Five Ad Agency Elves

BAILING OUT THE ECONOMY AND OUR INDUSTRY

The financial markets have been reeling from the impact of a recession we all knew we were in but refused to acknowledge until this month. How can we possibly get the economy back on track?

Click to my commentary this week at Media Life Magazine ... here. I suspect I'll have a mailbox full of comments!

PAIN IN THE PRESS

As the Tribune Company announces bankruptcy with thirteen billion dollars in debt, the New York Times borrows against its real estate assets to stay afloat and the Miami Herald is put up for sale by financially strapped McClatchy, one begins to wonder what the future of the printed news page may bring.

It is not for the lack of readers. It is, more obviously, for the lack of advertising revenue that began with the loss of classified ads to the likes of Craigslist and other online resources, followed by a downturn in our economy and the pullback in display ads by retailers … a perfect storm.

The newspaper business model, one that relies on ad revenue to keep the presses rolling, has been showing stress cracks and is now breaking apart.

On one hand, we have journalistic integrity and depth taking it squarely on the chin as layoffs in the industry take their toll.

Who cares? Advertisers certainly do not. They will find other channels to take the place of newspapers that have long been gone. Readers? For the most part, readers who are loyal to their morning and Sunday editions will feel the pain created by the void.

Newspapers have been through downturns in the past and reinvented themselves with special editions and sections. The rebound this time around will not be easy as the downturn is wider and deeper than before.

How can newspapers survive? Downsize the paper, creating niche markets. Increase the cost of the paper, moving from an ad-supported model to a subscription supported model. Continue to embrace the internet as an adjunct to the printed page.

Finally, boldly move to recapture classified ads. Carry them at NO CHARGE. And watch as circulation jumps and display ad revenue trickles back.

The newspaper industry has been slow to react and slower to fight back, lacking an understanding of the real psychological drivers of their business.

A HALLMARK CARD FOR GOOGLE

From today’s AP Newswire: “A new deal between Google Inc. and Hallmark Channel allows advertisers to place ads on Hallmark's namesake and movie channels through the Internet search operator, the companies said Wednesday.
Terms of the agreement were not disclosed.

Starting early next year advertisers will use the Google TV Ads platform to place ads on Hallmark Channel and Hallmark Movie Channel. The platform will also provide viewership data that will allow advertisers to make real-time adjustments to their placements.

Hallmark Channel was viewed in 86 million U.S. homes in November and plans to run more than 30 original movies in 2009. Hallmark Movie Channel shows classic movies, presentations from the Hallmark Hall of Fame library, Hallmark Channel original movies and special events.”

Google TV Ads now represents more than one hundred on-air program opportunities. A review of their demos on YouTube provides some basic understanding of the process. Frankly, I am wary of the ability of Google to reduce the purchase of TV time to a PC driven interface. The tool appears fun to use and if you’re in a mindless state does all of the “thinking” for you. Thanks, but no thanks. The demos appear to be focused on DR advertisers paying $75 to $275 for a cable program slot in an auction based venue.

What is Hallmark thinking? Apparently, desperation breeds panic. And I’m sure the Hallmark reps feel all warm and fuzzy about the prospect of Google selling for them …. Not. If this signals trouble selling inventory for Hallmark, and if you’re a negotiator and not a PC drone, use the weakness to your negotiating advantage! You might want to do the same with all the other Google programs too.

FREEDOM TO SEARCH

This coming January, Google will have been in existence for twelve years. Ten years ago, it was incorporated. Four years ago it went public. Two years ago it ventured into offline media sales with the purchase of dMarc. Just last year, they acquired DoubleClick. Today, Google commands seventy two percent of web search activity in the US and manages hundreds of products in information, communication and media channels.

Search, however reins over the Google Empire. Seeking personal relevance in its rankings, the search giant relies on hundreds of signals to generate relevant query results, while battling SEOs that attempt to manipulate results and disruptive sites that rely on cloaking to draw traffic.

Google will eventually win these battles and will move on to refine search in ways that we cannot yet imagine, sometimes relying on an empirical basis for ethical theory. Near-term, look for movement away from keywords. In an attempt to capture true user intent, semantic search will displace keywords.

How far can Google go before relevance is distilled down to a single relevant result, and in doing so limits potential discovery choices? When a query result or an Adword link is returned to me because it’s “relevant” isn’t the search engine opting to reveal what it “thinks” is best for me? Somewhere between focused relevance and freedom of discovery is where I want to be.

Are we taking the potential ROI from razor sharp results too far at the expense of the consumer’s ability and freedom to explore potential alternatives? Imagine a magazine with ads and editorial content that was only relevant to your perceived interests as a subscriber. A very thin copy delivered to you while at the newsstand, the same non-directed issue had four times the content.

Are we backing ourselves into a society that needs to think less? Every school-age child carries a calculator and a digital time device. Yet few can do the math themselves or read an analog clock.

SOCIAL NETWORKS NOTWORKING ?

If you haven’t heard the news lately, Ted McConnell, general manager-interactive marketing and innovation at Procter & Gamble Co., suggested "What in heaven's name made you think you could monetize the real estate in which somebody is breaking up with their girlfriend?"

Wow! That can set the social networking gurus back a few months, if not years.

What can we make of that statement? It suggests a serious look at the channel as an intrusion by advertisers who believe that commercial messages in the midst of a conversation between friends are okay.

When marketers hijack conversations, instead of creating their own environment, it doesn’t do them any good. While MySpace, YouTube, Facebook and the like can offer a potentially valuable space to play in, an assessment of the value marketers provide, relative to the perceived intrusion (and sometimes backlash), needs to be evaluated.

One of the better examples for the use of marketer-generated content points to Johnson & Johnson’s Health Channel created for YouTube. Over the last 3-4 months J&J created sixty-four informative videos, generating over 226,000 views … all without commercial overlays. The most viewed focused on teen obesity, an animation of cardiovascular disease (likely used by doctors for illustration) and Olympic athlete profiles. Those most discussed, followed the most viewed with the addition of ADHD in kids. The videos make you feel good and, more importantly, provide a valuable service to those seeking information. I can also argue that it provides a lift in positive awareness for J&J.

Bravo J&J.

THE WINDS OF CHANGE

There is only one constant. Change.

The world at large, its people, nature, the environment and “even” the business of advertising is not insulated from it.

Change happens….sometimes for the greater good and sometimes for a humbling experience. Recent events in the financial world are forcing many of us to navigate what is amounting to a sea change…. a transformation that will affect our global economy and ultimately the fortunes of marketers, their agencies and the media channels we work with.

We are just beginning to hear. Automotive marketers will slash budgets and some will disappear entirely. GM is trading at $2.75 a share with a market cap of $1.6 billion! Banks are swallowed whole by other banks. American Express, for fear of its ability to continue in its present state has transformed itself into a holding bank.

Consumers are retreating, opting out of purchases that carry long-term liabilities. And our government will wind up spending trillions of dollars to support the very institutions that created the mess we are in today. And when those institutions cannot repay the government, guess who gets to hold the empty bag?

The Obama administration’s platform is all about change. Here are just a few of the changes that will likely affect the business of advertising during his term.

• Corporate tax deductions for advertising will be scrutinized and supported by a bill to exclude it as an expense. The Association of National Advertisers is already monitoring moves in this direction.

• As one of two countries on the planet that allow Rx advertising for new products, look towards a policy that will disallow the practice for up to 12 months, stripping billions of dollars out of the advertising pie.

• Placing the issue of privacy, personal data collection and utilization under a microscope, the effect on the ability of media channels to target ads based upon behavior will likely diminish.

• The FTC and the FCC will secure a broader power base to enforce mandates on ad guidelines and the ability for media channels to converge through consolidation.

The good news is that as the winds of change shift as well. We are part of business that is resilient and always bounces back. When tobacco advertising was legislated off the airwaves in the 80’s, panic set in for many agencies …. but they all bounced back. When the Internet bubble burst in 2000, it came back stronger. And as tough as it may sound, the best advice is to try and stay in the game.

ARE YOU SAFE?

From time to time I will be conducting a poll of the readers of this blog on topics that are timely and industry related.

Here's the first.

Our industry is facing layoffs coast to coast, especially in the automotive and financial sectors. It will likely spill over into the retail sector during the holidays.

Tell us how secure you feel in your job.

GOOGLE .... NYET!

Google’s ability to conquer all is being tested.

The recent announcement that the Yahoo! deal for the search business will not go through and the less, but not insignificant, push-back buy Russia’s FAS preventing Google from the purchase of the Begun Ad Agency for $140 million, signals an uphill climb for the search giant outside the US.

FAS Russia is an authorized federal executive power body responsible for prevention, restriction and suppression of monopolistic activity and unfair competition. It has become one of Russia’s most powerful agencies. Notwithstanding the agency’s mandate to watchdog such deals, it is also believed that Putin may have blocked the deal, recalling Sergey Brin’s comment that "Russia is Nigeria with snow, ruled by a gang of crazy cowboys."

Add to the equation that Yandex (the leading search engine in Russia) dominates the market by a wide margin and we see an emerging pattern …. One that dictates a more conservative approach tempered by a unique understanding of cultural needs and a sensitivity to the local political climate.

In northeast Asia, particularly in Korea, Google accounts for less than 3 percent of search page views, giving way to NAVER with a 74 percent market share for search.

As Google reaches out to international markets to maintain growth while, at the same time the US economy begins to stall, the giant will soon come to a crossroads. Whether forging straight ahead or taking a strategic turn to manage a maturing company, much of Google’s future growth will depend on its ability to cooperate with local governments on a global scale.

JUST DO IT . . . . VOTE!

This blog has never taken political sides .... and likely never will. This presidential election will perhaps turn out the largest number of voters in this country's history. Be part of that history. Take the time to stand in line and cast your ballot to make a difference. One vote can make a difference. Teach your children by example.