| Wednesday, Jan 23, 2008 |
What's inside:
Today's Media News
1. Media Stocks Dive Along With Market by Wayne Friedman
2. ESPN Launches Mosaic Screens For X Games by David Goetzl
3. KFC To Super Bowl Scorer: Chicken Dance by Nina Lentini
4. MasterCard Mini-Drama Airs At SAG Awards by David Goetzl
5. Radio Dials Trouble: More Rough Times Ahead by Erik Sass
6. Mattone Named 'Spry' Publisher by Erik Sass
7. NBC Lines Up Mondays by Wayne Friedman
On Media
8. Nowhere To Run: Trickle-Down Theory Impacts Advertising by Diane Mermigas
Commentary
9. Media X: Buy American by Jack Feuer
News Briefs
10. YuMe To Handle NBC Direct
11. Meredith 2Q Broadcast Declines
12. Bravo Renews Griffin's 'D-List'
13. Reader's Digest Names Tom Prince Exec Editor
Today's News
1. Media Stocks Dive Along With Market
by Wayne Friedman
Media stocks were not immune to the stock market's wild ride downward that dropped the Dow Jones Industrial average by a massive 500 points at one point on Tuesday.
The big sell-off, resulting from credit concerns and the housing crisis, started as worldwide markets tumbled overnight on Monday. U.S. stock markets have been in free fall since the beginning of the year--culminating in two massive triple-digit point drops last week.
Since the beginning of the year, big media stocks have tumbled as well--already down as a group in 2007. So far in 2008, Walt Disney shares are down 11.7%, News Corp. is off around 9%, and Time Warner's stock has slipped 6%.
Media stocks have been pulled down in concert with the rest of the market in the belief that a U.S. recession has arrived or is close at hand, according to analysts. The finger is also pointed at a potentially weaker advertising market that impacts these stocks.
In mid-day trading yesterday, Sony Corp. was off a big 3.5% to $49.60 and Time Warner was down 3.4% to $15.01. Lesser losers on the day were Walt Disney, with a 1.8% cut to $28.00; CBS, with a 1.7% drop to $22.70; Viacom, with a 1.4% cut to $37.65; and News Corp., with a 1.4% slip to 18.42.
Other radio and TV stocks also suffered. Clear Channel Communications was down a big 5.3% to $31.77; XM Satellite Radio tumbled 4% to $10.70; Westwood One suffered almost a 10% loss to $1.59; and Meredith Corp. slipped 3.6% to $38.20.
Clear Channel is in the midst of a proposed sale to take the company private. The latest proposal meant that stockholders would get $39.20 in cash for each share they own--plus additional consideration if the merger's closing occurs after Dec. 31.
Radio stocks have been particularly hurt in recent years because of an ailing advertising market.
2. ESPN Launches Mosaic Screens For X Games
by David Goetzl
With this week's Winter X Games, ESPN is continuing its interactive TV initiatives with Dish Network, although it's expanding the number of advertisers.
Under the application, ESPN takes over a channel on the satellite operator, where it creates a "mosaic" with six small "screens." Each offers a different action simultaneously. Viewers are given multiple opportunities to toggle between the various feeds, and to access content from sponsors.
An animated video unit will run in the mosaic's upper right, and viewers can click through to an advertiser's branded microsite. The interactivity then continues as advertisers can offer additional click-through options, such as the opportunity to search for the nearest retail location.
"They really like to reach consumers one-on-one and give them more information," says Jeff Siegel, ESPN senior vice president, regional sales, direct response and emerging media.
Siegel adds that marketers are attracted to the more definitive metrics the opportunity provides, where Dish can track viewership patterns and click-throughs.
The linear ESPN feed will simulcast the ads that run on that network. On the other mini-channels, the four advertisers will run in equal rotation. The advertisers are also receiving exposure, as ESPN offers X Games coverage on other platforms--including VOD provided by multiple cable operators, the broadband video site ESPN360.com and ESPN's mobile outlet.
In past iTV initiatives with Dish, which is in 13 million homes, ESPN has signed two to three advertisers. For the Winter X Games starting tomorrow, four are on board: the Navy, Microsoft's Zune portable music device, HDTV marketer Olevia and Jeep.
Navy plans to use its microsite to offer recruitment features, such as a video of Navy Seals in action.
ESPN has partnered with Dish before for the Winter X Games, along with the Summer X Games, plus golf and auto racing. College football could be next for iTV, as well as "Monday Night Football," although that would involve rights negotiations with the NFL.
With the mosaic Dish channel, viewers can watch the six mini-screens all at once or opt to fill the full screen with just one image. The six feeds will include the standard ESPN linear broadcast, along with others produced specifically for the Dish channel--each with its own announcers and unique content. Among them is a feed dedicated to snowboarding, another to freestyle skiing and a Best of X Games.
When ESPN covers events on multiple platforms, it refers to it as "liquid content." Describing the X Games packages, Siegel says it is "liquid advertising."
3. KFC To Super Bowl Scorer: Chicken Dance
by Nina Lentini
KFC is out to ambush the Super Bowl by potentially getting a scoring player to perform the so-called chicken dance in the end zone.
The Yum Brands-owned company will pay $260,000 in the name of the dancer to its Colonels Scholars, a charity providing college scholarships. That sum could entice a grown football player to flap his wings.
The NFL is not amused.
"This has nothing to do with us," spokesperson Brian McCarthy grumbled. "This is Super Bowl Ambush Marketing 101. Everyone looks to draft off the excitement for the game."
If KFC succeeds, that quarter million dollars will be chump change compared to the reported $2.7 million going rate for 30 seconds of air time.
Rob Frankel, a branding expert based in Los Angeles and no big fan of Yum Brands, says: "If they pull it off right, it could be good. I mean, it's a motherhood issue, giving money to charity. And it's not a humiliating thing they're asking a player to do."
Frankel says restaurant chain El Pollo Loco (The Crazy Chicken), with units in California, Arizona and Texas, is identified with the chicken dance. "If I were El Pollo Loco," he joked, "I'd put out press releases, saying to watch the Super Bowl for the player doing our chicken dance and save myself a cool quarter million."
Rick Maynard, a KFC spokesperson, tells MediaPost that the company is reaching out to those players most likely to score during the game to "let them know about the offer." KFC also is approaching half-time entertainer Tom Petty with the same deal.
"There are lots of ways to advertise," he says. "We think this is unique, and will get people talking about something that might take place during the game itself." He calls the dance the "domain of bad wedding reception music nationwide," but still thinks viewers will connect the dots from chickens to flapping wings to KFC hot wings, which is the focus of this promotion.
Just to be safe, KFC has lined up former Atlanta Falcons player Jamal Anderson, who was known for his "Dirty Bird" end zone dance, to be on site prior to what KFC refers to as "the big game." "We think this is a fun and creative marketing concept that both fans and the media will be interested in, and we're spreading the word through an online digital campaign," Maynard says. PR is being handled by Weber Shandwick.
The company is also e-mail blasting the nearly million who have signed up to receive news at kfc.com.
KFC is also running a consumer promotion wherein people can upload videos of themselves doing the chicken dance and win "the ultimate big game party," including a flat-panel TV, a limo to bring in the guests, cheerleaders to fire up the crowd, a spread of KFC and a cleaning service for post-party tidying.
Entries are made at showusyourhotwings.com, with the winner announced on Monday.
4. MasterCard Mini-Drama Airs At SAG Awards
by David Goetzl
With networks and advertisers looking for ways to retain viewers throughout commercial pods, MasterCard will air a brief drama during the first break on Sunday's SAG Awards on the Turner networks.
The two-minute branded content has the story line in which a woman is at a standstill as she searches for a lost item with special meaning for her grandfather. Enter the World Elite MasterCard that allows her to fly to Paris to claim it.
"The Auction" will run on both TNT and TBS, which simulcast the awards--potentially the only ones to take place this year in the face of the ongoing writers' strike. MasterCard has advertised during the Oscars, one of the events that could be scuttled.
Linda Yaccarino, executive vice president, Turner Entertainment ad sales and marketing, said "The Auction" "promises to sustain the dramatic momentum throughout the evening that this awards show delivers every year."
Leading up to the awards show, TNT and MasterCard will try to build anticipation for "The Auction" via on-air promos, a presence on TNT.tv and on TNT's VOD offering.
In 2006, MasterCard and TNT also put together a mini-drama. Michael Lao, vice president of media at MasterCard Worldwide, said "The Auction" allows the company to "seamlessly integrate our product into the story line."
GSD&M's Idea City handles MasterCard's media account and spearheaded the deal.
5. Radio Dials Trouble: More Rough Times Ahead
by Erik Sass
Previously stuck in the doldrums, radio's boat is now springing leaks and taking on water. The maritime metaphor seems apt, as December brought the eighth straight month of revenue drops--with a 5% decline compared to the same month in 2006, according to figures from the Radio Advertising Bureau.
Radio's poor performance is now outpacing even Wall Street's negative predictions, notes radio analyst Jim Boyle of CL King and Associates, who said investors predicted a mere 2% drop.
The drop was due to continued losses in local ad revenue, traditionally radio's "bread and butter," which fell 4% in December after a 5% drop in November. On the basis of this data, Boyle now predicts an overall 4% drop in the fourth quarter of 2006--almost three times the previous industry estimate of 1.5%.
Bear Stearns analyst Victor Miller pointed out that December should have been easier than November in terms of year-to-year comparisons, since there was no political ad spending in December 2006. In the fourth quarter, Miller projects revenue drops at all the major broadcasters: CBS Radio down 7%, Citadel 5.5%, Beasley 6%, Radio One 5%, Cumulus 3.5% and Clear Channel 3%.
Looking ahead, Miller also predicts a flat 2008, with 3% shrinkage in core revenues offset by growth in online operations. Jonathan Jacoby of Bank of America agreed, writing that the business "will continue to be weak" through at least the first quarter of 2008, and forecasting a 3% drop.
Boyle also emphasized that revenue streams are crucial, but believes some can be found in the core broadcast audiences. Specifically, he advises radio broadcasters to focus on monetizing "hard-core" or P1 listeners who always listen to specific stations. If they can be measured, the P1 listeners constitute a highly engaged audience that should be very attractive to advertisers.
6. Mattone Named 'Spry' Publisher
by Erik Sass
The Publishing Group of America has hired Bob Mattone, previously in charge of New York ad sales for TV Guide, as the launch publisher for Spry, a new newspaper-distributed magazine that will launch in September. With a planned circulation of 9 million, PGA is calling Spry "the largest health magazine launch of all time."
PGA also publishes American Profile, with circulation of 9 million, and Relish, a monthly newspaper-distributed title focusing on food, which launched with a circulation of 6.8 million before upping to 9 million in 2007.
Spry will target America's aging baby-boomer cohort--the largest demographic group in American history--with information and advice for healthy lifestyles, as well as food, beauty, travel, entertainment and shopping. The monthly magazine is the cornerstone of a multi-platform brand that also offers podcasts, health fairs, a health search engine, and mobile content.
In addition to TV Guide, Mattone has worked in ad sales at SI for Kids, ESPN the Magazine, and Popular Mechanics, as well as in Hearst's direct-response marketing division. He has directed the creation of new mobile content services and also has experience in custom publishing.
Beginning with its flagship, American Profile, PGA has sought to enter the weekly and monthly newspaper magazine market by focusing on markets that were under-served by older titles, like Parade and USA Weekend, which dominate the so-called "A" and "B" counties (and forced out Time Inc.'s revived Life earlier this year). By aggregating smaller "C" and "D" counties, PGA offers advertisers comparable reach in untapped markets.
Spry's launch was announced simultaneous with the acquisition of PGA by private-equity investors from Shamrock Capital Growth Fund and Bain Capital Ventures in early December. It rides a wave of interest in healthy living, along with a host of other acquisitions and new launches by magazine publishers.
Most recently, in December U.S. News & World Report signed a deal to make video content from HealthiNation available at health.usnews.com. In October, The New York Times teamed with A.D.A.M., a company that maintains an online compendium of information on health conditions, treatments and insurance, to deliver the new service. The Times site is launching a new section with news and analysis on health-related topics.
In mid-September, Hearst bought RealAge.com, a site that engages consumers with the promise of a quiz that determines their "real age," based on various health and lifestyle factors. And in June, Meredith Corporation bought Healia.com, a consumer-health search engine.
7. NBC Lines Up Mondays
by Wayne Friedman
Give NBC its due this mixed-up broadcast year--it has figured out how to handle Monday night in 2008 so far.
NBC won its second Monday night in a row, thanks to a somewhat hodgepodge lineup--"American Gladiators," "Deal or No Deal" and "Medium." It averaged a Nielsen Preliminary 4.3 rating/11 share among 18-49 viewers.
NBC's "Deal" was able to handle the new, highly touted Fox show, "Terminator: The Sarah Connor Chronicles" with a 4.4/10 rating, while "Connor" earned a 3.6/8 number. CBS' rerun of "Two and a Half Men" earned a very respectable 4.0/9.
The new sci-fi drama numbers are down from their lofty 7.7 rating in its debut. But the 3.6 number is still solid enough for Fox to sell to advertisers--especially in a marketplace short of original network programming.
The same goes for NBC's "Medium." It earned a 3.4/9, winning the 10 p.m. time period. That said, the show was up against a rerun from CBS' "CSI: Miami," which performed gamely with a 3.1/8 number--a typical solid performance for a CBS procedural crime drama.
On Media
8. Nowhere To Run: Trickle-Down Theory Impacts Advertising
by Diane Mermigas
Amid the chaos and panic created by Wall Street and the Federal Reserve, ad-dependent companies are scrambling to determine just how impaired their financial lifeline will be in a troubled economy. Three words: trickle-down effect.
The broad-scale tumult is filtering down into the crevices of all media and advertising companies. They are making adjustments in spending as their costs, revenues and credit tighten. They are watching their stocks get hammered, and their ability to leverage assets or do deals is drying up--for now.
The normal retrenchment that comes during an economic downturn is being complicated by several unusual factors that could extend into 2009. Major advertiser categories, such as autos, financial and housing, are undergoing an unprecedented squeeze and will not provide the spending levels that ad-supported media needs. Retailers and packaged-goods marketers are also under pressure. Media itself is undergoing transformative change, moving from passive to interactive; the learning curve will last for years. Unlike recessions past, advertisers continue to shift some of their cautious strategic spending to new interactive platforms, where they can permanently realize more immediate returns.
These economic pressures will spill over into 2009, when there will be no $3 billion artificial boost of cyclical election-year dollars. Advertiser spending on traditional and new interactive marketing will continue to fragment, as will consumer attention. "It is going to be pretty ugly for a while--well into next year," says Lauren Rich Fine, formerly advertising guru at Merrill Lynch and now researcher in residence at Kent State University.
The stop gaps media companies in particular are hoping to fall back on--ramping digital revenues and international sales--will not increase rapidly enough to offset declines in diffused traditional advertiser spending. Most media companies remain vulnerable. Newspapers, outdoor, Internet display and radio have above-average exposure to the most risky advertising categories--including financial, real estate, retail and construction, which collectively account for nearly 10% of total U.S. advertising, according to Bernstein. Media companies are among the largest advertising categories, previously believed to be recession-proof.
Advertising contributes as much as 97% to the revenues of a media company such as Clear Channel Communications, 71% of CBS Corp. revenues, and as little as 22% to Walt Disney Co. Advertising also is a growing revenue component for Internet giants Google and Yahoo. Consumer spending, which may not be bolstered much by the government's proposed $150 billion stimulus package, contributes 55% to Disney's overall revenues and 72% to Time Warner. On the flip side, digital revenues contribute less than 10% of most media company revenues, and only News Corp. and GE (owner of NBC) rely on international markets for half of their income. The level of international growth that media companies seek will not come while foreign markets are being dragged down into U.S. economic jitters.
So, as advertisers go (in every conceivable industry), so go media companies. The economic uncertainty is creating mixed views for 2008, according to speakers at Bear Stearns' recent annual advertising summit. The outlook depends on who and where you are in the medium spectrum, according to Bear Stearns and industry trade groups. The most volatile--newspapers--could decline as little as 1.2%, or more than 7% in the case of a recession. Broadcast TV should top 9%, fed by the Olympics and elections. Cable could be up more than 5.5%, benefiting from audience and ad-dollar shifts from the writers' strike damage at the broadcast networks. Outdoor will be up 6%, and the Internet 22%.
However, all bets are off in 2009, when the economy and advertiser spending could still be under pressure. That prospect is impetus for all media and entertainment concerns to move more of their ad-supported branded content and services online. That is where double-digit growth will continue for years--as marketers move past search and text advertising into new forms of connecting and transacting with key consumers. The science of pitching, selling and buying is in the throes of a sea change that will alter ad spending among media platforms and devices.
There also is incentive for traditional media to alter the way it conducts its revenue-generating business. For instance, backing away from the costly upfront selling ritual and leaning toward a 52-week continuous selling cycle, based on the development and availability of new content, is a move that NBC Universal chief executive Jeff Zucker is initiating. With advertisers looking to solidly justify every dollar they commit, there is incentive for media and measurement companies to further sharpen and qualify their audience metrics.
In a bullish report titled "The Cowboys Dance On and On...," Yankee Group analyst Daniel Taylor recommends that advertisers use these uncertain times to incorporate interactive into mainstream media spending schedules, invest in building and maintaining data interchange, grow online expenditures more than 100% annually, and explore sponsored content and "advertainment."
Media companies should create new marketing segments, take the lead in online privacy, invest in online content, focus on cross-media opportunities and develop social networks. The reason: even as the number of Internet users levels off, Internet advertising will continue to grow at a 24% compounded annual rate to more than $50 billion in 2011, surpassing all forms of broadcast television, cable and radio spending. That's why the Internet cowboys are the only ones dancing.
Commentary
9. Media X: Buy American
by Jack Feuer
I'm waiting for Firestone to align my tires and change my oil in Thousand Oaks, a God-fearing font of red-state suburbia 40 miles northwest of Los Angeles, in which I have dwelt, deep undercover and disguised as a goy, for two decades. Firestone tells me it will only take four hours. In the meantime, I'm right next to the mall, so I stroll over.
I settle in at the Cheesecake Factory for pinot, popcorn shrimp and the football game. Up walks a drone with crew-cut hair and country-club clothes and his kid, who looks nine or 10 years old. They sit at the bar, which I don't think is the best parenting choice, but they want to watch the Chargers game, so OK.
Ah, but then Dad starts telling the kid about a Bud Light commercial. The one where some poor schmuck has been given tickets to a football game by his buddy, who wants to get the poor schmuck out of the house because the buddy is, apparently, diddling the schmuck's wife. Dad finds this hilarious. Sonny doesn't get it. Dad repeats the spot's plot, and then repeats it again, until the kid understands.
Heartening to think of this youngster as an adult, telling his own son about the time he bonded with granddad over advertised alcohol use and adultery.
Normally, I might not have even noticed this slice of the American way of life. But the--shall we say--ironies of our consumer culture are always most apparent during the two-week Super Bowl marketing mash-up that kicks off with the conference championships and concludes with the Big Game. We're doubly drenched in blood red, white and blue when Super Bowl fortnight falls within a presidential campaign year.
And all of it is driven by you, my little media and marketing poppets. This is the only time of the year in which your iron hand sheds its silken glove. You drop the humble-pie masquerade and all that claptrap about consumer control and bring the communications hammer down upon our heads with a vengeance. It's a singular moment when the veil lifts, and you are revealed not as the servants of the marketplace you pretend to be but as you really are: a relentless, unstoppable and implacable Messaging Machine.
This is why our national sport and marketing are so tightly linked. The brutal zero-sum of a football game is the perfect metaphor for living in a material world. And the cold calculation and precision pandering of a presidential race is its perfect complement.
There's no better observation post for this process than a place like Thousand Oaks, either. Kudos to Bud Light, as well, for their latest contribution to our country's cultural uplift. They'll have plenty of company in the next two weeks.
That's about when Firestone tells me they will be finished with my car.
News Briefs
10. YuMe To Handle NBC Direct
NBCU has hired broadband video ad network YuMe to handle all technical ad delivery aspects of its new NBC Direct service. The service gives Web users the option to subscribe to their favorite prime-time series, and to have full-length episodes delivered to their desktops. YuMe will embed the spots within shows, although NBC retains sales responsibilities.
11. Meredith 2Q Broadcast Declines
Meredith Corp. reported that its second quarter, which ended Dec. 31, 2007, showed that broadcasting operating profit declined to $28 million from $40 million, and revenues decreased 16% to $88 million. Net political revenues were $22 million less than the prior-year quarter, and $30 million less than the prior-year fiscal first half. Non-political advertising revenues grew 6% in the quarter, and 4% in the first six months of the fiscal year.
12. Bravo Renews Griffin's 'D-List'
It's not just reality shows that are booming during the writers' strike. Bravo gave a green light to the fourth season of "Kathy Griffin: My Life on the D-List" for a fourth season, which will return later this year. Picture This Television will produce the show for the cable network.
13. Reader's Digest Names Tom Prince Exec Editor
Tom Prince has been named executive editor of Reader's Digest, moving to the role from his previous position as vice president and development editor for Martha Stewart Living Omnimedia. At MSLO, Prince directed the launch of Blueprint, a lifestyle magazine targeting younger professional women that was recently folded as a stand-alone publication.
--Erik Sass
Wednesday, Jan 23, 2008
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