The action is heating up once again on Madison Avenue's mergers and acquisitions front as two top holding company chiefs signal plans to acquire big targets. Speaking at the World Economic Forum in Davos, Switzerland, Publicis Groupe CEO Maurice Levy said he still has his eye on London-based Aegis Group, and a new offer could be made as soon as March. The disclosure follows statements last week by WPP Group CEO Martin Sorrell that he was still interested in Aegis' marketing research operations, though he is blocked from making another bid for until late this year. Sorrell, however, reportedly is considering a bid for at least part of Dutch-based research giant VNU. Sorrell has approached the group of private equity firms that have offered $8.8 billion to acquire VNU, and which are expected to break it up and sell off the pieces, Reuters reported Tuesday morning. The report did not say what VNU assets Sorrell is most interested in, but Nielsen Media Research is a good bet. WPP's AGB unit currently has a joint venture with Nielsen for TV ratings outside the U.S., and the British ad agency chief may hope to fold Nielsen's U.S. TV operations into that. On the other hand, WPP has also been building its marketing research holdings, and signaled its desire to do more vis a vis its expression of interest in Aegis' Synovate unit, indicating that VNU's ACNielsen operations might also be a good fit. Reuters reported that a WPP spokesman denied the company was in discussions with the buyout firms.
Carl Icahn continued his assault on Time Warner yesterday, announcing that he has a new CEO ready to take over the company. Icahn's choice is Frank Biondi, former President-CEO of Viacom and head of Universal Studios. Biondi would replace Richard Parsons as Chairman-CEO if the Icahn-led effort to wrest control of the Time Warner board is successful. Icahn believes TW has still-untapped shareholder value, and wants to spin off some business units and trim costs, but faces an uphill battle. Time Warner did not return a call seeking comment. Biondi, the CEO-in-waiting, will join the Icahn proxy fight and plans to implement a restructuring plan developed by investment advisors Lazard when he takes over. "In order to achieve its true potential, Time Warner's culture must change to enable each of its separate business units to develop their own strategies and capitalize on their leading roles in the rapidly evolving media sector," said Biondi in a statement. "They must not be constrained by a counterproductive bureaucracy at Columbus Circle (the site of TW's new headquarters). Time Warner has the world's leading media assets. However, its share price has failed to reflect the inherent potential of its assets." Time Warner's share price has hovered around $17 a share for several years, closing up 1.5 percent yesterday. Biondi would, in a sense, be returning to Time Warner, having previously served as CEO of HBO.
The body count at Time Inc. is growing. The company announced Monday that 66 employees were being dismissed--and that an additional, unspecified number of editorial guild employees were being offered voluntary buyout packages, and had to respond to the company's offer by February 13. Monday's casualties were distributed across the board at several unidentified Time Inc., titles. They consisted of 40 business-side staffers and 26 non-guild editorial employees, according to a company spokeswoman. The layoffs were in addition to the more than 100 firings--including several high-level, long-time workers--that came in the wake of a massive company restructuring announced in December by CEO Ann Moore. The new round of layoffs had been expected, but speculation as to how many employees would be affected varied considerably. The spokeswoman said that, including the number of unspecified voluntary buyouts, the total number of people leaving the company would not exceed 100. She added that the layoffs were "not just about cost-cutting, but also about aligning with the new structure and investing in areas of higher growth." The spokeswoman also sought to dispel rumors that more layoffs were imminent. "This is it for awhile," she said. "We don't expect anything else to happen in the foreseeable future." Earlier, unsubstantiated reports indicated that the number of dismissals could exceed 100. The moves were engineered by recently appointed co-Chief Operating Officers John Squires and Nora McAniff, along with the company's editorial director John Huey. Squires and McAniff were named to their posts as part of the restructuring announced in December by Moore, who divided responsibilities for most of the company's brands between the two executives. Under Moore's plan, McAniff was put in charge of the women's titles, including People, In Style, and Real Simple, while Squires was assigned to handle the male-oriented sports and enthusiast titles, as well as Fortune and Time. Since their appointments, the pair has made several moves to bring the different units in line with the reorganization. Less than two weeks ago, they hired two executives from outside the company for high-level advertising roles (MediaDailyNews, January 19). In those moves, Leslie Picard was named senior VP of sales for Time Inc.'s corporate sales and marketing division, a new post in a newly restructured unit. She most recently held the title of VP-publisher of Conde Nast's Bon Appetit, but also worked for six years as VP of corporate sales. Also, Thomas Beusse was named president of Time4 Media, which includes titles such as Golf Magazine, Field & Stream, Popular Science, Yachting, and SKI, as well as This Old House Ventures and Warren Miller Entertainment. Beusse was most recently the president of magazine publishing at Rodale, Inc. The restructuring and subsequent layoffs are a result of the increasing pressure Time Inc. and other large magazine publishing companies are under to retain high profit margins during a particularly challenging period for the magazine industry. Some of Time Inc.'s titles are suffering declines in advertising and circulation, and the company is faced with a growing need to develop more effective synergies with its corporate parent. In addition, the company also needs to increase the number of its digital offerings in order to more effectively compete with the growing popularity of online publications.
Describing traditional mass media as "nearly obsolete" among first-time car buyers, a well regarded auto industry researcher Tuesday released findings of a new study showing the Internet now is the dominant medium among new car buyers. The study, by the Polk Center for Automotive Studies, shows that TV has fallen to 8.2 percent, magazines to 4.4 percent, newspapers to 3.6 percent and radio to 1.1 percent of consumers who deem them the "most important informational tool" in their first-time car purchase. "The Internet's relevance in the 18- to 30-year age group has reached critical mass and is completely reconfiguring how car companies need to reach out to first-time buyers," said Lonnie Miller, managing director at Polk, who said that shift is reflected in more aggressive Internet marketing efforts by both manufacturers and local auto dealers. She predicted other emerging technologies including online podcasts, mobile media, and video-on-demand would further change the way the auto industry markets itself. "Harnessing mobile media technology will be the automotive industry's most important marketing challenge -- and opportunity -- in the next decade," she said, emphasizing that the so-called Y generation is abandoning traditional forms of advertising, and that it is imperative for automakers to develop deals with emerging media technology developers. The findings come as more bad news for the traditional media marketplace - especially local TV stations - where automotive advertising is the largest single advertising category, but which has been eroding rapidly. A total of 366 first-time vehicle buyers (ages 18-30) participated in the study between November 4 and 10, 2005. Complete results of the report are available on http://www.polk.com .
Hurricane Katrina may have devastated the media marketplace in the Gulf region, but a new report signals some bright spots for the most affected market: New Orleans. Without question, the overall media outlook remains bleak, as a large number of the market's population have resettled in other parts of the country, with no apparent plans to come back. According to a recent report by Brown University, up to 80 percent of New Orleans' African American population may never return. Now a study from Louisiana-based consultant Zehnder Communications shows just have severe the depopulation has been for some key parishes: "Orleans decreased from 460,000 to 100,000," while "St. Bernard decreased from 67,000 to 7,000," the report reveals. One embittered evacuee, Shamekeia Marshall, is typical. A former security guard for the Louisiana Supreme Court, Marshall said she plans to stay in Helena, AK, with her two young children: "I'm never going back to New Orleans, not after [being in] the Superdome." Marshall cited the demeaning treatment meted out to her family there, and her fear that "it will happen again" as reasons for staying away. Between the depopulation of the city, the destruction of consumer electronics by floodwaters, and delays in repairs to the electric grid, the pool of potential television viewers has fallen dramatically, according to the Zehnder study: "The television viewing audience in the New Orleans market was estimated to have decreased from 1.6 million to 1 million following Hurricane Katrina." Meanwhile, television ratings measurement also took a hit, with Nielsen currently saying that it will withhold numbers until November, 2006. As it stands now, Nielsen has lost touch with 195 of 415 original Nielsen families, and of the remaining 220, the homes of 35 were totally destroyed by the hurricane--meaning that Nielsen is perilously close to its minimum sample size of 180 households. Disruptions to electrical and phone service combine to make accurate measurement impossible. But there have also been some surprising upswings in certain sectors, as reflected in a survey by Kagan Research showing increased demand for advertising sales in the Central Gulf region. Michael Buckley, a researcher for Kagan, attributed the increase to "the extra influx of money for construction and insurance, and all the other kinds of things you need for reconstruction." According to Kagan, the central Gulf region overall is enjoying a 5-year cumulative average growth rate of 7.7 percent in advertising sales, as compared with 3.8 percent in the "central South" region further east. Radio advertising in particular has enjoyed increased demand for ad sales in the New Orleans region, according to Zehnder's report, which cites more commuters driving into the city from temporary residences outside, as well as increased congestion and longer drive times caused by infrastructure damage and repairs. As widely predicted, New Orleans' bust has created a boom for nearby Baton Rouge. The city's population experienced a temporary increase of 250,000 and a likely permanent increase of 50,000, according to Zehnder, with home sales rising 22 percent and the creation of perhaps 30,000 new jobs. The daily circulation of the Baton Rouge Advocate increased from 91,000 to 106,000, while demand for radio ads grew for the same reasons cited in New Orleans, although prices have settled down to around previous levels.
NBC's "The Book of Daniel" has an afterlife. Proving that nothing remains on the cutting room floor in the age of broadband, NBC said it will stream unaired episodes on NBC.com for the next three weeks. The controversial series was canceled last week after anemic ratings. The complete episode that would have aired Friday is available online free, with two other unseen episodes set to be streamed for a week each, starting the next two Fridays. Conservative Christian groups had protested the show's content, which includes a pill-popping priest with a gay son and pot-dealing daughter. Several affiliates declined to air it. NBC declined comment on whether the online availability would be an issue. The move by NBC could usher in a new era in which networks make remaining episodes of cancelled shows available on their Web sites. The strategy could drive traffic to the sites with little downside. The "Daniel" experiment promises to be of great interest to NBC Universal's Bravo unit, which recently launched BrilliantButCancelled.com--a new Trio-branded broadband channel offering failed shows, as the defunct Trio network did. Trio went off the air on Dec. 31.
For the second straight day, ABC journalists were in the difficult position of covering the traumatic story of "World News Tonight" co-anchor Bob Woodruff and network cameraman Doug Vogt. Woodruff and Vogt's battles to recover from injuries suffered in a roadside attack Sunday in Iraq led ABC's "World News Tonight" newscast yesterday, just as they did the day before. Woodruff's co-anchor Elizabeth Vargas anchored the program solo both Sunday and Monday. Vargas said both men were showing signs of improvement, but "still face a long road of recovery ahead." Both men were at a U.S. military hospital in Germany. Woodruff's brother, David, spoke with "World News Tonight" and expressed optimism that Woodruff would recover. "WNT" also featured a closing piece yesterday about the outpouring of support ABC has received in the two days since Woodruff and Vogt were injured while traveling with the Iraqi military. Woodruff and Vargas took over as permanent co-anchors of "WNT" earlier this month.
Disney Publishing's Family Fun magazine is increasing its rate base and adding new columns, features, and graphics to coincide with the magazine's 15th anniversary, the company announced Monday. The rate base increased to 2 million, effective with the February issue, from 1.9 million in 2005. When the title was acquired by Disney in 1992, the rate base stood at 200,000, and has had an average annual increase of 100,000 over the last ten years. Family Fun also increased its ad pages in 2005 to 722 from 643 the previous year for a 12.3 percent increase, according to figures from the Publishers Information Bureau. The magazine has several tailored marketing programs, including partnerships with the World's Fair for Kids and the Bronx Zoo. The title is targeted to parents with children ages three to 12, and provides coverage of creative activities, birthday party ideas, kid-friendly vacation spots, family cooking, crafts, home technology solutions, and related articles. "Our readers turn to Family Fun because of its great ideas and interaction with other families," said Jonathan Adolph, editor. "The newly designed magazine gives them more of what they love best." Family Fun Publisher Mary Beth Wright characterized the rate base increase as "a testament to the positive reception this magazine has received from readers nationwide."
In the past few months, research about the frequency of product placements appearing in TV shows has made news--in particular, the number of product placements in reality shows, such as "The Contender," which distinguished itself with an average of 500 individual occurrences for the Everlast brand. Yet new research forthcoming in the Journal of Advertising Research suggests that there is more to the picture than just counting occurrences. The traditional "frequency-based" approach works on the assumption that each "occurrence" is equal. In fact, there are a number of other dynamic and important elements at work. In TV shows or sporting events where there may be continuous, static, or repetitive occurrences of a brand, logo, or product, a viewer's attention, awareness, and engagement to that stimulus gradually decays over time. This is a well-known fact confirmed in perception (aural and visual) and attention studies. Advertisers have borrowed from this and apply a "decay rate," called a half-life, to account for the diminishing influence advertising has over time. In addition, the "frequency" approach (counting occurrences as if they are all equal) misses the entire dimension of "engagement": how people actually view, make sense of, and respond to the brand in content and attend to a show, storyline, or episode. If we take the Everlast brand in "The Contender" as an example, as the involvement and interest in the show increases, the decay rate (recall/recognition of the brand) kicks in. After a certain amount of time, attention to the Everlast brand fades away as people become more involved in the content, action, or story being presented in the show. A "crossover dynamic" occurs that mitigates the frequency effect. Another example is the red Coca-Cola cup on "American Idol"--while awareness may be high at the beginning of the show, by the end, it becomes as black as Simon's shirt. It is the context of the placement--its quality, relevance, ability to engage, involve, and hold attention--that matters. Judgments based on frequency counts alone can be distorted. The Advertising Research Foundation's MI4 project on engagement is on the right track: let's get beyond counting to the elements that recognize the power of the brand idea. Only then can we determine what works, what doesn't, and why, in the important emerging new media and product placement integration industry.