BNET Advertising

Dell laid off Mark Jarvis, the company’s chief marketing officer, raising questions about Enfatico’s relationship with the client. Jarvis was a supporter of the agency, and the second client-exec-supporter of Enfatico’s to go. Back in November, vp marketing Casey Jones lost his job. He was the “creator” of Enfatico, the Dell-only agency that WPP agreed to make from scratch to service Dell’s $150 million account.

With Enfatico’s two top client supporters at Dell gone, and a massive cost-cutting drive under way at Dell, it is shaping up to be a difficult 2009 for Enfatico. Some, such as the folks over at Tribble, are already counting the days until Dell wields the ax.

What Enfatico must do in 2009 is re-cement its relationship with whoever is now the key executive Erin Nelson, vp of marketing for Dell’s operations in Europe, the Middle East and Africa, who is now overseeing its work. The agency has one advantage going for it: According to the WSJ, it has actually saved Dell some money. That’s a good start.

Enfatico will be under pressure from WPP chief Martin Sorrell to squeeze every last dime out of Dell as long as their three-year contract lasts, but at the same time if it wants to keep the business the agency must be as cheap as possible. That is going to be a difficult tightrope to walk in 2009. It helps to understand the position Dell is in financially:

Dell’s revenue is flat or declining. Its net income is doing the same. Its SG&A expenses (the budget line where ther ad costs are located) fell by 12 percent — suggesting that Enfatico has saved the company money.

Now check out when that money was saved. According to Dell’s own most recent Q3 of fiscal 2009 financial statement (emphasis added):

Advertising expenses decreased approximately $50 million in the third quarter of Fiscal 2009 from the same period in Fiscal 2008.

Advertising expenses decreased approximately $40 million in the first nine months of Fiscal 2009 from the same period in Fiscal 2008.

In other words, Dell sharply reduced its advertising expenses in the most recent quarter. Whatever Enfatico was doing back in February, it’s doing much less of right now. (Or ought to be, if it’s trying to remain sensitive to its client’s budgeting problem.)

Further reducing Dell’s expenses in Q1 and Q2 of 2009 will help Enfatico. This may mean layoffs. Or it may mean axing some marketing plans.

Dell itself might want to help its own agency save money by reducing the amount of stuff it wants advertised. Everyone already knows Dell is a huge company that sells all kinds of different computers. Whatever kind of machine you want, Dell can give it to you in pretty much any way you want it. So does Dell really need to individually promote every single chip and and button that pops out of its factory? Look at all the products it promoted in the last couple of months:

• Dec 9, “smallest desktop ever.”
• Nov. 21, “Dell Adds Eye Candy to Inspiron Mini Mix with Cherry Red, Pretty Pink and Tristan Eaton Designs”
• Nov 17, “Power Up Into the Fast Lane with Dell’s Studio XPS Desktop”
• Nov. 11, “Bold New Dell (Product) Red Artwork for Studio Laptops Express Passion for Art, Desire to Make A Difference”
• Oct. 30, “Fresh New Version of the Iconic Dell XPS One”
• Oct. 26, “Slim, Stylish and Well-Connected: Introducing the Dell Inspiron Mini 12″

I stopped counting at that point — but trust me, Dell’s press releases about “new stuff” are endless. So perhaps Dell can do more by doing less. Just tell customers they have great products, something for everyone, and you can pretty much get them customized. Then there’s no need for separate work on separate models, and you can ax the associated adspend.

Valassis Communications, the direct mail giant, has stopped paying its bills and its stock is worth precisely zero dollars, according to separate reports. Fraser Papers recently sued Valassis for nearly $1 million, an unpaid bill for shipping paper to the company between May and June, according to the Bangor Daily News:

The Madawaska firm [Fraser] alleges that Valassis ignored its demands for payment in August and September.

That news came as this Washington Post note on a Morningstar analysis stated Valassis’s stock is worth $0 — yes, that’s no dollars whatsoever. Morningstar made the call over the “tough advertising environment, troubling debt load,” that Valassis faces.

BNET noted earlier this year that the revenue yield on its operating expenses was so marginal that it came last in a list of 10 publicly traded ad networks. The company already laid off 3 percent (or 165) of its employees.

That’s not the only trouble facing Valassis. As BNET readers know, the company’s profit has been crushed by its massive litigation expenses. (It’s suing its main rival, News America Marketing Group, over alleged monopoly practices.) The company has sales of more than $500 million a quarter.

Those stakes — and Valassis’s legal bills — are getting even higher. A judge just postponed the trial in the case until March.

TBWA creates “Obama stomache ache ad” in Philippines – Domperodone Motilium spot by TBWA SMP uses a lookalike to protray the president getting indigestion while visiting the premier of the Philippines for lunch. [Source: Ad Age]

Levy voted more likable than Roth, Sorrell or Wren — O’Dwyer’s poll asked readers who they’d like to share a cup of tea with. Publicis chief Maurice Levy beat out the other network heads. [Source: O'Dwyer's PR]

Vertis Communications lays off 91 — Print and DM shop to close due to merger with American Color Graphics. Layoffs there bring the BNET ad agency layoff counter to 6,231. [Source: San Antonio Express-News]

M&C Saatchi sets anti-binge drinking assignment for UK students — amusing results ensue. [Source: Some girl's blog]

Movie studios routinely advertise DVDs for violent, scary and suggestive movies on children’s TV, according to recent statements by the ad industry’s own kids’ TV watchdog.

The Children’s Advertising Review Unit has cited at least seven movies rated PG-13 whose DVDs were advertised this year on TV shows targeted at viewers 12 and under. Of those movies, three were advertised by Paramount, and the studio said in all three cases that it “intended” for the DVDs to be advertised to kids. The Paramount movies were Indiana Jones and the Kingdom of the Crystal Skulls, Iron Man and Drillbit Taylor.

In the case of Paramount’s Drillbit Taylor, CARU cited the movie because:

The commercial for “Drillbit Taylor,” aired during children’s programming hours. The film is rated PG-13 by the Motion Picture Association of America (MPAA) for “crude sexual references throughout, strong bullying, language, drug references and partial nudity.”

According to CARU, Paramount is unrepentant. For all three Paramount movies cited, CARU wrote,

Paramount Studios has indicated it intended for the ads in question to run on programming which CARU believes is primarily directed to children under 12.

CARU monitors children’s movie advertising under an agreement with the MPAA, the movie industry’s own advertising authority. Their agreement states:

CARU will ask the advertiser to pull the ad and to make sure the placement does not reoccur. If the advertiser complies, CARU will close its inquiry. If the placement was intentional, CARU will refer the matter to the MPAA Advertising Administration to determine whether the film is appropriate to be advertised to children. CARU will publicly report both its closings and referrals.

The problem seems to be that studios have figured out that once a movie has been referred to MPAA, nothing more happens. Messages were left with Paramount at the time of writing. MPAA could not be reached as their numbers in Washington, D.C., and Los Angeles led to voicemail prompts that prevent callers from leaving messages. A CARU spokesperson said she did not know what MPAA did once they received an inappropriate advertising referral from CARU.

• A list of movies cited by CARU:
• Drillbit Taylor (Paramount)
  The commercial for “Drillbit Taylor,” aired during children’s programming hours. The film is rated PG-13 by the Motion Picture Association of America (MPAA) for “crude sexual references throughout, strong bullying, language, drug references and partial nudity.
  Paramount Studios has indicated it intended for the ads in question to run on programming which CARU believes is primarily directed to children under 12.
• Indiana Jones and the Kingdom of the Crystal Skulls (Paramount)
  The film is rated PG-13 by the Motion Picture Association of America (MPAA) “for sequences of intense action violence, some frightening sci-fi images, and brief suggestive content,” raising concerns regarding the appropriateness of advertising a film rated PG-13 to children. In this case Paramount Studios has indicated it intended for the ads in question to run on programming which CARU believes is primarily directed to children under 12.
• Iron Man (Paramount)
  The commercial for “Iron Man” aired during children’s programming hours. The film is rated PG-13 by the Motion Picture Association of America (MPAA) for “some intense sequences of Sci-Fi action and violence and brief suggestive content.” In this case Paramount Studios has indicated it intended for the ads in question to run on programming which CARU believes is primarily directed to children under 12.
• The Incredible Hulk (Universal)
  Broadcast advertising for “The Incredible Hulk” DVD aired during children’s programming hours. The DVD is rated PG-13 by the Motion Picture Association of America (MPAA) for “for sequences of intense action violence, some frightening sci-fi images, and brief suggestive content.”
• Get Smart (Warner Bros.)
  “Get Smart” aired during children’s programming hours. The film is rated PG-13 by the Motion Picture Association of America (MPAA) for “some rude humor, action violence and language.”
• The Mummy: Tomb of the Dragon Emporer (Universal Pictures)
  Broadcast advertising for the film, rated PG-13 by “for adventure action and violence,” aired, among other times, on Nick Toons, during the program “Avatar: The Last Airbender.”
• “Sisterhood of the Traveling Pants 2 (Warner)
  The commercial for “Sisterhood of the Traveling Pants 2,” rated PG-13 by the Motion Picture Association of America (MPAA) for “mature material and sensuality,” aired, among other times, on July 21, 2008, on Nick 1 during children’s programming.

Pictured: Anne Hathaway in a scene from Get Smart.

Advertisers gain upper hand in web formats – As growth in online advertising slows, some Internet companies are easing the restrictions they impose on the categories and formats of advertising they will accept. Web sites have started letting marketers create bigger, more intrusive ads that take up more space on the page. Video sites are accepting more “pre-roll ads,” or commercial time sold before short video clips, a model often shunned for fear of annoying visitors. [Source: Daily Anchor]

Historical look at ad agency employment levels — The biz never recovered from the dot-com/Sept. 11 crash; 6,200 jobs lost in 2008 from the peak. (Note to BNET readers: These numbers jibe almost exactly with BNET’s ad agency layoff counter.) [Source: Ad Age]

Y&R gets pizza chain — Round Table Pizza has selected the San Francisco office of Young & Rubicam to handle creative duties on its ad account after a review. WPP Group’s Y&R bested two undisclosed agencies to land the business. Boston-based consultancy Pile and Co. managed the review. Major media spending on the brand totaled $17 million last year. [Source: Adweek]

Fiat selects WPP — Fiat, the Italian car manufacturer, is set to realign its £150m European media business into WPP-owned agencies, a move that will see Mediaedge:cia take the £10m UK account from Publicis Groupe’s Starcom. [Source: Mediaweek UK]

NBC nixed an idea to have a single Super Bowl spot shared by multiple advertisers. The idea, floated by agency Cesario Migliozzi, was to buy a single spot in the big game and then divide it into eight mini-spots of a few seconds each. Each slot would be bought by a different advertiser, and the whole would form 30 seconds of extremely fast messaging. But according to Adweek and AgencySpy, NBC has called the deal off and now CM is threatening to sue. Says AgencySpy:

Reasons for NBC’s decision to pull out of the deal (and negate it as a possibility) are speculative at best.

Well, no, not really. NBC killed this idea over the simple economics of pricing.

NBC is essentially selling airtime, a commodity in the U.S., which has hundreds of cable and satellite channels before you even start looking at radio and the internet. NBC’s problem, therefore, is how to keep prices high in a commodified market where competition should drive prices down. The solution is to restrict supply.

CM’s move to buy the time and resell it essentially does the opposite of that: It commodifies the airtime and opens it up in small chunks to many smaller advertisers. By removing the branded sheen of the Super Bowl, CM was essentially revealing the spot for what it was — a commodity product that happened to be sitting in front of a large TV audience (worth between $2.5 million and $3 million per 30 seconds).

To allow that to happen would put NBC in the position of competing on price for its own airtime with every media-buying agency who booked a slot. As the original supplier, NBC would run the risk of selling the airtime below its maximum value — and thus be in the position of leaving money on the table. (NBC’s reward would be getting a guaranteed price — resellers would run the risk of not being able to sell the inventory they bought.)

So, naturally, NBC put a stop to this plan. Two other things emerge:

1. This was a great publicity stunt for CM.
2. As BNET predicted back on Dec. 17, the Super Bowl continues to shape up as the most boring Super Bowl for advertising, ever.

• For more of BNET’s coverage of ad agency pricing issues:
• WPP’s In-House Commercial Production Shop Courts Controversy With Clients
• Levi’s Asks for Transparency and Media Buyers Balk

BBDO has taken more than its fair share of recession headlines recently as it announced layoffs of 189 staffers and the loss of its flagship Pepsi account. Salt is poured on the wound with this Ad Age report noting that BBDO will create “only” three Super Bowl spots this year. Folks who remain at the agency could be forgiven for asking themselves, what went wrong?

After all, this was the shop that went through a protracted and public effort to drag itself out of the TV age and into the 21st century, especially with its hiring of creative director David Lubars to “teach” the agency how to use the internet instead of the boob tube. So what must BBDO do to get it right in 2009?

First, it’s worth noting the commonalities between the major pieces of work the agency has recently lost. Pepsi, Best Buy, and Chrysler. (Yes, I know BBDO hasn’t lost Chrysler, but the reduction in Chrysler’s spend in 2009 will be similar to losing a decent-sized car account.) These accounts have reduced work at BBDO for differing reasons, but they all had one thing in common: They were big branding accounts.

Before she was made redundant, Chrysler CMO Deborah Wahl Meyer said she was no longer interested in branding:

That idea of bombarding consumers with GRPs to build top-of-mind awareness is, we think, a big waste of marketing dollars. The consumer process increasingly starts with a search engine. It’s accurate to say that ‘awareness’ is overrated.

Best Buy has chosen to focus on its Geek Squad customer service function (with Crispin, Porter & Bogusky) instead of its traditional branding.

And although we haven’t seen much of what Pepsi’s post-BBDO work looks like, I’m going to bet it will be more promotional than brand-oriented in nature. (UPDATE: Right on schedule, this video seeks to prove me wrong.)

The irony here is that while BBDO was focusing on changing its skill set from TV to the internet, its media-agnostic clients moved their interests from branding to sales-oriented promotional stuff.

What BBDO must do in 2009, therefore, is to drop its efforts to persuade clients to do gigantic, glitzy, brand-image campaigns. Instead, it should focus on sales-oriented promo work that has a direct effect at the retail level. One potential way forward for BBDO is to do more of the PR-oriented stunts such as the one that won it the Starbucks account — free coffee giveaways on special occasions, such as election day. (Note that such promos don’t have to be boring.)

Now that BBDO has Starbucks, the temptation will be to roll out some massive new brand image work. That would be a costly error. There’s nothing fundamentally wrong with Starbucks brand; and besides, the chain flourished for years without advertising. To up its major media spend would be to demonstrate that retaining BBDO is a waste of money. That temptation must be avoided. BBDO should concentrate on low-level, sales-effectiveness promotions. (Persuading the client to make the interior of Starbucks feel less cramped and smell a bit more like actual coffee would be a start.)

(For more on why branding is a loss-leader for big agencies these days check here and here.)

In terms of corporate strategy, BBDO might want to check out what Y&R Brands recently did with Danone in Paris. WPP acquired Danone’s customer relations management facilities and melded them into Y&R. Martin Sorrell knows that once Y&R controls all Danone’s CRM, it will be enormously difficult to “fire” the WPP shop.

Not helping BBDO is its Omnicom sister shop TBWA/Chiat/Day. That agency (which stole Pepsi from BBDO) is rolling a new campaign for McDonald’s coffee which directly targets Starbucks. The tagline is “Four bucks is dumb” (i.e. the price of coffee at Starbucks).

But that kind of tactical price war advertising is exactly the sort that BBDO needs to get good at, fast.

These were the stories that didn’t make BNET’s headlines in December 2008, but were nonetheless too odd to be ignored.

1. Brits invent “eyelid advertising”
   Decals and messages are written onto participants’ eyelids, who then go around winking at potential customers. Billed on a pay-per-wink basis.
2. Saatchi restaurant gets clean bill of health
   NYC health inspectors checked out a restaurant carrying Saatch & Saatchi’s name and address (possibly the office canteen?) and found no violations. The year before it had eight, including failure to display the classic “Choking Victim” poster.
3. Decline of Western Civilization: Under-funded teacher forced to sell advertising on school test papers
   When high school calculus teacher Tom Farber was told that his photocopying budget was being cut to a point where he wouldn’t be able to repro a year’s worth of tests, he decided to start selling advertising space on the test sheets.
4. Don’t cry in front of Alliance CEO Jarrod Moses
   Moses, who heads an entertainment marketing firm that is part of Grey Global Group, dislikes it went people weep at work.
5. Pretentious “3D” social media site for ad creatives is nonfunctional
   Facebook isn’t good enough for the agency crowd. They need something hipper. You know, over-designed and difficult to use — to keep the plebs out. So they created SohoMuse.com, an alleged “3D” networking site for the “creative nomad.” Judging by the front door, which is decorated entirely with images from New York, these “nomads” will be travelling the length and breadth of several blocks of Manhattan. The site is non-operational at the time of writing.
6. TBWA invents “teabag dangler” ads
   You know those labels on the end of the piece of string on a tea bag? They’re now ads. They’re called “teabag danglers.” Don’t Google that if you’re at work.
7. JWT celebrates Xmas with giant cockroaches
   According to this blogger, here’s a list of creatures that showed up at JWT’s Xmas bash: a baby Siberian tiger, a baby cougar, a wolf, a big snake, big disgusting cockroaches, a tarantula, a scorpion, a lemur.
8. How the Energizer bunny influenced presidents
   A list of presidents and presidential candidates — and the inspiration they drew from the Energizer Bunny.
9. Church’s anti-gay ad offends gays
   A newspaper ad placed by Sandown Free Presbyterian church in Belfast breached advertising codes, the Advertising Standards Authority has ruled. The ad might cause “serious offense” because it calls homosexuality an “abomination.”
10. WPP’s Sorrell joins U.K.’s World Cup bid board
    Because, obviously, what football needs is a Harvard-educated adman.

• Want more?
• The Top 10 Weirdest Ad Stories of November

The New York Times’ revenues sank 13.9 percent last month. Ad revenue fell 20.9 percent. Despite a traffic increase to its web sites, ad revenue from the web declined 3.8 percent. At sister company New England Media Group (which houses the Boston Globe et al), ad revenue tumbled 23.3 percent.

The sobering news that even the best news brand on the planet cannot yet make a decent business out of the internet has led some to suggest that NYT may be the canary in the coal mine for web advertising — a leading indicator that spending declines will indeed come to the web, despite predictions (BNET readers are already familiar with the theory that the web and traditional ad economies have essentially uncoupled from each other in the last few months).

In terms of the ad business, the numbers seem to suggest that the recession is so bad that marketers no longer have the cash to reach NYT’s massive audience, 173 million views a month, plus its paper circ.

In response, the Times has frozen wages for non-union staff and attempted to do a real estate deal to pull equity out of its massively expensive Manhattan skyscraper. Earlier this year, the Times laid off 100 of its 1300 newsroom staff.

Check out NYT’s Q3 earnings statements: salary expenses (which are a significant portion of selling, general and administrative expenses) are just under half of revenues. Production costs (i.e. printing papers) are the other half. The company was only profitable because it sold its broadcasting group.

This suggests that if the Times wants to stay profitable it ought to consider laying off hundreds more of its staff. At the same time, it needs to figure out how to print less and make a greater margin on what remains.

JWT’s director of trendspotting Ann Mack has spent much of December giving interviews to the media. Trendspotting is one of those dubious add-on services that agencies like to sell to clients because it’s cheap to produce and non-measurable. But the real problem with trendspotting is that it’s a bit like being a TV psychic: merely asking the right questions and stating the obvious does not mean that you have special powers; and half the time the “predictions” being sold aren’t even predictions.

Let’s look at Mack’s methodology:

I’m constantly out in the field, crisscrossing the globe, observing, listening and talking to influencers and experts of every stripe from those in publishing, music and politics to technology, beauty and art.

Nice work if you can get it, but note the lack of plumbers, truckers, waitresses, insurance workers, accountants, and other ordinary folk in her sample set. These are predictions that will sound lovely to university educated clients, but will they wash with the masses?

A large portion of Mack’s trends are merely statements of the obvious:

With the economy getting weaker, there will be more people with time on their hands looking for low- to no-cost media to keep them informed—or take their minds off things. In home, television will be getting a boost as analog broadcasts are phased out and countries shift to digital broadcasting. On the other hand, it’s likely to be a tough year for media such as newspapers and magazines, especially at a time when much of their content or similar content can be found for free online.

Well, duh! But there’s more:

Layoffs will cause people to ponder whether they’d even want a job that’s like the one they were forced to leave…

As the availability of wireless broadband expands and the cost of advanced mobile phones drops, the mobile device will become the preferred hub for digital activity.

These are examples of how trendspotters simply take something that is already going on (unemployment, advanced mobile phones), assume correctly that it will continue to happen, and then name it as a trend they’re predicting. It’s really not that difficult. Let’s try it: “I predict that teenagers will listen to new forms of music, much of which will offend or alarm their parents.”

The great thing about “predicting” is that if you keep it common-sensical enough, you can never get it wrong. Occasionally, however, Mack does stick her neck out and come up with something genuinely interesting:

The use of e-mail will decline. E-mail is “an increasingly outdated medium,” says Ann Mack, … The reasons are twofold. Younger people prefer to communicate via text messages and social networks, and people of all ages are fed up with overflowing in-boxes.

Saying Email will decline is similar to suggesting that sending a package via Fedex has “declined” since the invention of email — it has, but the idea that the ability to send an express package is now unimportant is just silly. There will always be a need for it. Particularly in business — email provides a formal, timestamped, verifiable, instant record of transactions. It’s legally recognized as binding. Lawyers will not be switching to IM any time soon.

The bottom line here is that Mack is essentially stating the obvious: Five years ago we had email inboxes. Now we have Facebook accounts, Twitter, IM and texting — and email’s share of time is necessarily in decline. This isn’t a prediction, it’s simple math.

There are some things that Mack will be flat wrong about, however. Here’s three:

Sous Vide at Home: High-end restaurants have been using sous vide, a technique in which food is vacuum-packed and cooked at precise temperatures, for several years. Now this exacting method, which requires less fat yet results in juicy, intensely flavorful dishes, is trickling down to the home chef. Per Se chef Thomas Keller’s latest cookbook, “Under Pressure,” focuses on sous vide; upscale cookware chain Sur La Table recently started offering sous vide appliances; and ambitious home cooks are trading tips online.

The idea that, in a recession, people will be influenced by an “exacting” homecooking method pioneered by the most expensive restaurant in New York is totally ridiculous. But some people will do this — Mack has tried it, doubtless — and thus the trend comes “true.”

The Pisco Sour: The latest Latin drink is the pisco sour, Peru’s national cocktail. Traditionally made with Pisco (a type of Peruvian brandy), lemon juice, egg whites, simple syrup and bitters, the Pisco sour is steadily migrating from Peruvian restaurants to the mainstream.

Here’s how to make a Pisco Sour at home:
1 1/2 ounce Pisco
1/2 ounce fresh lemon juice
1/2 ounce simple syrup
1 whole egg white

I predict that the pisco sour will not become a major trend in 2009 because of the difficulty and expense of its ingredients. Do you really want to crack an egg, separate the yolk, and use only the white before mixing your drink? Are you going to keep “simple syrup” around the whole time? Of course not.

On the travel front, Mack predicts:

unconventional lodging, like home swaps or staying in a monastery; pod hotels …

I predict that staying in a monastery will not become a big trend in 2009, because there just aren’t that many monasteries around.

Bottom line: I predict trendspotting will continue in 2009 as long as clients keep paying for them…

Image by Flickr user griraffes, CC