3.1
prospects
3.54

3.5

Overall career appeal 3.3

4.06

14
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
 What are the Strengths and Weaknesses of the Advertising Industry?
Selected responses to an open-ended question.
Direction of the Industry
“The clients will take control of creating
their brand and communication
strategies in order to control
integration consistency. There will be
no more advertising generalists.
People must become specialists and
act as a much larger team. A new kind
of leadership will require far more
collaboration.”
- Consultant
“Younger employees are encouraged
by the success of smaller "upstart"
agencies. On the other end of the
scale, the giant agencies are viewed
as dinosaurs and the mega holding
company business model appears to
be broken forever. I believe the growth
in our industry will be with smaller,
more creative and entrepreneurial
independent shops.”
- Agency Exec
“Strengths: Good quality creative, humor and information blended together.
Weakness: The ‘chew ‘em up, spit ‘em out’ mentality that agencies have.
People work one place 1-2 years as a maximum.”
- Media Exec
“Strengths: Still offers excitement, responsibility (and fun) faster than other
businesses.
Weakness: Instability, insane account and personnel turnover, decimation
of middle aged exec ranks which has sent a terrible message to young up
and comers.”
- Consultant
“Strengths are in the wide ranging opportunities replacing traditional media
and message development. A weakness is that the industry is slow in
making the transition to new media.”
- Academic
“Strengths: Creativity, fun, "glamour."
Weaknesses: Instability, competitiveness, managing/keeping up with the
changing media landscape.”
- Association
“I think the opportunity for creative and innovative work are still the
strengths that draw interested people to the field. A weakness could be a lot
of the negative press toward the advertising career field over the past five
years or so.”
- Academic
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Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
Industry Leaders Feel The Benefits of Past Mentorship…
Over 85% of industry leaders said that being mentored was at least “important” in their own personal career success (compared to
81% in 2005); significantly, no one who was mentored felt that the experience “was not very important.”

Importance of mentorship to personal career success On Mentoring Experiences

(% responding)
“As a mentoree, it was important having
someone pay attention to me (take me
20%
Singularly important under their wing) when I was on my very
22.7% first job out of college. I was so naive, so
nervous, so intimidated by the more
41% mature, more experienced employees.
Very important
37.3% Without that mentor, who helped get me
connected with the right people and kept
telling me what a great talent I was, I think
20%
Important I might never have gone anywhere in the
25.3% business.”
- Ad Club Executive Director
Useful but not 5%
“I am still friends with the man that got me
directly impactful 8% started in the industry. He is responsible
for my success today.”
3% 2005 - Media Exec
Not very important
0% 2006
“When I first started in the business I
received a lot of encouragement from an
Was never formally 11% agency founder. This helped me set my
or informally
10.7% sights high and realize that I had the
mentored
potential to achieve whatever I was willing
to work toward.”
- Agency Exec

16
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
… And Return the Favor By Guiding Today’s Industry Newcomers
Today’s industry leaders work to pass on their own knowledge as a record 42.1% “always” mentor young professionals, a 68%
increase over last year; additionally, zero respondents “never” mentor others.

Do you mentor young professionals?

(% responding)

46%
42%

37%

25% 25%

2005 2006
17%

3% 4%
1% 0%

Never Infrequently Sometimes Frequently Always

17
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
The Continued Strain Of A Demanding Industry
Industry leaders struggle to balance their professional and personal lives; 62.6% felt that the demands of the advertising industry
are “higher” or “much higher” than those of other industries.

Conflicts between personal life and career, in

comparison to other industries
(% responding)

52%

41%

34% 35%

21%

14%

3%
0%

Much Higher Higher Same Lower

2005 2006

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Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
 No Shortage of Important Attributes For Success

Attributes for success in the ad industry

(five-point scale, with 1 being not important at all and 5
What Has Defined
being extremely important)
Your Success?
4.1
Creativity “Remaining a student of the industry.
3.8 Always seeking to know more than
anyone else except the best of the
4.6
Dedication functional experts.”
4.4
- Consultant
Innovative 4.3 “Consistently learning more and staying
thinking 4.1 with or ahead of the curve. Being
proactive rather than reactive in looking
Leadership 4.6 ahead and forecasting/predicting what's
ability 4.0 to come.”
4.3 - Media Exec
Willingness to
take risks 3.7 “Relationship building, integrity and a
desire to help someone solve business
4.6 challenges.”
Common Sense
4.3 - Association
4.7 “Being associated with talented people.
Integrity Willingness to take suggestions. Plan
4.2
your work. Work your plan.”
4.3 - Media Exec
Other
3.6
Talent
2005 Ability to listen
Team player
2006 Critical thinking
Passion 19
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
 And the Winners Are…

Most Successful Campaigns, 2005-2006

(Top responses, open-ended questions) Defining “Success”

• Apple Mac and Geico (two-way tie)

“It’s the ROI.”
- Multiple Respondents
• Dove
“They enriched the brand experience
in ways that helped create tighter
• Budweiser, Target, MiniCooper (three- bonds with their customers and make
way tie) the brands more appealing and
"human" to prospects.”
• Apple iPod - Agency Exec
“Memorable, creative – they brand
• AFLAC Insurance without becoming overexposed in our
mindsets.”
- Media Exec
2005’s Top 5
“Creatively/aesthetically appealing;
strategically sound; connection
2. Apple iPod
between strategy and creative; clear
3. Burger King on target audience.”
- Academic
4. Target
5. MiniCooper
6. Hewlett-Packard, UPS and Verizon
(three-way tie)

20
Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends
 The Best of Advertising’s Best

Most Admired Brands, 2005-2006 Most Industry Leaders

(Top responses, open-ended questions) (Responses, open-ended questions)

1. Coca-Cola
Dr. Arnold Barban Rupert Murdoch
2. Nike
David Bell (2) David Ogilvy (6)

3. Apple Alex Bogusky Crispen Porter team

4. Starbucks Bill Burnbach (3) Keith Reinhard

5. McDonalds Leo Burnett Janet Robinson

Lee Clow (3) Saatchi and Saatchi

2005’s Top 5
Donny Deutsch (2) Siverstein/Goodby (2)
2. Coca-Cola
Fay Ferguson Wally Snyder (2)
3. Apple
4. Nike Craig Fuller Jim Stengel

5. Google Jeff Goodby David Verklin

6. FedEx and BMW
Howard Gossage Jack Welch (2)

Mike Guarini Will Wieden

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Source: 2006 AAF Survey of Industry Leaders on Advertising Industry and New Media Trends