Advertising Industry

Cox Enterprises laid down $300 million for vertical ad network Adify today as ad networks in general continue to seem like the Next Big Thing. Adify is a major get for Cox, which is looking to increase it’s ad reach online. Marketing Vox points out:

Last August Adify launched the Gay Ad Network, which now tops the LGBT category. Adify also helps power Six Apart Media and enjoys the attentions of major investors, including NBCU and Time Warner. Clients include the Guardian, Forbes and Martha Stewart Living Omnimedia.

Paid Content chimes in:

For Cox, the strategic fit is a bit of a stretch on the online side…it does have Cox Newspapers’ online presence, and it is part of the upstart newspaper ad alliance quadrantOne. But on the cable ad services side, it has been among the early movers into digital and VOD advertising, and could be a fit there. It is also one of the founding cable partners of the ambitious national cable ad network Project Canoe…

According to our sources, Adify made about $7 million in revenues in 2007, and is on track to do around $35 million this year. By any standards, it is a very rich deal. Then, a juicy bit for the bankers: Adify hired JP Morgan after Cox approached the company. CEO Russell Fradin and COO/CFO did the deal themselves.

If all the recent media hoopla about ad networks has left you a bit confused, Dawn Anfuso over at iMedia has a very informative round up of the five different types of ad networks that’ll get you up to speed.

Ad Week published its agency report cards for 2007 today. Some interesting findings. For establishing a baseline, the mag found:

[T]he average gain for the 35 shops we evaluated was 7.6 percent, just a hair more than the 2006 average of 7.5 percent. (2005’s average, coincidentally, also was 7.5 percent, down from 7.7 percent in 2004.) By comparison, the average revenue growth among the 14 media agencies we assessed was 14 percent.

Reading the report cards, it’s an impressively deep dive into the workings of the various agencies. If I had one quibble, it’s that agencies are given their creativity grade based on “creativity, originality, positioning and strategy. We do not gauge effectiveness.” I understand that there are higher callings than the bottom line (and the bottom line is effectively covered in other sections of the report card), but couldn’t Ad Week at least factor in whether the beautifully conceived and executed advertisements, you know, moved some units?

It’s worth it to take the time and read the individual report cards, but if you’re looking to skim, the always helpful and insightful Catherine Taylor over at Adverganza took the time to compile all the grades into one neat list:

First, the grades for creative agencies:

Arnold: B
BBDO: B+
Bartle Bogle Hegarty: B+
Campbell-Ewald: C-
Campbell Mithun: D
Carmichael Lynch: C
Cramer-Krasselt: B
Crispin Porter + Bogusky: B+
DDB: B-
Deutsch: B
Doner: D
DraftFCB: C
Euro RSCG: B
Fallon: C-
Goodby, Silverstein + Partners: A-
Grey: C+
GSD&M Idea City: D+
Hill, Holliday, Connors, Cosmopulos: B+
JWT: C+
The Kaplan Thaler Group: B
Leo Burnett: C-
Lowe: D+
The Martin Agency: B+
McCann Erickson: B+
Merkley + Partners: B-
Mullen: B-
Ogilvy & Mather: C+
Publicis & Hal Riney: C+
Publicis USA: A-
The Richards Group: C
Saatchi & Saatchi: A-
TBWAChiatDay: B-
Wieden + Kennedy: B
Young & Rubicam: C+
Zimmerman: B-

Here are the media agency grades:

Carat: B-
Horizon: B
Initiative: A-
Mediacom: B+
Mediaedge CIA: A-
Mediavest: A-
Mindshare: B-
MPG: B
OMD: B
Optimedia: B+
PHD: B+
Starcom: B
Universal McCann: B
Zenith Media: A-

Via Ad Age, the U.K. is about to pass some very strict laws about what marketers can and can’t do in online spaces, specifically when it comes to identifying themselves around viral and blog marketing. From Ad Age:

Word-of-mouth marketing in the U.K. will face radical restrictions starting May 26, when it will become a criminal offense for brands to seed positive messages online without making the origin of the message clear.

Brand owners will face fines or even prison sentences if they contravene the consumer-protection regulations. The legislation came into force across Europe on Jan. 1, 2008, and is set to begin in the U.K. next month.

The rules make it an offense to blog, use brand ambassadors or seed viral ads while “falsely representing oneself as a consumer.” They also apply to bloggers who fail to disclose they have accepted money to write about a product.

The article touches on two examples of what would be out of bounds:

• Sony’s ill-fated PSP viral campaign a (glaringly obvious) attempt by the company to garner some underground cred
• Whole Foods CEO John Mackey’s dalliances in the Whole Foods message board on Yahoo Finance under a pseudonym.

While the American word-of-mouth marketers are unlikely to come under anything more than self-regulation at this point, it does put projects like Ted Murphy’s highly controversial PayPerPost blog network, in which bloggers essentially take on paid assignments directly from advertisers, in a different light. While PayPerPost bloggers are now required to disclose when they are being paid for a post, it’s interesting to think what the blogosphere, and word-of-mouth advertising in general, would look like if full disclosure was required about any and all money accepted.

(Note: I was not paid for this post.)

(Picture via Flickr user fabbio, CC 2.0)

Across the pond, London’s Office of Government Commerce has been the subject of numerous snickers, from both ad blogs and the more general blogosphere. After reportedly spending almost $28,000 in designing the government agency’s new logo, and branding numerous pens, cups, and other office ephemera, the OGC had this bold new look:

It’s modern, a sans serif typeface with a nice use of negative space. However, it was quickly noticed that it could be, with a little creative thinking, perceived a bit differently by rotating clockwise 90 degrees. The following may be slightly NSFW:

At least the OGC seems to have a sense of humor about it. Via the Telegraph:

A spokesman for OGC said: “It is true that it caused a few titters among some staff when viewed on its side, but on consideration we concluded that the effect was generic to the particular combination of the letters OGC - and it is not inappropriate to an organisation that’s looking to have a firm grip on Government spend.”

The 2008 BrandZ 100 Most Powerful Brands report came out this week. Put out by Millward Brown, and taken from combining financials with interviews with more than one million consumers around the world on 50,000 brands. While Google topping the list isn’t a big surprise there’s some surprising movement further down the list.

Russian mobile carrier MST enters in at #89, and is the first Russian company to make the top 100. Several Chinese companies rank quite high, including China Mobile at #5 (China Mobile was also the highest ranked mobile carrier), China Construction Bank at #31, and Bank of China at #32.

Showing the continuing shift in consumer spending, technology brands dominate the list, making up over a quarter of the top 100 brands.

The Kelsey Group forecasts that by 2012, spending on online classifieds in the U.S. are set to rise from $3.9 billion to $9.1 billion, while online verticals, including home services, home and garden, health care, legal and auto repair, will grow from $100 million to $5.6 billion in the next four years.

I talked with Peter Krasilovsky, a program director at Kelsey Group, about these numbers. Based on a trend analysis of rates of growth reported by the Internet Advertising Bureau, Krasilovsky noted that many local companies, which make up a great majority of the 12 million companies that advertise in the U.S., haven’t invested much in online advertising, but that could change with the increasing ubiquity of online vertical portals.

Places like Avoo (for lawyers), SpaBoom (for resorts and spas), and Xoova (for medical professionals), aimed at providing highly targeted local answers to users (and highly directed consumers to advertisers), could be ideal places for leery locals to make the jump into online advertising. According to the National Telecommunications and Information Administration, Internet usage is at more than 70 percent within the US, and a half of those users users with broadband; the print Yellow Pages are looking increasingly anemic.

Which isn’t helped by the Association of National Advertisers releasing an open letter to the Yellow Pages industry, demanding increased accountability in tracking circulation numbers. Frustrated with the Yellow Pages industry dragging its feet, ANA blogger Bill Duggan notes:

The current environment provides a tremendous opportunity for Yellow Pages. Marketing accountability and ROI are senior management imperatives — all marketing and advertising expenditures require justification. Yellow Pages already provides a unique level of accountability as marketers can track the calls resulting from their ads. However, without the fundamental metrics of syndicated audience measurement research and circulation auditing, the Yellow Pages medium simply won’t maximize its potential.

Whoops. After I said it looked like Platform A had dodged a bullet last week, after landing a rather large deal with Viacom and placing first among comScore’s ad network rankings, the company announced plans to lose 100 employees over the weekend. From the Washington Post story:

Deciding on where and how many jobs to cut was a top priority for Lynda Clarizio, who replaced Curt Viebranz as Platform-A president last month. Viebranz was ousted over disagreements over Platform-A’s budgeting, as well as over steps regarding the integration of the six separate units within the network.

One source, who didn’t want to be identified, said that Viebranz was forced out largely because he disagreed with AOL CEO Randy Falco and COO Ron Grant over which unit would manage ad sales tied to behavioral targeting — Tacoda or Advertising.com. Although Tacoda specializes in behavioral targeting, senior executives wanted to subordinate its sales force to display ad net Advertising.com, which was acquired by AOL in 2004 and has been considered one of the unit’s major success stories. Tacoda was bought by AOL last summer and at the time was headed by Viebranz, who was named president of Platform-A last September…

After noting a series of departures by senior Tacoda staff already reported in ClickZ, the Post reports that sources say “more voluntary departures are coming over the next few weeks as well.” Scary times at Platform A, without a doubt.

I wrote yesterday about the always-declining print ad pages and urged ad firms and clients to investigate online alternatives, but not every Internet outlet is optimal. Today there was a very smart article by Michael Estrin over at at iMedia, “Are advertisers killing Facebook?”, which turned a skeptical eye towards social networks as good online advertising platforms:

Long the darlings of Silicon Valley, sites like MySpace and Facebook have presented the world with nothing short of a phenomenon — and advertisers with the promise of a massive audience with members who are both highly engaged and quick to reveal personal details about themselves… Last month, The Economist ran a story on how social networks, which had received high praise from advertisers throughout 2007, still suffer from an inability to find a monetization model commensurate to their total number of page views. Google, too, has grumbled about social networks, and speculation has run rampant that the search giant is looking for a way out of its deal to sell inventory for MySpace.

Estrid talks to Greg Smith, a senior partner and COO at Neo@Ogilvy:

At their core, social networks are closer to a telephone conversation or a meeting in a coffee house than reading a newspaper or watching TV. For Smith, that means sites like MySpace and Facebook are probably good places to deliver marketing messages, but not specific ads. Precisely what that means isn’t certain, but according to Smith, social networks are in danger of being destroyed by salvos from Madison Ave.

Judging from my own experience on social networks, this means that advertisers do better with trying to become part of the social network than simply buying a banner targeted at a certain vertical. My eyes skim over an ad for It’s Always Sunny in Philadelphia or SubPop while I’m looking at friend’s photos or playing my next move in Scrabble. But give me even a small reason and I’ll easily become friends with SubPop on MySpace or join a It’s Always Sunny in Philadelphia fan group on Facebook, turning my own profile into a small advertisement in and of itself.

It’s become a fun tradition to wait for the Magazine Publishers of America’s ad pages report to come out every three months. It’s like Christmas morning: there’s hardly ever any surprises, and you end up realizing again how wasteful paper is. This quarter’s report isn’t much different. The MPA tried to spin it brightly:

“First quarter softness in ad categories like Automotive and Home Furnishings & Supplies indicate that the down economy has affected ad spending in magazines. However, we’re pleased to see the strength in some categories, particularly Food & Food Products, in the face of economic uncertainty.”

The NY Post, however, is less optimisitic:

Magazines that cover news, business and luxury goods were sent reeling in the first quarter of the year, while food magazines offered a few rays of light for the publishing industry, according to just released figures.

The MPA numbers don’t lie. While the double-digit growth in Food & Food Products must be gratifying, it’s a just a section of a rapidly falling industry. Technology was down in ad pages by 16.3 percent, Financial, Real Estate, and Insurance down by 5.5 percent, and even industry leader Drugs & Remedies was down 4.3 percent. Within individual magazines, the biggest gainers in ad pages were grocery store aisle cheapo Remedy, up 96.1 percent, followed by Hispanic parenting magazine Ser Padres at 81.5 percent. The biggest losers were National Geographic Kids, which plunged 49.2 percent, followed by Scientific American, which lost 45.5 percent of its ad pages.

Meanwhile, I’d be remiss to not point out that right here, right now in San Francisco the ad:tech conference is taking place, full of ideas about what firms and clients can do with that cash they’re oh-so-rapidly taking away from magazines.

(Image taken from flickr user shortfatkid, CC 2.0)

Not a bad day for AOL’s Platform-A ad network. First, the company announced a major deal with Verizon, in which Platform-A will rep all of its online advertising, as well as most of its mobile advertising:

Under the terms of the agreement, Verizon will leverage Platform-A’s sales capabilities for all of Verizon’s online inventory and a majority of Verizon’s mobile inventory. In addition, Platform-A will be the only sales organization that can represent Verizon’s inventory in the marketplace and guarantee placement within the Verizon network.

Then, comScore.com released its ad network metrics for March, and Platform-A topped the list:

Platform-A, the AOL ad network that combines Advertising.com, Quigo and Tacoda, served ads to 170 million U.S. Internet users in March, representing 91 percent of the total U.S. online population, to rank as the top ad network.

Both announcements must come as a relief to Platform-A staffers. The ad network has been dogged by rumors that Platform-A was about to lose 50 percent of it staffers, rumors started when ex-CEO Curt Viebranz was ousted and replaced with Lynda Clarizio.