In what appears to be the first move of its kind on Madison Avenue, one of the ad industry's top media shops has merged its traditional and digital media units into one integrated media services agency that insiders claim "reinvents the agency model." In this case, it also happens to be a model that will be headed by the digital management team, as a former traditional media head steps down. Aegis Group today will announce it is merging Carat with Carat Fusion into a single, integrated shop known simply as "Carat," MediaDailyNews has learned. The new, integrated agency will be headed by Aegis digital media stars Sarah Fay and Scott Sorokin, who will serve as CEO and president, respectively. Ray Warren, who joined Aegis two years ago as president of Carat USA and president of Carat Media Group Americas from managing director of Omnicom's OMD unit, is out. The reorganization is noteworthy for several reasons. First and most obviously, it is the first example of complete integration between a major traditional and digital media services organization. Secondly, it aligns Carat's North American operations with Aegis' burgeoning Isobar network, now the largest interactive marketing and digital media organization in the world, according to recent estimates from Paris-based RECMA. Lastly, it is a recognition that Carat USA needed to make a substantial change to its management team, following two years of mediocre new business, some major account losses, the defection of some key talent, and declining staff morale. Carat insiders say Warren never really filled the shoes of former Carat chief Charlie Rutman when he left to run Havas' MPG unit, and that they've been expecting a change for months. If Aegis wanted to truly reinvent Carat, it couldn't have picked a better team than Fay and Sorokin to do it. Fay, who most recently was CEO of Isobar's U.S. operations, including Carat Fusion, Molecular, and iProspect, was one of the agency's first digital media hires. She joined in 1998 as managing director of Carat Business and Technology, and also has a long history in direct marketing and business to business media. Sorokin, who most recently served as president of Carat Fusion, is newer to the Aegis organization, joining last year from McCann Worldgroup's MRM Worldwide unit, where he was global account leader on the Intel business. But Sorokin is one of Madison Avenue's true digital media pioneers, and has nearly a quarter century of experience working on some of the earliest digital developments, both pre- and post-Internet. Prior to that, he had a career as an advertising creative. The new team will report to David Verklin, CEO of Carat Americas.
ABC is teasing viewers this summer--just like a romantic meeting--in the marketing of its new fall TV shows. "We are taking a dating philosophy to our marketing," says Michael Benson, executive vice of marketing for ABC Entertainment. "I'm into doing teases--it's the art of the tease." Benson says that means offering less video of shows--at least initially. The "Dirty Sexy Money" promo simply offers dramatic, loud music with some video revealing the title of the show in graphics, one word at a time: Dirty. Sexy. Money. "The title is so provocative," says Benson. "[Viewers will be asking] what is this all about? It's just like dating." In another campaign, for ABC's new comedy "Carpoolers," one promo will use road-sign billboards with messages, such as "The bus is smelly," "The subway is hot" and "Carpoolers do it in the fast lane." With these efforts, ABC is returning to the racy marketing of years past, such as when it launched "Desperate Housewives" and "Lost." For instance, there was a "Housewives" promo that showed a wife's to-do list: "1. Pick up laundry. 2. Drop off husband's golf clubs. 3. Kill husband." "Housewives" also did one featuring Susan Mayer (Teri Hatcher's character), who teased in a promo: "Mary Alice, what have you done?" Yet Benson, commenting on "Desperate," is quick to add: "But we didn't tell you what the mystery was all about." Although some ABC research says fans are frustrated by the lack of video for a show, Benson says, "it means they want to see more of the show. That means it's working." This stance goes to ABC's overall strategy--not offering complete episodes of new shows on the Internet or elsewhere. By contrast, other networks do. Benson believes such a tactic jeopardizes the opening of a new series. "We won't do that," he says. "The Nielsen sample is so small, if one person sees another screening and they don't like it, they might say, 'We'll, I've seen it, so I don't have to see the premiere.' The most important thing for us is to open a show."
Hearst-Argyle Television Inc. got stung in its second-quarter earnings, sinking 32% to $17 million. The drop was partly the result of lower political advertising revenues in the period. For the quarter ending June 30, the station group's political advertising was at $3 million, versus $12.9 million for the same period in 2006. The second quarter showed political ads at $4.9 million. But as the presidential political ad season begins to ramp up, the company says that several of its markets will benefit from improved political spending in the third and fourth quarter. Other advertising business also got hit; in particular, automotive advertising declined 13%. There were declines among furniture/housewares, financial-services and fast-foods marketers. The company, however, reports increases in telecommunications, attractions, pharmaceuticals and movies. Overall, revenues were at $193.0 million--up 2.4% from second-quarter 2006. As with other station groups, H-A saw continued growth in digital revenue. The company had increases of 48% in digital-media revenues and 35% in retransmission consent fees. Still, both revenue sources are small parts of H-A's total revenue picture. Of the $778 million in revenue the company expects by the end of 2007, $24 million will come from digital ad revenues, and $20 million from cable operators in the form of retransmission fees. Evaluating Hearst stations' rating performance, David Barrett, president and CEO, noted in the company's release: "All 18 Hearst-Argyle stations that receive metered market data from Nielsen over-indexed their respective networks' prime-time ratings in May for ABC, NBC, CBS, CW and MN. Web traffic continues to grow at our station sites, and our strategy of serving our local viewers on-air, online and on-demand is on target."
TiVo Inc. has a new ad sales executive--former Viacom network executive Karen Bressner, who will now be senior vice president of advertising sales for the digital video recorder and service company. Bressner had been senior vice president of national advertising sales for Nick at Nite, TV Land and TVland.com. She also was vice president of Eastern region sales for Discovery Communications. Prior to her TV posts, Bressner worked at Young & Rubicam Inc. and Foote, Cone & Belding. In the last few years, TiVo has attempted to gain additional revenue from selling advertising and special-marketing platforms on its service, as well as providing research to advertisers. In February 2007, TiVo's Audience Research & Measurement unit started up its Stop|Watch ratings service, a second-by-second program and commercial-ratings research product. A number of subscriptions have been sold to ad agencies, networks and other marketing services.
XM posted one of its best quarters yet as it heads into a proposed merger with Sirius Satellite Radio--boasting increasing revenue, decreasing losses and promising new partnerships with automobile manufacturers. Revenue increased 22% compared to the same period in 2006 to $277 million, while its net loss dropped 23% to $176 million. Since second-quarter 2006, the satellite broadcaster has added 1,350,000 net subscriptions (the figure takes "churn" and dropped subscriptions into account), ending this quarter with 8.25 million subscribers. Thus, XM still leads Sirius by a substantial margin of 1.6 million subscribers, based on a first-quarter figure of 6.6 million from Sirius, the most recent available. Sirius is scheduled to release its second-quarter results on July 31. XM executive Hugh Panero pointed to the company's partnerships with automobile manufacturers, both new and long-standing, including GM, Hyundai, Lexus and Nissan. According to Panero, XM's automobile partnerships represent 60% of the U.S. auto market, and the second quarter saw XM radio installed in 8 million vehicles. Of these, 5.5 million were manufactured by GM. During the conference call, Panero also acknowledged his impending departure from XM, confirming the August exit announced by the company earlier this week. This may be a step toward drawing up a clean management slate for XM, as it is scrutinized by regulators prior to its proposed merger with Sirius Satellite Radio. While widely hailed as a pioneer of satellite radio, Panero ran afoul of XM investors and the Securities and Exchange Commission. A group of XM investors filed suit against Panero and four other XM executives in May 2006 over the sale of $79 million of stock the year before, accusing them of issuing false forecasts of overall subscriptions and the average cost of new subscriber acquisition to inflate stock prices in the six-month period before they sold their stock. The XM-Sirius merger is far from a sure thing, facing regulatory hurdles as well as skeptical lawmakers. Overall, Banc of America radio analyst Jonathan Jacoby says his Washington contacts "believe that there is still only a 35% chance of FCC approval, up from less than 30% a few months ago." To bolster its chances, Sirius CEO Mel Karmazin outlined a revised subscription program that the companies will adopt if allowed to merge. In the new "a la carte" program, subscribers have the option of choosing radio programming, picking only the genres they want. Under the post-merger terms, subscribers to both services would be able to choose from two basic a la carte options. The first allows subscribers to one service to choose 50 satellite channels from that service for $6.99 a month, about half the current rate of $12.95; consumers can also add additional channels beyond the basic 50 for $.25 apiece. Under the second plan, for $14.99, subscribers can choose up to 100 channels--including premium programming from the other service.
MPA Counts 62 Digital Initiatives In 2Q The Magazine Publishers of America has tallied up a record 62 new digital initiatives from magazine publishers in the second quarter of 2007--a 139% increase over the second quarter of 2006. Coming amid a raft of announcements for specific new projects, the overall count underlines the migration of magazine brands to more digital distribution. Among the big digital movers was Conde Nast, which introduced ad insertion in podcasts, video podcasts, social-networking features and integrated-marketing opportunities for advertisers. Hearst also bowed mobile sites and branded Webisodes, while Meredith offered original video content, desktop widgets and big portal redesigns. Forbes rolled out wiki features, a Facebook partnership and online databases. Hachette Filipacchi bought JumpStart, an online network for auto ads, and Bonnier debuted digital and social-networking features. Finally, McGraw-Hill's BusinessWeek created an online video hub and a free online database. A full listing of the new initiatives is available online at the MPA's Web site: http://www.magazine.org/digital/14321.cfm. The MPA began documenting new digital initiatives from magazines in 2006, to highlight the brands' adaptability to new media. Takkle Gets Funding from Sports Illustrated, NYC Takkle, a social network for high school athletes, is getting a funding boost from Sports Illustrated and the New York City Investment Fund, in a move that will bring SI articles to the site, as well as bring SI sponsorship to Takkle's "Faces in the Crowd," a special feature which highlights noteworthy high-school athletes. The New York City Investment Fund is the investment and economic development arm of the Partnership for New York City, an organization that brings together businesses to bolster the local economy. Emmis Buys Orange Coast Kommunications Emmis Publishing, L.P. has purchased Orange Coast Kommunications, which publishes Orange Coast magazine, for an undisclosed sum. Orange Coast is a luxury publication with a circulation of 60,000 targeting affluent Orange Country. This marks the most recent move in a series of purchases and partnerships in the luxury-magazine space. Lee Slattery Named Publisher of Fitness Magazine Lee Slattery is taking over the helm at Fitness magazine, owner Meredith Corp. announced Thursday. Previously, Slattery had served as vice president and publisher of Golf for Women; before that, she was the associate publisher of Glamour and Allure. Tom Hardy, executive vice president of Meredith's Magazine Group, remarked: "We are thrilled to have someone with Lee's broad experience and background join Fitness magazine. Her unique knowledge across a diverse range of advertising categories, and ability to lead major magazine brand sales groups, will be an enormous asset to the Fitness team."
Reports from the U.K. indicate that Britain's military defense chiefs are spending millions of pounds on more than 1,000 spin doctors to improve the public image of the armed forces. But they have no idea who these PRs are or whether they are having an impact. The admission was made in a report called "The Defense Communications Strategy," which also marks the government's first official acknowledgment that (surprise!) there is little or no British public support for the war in Iraq. First, it is easier to keep Lindsay Lohan on the wagon than it is to get 1,000 PR people to all pull in the same direction. Secondly, even the best that PR has to offer can't sell the public on what was clearly a bad idea to begin with--and it's only gone from bad to worse. But this is not an uncommon view of what PR is supposed to do--turn sow ears into silk purses, by any means necessary. As the tobacco industry so strikingly illustrated, you can fool some of the people some of the time, but not all of the people all of the time. At the end of the day, if you produce a substandard product (or worst still, one that will eventually kill your customers) or are dishonest or screw the consumer on service, the day will come when your corporate head will rest atop a petard in the village square--with reporters holding up the stake. Thanks to the Internet, they will get lots of help knowing whose head to sever. All sorts of insiders and malcontents and informed competitors will pull back the onion without the usual "going through channels" where reporters get "spun." The only way companies (and personalities) had to control what was written about them was to utterly control all access and information available to the press. (And have total control over who their employees were whispering to, which they most often didn't have.) That illusion of control has been greatly eroded in the Web 2.0 world. No one hates the term "spin control" more than good PR people. This implies that they have the power, ability and information to control how a reporter plays a story. But the vast majority of mature reporters can smell a spin a mile away and take into account that PR people are paid to put their client company's best foot forward--even if the body itself is riddled with cancer. The better PR folks view their role as conduits of accurate information so reporters get what they need for stories to be right. Even if that means confirming bad news about the company. Not trying to "manage" the direction of stories gains a certain amount of trust with reporters and wins the chance to react if a negative story is being written about your company. Good PR people are good sources of information about their companies and their industries, not "spin doctors." I once had a guy who was about to hire me ask: "Why would anybody want to be in PR?" Not an unreasonable question, since it is a business filled with charlatans, morons and some of the laziest people in the workforce. Ask the nearest reporter, he or she will fall over themselves rushing to tell you what they don't like about PR people--even if they would be hard-pressed to file without them. Most people prefer to have careers where if they put X amount of effort into a project they get X return on their work. But in PR, it is not uncommon to put XXX into a project to see X or nothing come back in return--regardless of the quality of your effort. To be fair, many related jobs like sales can have a similarly low hit rate. The flip side is that you can give a reporter the right idea on the right day, and the result might be a story that adds profound value to your company. PR is more than just press interviews. If done right, PR can, over the course of time, position a company very favorably with potential clients, potential investors and potential merger partners. But not if the company is little more than smoke and mirrors. And when the day comes that is revealed to the world, you will have the PR people shot at sunrise. But the gun will be pointed in the wrong direction.