Some high-priced cable networks forced some traditional TV dollars into the hands of big digital video players this upfront. Speaking at the OMMA Ad Nets conference on Monday, Donnie Williams, executive vice president, chief digital officer for independent media agency Horizon Media, estimates some clients shifted 8% to 13% more dollars into premium digital platforms during the recent upfront sales. Williams did not mention specific cable networks or digital video platforms. Many senior broadcast and cable network executives forecast -- and then claimed big CPM increases for this upfront period, anywhere from 11% to 13%. But Williams notes that some networks collapse from certain price points, where the CPM gap between cable and premium digital video sites closed significantly. "Those [TV] guys drop their rates by an unbelievable amount," says Williams. "So if last year we were looking at CPMs in excess of $30 [for some demos], let's say they dropped their rates by 75%. It was a real land grab. As a result, tons of money went through our organization to digital channels." How much money? A lot. "We were writing deals 8%, 12% to 13% -- that's the increase spend on premium digital channels," says Williams. More importantly, he adds: "We weren't taking a hit on rates." Right now, Williams says, the marketplace for some specific premium digital video sites is solid. "There were guaranteed CPMs in the premium marketplace that sold for $10 -- that's guaranteed against audience," says Williams. These CPMs are for all viewers, persons 2 plus. He notes that the future looks bright for some digital video players. "It's not going to be very long that dollars are going to be re-shuffled and people start to exhaust channels they feel are more in line with the offline [TV] channels they are purchasing."
Some sobering news for marketers and media agency executives -- consumer confidence has dropped again. Nielsen's second-quarter 2011 Global Online Confidence Survey points out that consumer confidence dropped to its lowest level in six quarters -- to an 89 index worldwide. Looking at just the U.S., confidence has fallen five index points to 78 -- which, according to Nielsen, is two points lower than the 80 points recorded during the first half of 2009, when the economy was in the depths of the major worldwide recession. "Weak economic figures, slowing manufacturing performance and inflation in Asia, an intensifying debt crisis in Europe and continuing political instability in the Middle East combined with rising household expenses in the U.S. have taken their toll on consumers' fragile confidence," said Dr. Venkatesh Bala, chief economist at The Cambridge Group, a business unit of The Nielsen Company. Nielsen research notes that 58% of global online consumers say they are still in a recession -- the most in the past year -- and more than half believe they will still be in a recession in a year's time. Thirty-one percent of U.S. consumers said they have no spare cash for discretionary spending; the number is 25% for Middle East/Africa consumers and 22% of Europeans. As a comparison, better consumer confidence news could be found in Europe (a 74 index) and Latin America (a 91 index), both of which were virtually unchanged, up one index point each. Bigger drops were found in Asia-Pacific and Middle East/Africa, but both regions were still at the highest confidence levels overall -- Asia-Pacific at a 98 index and Middle East/Africa at 94. Nielsen says those two regions remain the most optimistic.
Print advertising is not turning around as the newspaper business moves into the second half of the year, judging by second-quarter results from Gannett Co., which saw both revenues and profits contract due to continuing declines across all major ad categories. Broadcast TV advertising revenues (which have helped offset print declines in the past) were basically flat. Gannett's publishing division saw total revenues decline 4.9% from $1.03 billion in the second quarter of 2010 to $977.1 million in the second quarter of 2011, due mostly to the drop in ad revenues, which fell 6.5% from $692.2 million to $646.9 million over the same period. At Gannett's U.S. newspapers, including USA Today, retail advertising slipped 5.6%, national fell 9.8% and classifieds fell 8.2%. USA Today saw declines in travel, technology, automotive and retail categories, more than offsetting increases in financial and telecoms. Within the classifieds category, automotive slipped 4.1%, real estate was down 18.7% and recruitment was basically flat with a modest 0.4% decline. Gannett's broadcasting business (including Captivate, its place-based digital video network in office buildings) held steady, despite the lack of political advertising this year -- with total revenues basically flat at $184.4 million, up slightly from $184 million in the second quarter of 2010. TV revenues, in particular, inched up from $177.5 million to $177.7 million. As in previous quarters, the main bright spot for Gannett was in digital advertising: Total revenues at its digital segment, including CareerBuilder, grew 12.6% to $173.4 million. Including digital properties associated with its publishing and TV divisions, total digital revenues increased 12.6% to $276.2 million, or about 21% of the company's total revenues.
After posting a robust second quarter, Omnicom CEO John Wren said Tuesday that the economic outlook in the U.S. looks less auspicious than earlier in the year and the holding company expects "moderate growth" in the back half of 2011. "Though the job picture and the pace of economic improvement is more negative than it was last quarter and we remain concerned about the failure to complete a debt-ceiling deal, we believe that this situation will improve over the coming weeks and months," Wren said on a conference call. Congress is trying to hammer out a deal with President Obama on a plan to cut federal spending and avoid a default early next month. Wren said clients' spending plans continue largely unaffected, but that back-and-forth pattern has caused some near-term uncertainty. An agreement looked promising Tuesday. "Short of that, everybody has been very consistent so far in terms of what their (planned spending) is for the balance of the year," Wren said. Omnicom, which operates the OMD and PHD media agencies, posted 8.1% organic growth in the U.S. in the April-July quarter. That was slightly below the 8.2% figure for the period last year, but nearly double the growth in the first quarter of 2011. MediaPost reported Tuesday that Philips has placed its global media and creative accounts into review. Creative has been handled by Omnicom's DDB since 2003. Media is handled by Aegis Group's Carat. Asked about social media affecting business, Wren said it has become commonplace as part of any advertising or other campaign. Every initiative has "some social marketing component to it and it's becoming just part of the normal process that we go through in terms of wanting to ... extend the messaging." The U.S. accounts for 51% of Omnicom's revenues. The company recently made a major push to expand its presence in China, and Wren said it would continue to move aggressively in other emerging markets. "We expect to increase our acquisitions activities in other high-growth developing markets," Wren said. In the second quarter, overall domestic revenue was up 7.8% to $1.76 billion. Outside the U.S., revenue soared 22.7% to $1.72 billion. Global profit was up 13.1% to $275.1 million.
Media stocks posted some decent gains on Tuesday -- the best results coming to the embattled News Corp. after U.K. government testimony of chairman/CEO Rupert Murdoch. After getting battered for weeks over the News of the World newspaper scandal, News Corp. stock grew 5.5% to $15.79 per share on Tuesday. Other big movers: Comcast took on 2.2% to get to $24.47. CBS also posted stong results, climbing 2.2% to $27.96; Walt Disney was 2% higher to $39.54; Viacom also went 2% north to $56.49; and Time Warner grew 1.9% to $35.45. Other notable gainers: Lions Gate Entertainment improved 2.2% to $6.96; Dreamworks Animation SKG was 1.7% higher to $20.33; and Sony Corp. gained a little -- 0.2% to $26.65. Rumors have surfaced that News Corp. might be considering a change -- or a shift at the top -- with Rupert Murdoch, chairman/CEO of News Corp., giving up part, or all of his responsibilities to COO Chase Carey. But at a hearing in front of members of parliament, Murdoch denied that he was leaving. "I feel that people I trusted -- I'm not saying who, I don't know at what level -- have let me down," Murdoch said at the hearing. "And I think they behaved disgracefully, betrayed the company and me, and it's for them to pay. I think that frankly, I'm the best person to clean this up." Investors responded favorably. News Corp. stock price gains today amounted to about $2.2 billion. Still, the company's stock price is down about 13% since the scandal broke, a loss of about $6.1 billion in market value.
The recovery in consumer magazine advertising, already anemic at best, is in danger of collapsing entirely, judging by very weak ad page figures for August recently posted by MIN Online. Total ad pages for monthly magazines declined 7.42% in August 2011 versus the same month in 2010, according to MIN, which said 100 out of 152 monthly titles experienced declines. There were a few surprising winners, with MIN reporting substantial increases at Ladies' Home Journal, up 26.1%; Travel + Leisure, up 19.1%; Reader's Digest, up 30.3%; and Conde Nast Traveler, up 26.4%. But the overall picture was not encouraging, especially following an unusually weak second quarter. Separate figures from the Publishers Information Bureau show that total ad pages for all consumer magazines tracked by PIB (including weekly and monthly) registered a faint 0.3% increase from 43,543 in the second quarter of 2010 to 43,671 in the second quarter of 2011. In the first half of the year, 73 titles of the 212 tracked by the PIB saw ad pages increase or decrease more than 10%, with the rest experiencing smaller changes. Specifically, 33 titles saw ad pages decline 10% or more in the first half of 2011, while 40 grew 10% or more. Some 69 titles saw ad pages grow less than 10%, and 59 experienced ad page declines of less than 10%. The large number of titles showing little or no growth -- or experiencing only modest declines -- paints a portrait of an industry in stagnation, which may reflect increasing caution among advertisers worried about broader economic conditions.
The chief executive at Coca-Cola, one of the world's largest marketers, bluntly said Tuesday that the economy continues to drag in many countries, including the U.S., and the struggles extend beyond low-income individuals. "The economic recovery is weak here in the United States as well as in Europe, Japan and across most of the developed Western world," said CEO Muhtar Kent. "Many middle-class consumers, especially those in developed economies, are still feeling somewhat confused and fragile." The trend is different in some emerging markets, he said, such as Latin America, India and China. Moving forward, as more individuals move to cities and earn more, Kent indicated that Coke is well-positioned to capitalize. Coke will continue to invest in brand-building and other initiatives in North America and other developed regions, Kent said on a call with investors. In the second quarter, partly due to the economy, organic sales in the core sparkling beverage category, which includes the flagship brands, declined 1% in North America. A standout, however, continued to be Coke Zero, with 12% volume growth propelled by effective marketing, the company said. Fanta had 7% growth. Coke is gearing up for an extensive promotional effort for the 2012 London Olympics that will employ eight U.S. athletes -- notably Alex Morgan, who received a degree of stardom Sunday as she scored the first goal for the U.S. team in the Women's World Cup.
Netherlands-based electronics giant Philips is conducting a global review of both its media and creative assignments, the company confirmed today. In the U.S. alone, the client spends an estimated $350 million on ads. Carat is the client's media agency of record, while DDB is the creative agency of record, a Philips rep confirmed. Asked for comment, a Philips rep replied via email that "the process was started to review requirements and solutions suiting Philips growth strategy and objectives. Reviewing the relationship with our agency partners is basically part of normal business procedure." The company hopes to have the process wrapped up by October, the client rep added. Philips last reviewed its media assignment in 2007, when Carat successfully defended the account. Omnicom's DDB won the creative account in 2003. For Carat, Philips was one of two clients revealing global media reviews Tuesday. The other was Marriott, where the Aegis Group shop is the U.S. incumbent. That said, Carat has had a pretty good run on the pitch front the past year. Earlier this year, it won a piece of Disney's $1 billion media account. Last year, it retained its Pfizer assignment, and added Smucker ($125 million), Beiersdorf ($100 million), Red Bull ($50 million) and Relativity Media ($200 million) to its roster. In the loss column last year: RadioShack, Alberto Culver and Revlon, worth about $350 million in combined overall media spending. At press time, the agencies had not responded to requests for comment.
Marriott International just announced that it has placed the majority of its global media planning and buying business into what it described as a "closed review." Incumbent shops -- Carat (US), Starcom (Latin America), ZenithOptimedia (Asia Pacific) and MEC on a project basis (EMEA) -- have been invited to participate. Marriott said it expects to conclude the review and name its new media agency this fall. "Our business has experienced positive growth and increased globalization during the past several years despite the dynamic changes and competition in the market," stated Susan Thronson, senior vice president-global marketing at Marriott, adding, "We want to ensure that we are capitalizing on the global opportunities ahead and working with the best global media agency partner to help us grow our business going forward. We have a responsibility to explore alternative agencies to either confirm we have the best media partner in one of our incumbents or to partner with a new media agency resource." Marriott's creative account, handled primarily by Team One and McGarry Bowen, as well as paid search marketing, which is handled by Publicis Modem and other localized agencies around the world, are not affected by the review, nor are the agreements with other creative and specialized agencies globally. Marriott said Joanne Davis Consulting, New York, is handling the media agency search process.