Archive for January, 2008

The NY Times reported yesterday that Subway is suing Quiznos and SpikeTV/iFilm for financial and punitive damagesQuiznos v Subway resulting from a consumer generated video contest. The theme of the contest is Quiznos vs Subway. Harmless enough you’d think, considering the history of advertising rivalries such as the Pepsi challenge and others. I watched a bunch of the videos – some are funny, most are amateurish and some are boring. I certainly didn’t feel Quiznos was going over the top or doing anything worse than any other brand comparing their products to that of their competitors (and in the spirit of the political season, need i say more about political below-the-belt slugging in ads). What in fact is the difference between this and the Pepsi challenge? Apparently the execs and lawyers for Subway felt otherwise.

An example of one of the entries:
Quiznos vs. Subway Medical Challenge!

Ultimately the digital world will have our eyes on this case as it gets to trial one day, because there are some interesting and possibly scary presidents that can be set regarding CGM and how marketers influence and guide it. I’d be surprised if this case results in anything but happy lawyers on both sides and a ruling for Quiznos. Come on Subway – get creative and stop whining!

As I slaved away on my laptop this evening, I totally spaced out and missed the State of Bush Facethe Union Address. Bush antics aside (I actually heard the speech was pretty good), I really wanted to see the speech. So now at 11:20pm I went online assuming that the speech would be streamed in its entirety in several places. After 10 minutes of searching on Google, video sites and major news sites, I am thoroughly disappointed that nobody was on the ball enough to have the video of the complete speech posted online. Apparently I can read a transcript of the entire address, I can watch the last 50 years of complete State of the Unions, but the 2008 video is not online in its entirely yet. Why not? Isn’t this the YouTube generation? Aren’t the networks trying to integrate online and offline content and programming? I just don’t get it. Maybe it’s posted somewhere, but if I can’t find it, the average consumer most certainly can’t. 

*** UPDATE Tues 6:30AM: Ok, I just woke up and checked again, and wouldn’t you know it, the White House now holds the #1 organic listing for the 2008 State of the Union. C-Span and others have the content posted at this point. It’s interesting how the White House decided to exercise control over this content and how it is officially digitally disseminated. White House 2.o? I guess they wanted to limit comments and mash-ups…good luck!

As social media becomes a household category for media buyers the wold over, the race to Google crown logotap into the deep vaults of consumer data by publishers is intensifying. Google’s announcement last week that they are beta testing “demographic bidding” is a very interesting development with the future potential of leveraging various forms of consumer provided data. Of course demo targeting is the basic primary method for traditional media, and relevancy has been king in digital land. As Google develops this program further, I can see many other data points from ad-sense partners leveraged for targeting beyond demos alone. Any and all consumer provided data can and will be overlaid as targeting criteria. 

Ok – so you’re saying to yourself, ‘what’s new about that?’ Nothing of course – other than the fact that it is being overlaid on an existing platform that accounts for a significant level of consumer usage and ad spending (search accounted for approx 40% of all ad spending in 2007). Adding demo targeting to ad-words and ad-sense is a natural progression to further segment relevant search and long tail placements with specific demographic (and eventually other) segments. The move should benefit publishers by helping to increase targeting options and rates and creating further relevancy for consumers. It benefits advertisers by providing us with more ways to tap into the fragmented long tail, and it benefits consumers by making the marketing experience more relevant.

Maybe I’m just a digital media geek – but I love hearing about new ways to segment and engage consumers. I’m enthralled with data driven approached to marketing. Content used to be king, relevancy seems to be making a coup, and I argue that data is the heir.

 Update: the following was published in MediaPost on Jan 28, 2008.

In the spirit of keeping to the theme of the blurring lines between media, marketing and technology, I’d like to focus on theAgency Darwinsim impact of the blur on agencies. I’ll provide a continuing commentary on “the state of the advertising agency” – the evolution of the institution and the structure itself. Earlier this month I posted a 2008 prediction. One of the predictions included the morphing of the agency structure. I stated that “All general agencies who have not implemented new ways of working will succumb to the market forces driving the polarization of hyper-specialization or skilled integration”.

That goes for agencies large and small. Evolve and compete, or be displaced.

Just take this statement from Dell’s blog regarding their engagement of WPP for their $4.5 billion global business:

“Together with the WPP agency, Dell is creating a new marketing model designed to further propel Dell’s growth. We’ve been calling this ‘Project Da Vinci’ because we’ve been looking for the combination of artist and scientist—an agency that has both the creative horsepower and ability to measure the business impact of their work.”

For those who think that large agencies have it any easier than smaller agencies because of their deep pockets, think again. Granted, the big guys have the resources to invest properly. However, it takes a lot longer to turn around an oil tanker than it does a speed boat. Of course, the oil tankers have been turning for some time now, and it’s an impressive sight to see the ship riding the crest of a huge wave and passing a tipping point, surmounting the legacy resistance and generating even more momentum by integrating familiar digital marketing brands from all walks of life into major agencies everywhere you look. We’re talking about specialized agencies, ad delivery and measurement systems, research tools, technology companies, and even media companies. The growing need for agencies to posses technologies that help create efficiencies in processes, provide depth of reporting and analytics, and improve margins, is driving much of the consolidation. In today’s market climate, technologies and tools that can plug into an existing portfolio of a major media company or agency holding company can produce the promise-land exit strategy that every new media entrepreneur, agency executive or propellerhead has dreamed about. Most deals are somewhat grounded in reality, albeit valuation is as much an issue as it always has been for a complimentary acquisition versus a deal which is revenue based.

VC2.0
There’s a dynamic at play in the Venture Capital world as well, which is worth noting. During the period I’ll call VC1.0, we experienced the over funding of businesses based on the future potential of ad revenue, a fairly two dimensional future, if you will. The new round of growth we’re experiencing, including the proliferation of Web2.0 sites, are funded by what we’ll call VC2.0, characterized by smaller rounds of funding for innovative products that have a potential for exponential growth, predicated by consumer adoption and ongoing market consolidation. Although leaders in the space such as Wikipedia, YouTube, Flickr, MySpace, Facebook, Digg and others have certainly set the bar, and surely will continue to prove that they can hold their own and displace consumption of other media, admittedly, [like many VC1.0 funded companies] most web2.0 businesses will never thrive on their own. Rather, consumer adoption and a balance between visionary and practical leadership will help specific new agencies, technology companies and media companies become strategic pieces of an ever growing digital puzzle of complimentary assets within larger portfolios.

The only solution to fragmentation is ubiquity
Agencies large and small must apply different methods to accomplish this over-riding marketing principle of the new generation. Smaller agencies must collaborate to survive and grow. Some will bubble up to the top, merge, grow, compete and become new forces to be reckoned with. Larger agencies will continue to grow both organically and through strategic acquisitions. The gap between early movers and those sitting on the sidelines will continue to grow, as the competitive positioning of the digital haves and digital have nots applies new versus old world approaches to clients’ businesses in an environment ripe with change. Agencies risk passing a point-of-no-return at which organic growth alone cannot overcome the onslaught of your competitors’ momentum. The once untouchable industry position of the glorious name brand agency of yesteryear has been waning for the last handful of years, along with the primary focus on the :30 spot. The agency ecosystem, structures and processes that supported an industry for so many years and stood the test of time, has changed forever.

PaidContent.org reported on Sorrell’s position on ‘Legacy’ Agencies: “We have roughly $2 billion in our legacy businesses. Under our strategy, we look for complementary businesses and then graft them on to it. That’s what we’ve done with our new acquisitions, such as Bridge and Schematic, Blast Radius.”

WPP takes on Google
The agency holding companies have many stakeholders to keep happy, and although clients are an important stakeholder group, shareholders are equally as important. Lately I’ve read about WPP’s CEO Sir Martin Sorrell commenting on Google more so than his direct competitors Omnicom, IPG, Publicis, or Aegis. The competitive undertone between the world’s largest agency conglomerate, WPP, and the largest digital media and technology company, Google, is almost like a real life soap opera. The current level of “coopetition” is interesting. In an industry filled with uncertain direction as to how to reach an un-debated pot of gold at the end of the digital integrated rainbow, it seems like we take a slightly ‘open source’ view to business in general these days. We collaborate in and tolerate closer proximity to competitors than ever before, based on an interdependence of collective growth. If we learned anything over the last ten years, we learned that growth is not stifled by lack of control.

After last year’s $649 million purchase of 24/7 Real Media, ongoing acquisitions of some of the last remaining independent digital shops with critical mass, acquisitions in Asia and emerging markets poised for explosive growth such as in India, rumors are reverberating throughout the advertising and internet industries about additional consolidation. NY Post reported today a potential acquisition of web-based TV media & creative exchange, Spot Runner, mobile Firm Jump Tap, Canadian agency NuRun, and video network Video Egg. Sorrell was also rumored to have been a suitor of Doubleclick prior to the [almost completed] acquisition by Google. It’s as if WPP has become a staple of exit strategies the world over, much like Google has been for innovative small technology companies over the last decade.

The moves are being made at the highest levels, an essential component to make such a major shift in structure successfully.

According to PaidContent.org, Martin Sorrell put Google’s market cap and revenue into an interesting perspective: “We have a $15 billion market cap. If I take Publicis Groupe, which is roughly half that, and IPG, which is a third of that, its a combined $50 billion market cap. And all those companies’ revenues put together is $33 billion. In comparison, Google’s revenues are two-thirds of the top four ad holding companies and its market cap is more than four times those same companies.”

Market cap discussion aside. If I were advising Sorrell, I’d have him keep an eye over his shoulder for Microsoft. With aQuantive already integrated into their portfolio, investments in emerging platforms and human capital over the last few years, Microsoft is positioned strategically to compete with specific key agency assets within WPP as much if not more so than Google, who seems to have fumbled so far when “encroaching on agency turf” even as agencies have lay susceptible to the potential for several years.

WPP scorecard so far
23% of WPP’s business is digital. Based on their last corporate report projecting about $29 billion in billings for 2007, that equates to almost $3 billion in digital billings. Subsequently WPP landed the $4.5 billion Dell account, which promises to act as a catalyst for further integration, change and revenue.

Not too shabby for an oil tanker. What do you think? Many speed boats have run out of gas or sunk in storms while this powerful ship continued to slowly turn around. However, WPP is not alone. Aegis has been hard at work over the years developing what is now claimed as the largest digital agency in the world with its ISOBAR unit. In a watershed move last year, the traditional and digital media operations merged into one universal brand (Carat) led by its digital head. Of course, each of the holding companies and agencies of all sizes have also implemented the beginning phases of what will evolve into long term transition strategies.

So what are you waiting for? Sure you may not be Martin Sorrell, but you can still embrace the new dynamics of the “state of the agency”. Invest proportionately in technology and human capital. Challenge your team to develop new ways of engaging consumers, measuring effectiveness, and creating efficiencies within their own processes. Create an environment that fosters collaboration and sharing of digital knowledge & experience through all facets of the organization. Stir, wait 18 – 36 months, consider yourself part of the next generation of agencies that survived natural selection!

Hold on to your credentials presentations. Evolve and compete … or move out of the way!

Ever since rolling out the “proprietary Avenue A” ad-server (now known as Atlas), the aQuantive team has always beenDigital Shopping cart very aggressive about progressing the delivery and measurement of ads. After all, they did manage to become the #2 ad-server and were acquired by Microsoft for $6 billion. Their Mom’s are proud, trust me. They have had a commitment to cracking emerging platforms over the last several years. Microsoft is rolling out an ad delivery systems tied to RFID driven digital shopping carts in Shop Rite supermarkets is tied to a relationship marketing program, which now has the ability to trigger based behavioral targeting of offers in-store. I would assume the RFID also acts as a sort of in-store GPS to trigger ads as well, and maybe seconds as an anti-theft device. If Shop Rite moves to an RFID standard for their goods and suppliers they can also cut down supply chain costs considerably. Very cool.

The AP report states that the aQuantive acquisition “shored up the company’s capacity to serve video ads onto these grocery cart screens”. The acquisition and selective recruiting also helped Microsoft score some major human brain power in the last few years. I know a few folks at Microsoft who have been around the block a few times and really are some of the brightest people in the industry. Congratulations guys. Create some momentum with this, it’s just the beginning!

While we were looking for convergence in the form of IPTV for years, it has slowly been happening all around us in so many other shapes and forms. Digital channels and platforms such as SMS allow for the activation of otherwise passive media…and since everything is media, everything is up for grabs.

I guess you can just file this one under interesting, unless you are actively marketing in China…Youku.com

A had to do a double take when I first read the MediaPost headline last week – “China’s Youku Approaches YouTube Territory, Surpasses 100 Million Daily Mark“.  In one year the site went from zero to 12 million users – indeed reminiscent of YouTube. I’m quite aware of the internet growth in China, but this number represented a real landmark to me.

It was less than 10 years ago, when I was invited by Doubleclick’s CEO to co-present the state of online advertising affairs to a delegation from China consisting of leaders of academia and government. The Chinese government was censoring US based internet content at the time, and still to a degree flexes censorship power over the type of content its citizens can be exposed to. With Youku’s  scale, one must assume that the government’s biggest microscope is focused in their direction, or directly involved, which wouldn’t be surprising considering the fact that in many countries the government runs the largest national media companies.

I’ve been presenting digital marketing seminars to the diving and adventure travel industries since 2001. I’ve presented seminars in Singapore and Bangkok, and I’ve recently been scheduled to present a  seminar in Shanghai in 2009, to assist in bringing the fast growing, but still nascent Chinese market up to speed.

I’ve created a new category for “China” for the blog, so periodically I’ll post updates from this fascinating market.

When I read this piece in MediaPost today, something really interesting dawned on me…

First – The “new” L-Bar unit is a piece of real estate shaped in a reverse L (across bottom and down the right hand side) around the programming content.  It’s being deemed innovative (see next paragraph), and in the MediaPost piece only MTV and Bravo, two progressive networks, have been named as experimenting with the unit.

Why should we, as digital marketers, care?

We will continue to see digital media impact traditional media, as well as the internet itself impacting many industries in different ways, such as the travel and music industries as prime examples. The new technologies and relevant consumer-marketer connections are inevitably forcing traditional media to morph along this evolutionary path. However, they are evolving and morphing, as are the large agencies, whose structures were not prepared for the digital age, yet operating in it. As they change before our eyes and integrated digital extensions of traditional channels become the activation points for all media, we need to be prepared for it. Oh by the way – it’s been happening already…

I will explain the power of this transformation in the context of my observations as a consumer in Asia, particularly in Kuala Lumpur, Malaysia, winter of 2004. As I flipped through the channels to find something interesting to watch on TV, most of the stations, particularly the “pop-culture” channels such as the music networks, had the programming wrapped with ad blocks down the right hand side and across the bottom. Voila – your “L-Bar” unit. What was most interesting was the type of response focused advertising, particularly SMS triggered purchases. Was I living in a digital wonderland or was it the jet lag from flying 24 hours from NY via Stockholm?

As it turned out – I was indeed living in a digital wonderland. Although there were no blue or red pills, no hookah smoking catepillars or mad hatters – only multiple offers for various SMS products and subscriptions.

I wondered…were these ads being inserted (a la TV) or served and tracked (a la online)? Was it database driven? Could it be? If so, think of the optimization opportunities, which would be akin to that of digital media. Of course I attempted to sign up for a service or two, but my international GSM phone wouldn’t allow it (it accepted the spam text messages every other day but not my purchase attempt). Oh well. The future will come to America one day…

But I thought of the potential of this type of  advertising for mobile and online based products or services. It’s huge, but with a slightly annoying downside. The unit if, run too frequently (as in always as some stations did in Malaysia), was more than a little intrusive and obstructive, sometimes even annoying, but engaging to a degree. I wasn’t sure if that critique / review was the marketer in me or not – sometimes it’s hard to shut that off. But as a consumer I know I did feel at least a little annoyed at times.

This was just another example of how digital media is impacting traditional media, and how the integration with tradition media is becoming a more important aspect of the mix than ever before. Welcome to the future present of media.

It’s all a blur – a Digital Blur!