Propelled by strong growth in media services - especially digital media - Aegis Group this morning reported first half results that beat those of its major global agency competitors. With an organic revenue growth rate of 8.2% during the first half of 2008, Aegis outperformed Havas (+8.0%), Interpublic (+5.8%), Omnicom (+5.6%), Publicis (+5.4%), and WPP (+4.3%), and turned in margins that would make its competition green with envy. The first half performance came despite a tough advertising economy in key markets, as well as significant client losses and a reorganization of its flagship Carat unit in the U.S., and CEO Robert Lerwill warned of weaker results for the second half of 2008. Aegis first half performance came, in large part, from the continuing surge in demand for digital media services, and the company reported that digital revenues now account for 29% of Aegis total, up from 26% in 2007, 20% in 2006, 15% in 2005, and 7% in 2004. Aegis' digital media expansion was accelerated by 14 acquisitions during the first half, with a particular focus on fast-growing search engine marketing services within Aegis Media, and the company said its worldwide digital media organization now totals 3,300 worldwide, making it the largest provider of digital media services in the world. As a result, Aegis Media's organic revenues grew 10.0%, outpacing those of the total company's 8.2% organic growth rate, and Aegis' relatively tepid 4.9% forecast for the global advertising marketplace. Aegis Media also reported operating margins of 17.1% during the first half, and improvement from 16.9% during the first half of 2007, and much higher than the company's 10.7% overall margin for the first half of 2008. "We achieved these results despite a trading environment that is becoming tougher - with signs of slowing demand, particularly in Spain, the U.S. and the U.K.," Lerwill stated. "Consequently our revenue outlook for the second half of 2008 is less certain. We anticipate a lower rate of market growth than in the first half and are therefore taking some early steps to tighten our cost base in a number of markets. Nonetheless, we remain confident of delivering a result for the year at the upper end of market expectations."
Toronto-based agency holding company MDC Partners is spinning off a digital media management company that was incubated within its New York-based The Media Kitchen unit. The new company, dubbed Varick Media Management, a reference to Media Kitchen's address at 160 Varick Street in Manhattan, is based on an open online exchange structure that will enable marketers - and presumably other agencies - to trade digital media buys in "real time" across a variety of online exchanges, ad networks and Web sites. Varick Founder and President Darren Herman likened the new service to a Wall Street "hedge fund," and said that it utilizes proprietary algorithms to manage its client's digital media buys. "Our algorithms enable us to aggregate audiences and optimize the media mix," he boasted in today's announcement. Varick was spawned by MDC's The Media Kitchen, which is a unit of New York agency kirshenbaum bond + partners company, and will initially launch with the agency's roster of media clients. Varick grew out of a strategic partnership with MediaMath, a New York-based media trading platform that provides algorithmic bid management, analytics, and technology to media buyers. The system has access to multiple ad exchanges including Google, DoubleClick AdX, Yahoo! RightMedia, Microsoft AdECN, AOL Spot Market, TraffiQ, AdBidCentral and more than 110 million users across 65,000-plus Web publishers. The spin-off is part of a trend toward digital media entrepreneurism within Madison Avenue's leading media organizations. A variety of major shops are looking at new ways to monetize state-of-the-art media management systems beyond their internal roster of agency clients. In December, for example, Havas unveiled the development of a proprietary global online advertising network that it created on the basis of its internal Artemus online user data management system.
The head of market research company TNS came out swinging Wednesday, arguing that WPP's attempted takeover is at least partly rooted in WPP's own uncertain prospects. CEO David Lowden also suggested that WPP is attempting to capitalize on financial turmoil to acquire his company at a below-value price. Lowden said WPP's $2 billion offer, which TNS has rejected, is an indication that the market research sector is better positioned than WPP's traditional advertising base. WPP's hunger, he said, shows that "market research remains a growth industry--and at a time when there may be cyclical downturn--or, arguably, long-term decline in terms of advertising revenues." He added that a TNS (Taylor Nelson Sofres) acquisition by WPP would "clearly" help "shift the balance of their business more toward marketing services"--a stated goal. Of course, Lowden was no doubt looking to entice WPP to increase its offer price. He said TNS would have preferred to merge with fellow market research firm GfK, but the German company pulled out of the bidding Wednesday. TNS operates in 80 countries. WPP would use an acquisition to merge it with its Kantar Group and mount a challenge to Nielsen. Ironically, WPP has a joint venture with Nielsen outside the U.S. "I believe that WPP are being opportunistic ... when the market is low, they are trying to secure what they see as a strategically attractive asset at a price that is below what shareholders should insist upon," Lowden said. Lowden said that WPP's offer values TNS at 11.5 times EBITA, whereas some acquisitions in the sector recently have come in as high as 14.5 times. GfK's pullout, however, does appear to put WPP chief Martin Sorrell in the driver's seat to eventually gain control of TNS. TNS reported results for the first half of 2008 Wednesday, with 17% revenue growth. Most of its first-half growth came from overseas. The company said the U.S. market was a sore spot with declining revenues. From TNS' perspective, Lowden said the GfK merger offered more synergies--particularly in the technology area--and an opportunity to spark "very much a shift change within an industry." There were certain capabilities the merger would have brought to the marketplace that a combination with WPP would not allow, he said. In regard to WPP, Lowden said his criticism is "not to say they're not a good company. They've got some very good research businesses," he said. "They've got others that I would argue are not performing as they should do. But that's not my particular problem."
In a move that reflects the growing importance of digital revenues to radio's bottom line, CBS Radio is reorganizing its top management, the radio group's president and CEO Dan Mason announced earlier this week. David Goodman, the head of CBS Radio's digital media group, will now focus exclusively on digital strategy, including its close alignment with AOL Radio and the rollout of a new video platform. Previously, he was also the boss of its integrated-marketing division, but will give up this area of responsibility. Five years ago, as the executive vice president of marketing for Infinity Broadcasting, Goodman was responsible for forging the CBS alliance with AOL Radio. Earlier this year, AOL handed over responsibility for ad sales to CBS Radio, in addition to a content-sharing agreement. Also, Michael Weiss will take up the leadership role at the Altitude Group, CBS Radio's integrated marketing and sales force created by CBS Radio to focus on big national advertisers. (It was previously known as Infinity Promotions, then CBS Radio Integrated Solutions). Rich Lobel, an executive vice president with the Altitude Group, will help manage local and national sales at the digital media group, effectively making him a liaison between the two divisions. The news of these appointments comes not long after Clear Channel Radio announced its own top-level reorganization, including new digital roles. Last week, president and CEO John Hogan promoted Evan Harrison to president of its online music and radio division. The creation of the new position reflects Clear Channel's high hopes for its online business, which is expected to become a major revenue stream over the next decade. In November 2005, the company poached Harrison from AOL, where he was boss of the music division. Since then, he has overseen the revamping of hundreds of station Web sites and the creation of an array of new online features including video offerings. Most recently, he supervised the rollout of new on-demand services, widgets for Clear Channel audio and video, and a partnership with a network of freelance video producers to help local advertisers get into the new medium. Online is one of the few bright spots for radio, although its contribution to total revenue remains relatively small. In the first half of 2008, the Radio Advertising Bureau's off-air ad category--which includes online--grew 12% to $889 million. At this rate, the RAB claims that off-air revenue should exceed $2 billion by the end of the year. Although this is welcome news for radio, the first half of the year contributed only 9% of total revenues. What's more, online provides only part of off-air revenues, which also include experiential marketing. The RAB did not release a specific figure for online revenues.
TiVo has teamed up with Entertainment Weekly to highlight the magazine's "What to Watch" recommendations. TiVo will automatically record the suggested shows. Both entities will market the service, which will begin this fall. The move is part of TiVo's strategy to stay competitive with DVRs. TiVo currently has 1.7 million users. The partnership also allows TiVo subscribers to download Entertainment Weekly video content on the TiVo service. Viewers can see EW.com's original programs, such as "Just a Minute," "Ausiello TV," "Idolatry" and behind-the-scenes video from photo shoots. Scott Donaton, Entertainment Weekly publisher, says the alliance closes "the loop between the entertainment choices we spotlight and our audience's ability to connect directly to those entertainment experiences." In addition, the joint venture offers a new platform for the pub's video programming, currently available only on EW.com. Tom Rogers, TiVo CEO and president, added: "TiVo is all about providing easy solutions ... Entertainment Weekly's development of this complete solution for its readers is just what TiVo stands for." TiVo previously cut deals with Amazon, which lets users download TV shows and movies, and Rhapsody, a service that streams music.
Wenner Media's appointment of a new publisher for Rolling Stone, Will Schenck, is drawing attention to the woes of music magazines in 2008. With a few exceptions, this year's soundtrack for music magazines is a sad melody--maybe even a funeral dirge. Almost all the big mainstream music titles have seen ad pages fall, regardless of genre, and several are resorting to increased use of verified circulation to make their rate base. Schenck, formerly the publisher of Men's Journal, has his work cut out for him. Ad pages at Rolling Stone, the iconic music magazine, have fallen 20% through August 25 to 665, according to MIN Online. The drop is especially worrisome because it compounds a 4.7% drop in 2007, according to the Publishers Information Bureau. It looks like the venerable almanac of the American music scene is headed for two consecutive years of declines. What's more, it has massively ramped up the use of verified circulation (copies in waiting rooms and the like) to meet its rate base. Per the latest figures from the Audit Bureau of Circulations, verified circulation increased almost 1,900% from 2,439 in the first six months of 2007 to 48,474 in the same period this year. However, Schenck can take cold comfort knowing Rolling Stone isn't alone. Ad pages at Blender--Alpha Media's music mag targeting young men--have fallen 19.4% through July 21, to 336, according to MIN. That comes on top of a 5.4% decline in 2007, according to PIB. Blender also resembles Rolling Stone in its massively increased use of verified circulation--up about 1,250% from 7,458 in the first half of 2007 to 100,589 this year. The declines cut across musical genres: Vibe, a mainstream hip-hop title, saw ad pages tumble 20.4% through July 21, per MIN, to 460. And that's on top of a 19.9% decline in 2007, according to PIB. In the first six months of 2008, ABC has Vibe's newsstand sales slipping 11.8% to 97,288. Skipping genres again, Country Weekly's ad pages are down 26.6% through August 25 to 387, as newsstand sales slipped 19.4% to 90,861. The title also tripled its verified circulation, from 7,191 to 21,729. The one bright spot in terms of ad sales is Spin--for which ad pages are up 14.2% to 425 according to MIN, following an impressive increase of 24.3% in 2007. The magazine is building on its successful ad sales strategy with the recent hiring of Kelly Rae as executive fashion director to advise editorial, according to Mediaweek. In this role, she will effectively help integrate fashion brands into the magazine's content where appropriate, in a bid to attract more advertisers in that category. But even Spin is having trouble on the circulation front. According to ABC, its verified circulation increased from 0 last year to 36,951 this year, as newsstand sales fell 9.4% to 40,633, and paid subscriptions fell 10.7% to 389,919.
On a day that Lifetime announced its first-ever acquisition in the online arena, the company said it has tapped an executive to head all digital sales. Jen Duddy, the national sales director at iVillage, joins Lifetime in the newly created position of vice president, digital ad sales. On Wednesday, Lifetime said it had acquired privately held ParentsClick Network, which operates MothersClick.com, a social networking hub--and also runs a site that allows mothers to launch their own blogs. Lifetime is also acquiring the company's portfolio of over 200 parenting-related domains, including many brandable URLs, such as www.FathersClick.com and www.MothersGroups.com. The network plans to establish a host of sites in the parenting arena and a corresponding ad network. The sales aspect of that will come under Duddy, who joins after Lifetime said digital sales in the recently completed upfront doubled. Debbie Richman, executive vice president, ad sales, said Duddy will work to leverage Lifetime's brand equity on multiple properties, looking to increase integrated sales packages across them. She will also look to "develop customized offerings for clients." One area where Lifetime has achieved some success online--opening new sales opportunities--is in the casual-games area. Before joining iVillage last year, Duddy held senior management positions in in-game advertising at Electronic Arts for four years. With the ParentsClick acquisition, Lifetime Digital will now establish a San Francisco outpost. ParentsClick CEO Dietrich von Behren will head the operation.
Barack Obama has become such a dominant cultural presence that most newsstands could pass as campaign souvenir shops, but just two years ago he wasn't even on our radar. His rapid and unprecedented rise was in large part driven by his mastery of social media. So what can marketers learn about competing in social spaces from the Obama brand? Here are three guiding principles: One: There is No There Most brands have become destination-focused in the digital world. Our goal is to drive consumers to a place that we create and we control. Unfortunately, this approach is at odds with consumer behavior. Think about it in retail terms. You open stores where people are, not where you want them to be. When it comes to social networks, people have already established their roots, and brands need to adapt to them. We need to bring the brand to consumers, not vice versa. While Obama does have his own social network, mybarackobama.com, it is by no means the sole focus of his social strategy. He has also created 16 official presences in other social nets, from Facebook to Black Planet to Glee. A quick and totally unofficial membership count of the various Obama communities comes to about 4 million, only 25% of which is through the branded social network. Had Obama gone the typical route, and just built the destination, 75% of the social community wouldn't exist. Two: Brand as Silly Putty Once a brand shifts its mindset away from destination and toward distribution, it must decide how to present itself in social spaces. To do so effectively calls for a new way to think about branding. The brand has typically been thought of as a sacred object that can never be handled or altered, like a jewel behind a case. Social environments require an approach that is much more pliable - like Silly Putty. Silly Putty can be pulled and twisted, but is always recognizable - it is always "it," no matter what shape it takes. Let's give the Brand Police a new beat. Instead of worrying about minutiae like the amount of white space surrounding the corporate logo, they ought to focus on bringing the core values of the brand to life in a way that is meaningful to consumers. Instead of spending time making sure that the brand looks the same everywhere, focus on making sure that the brand behaves in a way that is consistent with its value. Three: Advertising Never Started a Movement Although Obama is the most successful online marketer ever, he has done relatively little online advertising. He's used social to power his campaign in a more meaningful way - to organize and build momentum. Advertising tells people about things. Social lets people do things. At the heart of Obama's social strategy is a desire to connect individuals to fuel the bigger movement. Like a great host, Obama uses social media to make introductions, to orchestrate, to facilitate. Join mybarackobama.com and see how easy it is to get connected to grassroots groups in your neighborhood. Next Steps Start distributing your brand across multiple social spaces, be flexible with how the brand manifests itself in those environments, and think about movements your brand could start or participate in.