Advertising Industry

My colleague David Weir has an excellent run down on the deal between WPP and Yahoo’s online ad exchange (two failing giants huddling together in the cold, cold night from what I can tell). But the story out of WPP that’s really lighting up the ad blogosphere is their decision to rename their effort at constructing “the ad agency of the future” for computer giant Dell from the somewhat silly Da Vinci to Synarchy, which is not only silly but also alludes to secret societies, facism, and just downright nutbar-level craziness. From the Wikipedia entry on Synarchy:

Alexandre Saint-Yves d’Alveydre, an occultist, also used the word “synarchy” to describe a form of government where political power effectively rests with secret societies or, more precisely, esoteric societies, which are composed of oracles. He associated this form of governance with “ascended masters” in subterranean caverns of Agartha, who supposedly communicated with him telepathically. Saint-Yves believed that this synarchist world government was transferred to a hollow Earth at the start of the Kali-Yuga era, around 3,200 B.C.

Which, of course, sounds a lot like how it works at any corporate behemoth (such as *cough* WPP).

As always, George Parker of AdScam says it better than I can:

[T]he Wikipedia entry for “Synarchy” quotes from Vichy France when French industrialists saw Nazi Germany as an alternative to Communism: “Many of them had extensive and intimate business relations with German interests and were still dreaming of a new system of “Synarchy,” which meant government of Europe on fascist principles by an international brotherhood of financiers and industrialists.” How fucking perfect is that? Considering the “Synarchy” brotherhood still hasn’t come up with a CEO after months of looking, you’d think that in true fascist style, the “Height Challenged One” [WPP CEO Ken Segall] would have had someone taken out and shot by now! Loved the bit at the end pointing out this wonderful new identity was created by Uber-Scam artists, Landor, which is co-incidentally, another part of the WPP Dark Star empire. Wonder if anyone’s told them it’s also the name of a Thrash/Metal group in the fucking Faroe Isles? Can’t wait to see the ads!!!

The mobile advertising revolution has been just around the corner for years now, and according to a new report put out by the folks over at Heavy Reading, it’s going to stay around the corner for at least another 18 to 24 months. There’s a quick chart which nicely sums up just why it’s going to take so long for mobile ads to become a real driver in the industry:

I think the final limitation is also the greatest in mobile advertising. Because cell phones are still largely seen as tools for communication, and not as entertainment devices — although this is changing — consumer attitudes towards advertising are going to be markedly different from people they expect when they’re watching television, reading a magazine, or browsing a celebrity gossip blog.

AT&T already sends me periodic text messages shilling for ringtones I can buy at their Media Mall, and they fill me with a rage that most advertisements don’t. If I was on a plan where I was also paying for every text I received, I imagine I’d smash my phone. This is a stumbling point, though, not a game ender. People’s attitudes towards the tech in their life can change, and the report predicts mobile ad revenue will top $10 billion by 2013.

It looks like Publicis Groupe-owned ad shop Leo Burnett Worldwide is about to make an aquisition in China, according to Reuters, but Chairman Tom Bernardin remains tight lipped about who exactly is getting brought into the corporate fold.

“You might see one next week,” Bernardin told Reuters in an interview on Tuesday, saying the acquisition was certain to go through but the timing was not yet set. He declined to give further details… China’s fast-growing advertising market is already the world’s fourth-biggest, worth $21 billion according to an estimate by brokerage CLSA, as economic growth boosts corporate spending on advertisements and marketing.

AgencySpy takes a stab at who Burnett’s target might be:

Want to makes some guesses? How about Zi Corporation, a mobile discovery and advertising solutions, whose revenue is up 15% and debts way down this quarter? How about outdoor advertising firm VisionChina Media Inc.? Hmm… Chinese web portal Sohu.com? It’s a side step, but the company is huge in the online gaming sector. Their revenue jumped 156% to $84.8 million recently. Who knows?

This isn’t the first company Leo Burnett has snapped up. Last year, the firm — which did $190 million in revenue in 2007 — acquired Yong Yang as part of Publicis’ larger effort at moving into China.

From over at AdWeek comes a long and measured look at green marketing from the only angle that ultimately matters: Do consumers care? The answer, depressingly, is: Eh, not so much. From the story:

When it asks about specifics of green behavior, polling tends to confirm that mainstream consumers have learned to talk the talk but are still in the baby-steps phase of walking the walk. A new TNS survey found just 26 percent of Americans saying they “actively seek environmentally friendly products.” In a global poll by Nielsen (Adweek’s parent company), about half the respondents said they’d forgo packaging provided for “convenience purposes” if it would help the environment, but only 27 percent would give up packaging designed to keep products “clean and untouched by others.” More broadly, in a Gallup poll fielded prior to this year’s Earth Day, fewer than one-third of respondents (28 percent) claimed to have made “major changes” in their own shopping and living habits over the past five years to help protect the environment.

So if consumers are unwilling to make lifestyle changes in their own buying habits, how much goodwill will you generate for carbon credits or all those solar panels you just threw down on? Turns out the value of green marketing is not so much reaping the goodwill, but avoiding the ire of consumers who perceive an actively environmentally negligent brand:

None of this, however, means consumers will cut much slack to companies that are conspicuously neglectful in their behavior. The irony, as noted in a recent report by BBMG (a New York- and San Francisco-based branding and integrated-marketing firm that works with “values-driven” companies and organizations), is that consumers are more demanding of the corporate sector than of themselves. Think of it as a case of individuals outsourcing environmental responsibility to big business. “We do see a ‘green-action gap,’ where consumers expect more from companies than they actually do themselves,” says Raphael Bemporad, a founding partner of BBMG. And that leads to one of the asymmetries in consumer attitudes: People who are tepid about rewarding virtuous companies could well be energetic about punishing the unvirtuous. A Cone poll last spring found 85 percent of Americans saying they’d consider switching brands due to “a company’s negative corporate responsibility practices.”

Perhaps the most dispiriting takeaway is that the most hardened of hippies, who should theoretically be the most sensitive to corporate environmental initiatives, are instead highly resistant to green messages:

The most obvious market for green marketing efforts is people who are already attuned to environmental matters and to corporate social responsibility in general. But this is also an especially tough audience. The TNS study cited above segmented consumers by “shades of green,” and those classified as Eco Centrics (i.e., among the most highly concerned about the environment) were described as “generally scornful of companies’ green efforts, viewing corporate green initiatives as nothing more than marketing tactics.”

At its upfronts today, MTV announced a new plan to soldier forward on “podbusting” — essentially creating branded mini-movies that are inserted into commercial breaks. The idea is that if the ad is compelling enough, increasingly DVR-enabled users won’t fast forward through, and instead watch the proceedings. From the NYT:

“We’re looking to redefine the commercial experience,” said John Shea, who runs the integrated marketing division for MTV and VH1.

Dario Spina, who handles the same job for MTV’s entertainment channels like Comedy Central and Spike, said of countering the digital video recorder, “That’s the idea here; we want to blur the lines between the commercial breaks and the entertainment content.”

The idea is being met with skepticism within the ad blog world, and outright derision outside of it. Hamilton Nolan over at Gawker gave the idea a hellacious beatdown, stating flatly:

More entertaining and engaging ads are the work of the devil… This whole “great ads that you want to watch just cause they’re so great” is a huge backlash waiting to happen. It was also the business model of Firebrand.com, which went out of business despite a preponderance of nakedness.

Spawn of Satan or not, these type of ads are gaining traction. TBA Global announced today they’ll be spinning off a digital entertainment division solely dedicated to creating branded entertainment online, called TBA DEEP (Digital Entertainment Engagement Programming.) They’ve had some success with “Kim and Seana” a web series about two American Apparel-esque ladies who drive around in a Ford equipped with Sync technlogy, meeting up with indie musicians. The duo have nearly 3,400 MySpace friends.

Blinkx seems to be clocking along at a fine pace, doubling its salesforce, according to a new release. From the release:

Blinkx, the world’s largest and most advanced video search engine, today announced that it has doubled its advertising sales team to support new business development, and plans to continue its aggressive growth in this area…

The online TV and video advertising market is growing exponentially: a recent report from Forrester Research forecast that the market will reach $7.2 billion in the US by 2012. In 2007, blinkx launched the world’s first truly contextual advertising platform for Internet television and video, AdHoc, to capitalize on this massive opportunity. AdHoc uses blinkx’s unique processing technology to match video content and consumer profiles to relevant ads, and since has been used in successful campaigns for leading brands, including Dell, Best Buy and Nokia.

The company, which uses speech recognition to help advertisers search online video, has been burning it up lately, announcing within the last month deals with Handbags.com, The Poker Channel, and revision3, while other competitors, such as TVEyes, have failed to announce much of anything since late 2007.

Ad Age put out its revenue numbers for the industry as a whole for 2007, and found a surprising 8.6 percent jump in growth. With a slumping print industry continuing a multi-year swan dive, that growth was bolstered by a lot of digital. From Ad Age:

While it comes as no surprise that revenue at digital specialty agencies rocketed last year (up 26.8% in the U.S.), it’s clear that digital services have become a way of life (or a way to avoid death) for agencies of all disciplines. In fact, U.S. ad agencies reported an average 10.2% of revenue from digital in 2007.

And in some cases, it was a lot more. Goodby, Silverstein & Partners … said digital services last year generated 52% of its revenue. The San Francisco agency works for such digitally connected clients as Hewlett-Packard Co. …

Ad Age estimates that the Big 4 ad firms — Omnicom Group, WPP Group, Interpublic Group of Cos. and Publicis Groupe — last year generated 12.3% of worldwide revenue from digital services.

Also put out today, Ad Age’s Top 50 Digital Agencies in the U.S., and Ad Week’s Digital Agency Report Card. And Catherine Taylor over at Adverganza breaks down Ad Week’s Report Card without all that clicking around:

AGENCY.COM: D
AKQA: A-
AVENUE A/RAZORFISH: B
DIGITAS: C+
ICROSSING: C
MRM WORLDWIDE: C
OGILVY INTERACTIVE: B
ORGANIC: B
R/GA: B
TRIBAL DDB: B+

Two interesting points about Google popped up yesterday. The first, a  story in Ad Age about Google saddling up with Dish TV to set up an ad delivery platform. Essentially, Google wants to get better demographic and consumer engagement numbers, while using the same bidding concept for TV ads that they’ve used for search ads. From Ad Age:

As it does with its AdWords search system, Google plans to sell spots based not only on price but on how well an ad performs. Better-quality advertising — advertising the audience deems most relevant — will be rewarded, as marketers will pay less for the same spot. Lower-quality advertising — the ads deemed less relevant by consumers — will acquire higher media bills.

There’s a moment of confusion in the article though, noting:

Adding quality scoring is a natural evolution. The proxy for quality, Mr. Desai said, could take the form of “initial audience retained” — a metric currently offered through the TV-ads system. He said there are three steps to getting its system ready to add an ad-quality metric: 1) create an accurate and timely measurement model; 2) decipher the quality signals; and 3) add those quality signals to the ad-buying auction. Right now, Google appears to be somewhere in between steps one and two and is moving deliberately…

It’s true that right now the data is limited: Google runs ads in about 14 million homes that use the Dish Network. But not all of those homes can transmit second-by-second ratings data back to Google, as that requires “return path” technology. Google won’t comment on exactly how many homes let it gather data, but a few TV research estimates have pegged the figure as slightly more than half.

Google also doesn’t know the demographics of those people who have tuned out during an ad. Through a deal with Nielsen, it can get some demographic data, but for the most part, it can’t tell exactly who is tuning out. If an advertiser is running a spot for men’s deodorant, for example, and 20% of the people tune out halfway through but they’re almost all women, that ad may be no less effective despite the drop off.

So how does Google plan to start getting more accurate data on demographics? Techdirt got a scoop today that may have the clue [emphasis added]:

“I don’t want my GTV. Excerpts from a newly-published Google patent application for Targeted Video Advertising: [1] ‘Users may be allowed to skip particular commercials, but required to watch or accept a set number of commercials in order to watch a program. The required number may be, for example, a set integer, such as 11 commercials.’ [2] ‘The system…may also require the user to fully watch at least four promotions before the program will continue.’ [3] ‘The profile includes some demographic information of the user, such as income, age, and gender. This information may be obtained when the user registers for the video service.’ [4] ‘A commercial with the interactive format is an advertisement that requires user interaction to be completed (e.g., a survey).’ Yikes.”

While it still may be a few years down the line (or the patent could simply be Google seeking to lock others out of the same game) Google could potentially develop an accurate measure of engagement to rival Nielsen, which has been on a bit of acquisition streak lately, sensing its own weakness online.

Two ad bloggers today said they’ve heard rumors of lay offs coming down the pike at Ogilvy NY. George Packer, the funny, foul-mouthed blogger behind AdScam and AdHurl, reported this morning:

One of my “deep throats” in New York tells me there have been big layoffs this morning at Ogilvy. Can’t find anything on the wires. Wouldn’t surprise me… They haven’t picked up any major new biz in fucking ages. Maybe, they’re cleaning house before they move to that mothballed oil tanker on the far, far, West side. Anyone know anything? All fucking hush-hush as usual.

Tribble Ad Agency followed up on Packer’s post, noting:

Parker got the goods, Major Layoffs at Ogilvy… we heard that rumor as well… but our sources are always not the rock solid ones that Parker got :) …

Since the cat is out of the bag, our sources stated that more layoffs are scheduled..

Where there’s smoke there’s usually fire, but then again in the blogosphere it takes amazingly little to produce some smoke. It’s true that I haven’t seen anything new announced by Ogilvy NY in a while, and parent group WPP announced disappointing sales growth last Friday.

(Picture of pink slips via Flickr user My Hobo Soul, CC 2.0)

London-based firm Aegis saw a nice bump in stock price today. Via the Guardian UK:

Shares in marketing services group Aegis rose 4.5% this morning after it reported a strong start to the year with an 8.3% rise in organic growth in the first quarter.

Aegis, which had seen its share price rise to 122.25p by 8.53am, said first-quarter growth put it “ahead of the wider marketing communications industry”.

Meanwhile, Interpublic announced losses today. Every cloud has a silver lining though (in this case, however, the silver lining is financial losses of nearly $70 million.) At Market Watch:

The company reported a loss of $69.7 million, or 15 cents a share, narrower than the loss of $132.8 million, or 29 cents, in the first quarter of 2007.

Quarterly revenue came in at $1.49 billion, up from $1.36 billion a year earlier. On the top line, currency added 3.8% to growth and acquisitions 0.3%.