WPP Group, the world's second largest advertising holding company, Friday reported strong 2004 results and indicated a relatively positive outlook for the near- and long-term advertising marketplace, thanks largely to contributions from new forms of media and marketing services. The company also indicated plans to continue to diversify into non-traditional advertising services, especially marketing research, announcing a bid to acquire NOP World, a marketing and media research company that United Business Media recently put on the block. While WPP is known for operating ad agencies like J. Walter Thompson and Young & Rubicam, and media shops like MindShare and Mediaedge:cia, it has become a significant player in the research business, which has been among the fastest growing segments and most stable areas of WPP's operations during the past few years. WPP's bid for NOP World, which measures TV, radio and magazine audiences, was not disclosed, but analysts have estimated United Business Media could fetch more than $600 million for the unit. Last year, WPP formed a joint venture with VNU, the parent of Nielsen Media Research, which has also been on the prowl to acquire new research businesses. The venture, which combined WPP's AGB Group with Nielsen's non-U.S. TV ratings operations, is known as AGB Nielsen Media Research, and provides TV ratings in 30 countries. Research accounted for only 16 percent of WPP's revenues in 2004, but was among its fastest growing sectors, and the company indicated it plans to continue to diversify beyond its core advertising and "media investment management" businesses, which accounted for 47 percent of WPP's revenues. "Network television price inflation and declining audiences, fragmentation of traditional media and rapid development of new technologies continued to drive experimentation by our clients in new media and non-traditional alternatives," the company said in its 2004 earnings report, noting that non-traditional marketing services now account for 54 percent of its revenues. An especially fast-growing, though still relatively small sector has been online media, which accounted for $400 million, or more than 5 percent of WPP's revenues. "This is in line with over 5% for on-line media's share of total advertising spend in the United States and approximately 4% share worldwide. The new media continue to build their share of client spending," the company said. The company said it emerged from "some 36 months of unrelenting economic battering" in 2004, a year in which total reportable revenues rose nearly 5 percent to $8.2 billion. Advertising and media buying demonstrated a significant turnaround within that, with revenues rising 10.8 percent, including WPP's acquisition of Cordiant. On a pro forma basis, revenues for the sector rose more than 3 percent thanks largely to new billings growth. During 2004, MindShare and Mediaedge:cia generated more than $5 billion in new media billings. "Our media investment management businesses started to improve in October 2002, and then significantly from April 2003. This growth continued for the remainder of 2003 and escalated during 2004, primarily driven by the strong new business wins, in turn driven by client consolidation," the company reported, adding that advertising has followed a similar trend, but "less strongly."
Starcom USA has hired Wendy Falk MacGregor to serve in the newly created role of senior vice president, strategic marketing, where she will be charged with developing new tools and services that will leverage the Publicis Groupe media shop's planning, investment, accountability, and partnership expertise. The development process will embrace emerging technology and the rapidly changing communications marketplace. MacGregor will report to Chief Marketing Officer Steven Feuling, another former client side marketing executive who came to Starcom from Kmart nearly a year ago. At Hyatt, MacGregor served as vice president of marketing, where she was noted for developing marketing programs, brand advertising campaigns, and global business partnerships. Still, MacGregor, 38, is making a return of sorts, having once served at Starcom forerunner and sister agency Leo Burnett. During her time with Burnett, from 1992 to 2001, MacGregor worked on several global accounts, including Coca-Cola's juice division, Kraft, and McDonald's.
The Weather Channel is predicting snow, sub-freezing temperatures, and lots of ice during its 2005 upfront events planned for March 12 in Quebec, Canada. This year the all-weather channel has invited advertising decision-makers to join them to experience the awe and beauty of the weather first-hand. The Quebec event will be held at the Ice Hotel, an ice and snow architectural wonder, with activities such as dog sledding, snowmobiling, and ice sculpting workshops accompanying the sometimes frosty negotiating postures of buyers and sellers. "This event will break through the upfront clutter," said Paul Iaffaldano, executive vice president and general manager for TWC Media Solutions. "By providing advertisers with the opportunity to experience the weather, we're showing them what our viewers live each and every day." Given the steady snowfall in the Northeast, some media buyers might hope that The Weather Channel switches its meeting to somewhere more clement, like Bora Bora.
As issues of diversity become more acute for marketers and creative shops, a group of multicultural firms have grouped together to form the Association of Black-Owned Advertising Agencies. The ABAA is based in Chicago, and its interim chairman is Eugene Morris, chairman and CEO of Chicago-based E. Morris Communications, Inc. "The formation of the ABAA was long overdue," Morris said. "For more than 40 years, the African-American market has been the number one ethnic market in America. With the growing importance of these consumers, we need to find ways to collectively use our expertise and address critical issues facing both the market and our agencies." Morris is--along with fellow ABAA officers Eugene Faison, chairman and CEO of Equals Three Communications, and J. Melvin Muse, chairman and executive creative director of Muse Communications--on the American Association of Advertising Agencies and its diversity committee. "I'm still actively involved with the 4A's, and this is not meant to be any substitute for the issues they're tackling," Morris said. For its part, the 4A's applauded Morris and the goals of the ABAA and hopes to assist the new organization any way it can, said Adonis Hoffman, the 4A's senior vice president and legal counsel. "I think it's a very positive development that the African-American-owned ad agencies decided to formalize their association," Adonis said. "Black ad agencies face unique challenges in the marketplace and they also offer unique skills. Gene Morris is one of the real leaders in the industry. We look forward to working with the association on areas of mutual interest." In particular, Adonis said, the 4A's has been concentrating on a diversity initiative to help ad agencies address the issues of recruitment, retention, and developing relationships with various minority business suppliers that do business with agencies. One of the areas where the interests of the 4A's and the ABAA might run counter is the problem that, in the grand scheme of things, is a good problem. As Morris noted, with all the efforts from general market agencies to try to embrace multicultural advertising and attract senior African-American executives, some traditionally black companies could find themselves in a tug of war over rising stars. "There are some issues that the 4A's can't address because there might be certain concerns on the part of African-American agencies that run counter to interests of some of its own members," Morris said. "They have to take a more global or more macro view than we will. For example, the diversity initiative that the 4A's is championing is something that African-American agencies really need to look at. In the long run, it could affect our businesses, since the general market agencies would like to increase the levels of African-Americans. But where are they going to get these people from? They can't get them from each other because they don't have any. And they can't really raid their own clients. So African-American agencies are the likely source of that talent. And we have to be mindful of that, and as African-American agencies, we need to have a position on that and discuss how to handle it." As for the ABAA's other areas of interest, Morris said the organization initially will be devoted to advocate for the interests of African-American-owned ad agencies, and look to forge relationships with governmental, industry, consumer, and other groups on matters affecting the industry. The ABAA also hopes to establish opportunities for African-American students entering the advertising profession through scholarships, internships, and mentoring programs.
Providing broadband service through electric power lines is a potentially competitive alternative to high-speed Internet connections via cable and DSL, but infrastructure and regulatory issues loom, said participants in a conference call yesterday held by the New Millennium Research Council, a Washington, D.C.-based lobby and policy group.If broadband-over-power-line service were offered for $30 per month, estimated Barry Goodstadt, vice president and senior consultant for Harris Interactive, it would reach 13 million households and present a $4.5 million revenue opportunity over the next three to five years. But Robert Olsen, professor of electrical engineering at Washington State University, cautioned that broadband-over-power lines potentially interferes with certain radio signals--a problem that engineers will have to fix before the nation sees extensive power line implementation. "The FCC requires that broadband-over-power line operators not provide harmful interference to users, but a standard has not yet been established for harmful interference," Olsen warned.Harris Interactive's Goodstadt replied that interference concerns would be minimized in newer power grids, which tend to bury lines underground rather than locate them overhead. Allen Hepner, executive director of the New Millennium Research Council, added that it's unclear how the government would regulate broadband-over-power service.Joseph Fergus, president and chief executive of Communications Technologies Inc.--currently deploying the technology in Manassas, Va.--said he had a waiting list of 1,200 customers.Because of the technology's relatively cheap cost of $28.95 per month, rival broadband providers in and around Manassas were forced to reduce their prices, Fergus claimed. He declined to go into specifics.
Uncertainty with media ratings is not a pleasant state of mind. It causes advertisers to question their media expenditures and, if serious enough, limit these expenditures. This feeling of uncertainty has been fueled by inconsistent ratings in the television industry as well as recent revelations of inflated circulation figures by major newspapers. It is no wonder that media and advertising organizations are calling for increased accountability of the organizations that are entrusted to produce these ratings for print and electronic media. The expectation that the advertising and media industry would "regulate itself" without federal oversight is becoming less tenable with a recent announcement by Senator Conrad Burns that such oversight may indeed be necessary. In response to this industry anxiety, Nielsen Media Research has been the most visible among the media ratings companies to address concerns about inconsistent ratings and the absence of independent audits. For example, Nielsen Media Research recently announced that they would provide $2.5 million for "independent" research to evaluate its television ratings, although Nielsen researchers will remain part of this "independent" team. Nielsen Media Research also funded a national advertising campaign to improve its image among ethnic consumers in the United States -- considered a needed activity to reduce the higher fault rates among African-American and Hispanic households in their television panels. Nielsen also engaged two key Hispanic organizations to defuse its critics and obtain a stamp of approval for its Hispanic methodology: Tomás Rivera Policy Institute and the Willie Velasquez Research Institute. Finally, endorsements by the NAACP and the Rev. Jesse Jackson for its local people meter served as another stamp of approval for its methodology with African-American consumers. While Nielsen Media Research appears to be the target of a disproportionate share of the increased demands for accountability, other media ratings services are waiting with intense anticipation. Undoubtedly, the explosive growth of Hispanics in major urban markets has forced media ratings companies to rethink their traditional methodologies. Why? It's because Hispanic audiences are very difficult to measure. For example, stable measurements over time become more challenging when 60 to 70 percent of Hispanics are renters who tend to be highly transient. Efforts to quantify Hispanic households by language usage are highly unreliable since individual household members vary greatly in their usage of language. When two-thirds of Hispanics have not graduated from high school, it makes the reading and recording of diaries a dubious exercise in either language. And a general distrust of institutions, especially among recent immigrants, complicates the recruitment and retention of Hispanics in research panels. For these reasons, media ratings services have a great potential to overestimate or underestimate Hispanic audiences, especially in the absence of independent audits by experts in Hispanic measurement. Standard guidelines for the measurement of Hispanic audiences are greatly overdue. The lack of industry attention on measurement guidelines is not surprising given the tremendous amount of news hype associated with Hispanic population growth, its spending power, and the virtues of the Spanish-language media. All hype aside, however, it is important to recognize the potential sources of measurement bias that are inherent in all studies of Hispanic audiences: Sampling Bias: Studies frequently select households located in ZIP codes with high concentrations of Hispanics, a practice that leads to higher representation of foreign-born immigrants who are primarily Spanish-language dependent, blue collar, and less educated. Instrumentation Bias: Although seemingly obvious, studies do not consistently provide measurement instruments in English and Spanish-language options, sometimes leaving interviewers to translate "on-the-fly." Significant bias is also introduced when under-educated Hispanics are required to record their media behavior on paper diaries, a practice that also tends to favor the recall of Spanish-language programs. Local people meters, while offering more precision, require more active participation by all members of a household. Hispanic households, who tend to have more members per household and younger ones as well, are more likely than non-Hispanics to experience fault rates. Interviewing Bias: Bias is further introduced by the use of monolingual interviewers rather than those that are bilingual. English-dominant interviewers tend to interview English-dominant respondents more often, while Spanish-dominant interviewers are more likely to interview Spanish-dominant respondents. The preponderance of women as interviewers, coupled with the higher cooperation rate of female respondents, also tends to result in more completed interviews with Hispanic females. It is not uncommon to find Hispanic-targeted studies that are over-represented with foreign-born, Spanish-dominant female respondents because the interviewing team had few bilinguals and enjoyed completing interviews with the more cooperative female respondents. Analytic Bias: A perfectly executed study can still fall prey to the analyst who transforms the raw survey data into ratings using improper weighting procedures. Post-stratification weighting is recommended when the data collection process leads to imbalances in the expected sample distribution. For example, if the proportion of foreign-born Hispanics in the study sample is 80 percent but the Census Bureau shows that it should be 60 percent, then a post-stratification weight is necessary to ensure that the ratings do not over-represent the foreign-born or under-represent native-born Hispanics. An imbalance by gender would require a similar adjustment. The failure to use weights when needed, or the deliberate use of incorrect weights, can lead to significant errors in ratings produced for any medium. To improve industry confidence in the measurement of media behavior, especially those involving African-American and Hispanic audiences, bold steps need to be taken by the media ratings companies as well as organizations that use these ratings. Media ratings services will need to become more transparent in disclosing the details of their ratings methodology so that independent experts can evaluate their soundness. Media ratings services should also resist efforts to seek endorsements from ethnic organizations, launch advertising campaigns, or prematurely disparage its critics - tactics that unnecessarily delay the discovery of viable methodological solutions. Organizations that buy or use ratings services, on the other hand, should demand more accountability from the ratings industry. Some important first steps might include the following: · Develop standards of measurement for Hispanic or multicultural audiences that apply to all print and electronic media. · Develop an audit team of measurement professionals who are experts in audience measurement techniques for multicultural audiences, and who work regularly with the analysis of related data. · Encourage all major print and electronic media ratings services to obtain accreditation from the audit team of multicultural measurement experts. · Communicate the complete results of these audits to the public. Who knows -- the media ratings companies just might become more profitable when the cloak of secrecy surrounding their measurement methodology is lifted. Multicultural audiences might be measured more accurately. Federal oversight might take a back seat. And advertisers might be willing to spend more money. It could happen.