    |
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- VS -
(OR
300
Reasons Why It Needs to CHANGE)
Small B-to-B Brands
Get Their 'TV Moment' / Industry's Been Slow to Come Online but Finds
Promise in Narrowcasting / #1
By Abbey Klaassen /
Published: December 14, 2006
NEW YORK (AdAge.com) -- As more of the U.S. population moves
online, B-to-B industries that previously thought they were immune to
the migration have had to begin figuring out their web strategies. And
increasingly, those strategies are involving video.
Starlink, Cygnus' media agency, worked with Caterpillar to
complete the deal for the spot on ForConstrutionPros.com.
'Sight, sound and motion'
Recently, for example, Caterpillar launched what are essentially
long-form commercials -- or infomercials -- on ForConstructionPros.com,
a division of Cygnus. Such online-video plays are letting marketers previously
relegated to print media take advantage of the "sight, sound and
motion" of TV, said Starlink's Vickie Szombathy, who chairs the American
Association of Advertising Agencies' B-to-B committee. Starlink, Cygnus'
media agency, worked with Caterpillar to complete the deal for the spot
on ForConstrutionPros.com.
"We're finding more and more that Caterpillar's customers
are going online for information," she said. "It was a category
that's slow to coming online because people were often out on road and
traditional means of communication was face-to-face or through dealers.
But now ... we're finding the category moving online for information and
things like specs."
Caterpillar already had a great deal of video assets: training
videos and the promotional videos dealers would use to sell the company's
products. Much of the content on the video site will be repurposed, said
Carr Davis, Cygnus Business Media's co-CEO. "I don't think it's appropriate
to just produce video for the internet as a first run, but [it works]
if you have content and repurpose it."
Reminiscent of cable TV
Cygnus used Permission TV technology to build the new video
channel. Mr. Davis looks at it as one step removed from cable TV, which
opened up a whole new type of niche programming that broadcast could never
make possible. The business model for the channel isn't quite sussed out
-- it's too early to see where the CPMs will land, said Mr. Davis. But
it's clearly part of a trend. Earlier this year, for example, Scripps
Networks launched HGTVPro.com, a video-rich site targeting professional
builders.
"This is energizing for B-to-B," said Ms. Szombathy.
"It's been such a traditional world of trade publications."
Trades will still be important, she said, but "[marketers of] a very
specific vertical product normally won't have a budget for television.
Well, now they can use the video assets they have, craft long-form commercials
and put them out there in a forum that allows them, in essence, to be
on TV."
NYC Outdoor Market Gets More Competitive / Van Wagner, Titan
Each Win MTA Contracts /
By Andrew Hampp /
Published: December 15, 2006
NEW YORK (AdAge.com) -- The New York City public transportation
system is about to get a lot more congested, and not because of human
traffic. Two new Metropolitan Transportation Authority contracts for 2007
signed this week have made the country's most pivotal outdoor market even
more competitive, with Van Wagner and relative newcomer Titan Worldwide
making significant dents in the space.
Van Wagner won a contract to service phone kiosks and billboards,
while Titan will handle bus advertising.
"The New York market has become increasingly crowded over
the last 10 years or so," said Jodi Senese, exec VP-marketing for
CBS Outdoor, a company that has lost its largest contract renewals with
the city to competitors in recent years. "There's an absolute proliferation
of phone kiosks and more wild posting than any other city."
On the comeback trail
Van Wagner, for one, is on the comeback trail following yesterday's
announcement that it had won the license to manage the MTA's outdoor billboard
advertising on all NYC Transit Authority properties. Since Van Wagner
lost the bid for Manhattan's street furniture contract last year to Cemusa,
the deal was especially crucial for a company that has made its mark in
billboards. The privately-held outdoor-advertising company will operate
300 large-format billboards across the city, nearly doubling its current
inventory, in addition to its highly visible public-telephone-kiosk panels.
Van Wagner now has 9,000 advertising panels in Manhattan.
President-CEO Richard Schaps said the company had the opportunity
to bid on all MTA properties but instead chose to focus on billboards.
"It's difficult to grow in the out-of-home media business, but we
have done a great job in the climate," he said. "Our competitors
have bought these assets from others, but we build, and they buy."
Bus
advertising
Titan Worldwide, meanwhile, will takeover bus advertising on
6,000 vehicles across all five boroughs. The contract win is a territorial
reclaiming of sorts for CEO Don Allman, who held the bus contract in the
late 1980s with Titan Chairman Bill Apfelbaum under the now-defunct Transportation
Displays.
Mr. Allman said the 10-year deal will offer plenty of room for innovation. "We are into doing things everyone else is doing in addition to bringing new products to the market," he said. Titan's simultaneous win of Minneapolis' transit system this week only adds to its national growth.
These deals, coupled with Cemusa's impending street-furniture
takeover and Clear Channel's outstanding stake in Times Square, have made
New York City much harder to monopolize since Viacom -- now known as CBS
-- dominated in the late '90s. "It used to be you could sit down
with CBS in the old days and go with your entire budget," said John
Connolly, president of Mediacom Outdoor. "You could buy bulletins,
phone kiosks, the subways. You could literally buy New York City in a
one-stop shop. This is absolutely, positively not possible now."
Key platforms
CBS still has enough visible properties scattered across key
platforms -- LCD screens in subways, fully-wrapped shuttles -- for Ms.
Senese to consider its stake to be the "crown jewel" in New
York out-of-home products. "Clearly we have the most creative palette
for experiential engagement, digital, etc.," she said, citing other
contracts in Washington, Chicago and Atlanta. "We're still a dominant
player in the transit space in New York City -- all major outdoor properties,
buses, shelters and subways. We feel, with the combination of underground
subways, we have the best offerings for any advertiser."
The same inventory is still available to New York buyers, just
with different ownership, Mr. Connolly said. Having a broader palette
to choose from keeps prices competitive and guarantees higher with renewed
contracts. "We don't have a problem with increases as long as [the
company] can prove they can deliver a higher value that's more than the
typical cost of living," Mr. Connolly said.
P&G: We Won't Slash Spending to Make Our Margins / But
Highlights Cases Where Marketing Cuts Helped Brands
By Jack Neff /
Published: December 14, 2006
CINCINNATI (AdAge.com) -- Procter & Gamble Co. won't rely
on cuts in marketing spending to reach its aggressive margin-expansion
targets over the balance of the decade, despite having cut reported ad
spending as a share of sales the past two fiscal years, executives told
a meeting of analysts today.
At the same time, however, the company went to lengths to point
out that restraining ad spending doesn't necessarily have to hurt brands.
Case in point, according to Chief Financial Officer Clayton Daley: P&G's
North American fabric-care business, which cut ad spending as a share
of sales by 2% over the five fiscal years ended June 30 but increased
sales $900 million, boosting market share 3.5 points and building scores
for brand equity on flagship Tide to record levels.
Through cost cutting, sales growth and shifts to more profitable
businesses (like beauty care and higher-value products), P&G hopes
to increase its operating margin from 19.4% last year to around 24% in
2010. But Mr. Daley said, "Our sustained-growth model doesn't actually
count on P&G reducing marketing as a percent of sales. As such, we
will look to reinvest [marketing-efficiency savings] back in the business."
Nonetheless, P&G has cut global ad spending as a share
of sales for the past two years -- to 9.9% from 10.7% in fiscal 2004 --
following three years of growth in the metric.
Boosted ROI
In a taped segment, Global Marketing Officer Jim Stengel noted
that ad spending isn't determined centrally but by individual businesses
and brands. He added that the increased use of the marketing-mix modeling
he first discussed three years ago is now delivering increased marketing
return on investment and that the company's brand equity measurement is
up.
"There has been no corporate mandate to cut ad spending
as a percent of sales," Mr. Stengel said, "only to spend all
marketing money more efficiently." He reiterated prior statements
by Chairman-CEO A.G. Lafley that ad spending as a share of sales is "just
not the right measurement."
He said P&G has had significant launches where TV was not
the leading element in the marketing mix, citing a recent Always upgrade
that relied entirely on "targeted print media" and Prilosec,
"which has done the same with interactive approaches."
That said, TNS Media Intelligence data show Always still spent
the bulk of its overall measured media on TV last year, and 51% of its
dollars on TV in the third quarter of 2006. Prilosec spent $3.6 million
on internet ads compared to $21.6 million on TV and about $50 million
overall through the third quarter, according to TNS.
Emphasis on interactive
Susan Arnold, vice chairman-global health and beauty, said
several elements of the marketing mix, including interactive and influencer
marketing -- which she defined broadly to include word-of-mouth marketing
among friends and family -- have been shown to have higher ROI than TV.
She defined interactive broadly to include any marketing that uses technology
to foster two-way communication with consumers, including such unmeasured
media as mobile and e-mail marketing. And she lauded the "Always
Changing" in-school education program for the feminine-care brand
that she said reached 90% of fifth-grade girls in the U.S.
Mr. Lafley conceded that the North American fabric-care case,
which combined big share gains with smaller relative ad outlays, was special
in that it came as P&G's chief rival, Unilever, pulled back on marketing
in the U.S. following its failed launch of laundry tablets in 2000. "Most
of the competition doesn't find the category that attractive," he
said.
P&G's new trade-marketing program, which takes effect in
January and is based heavily on Gillette's pay-for-performance model,
could boost P&G sales substantially, said Bob McDonald, vice chairman-global
operations.
Looking for drug-store increase
He said just the potential to get more P&G products, such
as Tide to Go stain-remover pens or Prilosec antacids, at multiple display
points in the front end of the store could boost sales by $100 million
annually. The much bigger goal of using Gillette's better performance
in drug stores to close P&G's market-share gap there (compared to
what it has in mass outlets such as Wal-Mart Stores) could eventually
boost P&G sales by $2 billion annually, he said.
Chip
Bergh, the former P&G executive who took over as president-blades
and razors, said sales of the closely launched Fusion men's system are
accelerating. He said Fusion has logged $325 million in total sales to
date, mainly in North America, and topping a 25% share in replacement
blades in November, up more than five points since August, indicating
strong repeat sales. "There's no question that Fusion will be a billion-dollar
brand," Mr. Bergh said.
Leaping Into the Non-Paid Advertising Ring (Why Small Agencies
Must Embrace Non-Traditional Media) /
There's a proverb in the Bible that says that there is nothing
new under the sun. That's something to remember when you think you've
struck upon Bart Cleveland a completely original idea. To be fresh today
depends not just upon the idea but how it's delivered. For example, non-paid
media is an opportunity that small agencies should be well versed in by
now. Like it or not, communicating outside traditional media is no longer
a guerilla tactic. The past two years our agency has had a revolutionary
change in the way we approach this opportunity. I don't feel we're ahead
of the curve, but we're trying. We have no choice but to be ahead if we
want to compete on national level. Any agency that is not clearly comfortable
utilizing non-traditional media is going to pay a stiff penalty in the
near future. That's the dark prediction. The silver lined one is that
we small agencies that do utilize it are going to do better work and be
more competitive for clients who feel that this expertise is only found
at larger agencies.
We just completed a major brand campaign launch for Taos Ski
Valley. It was initially launched with only a
It's too soon to evaluate the results of this campaign but
one thing is certain: It was an invigorating effort for the client. Seeing
their passion voiced in this way has their entire company filled with
pride and renewed enthusiasm. Using this genre we were able to voice something
sincere about Taos that paid media couldn't do. I believe that's one of
the biggest opportunities non-paid media ideas offer.
Agencies that aren't looking into non-paid media opportunities
for their clients are limiting the bang for their buck. It is a proven
opportunity for small agencies to move the needle farther for a client
with limited budgets. I'm sure many small agencies are taking advantage
of the new world of communication with programs of their own, but I also
know that we can perceive this as virgin territory. I know of some of
our peer agencies that are well versed in this area and I'm sure there
are others. I'd love to hear from you.
Posted by Bart Cleveland on 12.13.06 @ 07:26 AM | 6 comments
GSD&M Opts Out of Wal-Mart Review / Declines Invite to Re-Pitch
for $580 Million Account / #5
By Matthew Creamer / Published: December
14, 2006
NEW YORK (AdAge.com) -- GSD&M has opted out of Wal-Mart's
$580 million re-review of its creative and media accounts. The Omnicom
Group agency and Wal-Mart incumbent based in Austin, Texas, lost out to
Interpublic Group of Cos.' DraftFCB in a decision made in late October.
But Wal-Mart reversed that decision and reopened the review last week
after ousting a pair of marketing executives involved in the review, including
Julie Roehm, senior VP-marketing communications.
Roy Spence 'We declare victory'
A statement from GSD&M co-founder and President Roy Spence
read: "I want to thank Wal-Mart for inviting us to re-pitch the business.
I have decided to decline. We helped build Wal-Mart from $11 billion in
sales to $312 billion. We declare victory. We will do everything to make
the transition perfect. We wish our great friends well. And we are moving
on."
The agency's reasoning was not immediately clear, but the Wal-Mart
review, which was announced back in May, is known to have put pressure
on the agency, especially given the 20-year duration and high-profile
nature of the relationship. GSD&M, which has a contract with Wal-Mart
that extends until the end of January, is also said to be excited about
the prospect of chasing retail accounts that Wal-Mart's business long
kept the agency out of. And it's likely that the scandal that erupted
following the dismissal of Ms. Roehm and Sean Womack, VP-communications
architecture, made the account -- though large in terms of billings --
a less desirable piece of business.
Wal-Mart has invited the two other finalists from the previous
review, WPP Group's Ogilvy & Mather and Interpublic's Martin Agency,
according to people familiar with the situation. The review is being managed
by Select Resources International, which also handled the first review,
and no other agencies are believed to be invited. A decision is expected
by the end of January.
Very different approaches
The two agencies vying for the account couldn't be more different.
Ogilvy is a global behemoth known for doing a full spectrum of marketing
services, from traditional advertising to direct mail to interactive work,
for marketers like IBM and American Express. The Richmond, Va.-based Martin
Agency, on the other hand, is best known for producing offbeat work such
as its Gecko campaign for the insurer Geico. Winning an account the size
of Wal-Mart would be a major coup for an agency that's on the verge of
becoming on the agency world's top players.
In the first review, Ogilvy pitched with WPP's Mediaedge:cia
and Martin partnered with Interpublic sibling R/GA. Aegis Group's Carat,
which partnered with DraftFCB to win Wal-Mart's media business in October
only to see it go back in review, is once again vying for that business.
Unlike DraftFCB, Carat was invited back into the review. It wasn't immediately
clear how the agencies will partner on the redo.
Agency spokespeople either couldn't be reached or referred
calls to Wal-Mart.
Wal-Mart has maintained that the review is being run by Chief
Marketing Officer John Fleming, but executives familiar with the matter
say it's being headed up by Wal-Mart Stores USA CEO Eduardo Castro-Wright
and Stephen Quinn, senior VP-marketing.
/ Contributing: Lisa Sanders
Channel
One: Going, Going, Gone? / Primedia Weighing Options for Its In-School
TV Network / #6
By Claire Atkinson /
Published: December 14, 2006
NEW YORK (AdAge.com) -- The future of Channel One, the in-school TV network that launched the careers of CNN's Anderson Cooper and "National Geographic's Ultimate Explorer" host Lisa Ling, is hanging in the balance..
The Primedia company is seriously off its ad projections for
the fourth quarter following a challenging 2006. Channel One is part of
Primedia's Education division, which performed poorly in the third quarter.
For the first nine months of the year, ad revenue in the education segment
fell 27.8%, to $17.1 million from $23.7 million, while third-quarter ad
revenue fell to $3.7 million from $4.2 million, off almost 12%.
According to executives familiar with Primedia, the company
has been quietly talking to prospective partners, including Walt Disney
Co., about a possible sale. One executive close to Primedia said talks
never progressed after Disney failed to show interest in the company,
which has been a target of activists who are against advertising in schools.
A Disney spokesman said the company would not comment.
Fears of more regulation
The service has also struggled amid a marketer pullback on
kid-targeted food and beverage ads over fears of greater regulation. That
coupled with a decline in federal spending on the channel has hamstrung
the in-school network.
"Channel One continues to struggle on the revenue side
as it has had a much lower than expected 2006 fourth quarter selling season.
As a result, we're expecting Channel One to deliver roughly two-thirds
of the revenue that we had originally planned for 2006, and we're in the
process of assessing the business," said Dean Nelson, Primedia chairman,
president-CEO, during a third quarter earnings call Nov. 1.
"We continue to look at a number of strategic options
for this business," a Primedia spokesperson said.
No more Cingular ads
Channel One is run by CEO Judy Harris, who joined in March
2005 after working at PBS as exec-VP businesses and at Discovery Communications.
The company delivers programming along with two minutes of advertising
to school classrooms and common areas, like cafeterias. Since 1990, the
network has outfitted schools with free TV and VCR equipment as part of
an agreement to air newscasts with the ads during school hours. Channel
One News reaches more than 7 million secondary-school children in 11,000
schools and has in the past won a Peabody for its coverage of issues for
young people.
The home page of ChannelOne.com hosts U.S. Army "All American
Bowl" football game ads, but had carried banners for Pepsi products
and Cingular this year. Cingular is no longer appearing on its home page.
"Our advertising decisions often cause us to add some
properties and drop others in our ongoing effort to ensure that we reach
the right audience with the right messages," a Cingular spokesman
said. "That said, we are not going to comment one way or the other
on individual decisions."
Primedia, which is 60% owned by Kohlberg, Kravis, Roberts &
Co., last week sold 17 outdoor magazines and accompanying web properties
to InterMedia Partners for $170 million, including titles such as Guns
& Ammo and Game & Fish. ~~~ Contributing: Alice Cuneo
China Surpasses U.S. as Biggest Driver of Global Ad Growth
/ Group M Also Forecasts 5% Increase in Spending for '07 /
By Lisa Sanders /
Published: December 04, 2006
NEW YORK (AdAge.com) -- China will surpass the U.S. as the
single biggest contributor to global advertising growth for the first
time at the end of 2006, foresees Adam Smith, futures director of Group
M, WPP Group's media unit.
Adam Smith says that as a source of media growth, the internet
is 'largely the preserve of the West,' and he predicts the U.S.'s investment
in major media will increase a modest 2.4% to $154 billion in 2007.
Morning predictions
Other morsels divined at a breakfast-hour presentation today
include that print, despite remarkable innovation in some markets, will
continue to diminish as a source of media-spending growth globally, and
the internet, which in recent years has grown at a breakneck pace comparatively,
is "largely the preserve of the West," in Mr. Smith's opinion.
His talk was the first portion in a weeklong media conference
organized by investment bank Credit Suisse.
Mr. Smith, who joined WPP last January from Publicis Groupe's
ZenithOptimedia Group, predicted global media-spending growth rates will
remain essentially flat in 2007. This year media spending will be up 5.3%
from 2005 at $395 billion; next year he predicted another increase, but
not at the same rate, as media spending will jump 5% over this year to
reach $414 billion.
China's investment in major media in 2006 will rise to $4.2
billion vs. the U.S.'s $4 billion.
In the U.S., Mr. Smith anticipates media growth in 2006 will
rise a modest 2.7% over last year to $151 billion, but for 2007 the increase
will be an even more modest 2.4% to $154 billion.
TV's role in growing economies
Globally, TV is "by far the largest source of media growth,
and the predominant source of growth in emerging economies, while the
internet is picking up," said Mr. Smith. Print, which he calls "extremely
competitive and innovative," is "managing to hang on to reach"
in certain sectors, such as weekly magazines and free commuter dailies
in Western Europe, but the medium is having difficulty in securing price
advantages. Publishers continue to introduce new titles but subscription
prices are declining. "Advertisers have no inflation in many if not
most print sectors," he said.
The internet's contribution to world media growth is holding
steady -- 27% in 2006, expected to be 28% next year -- and the big question,
in Mr. Smith's opinion, is just how vigorous the next wave of growth in
Internet advertising spending will be. "Where will the growth come
from? Will it be big advertisers, like Unilever or Kellogg?" he asked.
TV continues to be the biggest medium globally, garnering half
of all media investment growth. In North Asia, TV is still the largest
source of media growth, and a key agency skill in the market is "price
analysis," Mr. Smith said.
Internet spending in Europe
In Western Europe, dollars continue to shift from TV to the
internet, and in the U.K. specifically, the internet is "pretty much
the only source of revenue growth," Mr. Smith said, noting that the
"direct response people have made hay with that."
The U.K., in fact, leads Western Europe and the U.S. in share
of internet spending, including search, but Mr. Smith's analysis showed
"we've reached a watershed. Will we see double-digit growth rate
of 30% or 40% again?"
He believes growth will continue because of attributes such
as accountability; consumers' quest for entertainment and information;
the continued increase in broadband penetration; and e-commerce, but barriers
remain. Marketers and agencies alike "have an attachment to traditional
media," Mr. Smith said, and there is a lack of understanding in how
digital can help big advertisers, particularly those in package goods.
"We don't know enough," Mr. Smith said. "Not
every brand will make it online."
CHINA IS GLOBE'S MAIN AD GROWTH DRIVER: GROUPM CHIEF
NEW YORK: The unstoppable juggernaut that is the Chinese economy
will help it overtake the US as the biggest driver of global advertising
growth by the end of this year, predicts the head of WPP Group's media
unit GroupM, Adam Smith.
He predicts China's investment in major media during 2006 will
top $4.2 billion (€3.15; £2.12bn) while the US will reach $4bn.
Smith told a New York conference that global media spend on
print was continuing to slide, despite is innovations, while the web's
eyewatering expansion would remain "largely the preserve of the West".
He was optimistic about television's adspend future, despite gloom in
certain quarters. He believes its strength lies in emerging economies
and a key agency skill in the market is "price analysis".
In Western Europe, however, ad budgets continue to migrate
from TV to the web. In the UK, which leads the continent and the US in
internet advertising, Smith says online is "pretty much the only
source of revenue growth".
He expects the medium will continue its expansion, but may
not sustain previous 30% to 40% growth rates.
Smith noted that some marketers, particularly those in packaged
goods, "have an attachment to traditional media" and lack understanding
in how digital media can help them.
He
predicts global media spend growth rates will remain flat in 2007 at 5%
to reach $414bn. This year's media spend will be up 5.3% from 2005 to
$395bn.
Data sourced from AdAge.com; additional content by WARC staff,
06 December 2006
US MAGAZINES HOPE FOR BETTER NEW YEAR NEWS
NEW YORK: Magazine revenues in the US experienced a flat
2006 in the wake of an equally horizontal 2005 - but publishers
remain hopeful that next year will see something of a renaissance.
Dennis
Publishing's Maxim's January 2007 issue is expected to see a 10% gain
over the same period in 2006, while February looks headed for a 25% gain.
Conde Nast Publications' Jane, which is down 20% for the year,
has closed a February issue up 38% and anticipates a March increase well
above 10%.
Luxury titles dependent on watch or jewlery advertising performed
well in 2006. American Express Publishing expanded fashion pages by 9%
and jewelry by 9%.
Nina Lawrence, vp-publisher at Conde's W is confident 2007's
first quarter will beat 2006's, saying: "The rich are getting richer
and there are more of them."
Data sourced from AdAge.com; additional content by WARC staff,
06 December 2006
P&G
OUTLINES ADVERTISING - SALES EQUATION / #10
CINCINNATI: Procter & Gamble says it has no mandate to
cut advertising as a percentage of sales - although the world's highest-spending
marketer aims to deploy its ad billions more efficiently and effectively.
The consumer goods titan hopes to increase its operating margin
from 19.4% last year to around 24% in 2010.
CFO Clayton Daley told an analysts' meeting at company HQ:
"Our sustained-growth model doesn't actually count on P&G reducing
marketing as a percent of sales. As such, we will look to reinvest [marketing-efficiency
savings] back in the business."
However, he pointed out that pegging back adspend is not necessarily
harmful to brands.
The meeting heard the company's North American fabric-care
business cut adspend as a share of sales by 2% over the five fiscal years
ended June 30, but increased sales $900 million (€686m; £459m).
As a result market share rose by 3.5 points and raised brand
equity on flagship detergent Tide to record levels.
The company, whose brands also include Pampers diapers and
Crest toothpaste, has cut global adspend as a share of sales for the past
two years - to 9.9% from 10.7% in fiscal 2004.
And television is now not the default lead in the marketing
mix. Global marketing officer Jim Stengel cited a recent feminine care
Always upgrade that relied entirely on "targeted print media",
while antacid remedy Prilosec "has done the same with interactive
approaches".
Data sourced from AdAge.com; additional content by WARC staff,
18 December 2006
News: 7 Day Round Up / December 11 to December 5, 2006
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The Facts and Stats on Mobile Outdoor Advertising...
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