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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  • Crowdsource Design Services Steal Business From Design Studios, Which Now Steal Business From Agencies

    Ever since the advent of crowdsource-fueled creative entities like 99Designs, Freelancer and Fiver, design studios -- which previously buttered their bread with business from ad agencies -- are now upping their game, cutting out the agency and going direct to the brand for business.

    Of the trend, Design Business Council Head Greg Branson said: “A lot of the designers I work with have a strategy partner or a senior person in the business that does strategy. Many of them have been recruited by the designer out of the advertising industry, with the intention of taking their business to a higher level and offering a broader range of services."

    While a design studio isn't going to take over the Coke account any time soon, shifts like this are on the rise. Interestingly, even before 99Designs and the like, Barbarian Group -- which prior to Subservient Chicken was a tech design studio of sorts -- transformed itself into a full-blown agency complete with all the usual agency services. 

    No, there won't be a weekly parade of design studios making it big like Barbarian did, but market conditions have changed significantly enough that we will continue to see more of this.

  • Digital Agency Spark Growth Is High-Fiving Itself Over Success Of April Fool's Joke

    Way, way back on April 1, digital agency Spark Growth crafted an April Fool's joke for its client footwear brand Miz Mooz. The agency created Selfie Shoes -- shoes that would, you know, take selfies. Well, the agency and Miz Mooz are very pleased with the results. 

    The work went viral, garnering over 2 million YouTube hits, mentions in more than 650 publications, and coverage on "The Today Show," "Good Morning America," "CBS This Morning," and other broadcasts. Furthermore, the agency tells me the stunt increased share of voice about the Miz Mooz brand by 12,143% between March 30 and April 6 according to Whispr Group -- and accumulated more than 35,000 mentions in English-speaking countries, achieved over 7 million views in China and 1 million online mentions, and was dubbed one of "The Web's Best April Fools' Pranks.” 

    Of the stunt's success, Miz Mooz CEO Ron Kenigsberg said: "We have always loved our dedicated Miz Mooz audience, but it was exciting to gain attention on a worldwide scale. We couldn’t be more pleased with the outcome.”

    Well, congratulations, Spark Growth!
  • McKinney Opens SoHo Office, Founder Chick McKinney Rolls Over In Grave

    So Raleigh, North Carolina-based McKinney is opening an office in New York City's SoHo district at 15 Watts Street. Usually, an agency opening an office in New York is no big deal. However, one of the founding principles of McKinney as voiced by Founder Chick McKinney was that it really wasn't a place Chick wanted to be.

    Of course, this line of thinking is no secret to current McKinney management, which gleefully announced the June 3 SoHo office opening with an ad featuring an image of Chick and a quote that reads: "I never really had a desire to live in New York City."

    The ad also reads: "Please forgive us, Chick." Now if we could only talk to the dead, we'd be able to ascertain whether or not Chick is miffed over this move and whether or not he thinks the strategy behind announcing the new office is inventively cheeky.

    At least the agency waited a respectful 8 years before making the move to New York.
  • Aishwarya Rai Blames Creative Agency For That Racist Ad

    For the past day or so, it seems impossible to escape from a Google News alert that isn't filled with that story about popular Indian celebrity Aishwarya Rai, who appeared in an ad for Kalyan Jewellers elegantly dressed with a dark-skinned child holding an umbrella over her head. Many have called the ad racist. 

    An open letter from a consortium of feminist, child and human rights groups says the ad appears to "be representing aristocracy from a bygone era -- bejewelled, poised and relaxing while an obviously underage slave-child, very dark and emaciated, struggles to hold an oversize umbrella over your head." 

    The letter, which shares several examples of 17th- and 18th-century images that would now be considered racist, continues: "We wish to convey our dismay at the concept of this advertisement, and that you have, perhaps unthinkingly, associated with such a regressive portrayal of a child to sell a product...we, therefore, urge you to do the right thing -- cease to associate yourself with this offensive image by ensuring that further use of this advertisement is stopped."

    In response, a statement from Aishwarya pretty much shirks any responsibility and blames the creative agency for the debacle. The statement read: "On the onset we would like to thank you on drawing our attention to the observation of the perception of the advertisement. Here is an attachment (picture of Aishwarya without the child holding the umbrella) of the shot taken by somebody during the shoot. The final layout of the ad is entirely the prerogative of the creative team for a brand. However shall forward your article as a viewpoint that can be taken into consideration by the creative team of professionals working on the brand visual communication. Thank you once again."

    Kalyan Jewellers has pulled the ad.

  • Apparently, The Spanish Can't Pronounce 'Ogilvy & Mather' Properly

    Is there any other industry that pokes fun at itself as much as advertising? Perhaps, but I can't think of one right now. Maybe it's because I have yet again been distracted by a witty agency self-promotion that gleefully mocks the fact that seemingly no one in Spain can properly pronounce "Ogilvy & Mather."

    To point out this travesty and to offer some help, the agency itself has produced a series of videos featuring a very regal English gentleman offering helpful tips on the proper pronunciation of the agency's name.

    Once such video instructs viewers that the emphasis is on the "O" and should be pronounced as if one were surprised or in pain. Sort of like being whacked in the nuts with a boot. Which is exactly what happens to our regal English gentleman in this particular video. 

    Check out all the videos here.
  • Surprise, Surprise. Chuck E. Cheese Gets New CMO And Launches Agency Review

    This is getting so tired. New CMO joins brand. CMO, in an effort to prove his or her worth, trashes current agency and launches review, thereby proving that whatever the previous CMO had in place sucked and the new solution is far superior. It's like a broken record. Oh wait, half of you have no idea what a record is. Anyway, the whole thing is like predicting an apple will fall if you drop it.

    So what's the latest CMO-fueled shenanigan? In January, Michael Hartman joined Chuck E. Cheese as chief marketing officer. Previously, Hartman was senior marketing officer at Seaworld. Yeah, probably a really good move for Hartman, given the crap that brand is facing these days. But back to the agency review.

    Sources tell AdWeek the brand has launched a creative agency review. But the source everyone really wants to hear from, Hartman, isn't talking. Mums the word I guess. It's as if it's some sort of national security secret that will topple the entire world of marketing if any one were, God forbid, to become privy to the inner dealings of an agency review. 

    Currently, the account is handled by The Richards Group. But...wait for it...no one from The Richards Group is talking either. Last year, the brand spent $28 million on media, according to Kantar Media.
  • Rise Interactive Agency Wins LA Search Marketing Award

    On Wednesday at the LSA|15 Conference in Los Angeles, the Local Search Association announced the winners of its second annual Ad to Action Awards competition. LSA received 91 entries across 10 categories and the winners were revealed on the main stage at the event.

    The competition focused on celebrating the most innovative "local" marketing products or solutions that facilitate consumer actions such as calls, clicks, store visits, etc. The winners demonstrated the greatest potential for driving local consumer engagement and best addressed current market needs.

    The judging panel -- made up of 18 companies including Twitter, Foursquare, Yahoo, MapQuest, xAd and more -- evaluated these products and solutions. Each judge reviewed a subset of entries and no judge reviewed any entries where there was a potential conflict of interest.

    In the Platforms and Services category, Chicago-based Rise Interactive, which likes to refer to itself as an "interactive investment management firm," won the top spot. And we can see why. Any agency that can spin the fact that they buy online advertising into "interactive investment management form" is worthy of praise.

  • SMG Just Screamed 'Oh Sh*t' ... Again!

    Late last year, in an effort to consolidate its global media planning business with one agency, Mars yanked its account from Starcom, placed it in review and handed it to MediaCom. The agency has also recently lost Microsoft and Anheuser-Busch InBev. Now, Starcom is getting the shaft again.

    Soft drink giant Coca-Cola has placed its U.S. media buying and planning account into review. While MediaVest will participate in the review alongside sister Coke agencies UM, MediaCom and Carat, we all know how these things go.

    Hoping to placate any nervousness, a Coke spokeswoman said: "We have a very productive and strong relationship with Starcom MediaVest Group that has served both companies very well for the last 11 years. Over this period, SMG has continually improved and strengthened its offering and remains a valued partner. As the media marketplace reshapes and reinvents itself, we frequently take the opportunity to formally review our media partners all around the world. Continued appraisal of our partners ensures we are both working with, and acting as, the best partners to create the most value at the right price."

    Oh -- because evaluating the actual work agencies do on a day-to-day basis for you is too difficult? You need the dog and pony show to make sure your agencies don't get too comfortable? Same old story.
  • Agency Stages Fake Robbery to Illustrate How Awesome Its Work Is

    On April 16, it was reported that three men broke into the offices of Sagmeister & Walsch at 206 West 23rd Street in New York and made off with a bunch of stuff. The entire robbery, however, was caught by a ceiling cam that normally streams studio activity to the agency Web site.

    Of the robbery, Steffan Sagmeister said: "We never thought something like this could happen. When we launched our website we thought it would be a good way to showcase our work to those who admire us; now it's all gone." 

    Following the robbery, the agency tweeted: "We are Deeply saddened by this loss. Next time take the printer." You see, all the robbers took was the agency's work and nothing else. Now what sort of robbers do you think would take only the work -- that's valuable to no one but the client and the agency -- and not all the physical electronics that could be sold?

    Well, the agency itself, of course. Yes, the agency staged the robbery, got Creative Review to write about it and then the agency's receptionist burst into laughter when AdWeek's Tim Nudd called for confirmation. Well played, indeed!
  • Has Mobile Advertising Finally Arrived? Not According to AKQA CCO Rei Inamoto

    For, oh, at least the past 7-10 years, every prognosticator has gleefully been promising "this is the year of mobile!" to the point where it's become a joke. Now, certainly, mobile has matured and has become a viable medium for many things including advertising. But AKQA CCO Rei Inamoto isn't completely convinced.

    In an interview with The Drum, Inamoto said, “To an extent I think the promise of mobile in relation to marketing has been exaggerated. The biggest misconception about mobile and the biggest mistake that advertisers make about mobile is to treat it like an advertising channel. Instead we should use it as a way to provide service not to provide a message.”

    And, being the smart guy that he is, he's right. Rather than forcing old models (*cough* ...banners) through mobile devices, brands should embrace new services. Many have. Love them or hate them, Inamoto cites Uber as a brand that's fully embraced mobile, not as an advertising medium per se but, rather, as a platform for doing business. 

    So, yes, mobile has finally arrived. But my hope for the medium is that we can skip past all the missteps we took forcing old advertising models onto the internet and treat mobile very differently and more effectively. Like the personal service it has become. Not a pipe through which to shove ads.

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