Three years after forming Carat Digital to incubate an interactive TV advertising marketplace, Carat is managing to do what some of the TV industry's biggest players haven't been able to in as many decades: Get necessary, sometimes competing players to break down walls, open up, work together and begin sharing their results publicly. To be sure, the interactive TV advertising marketplace still is nascent, and highly diffused, but Carat at least has managed to field some fruitful campaigns, and perhaps more importantly, has made them public via a series of its so-called Digital Exchange meetings, and has convinced others to do so as well. That was clear during a one of the periodic Exchange meetings that took place this week in an overcapacity conference room at Carat's U.S. headquarters in New York, where scores of sweaty executives sat shoulder-to-shoulder and endured nearly three hours of presentations without air conditioning, or much if any elbow room. Most amazing of all, some of the executives in attendance were from rival media agencies that otherwise compete with Carat. "It's fantastic," beamed Carat CEO David Verklin, scanning the room and observing, "The fact that other agencies will join in and are working together is what gets me really excited, because Carat can't do it alone. MindShare can't do it alone. OMD can't do it alone. Starcom can't do it alone." Verklin is known for taking on seemingly unpopular causes, and in establishing Carat Digital and its Exchange meetings seems to have gone out on a limb that many in the industry have backed off of after decades of fits, false-starts and unfulfilled promises about a utopian advertising world that interactive TV would usher in. A world in which marketers engaged with consumers using the power of TV's sound, sight, motion and emotion to create greater returns on investment than have ever been seen. A world in which the brand building power of TV advertising is coupled seamlessly with the power of direct response and database marketing and more precision targeting that improves the medium for marketers and consumers alike. Others have come back to this vision. The integration of Interpublic's Draft and FCB operations is premised on it. The integration of Interpublic's Futures Marketing Group also is. But after a series of noble, failed interactive TV test beds and the seeming inability of big TV players to work together, many agencies and marketers are now looking past television and on to the Web for their interactive video future. That, in fact, was evident from some of the players presenting at this week's Exchange meeting, most of which included at least some Web component as part of their backchannel. The truth, according to Mitch Oscar, the executive vice president of Carat Digital and the impresario behind the Exchange meetings, is that TV and the Web are fusing and may ultimately become indistinguishable. The important thing, he adds, is that the resulting medium preserves the emotional power of conventional TV advertising. "We hear at Carat think the 30-second commercial, worth $60 billion, isn't dead," he asserted. "We think of it as a portal. That's what's so important about these technologies, which will mix together and will be called video." Put another way, Verklin said the real goal of the Exchange meetings was to develop an industry consensus that would help the next generation of television avoid some of the pitfalls that initially plagued the Internet. "What we've tried to do with the exchange is to be a place that is bringing the marketplace together so that we can work as a family or a team to bring new technologies to market that are relevant to advertisers," he said. "We didn't have that in the early days of the Web. What did we get with the Web? We got banners this big," he added holding a closely parted thumb and index finger for all to see, "and we got a CPM model." To help cultivate TV's new interactive marketplace, Carat has been willing to do something most agencies historically have not: share. More importantly, it has gotten its clients to do so. That was evident in the latest in a series of presentations Carat financial services client Chase made this week, revealing the most recent results of its interactive TV campaigns. The findings, which were gleaned from various versions of interactive TV ads for the Chase Freedom Card utilizing satellite TV operator EchoStar's Dish network video-on-demand platform, have generated lots of data, but not necessarily a great deal of understanding about how best to use interactive TV, or how it works differently than conventional TV advertising. But when Oscar revealed one particularly intriguing, but seemingly perplexing data point coming out of the campaign, Verklin drew on some traditional direct response television logic to explain it. The data showed that the Chase ads airing in so-called "fringe" dayparts actually generated a higher ratio of interactivity from viewers than 30-second spots airing in prime-time. "I don't know why," said a stymied Oscar, long one of the most knowledgeable of Madison Avenue's interactive TV pioneers. But drawing on his knowledge of direct response, Verklin noted that there historically has been an "inverse correlation" between response rates and the relative engagement of the programming and or daypart. In other words, that viewers are more reluctant to tune out of top prime-time TV shows than from syndicated re-runs airing outside of prime-time. "If you're a direct response advertiser, you love ["Gilligan's Island"], because you've seen it so many times that you don't feel like you're disrupting your viewing experience to go somewhere else," he explained. It is just such insights Verklin and his team are hoping to glean from others, and that by assembling groups of experts from diverse and varied backgrounds on neutral ground, maybe, just maybe, some will step forward for the betterment of all.
First Jon Mandel. Then Joe Uva. Now Steve Grubbs. Madison Avenue lost another of its legendary media buyers Wednesday when Omnicom announced Grubbs was stepping down as president-CEO of Omnicom's PHD North America operations to become CEO of Omnicom's Fuse Sports and Entertainment Group North America operations. Grubbs' move comes one month after Joe Uva stepped down as CEO of Omnicom's OMD unit to become CEO of Spanish-language media company Univision. The departures, taken with those of other big-name media buyers, signal something of a mini exodus from Madison Avenue, also impacting top buying positions at Interpublic, Publicis and even WPP, including: * November 2005: Bob Flood bolts the top buying job at Publicis' Optimedia unit to join MTV Networks. * April 2006: Elizabeth Herbst-Brady leaves the top buying job at Publicis' Starcom unit for News Corp.'s Twentieth Television unit. * October 2006: Bill Cella steps down as CEO of Interpublic's Magna Global Media unit to become vice chairman of Interpublic's DraftFCB. * November 2006: Jon Mandel leaves WPP's MediaCom unit to join Nielsen. * February 2007: Joe Uva steps down as CEO of Omnicom's OMD unit to join Univision. * March 2007: Steve Grubbs steps down as CEO of Omnicom's PHD North America operations to run Fuse. By any measure, that's an exceptional amount of turnover of top media buyer positions in a relatively short period of time--and in some cases represents a brain drain just as Madison Avenue is facing some fundamental shifts in the way media is bought and sold, and the way it is used by consumers. In some cases--such as Omnicom's Grubbs or Interpublic's Cella--these top buyers are remaining a part of the family, and will continue to play a role in leading media strategy. Cella, for example, serves on Interpublic's Media Council, which oversees Magna's operations. In fact, Grubbs' decision to leave PHD was part of a long-term succession plan that was put in place when Omnicom hired Matt Seiler as Grubbs' No. 2, according to Omnicom insiders. Meanwhile, Grubbs' appointment at Fuse signals a reorganization of Omnicom's sports and entertainment assets. In a related move, Robert Riesenberg, CEO of Full Circle Entertainment, was given the additional responsibility of president of Fuse--reporting to Grubbs, who reports in turn to Daryl Simm, chairman-CEO of Omnicom Media Group. Simm recently assumed some of the responsibilities handled by Uva, including oversight of OMD's global operations, although speculation is that Omnicom would eventually fill Uva's old role. As for Grubbs' senior statesman role as a member of Madison Avenue's media buying elite, that remains unclear. Over the years, Grubbs has led some important industry initiatives, including overseeing the American Association of Advertising Agencies' and Association of National Advertisers' annual Commercial Monitoring Report, before that was officially retired. He has also been Madison Avenue's front man on the eBay Media Marketplace project--an ambitious and controversial system that will test an online exchange for buying and selling television later this year. Grubbs has taken a high-profile role in that initiative lately, emceeing a controversial panel at a recent AAAAs conference, where he and other executives expressed frustration at how difficult it has become to convince sell-siders to participate in a test launch of the system. But cable selling executives in attendance took exception to what they thought was a characterization of them as obstacles, even though they had not yet viewed a pilot version of the system. Grubbs joins former Wal-Mart marketer Julie Roehm--who first raised the idea of an online trading system--as a top buy-side executive to leave the e-marketplace stage.
One of the world's biggest out-of-home advertising companies, JCDecaux, is joining forces with one of the newest, SecurityPoint Media LLC, to reach consumers on a new plane--or just before. The two companies are partnering to deliver ads to consumers at airport security checkpoints, via the trays provided for personal possessions like shoes and laptops. In a system approved by Transportation Security Administration (TSA), SecurityPoint, based in St. Petersburg, Florida, has been putting ads on airport security trays, tables and carts at Los Angeles International Airport since mid-2006. JCDecaux is only using one component--the trays themselves--for now. The Feds signed off on the novel approach in January after a six-month trial period, and the system is poised to hit the big time with the new partnership--including possible placement at JFK, Miami, George Bush Intercontinental and other hubs. Ad revenues will go to individual airports, helping insolvent municipal airport authorities raise much-needed cash. There are, however, some obvious objections. The audience is bored at best--and at worst, harried, annoyed or angry. But it could be a boon for businesses centered in the airport--such as car services, newsstands, bars and restaurants, as well as a broader range of companies hoping to tap into the concept of safety. In a January interview, Jack Sullivan, senior vice president and out-of-home media director for Starcom, was enthusiastic about the prospect. "For some advertisers, it could be great. For example, I can imagine a lot of insurance companies being interested, or any other company with a product related to security or well-being," he says. "But the ads have to be tasteful." Bernard Parisot, co-CEO of JCDecaux North America, remarked: "SecurityPoint Media has devised an ingenious, one-on-one advertising medium that not only reaches traveling consumers, it reduced their checkpoint wait times. This is a customer-service feature airports are eager to take advantage of." Joseph Ambrefe, president of SecurityPoint Media, added: "This collaboration brings together the ingenuity and operational experience of the SecurityPoint team with JCDecaux's world class presence in airport advertising."
It's early. But as buyers and sellers continue to posture in advance of the coming upfront, an influential neutral observer gives the advantage to the sell-side. Merrill Lynch analyst Jessica Reif Cohen said in a report issued Wednesday that the spring bazaar would be "stronger" than a year ago, with total dollars rising 4% to $8 billion for the four major networks. The basis for her projections is threefold: A tight scatter market encouraging advertisers to think twice about taking a pass on locked-in upfront pricing; dollars flowing to NBC for the Olympics, perhaps tightening inventory for other networks; and an economy trending upward. Reif Cohen projects--unlike a year ago when some deals were believed to be done without price increases or declines--that CPMs will rise in the 3% to 5% range for the four major networks, with ABC leading the pace at 5%. Fox will post the greatest volume increase--up 6% to $1.8 billion, she says. Among the networks with 22 hours of prime-time a week (Fox has 15), ABC and NBC will each rise 5% to $2.1 billion and $1.9 billion, respectively. Volume at CBS would be flat, but will still outpace the other three networks at $2.2 billion. Reif Cohen did write that getting a handle on true upfront performance can be like finding a needle in a haystack--since networks, with the possible exception of ABC, are unwilling to release or confirm figures. They do, however, like to convey a sense of success and flush intakes to Wall Street. In that vein, she adds, media companies "often play fast and loose" with what they hint are their upfront takes. Traditionally, sports dollars have not been counted as part of an upfront take--although nowadays, some networks "will slip sports into the numbers they discuss to cover up weakness." Not mentioned was NBC, which despite ratings straits last year posted a flat upfront--largely because it was believed to include "Sunday Night Football" dollars in the take floated in the market. (NBC would likely argue that through its sports, "Sunday Night Football" airs in prime time and is a regularly scheduled program.) Reif Cohen said her forecasts are based on discussions with advertisers and network executives--presumably each side has an agenda--and the trade press. She also tabbed the upfront as possibly "misleading," suggesting it may not merit the hoopla it generates in the media each spring. While it provides an indication of advertisers' and networks' views of the coming 12 to 18 months--and can serve as a barometer of current industry health--upfront commitments in May often fail to translate into real dollars. Advertisers have options to rescind into September and even during the January through June period. "Therefore, a strong upfront does not guarantee strong results," she wrote, "and a weak upfront does not necessarily portend a poor market." Her forecast for the robust upfront this spring is based on current scatter pricing that's up in the low double digits versus upfront costs--meaning that if an advertiser is now spending 10% or more now for spots than it would have paid in the upfront, it's likely to buy the spots in May this time around. Reif Cohen said ABC is on track for the largest CPM jumps despite a 10% drop in 18-to-49 ratings this season in regularly scheduled programs - the core of what's sold in the upfront--and its "Grey's Anatomy"-infused leadership on Thursdays, where it has increased its 18-to-49 performance by 69%. Reif Cohen projects the cable upfront will increase 3% in volume to $7.5 billion, with Discovery "the biggest winner" due to a ratings renaissance.
He probably won't stop at many Wal-Marts, even though some say it provides a window into the soul of America. But GSD&M President and founder Roy Spence this fall will embark on a coast-to-coast walk across the country with the goal to "feel America again." The 3,000-mile journey starts Sept. 30 in southern Maine and will wind through New England as the fall leaves turn. Clients needn't worry: He'll be armed with his BlackBerry and cell. "I want to connect again with real families, schools and urban and rural festivals," Spence said as he announced his impending journey at an industry event this week. The genesis of the trek is a belief that marketing cannot lose sight of consumers and perhaps boardroom discussions, and experts running "regression analyses" may have left him too far removed. "So while so many experts are trying to isolate us, I will be on the road looking for what unites us as a family and community of America," he said. It's high time, he said, to "get out of the planes, trains and automobiles, if just for a moment, and into the hands, hearts and soul of America and the world, itself." "Will this make me a better marketer? I hope so," he said. "Will it make me a better person? I am betting everything on it." Spence's journey looks to take six years, as he said he will walk 25 days a year and 20 miles a day. It will be hard to crisscross America without encountering a string of Wal-Marts. But even if provisions are low, it's unclear whether Spence will stop in--maybe for nostalgia's sake. GSD&M held the account for years before losing it late last year, then when a corporate snafu gave the agency another chance to retain it, the Texas shop declined. Spence said family members would join him annually on the trek, where he aims to traverse different regions at strategic times--the Rockies in the summer, the Great Plains in the spring, for example. Former President Clinton is expected to tag along for a mile or so, maybe through Arkansas? Even as Spence will be reachable via technological gadgets, the agency's day-to-day operations will be run by COO Duff Stewart and founder-Executive Vice President Judy Trabulsi.
Hispanics are avid consumers of all media--more so, in fact, than the general U.S. population. And they expect TV and Internet content to be delivered in tandem, according to a new joint study titled "Connected Culture" from the Yahoo-Telemundo partnership, with Experian Simmons Research. The data--gathered in an online and phone survey of more than 2,600 Hispanics ages 18-55 who regularly use Spanish at home--should stoke advertisers' already burning interest in the Hispanic market, the nation's fastest-growing ethnically and linguistically defined demographic group. According to the study, the average Hispanic consumer spends more than half of each day somehow engaged with television, the Net or communications devices, like mobile phones--often simultaneously. Respondents record an average 13.5 hours spent with media out of a total 51-hour multitasking day. Fifty percent of U.S. Hispanics also use the Internet while watching TV--in what Jose Rivera-Font, general manager, Yahoo North Latin America, referred to as "media meshing" behavior. Overall, Internet penetration has doubled from 2000-2006, Rivera-Font noted--and most of these are high-quality connections, with 80% of online Hispanics using broadband. Rivera-Font added they that are also big fans of video on the Internet, with about 50% searching online for content from favorite TV shows. Peter Blacker, senior vice president of digital media for Telemundo, said that coordinating TV programming with online content has paid off in a big way for the network's Yahoo-branded Web site, with unique visitors rising from 1.2 million in January to 1.7 million in February. "Fifty percent look on the Internet as an extension of TV," Blacker observed, "so we've created Web content with the goal of super-serving passion points." "We're able to drive traffic from television with messages in the shows and during commercial time that send viewers to Yahoo-Telemundo for more content," he adds. For example, telenovela fans can go to Yahoo-Telemundo for behind-the-scenes features, and fans of Mexican league football visit to see interviews with coaches and players. What's more, U.S. Hispanics who use the Internet include a high proportion of early adopters of new technology: 79% have a digital camera, versus 59% of the population at large; 90% have a cell phone, versus 79% overall; 61% took photos on a mobile phone, versus just 28% overall; and 66% send text messages, versus 38% overall. Rivera-Font attributed the high connectivity and early adopting behaviors to a need to stay connected with friends, family and the Spanish-language media--common characteristics of immigrant communities generally, and U.S. Hispanics specifically. Why is the Hispanic population in general highly desirable for marketers? According to another recent report produced by the Magazine Publishers of America, from 2000 to 2006, the purchasing power of Hispanics/Latinos climbed more than 63% to $798 billion. The report also cited a prediction from the University of Georgia's Selig Center for Economic Growth that "by 2011, it will top $1.2 trillion." Per the same MPA report, although median household income remains lower than the national average, parts of the population are moving into the middle class at a rapid pace. In the top 85 metropolitan areas, 14.3% of Hispanics ages 18-34 had household incomes of $50,000 or more in 2001, comparing favorably with 13.6% of the overall population of those areas.
Cablevision Systems Corp., like other cable operators, may be focusing on the high-profile triple play of video, data and voice services, but the company wants to remind investors of a somewhat forgotten area of lucre: advertising sales. With some $300 billion in ad messages spent in the U.S. per year, and with Cablevision reaching a 4% U.S. consumer footprint with its services, there is a potential for some $12 billion to $15 billion in ad sales, according to Tom Rutledge, COO of Cablevision Systems, speaking at the Bank of America 2007 Media, Telecommunications and Entertainment Conference yesterday. Cablevision pulls in around $250 million a year from advertising sales--or 6%--of its total revenues. "Who else reaches almost 70% of their universe [with its customers] with a full suite of video, data and voice services--yet is such an inconsequential part of the advertising mix?" he asks. In the future, with two-way interactive video platforms, as well as Cablevision's Internet and voice services, Rutledge believes this will change. "We'll create opportunities that will fulfill the needs of business to reach our customers." Rutledge said the triple-play part of the business is strong. "Selling has increase consistently in triple play," he said. Right now, the company's basic cable penetration is at 69%, its data services is at a 46% share and its voice services, a 26% share. Cablevision's market share of the voice business has been rising at about 10 percentage points per year, and data services at around six percentage points per year. Rutledge also said the $90 retail price tag of the triple-play package isn't expected to rise any time soon. The consumer churn rate for its triple-play service package is low when compared to consumers who buy separate Cablevision services.