The Real Danger Of 120-Day Payment Terms: Rising Interest Rates

Writing in Forbes, Avi Dan points out the real dangers to increasingly common 120-day payment terms: interest rates. Currently, short-term credit rates are near zero, minimizing the effect that longer terms have on agencies. But when markets turn and interest rates shoot back up to 5% or 6%, 120-day payment terms could be a death knell for some agencies. Agencies will need to borrow at higher interest rates just to stay afloat while waiting to be paid. Of this impending doom, Dan writes: "If the ad industry is not able to thwart this move toward extended payment terms, this could ultimately lead to the end of the agency business model, as we know it. If agencies cannot sustain themselves financially, marketers may have to resort to a new arrangement in which Madison Avenue’s role as an independent entity could give way to a system akin to in-house agency relationship, and where agency vendors are paid directly by the client."

Social media agency Movement Strategy has announced the addition of creative strategist, Stephen Para, as executive vice president and chief growth officer. An early proponent of digital marketing strategies, Para has helped build digital departments within agencies such as Catalyst/IMG and Tom, and Dick & Harry. He also developed a boutique design agency, The Conspiracy Project, and most recently, founded social media agency Kodiak/Samurai, contributing to his reputation as a brand communications expert. Of the hire, Movement Strategy Co-Founder Jason Mitchell said: “Over the past five years we have grown from a start-up to a highly respected agency. Bringing on Stephen marks the next step in our evolution as we focus on becoming a global social media agency. Stephen’s knowledge, creativity and relationships are helping us accomplish that.”

Advertising Age has a glowing piece on what it's touting as the new ad mecca: Austin, TX. Home to Omnicom's GSD&M, Dell, Whole Foods and SXSW, the town is indeed a happening place. But don't try to drive there. The place needs no less than three more Interstates to handle the growth. Sadly, that isn't coming anytime soon. What is coming is Ad Age's Small Agency Conference. And we have no problem mentioning that here at MediaPost. We've all got our conference series to keep the publishing side of things afloat. There's no secret there. But does one biggish ad agency and one big brand really make Austin a new ad mecca? Nothing is really going to unseat New York and San Francisco as Kings of Advertising. Think about it. What would Austin really have if it didn't have SXSW, which of course is the new love child of marketers and agencies?

Remember David Lipman? He was the guy whose agency, Lipman, tanked allegedly because of financial problems at parent company Revolate resulting in lawsuits filed for non-payment of vendor invoices. Well, he's back on his feet and has been tapped as chief creative officer for Town Creative. Of the hire, Town Creative President Wendy Maitland said: “By bringing David Lipman on board as chief creative officer, Town is revolutionizing branding and marketing in the worldwide real estate industry.”

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  • Former Arbitron, Simmons And Campbell-Ewald Exec Heads To Telmar

    Media planning software provider Telmar has named former Arbitron, Simmons, Traffic Audit Bureau and TNS exec Anna Fountas to the position of President of the Americas. Fountas will lead Telmar’s sales and client service organization in the U.S., Canada and South America to further expand usage of its core media planning system as well as applications for emerging media and data integration. 

    On joining Telmar, Fountas said: “Media planning software is more important than ever. Every day advertisers get more options, complexity, data and urgency to contend with. Advertising depends utterly on targeting, and targeting relies increasingly on data synthesis. Nothing performs like Telmar. I’m excited to have the opportunity to extend Telmar’s lead in performance and move the advertising business forward by increasing the number of planners with real-time capability.”

    Over the years, Fountas has introduced media research standards and advanced the state of the art for providers as well as associations. As president of the Traffic Audit Bureau, Fountas helped modernize the out-of-home measurement system. As president for syndicated studies at Simmons, she helped create the strategy for Hispanic measurement services. Earlier, as svp/sales and marketing/advertiser/agency services at Arbitron, she led the team that developed the first PC-based ad expenditure application for advertising data. She also ran sales and marketing for the TNS AdScope service, research for the Digital Place-Based Advertising Association (DPAA), and media information services for ad agency Campbell-Ewald.

  • Red Tettemer O'Connell +Partners Surprises Employee With Porsche Boxster

    Agency retreats are not usually an occasion that many look forward to. After all, it's an event usually filled with silly personal development games and come-to-Jesus fervor that just causes everyone to wince as if you were witnessing your father wearing a Speedo.

    But RTO+P went for something different this year, as they did several years ago when they awarded PR and Social Director Annie Heckenberger with a 1977 Midget MG. This year, the agency surprised Managing Director Perry Morris with a 2002 Porsche Boxster.

    But it wasn't simply a luck-of-the-draw thing. Morris had to demonstrate her skills. That is, her music trivia and Hungry Hungry Hippos skills. Who knows what that has to do with advertising but who really cares? An agency gave an employee a car! OK, a really, really old car but a cool car none the less. And that's just awesome.
  • This Ad Blocker Blocks Ads With...Award Winning Ads

    In celebration of its 2015 Pencil awards, British ad organization D&AD, with help from Paris-based BETC, has launched The Ad Filter, a browser plug in for Chrome and Firefox that will replace preroll ads with D&AD-winning ads.

    It's all to "celebrate creativity by inspiring and stimulating people in the industry and beyond. We wanted to demonstrate that people don't hate advertising, they just hate bad advertising," says BETC Paris Creative Director Olivier Apers.

    This is, perhaps, one of the most awesome time-wasters ever created. Well, at least for those of us in the ad world. After all, what's more inspiring than staring at a computer watching award-winning ads you didn't create to both madden you into despair and motivate you to greatness?
  • Financial Sector To Up Digital Budgets To $10 Billion Annually By 2019

    It's not a surprise that many brands are shifting their marketing budgets away from traditional media and toward  digital media but the financial segment is set to experience big shifts over the next four years according to recent eMarketer research. 

    The researcher forecasts an 11.7% compound annual growth rate between 2014 and 2019 for the financial sector, resulting in a $10 billion annual digital ad spend. According to Kantar Media, between 2013 and 2014 alone, television spending (across all sectors) dropped 4.7% from $3.4 billion to $3.2 billion, while online spend increased 20.4% from $2.4 billion to $2.9 billion.

    Dramatic spending drops were seen in magazine (down 7.3%), radio (down 10.9%) and outdoor (down 11.4%).

    In terms of spending objectives, eMarketer forecasts that the financial sector will allocate 62% of budget (or $4.46 billion) to direct response and 38% of budget (or $2.73 billion) to branding by the end of 2015.

    Search will dominate paid media spending for the financial sector in 2015, representing $3.40 billion or 47.3% of U.S. financial services total digital ad spending. eMarketer estimates that paid digital display will closely follow, with $3.02 billion of the financial sector’s budgets projected to flow to the category by the end of the year.

    Mobile is also an active area for financial brands. According to eMarketer, mobile advertising for the sector is expected to hit $3.49 billion by the end of 2015 in comparison to $3.7 billion spent on desktop.

    Social media has also seen significant spending increases, with financial brands increasing the share of budget to 8.8% in 2015, up from 5.9% in 2014 according to Duke University's Fuqua School of Business.

     

  • SS+K Gives Middle Finger to Open Office Haters

    Recently, there's been increased debate surrounding the open office concept and its effect on productivity. Various articles and studies have pointed out that it may not be as productive a work environment as old-school offices with walls and doors. Some posit that the concept fosters the creative spirit. Others posit that the concept fosters distraction and anxiety.

    While many agencies have gone open concept, one is publicly proclaiming its love for the concept in an open letter published in Ad Age. Penned by SS+K Partner and Chief Creative Officer Bobby Hershfield, the letter reads like a "facts be damned" opinion piece which, truth be told, is perhaps all well and good. After all, what works for some, doesn't work for others.

    In the letter, Hershfield thumbs his nose at stats highlighting the downside of the open office concept and touts the concept's benefits as he sees them. He writes: “We don't rely on email so much. We talk. Email follows up a conversation instead of initiating one, or even worse, substituting for one. We don't just share ideas. We wad them up and toss them at each other, blurt them out, interrupt and criticize and applaud them. We talk more. Walk around. Offer suggestions enroute to the bathroom. We don't hide in our offices. We don't hide behind walls. We are exposed and sometimes that fear puts pressure on us to be better in every aspect of our job." 

    He finishes, writing: "We are happier. We are less complacent. Less bored. We are stimulated. And we are getting to know one another better, which makes a culture that really is only about people and [making] ideas stronger."

    There never will be an answer to this conundrum mostly because everyone has a different work style. Some love the thrill of constant interaction and lobbing ideas back and forth while eating their lunch and walking on their standing treadmill desk. Others love to cocoon themselves and let prior interactions gestate into well-formed ideas which are then shared to a larger group. To each their own, I guess.

  • Hey Agencies, Here's 5 Reasons Why Startups Should Pay You More

    David Murdico, creative director and managing partner of Supercool Creative Agency puts forth a solid argument as to why startups should pay agencies more than brands do for the same work. 

    First of all, he notes a startup is an unknown entity and no one has ever heard of it before making it all the more difficult to create the necessary marketing program to achieve awareness and sale. He notes startups are generally more demanding than established brand marketers, often times because so much is at stake.

    Perhaps the biggest problem area when it comes to crafting marketing for a startup is that up until the point the startup reached out to an agency, everything about the startup has, thus far, operated in an echo chamber with scant few nodding and bobbing their heads in agreement without truly vetting the idea or how the idea will be perceived in the real world.

    Another challenge when working with a startup? They tend to change their mind a lot about, well, everything. And that can be a gigantic time suck. Check out Murdico's entire list here and file it away in your back pocket for use the next time you consider working with a startup.

  • This Consultant Argues CMOs, Not CFOs and COOs Should Rise to the Office of CEO

    Max Brand Equity President Richard Guha says marketers should own and run businesses. He notes that many CEOs are culled from the CFO and COO ranks rather than the CMO ranks. 

    Making the argument, he writes: "If Marketing were to do its job perfectly and customers were to come and buy, there would be no need for Sales. So if only Marketing could do its job perfectly, it would be the 'go-to' function in business. Yet, companies routinely look to the CFO or Head of Operations, who do not directly contribute to the key objective of the company when it comes to choosing a CEO instead of promoting the CMO to CEO. Why?

    Why, indeed? 

    Well, he says too many marketers rely on gut feel rather than sound, scientific analysis. He notes: "Engineers can’t [rely on gut feel], or bridges would collapse, buildings crumble, and machines fail. Marketers need to think more like good engineers than mere wielders of tools."

    Do marketers lack the ability to approach brand building in the manner Guha advocates? Or is the nature of marketing and advertising too "squishy" to be crafted with exactitude akin to engineering a bridge? Is it silly to even compare the two?
  • Tumblr Blog 'Mad Men Integrated' Envisions Mad Men Characters In the Digital Age

    This is gold! Gold, I tell you! And it's arrived just in time. As we all mourn the loss of our beloved Mad Men characters, they have been given renewed life, in the form of a Tumblr blog, as digital natives spewing all the usual buzzword bingo that's so prevalent in today's marketing landscape.

    Taking on the form of animated gifs, we have Don informing his secretary: "The future of advertising is socially integrated digital platforms." We have Peggy commending a co-worker saying: "Nice branded social post, bro." We have Don asking Peggy: "But does it work as a pre-roll." We have Don reacting to a proposed "Tinder-powered drone." We have Pete telling Don: "The CTRs need optimizing for behavioral targeting of Millennials." 

    And on and on and on. Brilliance.

  • Former Y&R Exec Heads To Children's Hospital Of Chicago

    Kary McIlwain, a 26-year veteran of Y&R, is heading to Ann & Robert H. Lurie Children's Hospital of Chicago in July taking the position of vice president of marketing. Since 2002, McIlwain has been president and North American managing partner of Y&R.

    Of Mcllwain, Children's Hospital President and CEO Patrick Magoon said: "We are excited to have a marketing executive of her caliber joining Lurie Children's. With her expertise and passion, Kary is the ideal leader to oversee our marketing efforts in support of the hospital's mission."

    Under McIlwain's tenure, Y&R was named 2014 Agency of the Year by the Chicago Advertising Federation. On joining Children's Hospital, Mcllwain adds, "I am thrilled to embark on this new phase in my career, to step out of the advertising agency world into promoting a mission-driven organization. Lurie Children's is a world class hospital that deserves world class recognition." 

    Linda Wolf, former chairman and CEO of Leo Burnett Company, chairs Lurie Children's Marketing Committee and said, "I have known Kary for many years and I have watched her grow into one of the top marketing executives in the country. Her deep knowledge of the advertising world and her track record of exceptional outcomes will greatly benefit Lurie Children's, one of Chicago's beloved institutions."
  • This McCann Mad Man Says Computers Have Destroyed Creativity

    Greg Birbil worked at McCann for over 40 years. He started in 1961 and retired ten years ago. In an interview with Vulture, he relives some memories from the Mad Men era of advertising but has no kind words for the current state of things, especially the use of technology in creative departments.

    Of that inevitable development, he says, "You know, I have a whole theory: I just think computers are not good for creative people. They’re a finishing-up tool, not the instrument to help you create. It’s not because I’m an old guy -- because I don’t respect or understand the value of the computer or the internet. It’s a pencil, an extremely fast pencil."

    He continues: "But the computer guys, at a digital agency, they’ve got their heads in the screen all day and have absolutely no human skills. An art director in the old days was dealing with typesetters, photographers, the client. These guys don’t. You’re looking to make people see things in a new way, and if you’re in there looking for stuff, that won’t happen."

    Is he right?
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