Drug giant Novartis has awarded its $600 million plus global media account to Publicis Groupe’s Starcom, after a review. The company began the search process a year ago, then kicked off the review formally in the early spring. The incumbent is WPP’s MEC. Executives there couldn’t be reached for comment. In the U.S., the company spent $300 million on ads in 2010, according to Kantar Media. For the first nine months of this year, U.S. spending totaled about $235 million, per Kantar. The drug maker stated: “After an extensive evaluation and careful consideration, we can confirm that Novartis has selected Starcom MediaVest Group (SMG) as our new global media agency. While we are not remaining with GroupM, we appreciate the relationship we have had with them over the past several years.” Sources indicated that Starcom will take over the Novartis account around the end of the first quarter of 2012. The client narrowed contenders in the review down to two finalists, including MEC and Starcom, back in October. Interpublic’s Initiative also participated but was eliminated just before the final round. It’s been an active year for big pharmaceutical reviews. Earlier this month, Bayer consolidated its global account with WPP’s MediaCom. Initiative had been the U.S. incumbent on the assignment. Last December, GlaxoSmithKline shifted its estimated $700 million media assignment in the U.S. from MediaCom to Omnicom’s PHD. Around the same time, Pfizer reviewed and retained Aegis Group’s Carat for its $1.2 billion U.S. media assignment. Novartis manufactures over-the-counter remedies, such as Excedrin headache tablets and cold-and-flu remedy Theraflu, as well as prescription drugs such as Diovan HCT for high blood pressure. The company reported net sales of more than $50.6 billion in its 2010 annual report, up 14% from the previous year. It’s been a bumpy ride for MEC recently. Last week, Toys R Us shifted duties on its $100 million assignment to OMD after a review. While it’s been an uneven year for the WPP shop, it has brought in $1 billion in net new business worldwide, punctuated by the $200 million global Marriott win in October. The shop made a change in its North American leadership in the fall when CEO Lee Doyle stepped down and was succeeded by Marla Kaplowitz. She had previously been president, U.S. clients and head of planning at the agency.
Kantar Media says U.S. advertising spending continues to slow down -- just inching up 0.4% in the third quarter. For the first nine months of the year, that puts U.S. advertising expenditures at $104.7 billion -- a 1.5% rise over the same period a year ago. Jon Swallen, senior vice president of research at Kantar Media North America, stated that the ad numbers ran “from plus 4.1% in the first quarter, to plus 2.8% in the second quarter and now a barely palpable plus 0.4% for the July to September period. "During third quarter, an expanding number of the largest marketers became even more conservative with their ad budgets, and these reductions have neutralized the healthy spending growth occurring among midsized advertisers," he added. The more positive story came from cable TV networks -- a 6.5% hike in the third quarter -- most from direct response advertisers. This area made up for slowing spending from auto manufacturers and restaurants. Overall, cable TV grew 9.9% for the first three months of the year. Network television -- still the biggest advertising category -- witnessed better news in the third quarter, up 0.2% from higher budgets from movie studios and consumer package-goods marketers. But for the first three quarters of the year, network TV spending is still down 5.7%. Much of this, according to Kantar, came from losing from a shift in college football and basketball programming that moved to cable networks in the first quarter of 2011. The biggest gains in any category came from Spanish-language TV, up 18% during the third quarter, followed by syndication TV, which was up 14.8%. Local TV lost 5.7% in the third quarter and 2.7% for the first nine months of the year -- all due to less political advertising money. The Internet had a mixed picture: It was up 15.8% in the third quarter for display advertising, but paid search was down 14.4% -- mostly from lower media buys from insurance companies, legal services and medical care providers. Much of the same was true for the first nine months of 2011 -- display spending increased 10.1% while paid search fell 2.1%. Consumer magazine ad expenditures witnessed a 1.4% drop in the third quarter, versus gains earlier in the year. Kantar says there has been demand from the personal care, apparel, prescription drug and direct-response categories, but continued big reductions from food companies and auto manufacturers. Overall for the first three quarters of the year, magazines has grown 2.2%. Outdoor spending slowed during the third quarter, but still registered gains of 3.2% for the third quarter and 8.6% for the nine months. National radio was up 2.0% in third quarter and up 2.2% year-to-date. Spot radio lost 2.3% in July-September and was off 1.9% for the first nine months of the year. Local newspapers -- despite robust budgets from local auto dealers and an uptick in financial advertising -- posted a 4.4% spending decline in Q3 and were down 3.9% year-to-date.
Out-of-home media platform VeriFone Systems has struck a new deal with NBC's owned TV stations group. The deal continues to include news, information, as well as entertainment programming seen in taxi cabs, gas stations and other digital OOH platforms. VeriFone has access to some 1 million retail installations and over 60,000 gas stations. The deal will also include interactive advertising opportunities through e-commerce, couponing and microsites. Bud Waller, vice chairman of VeriFone, lauded NBC's sales performance and programming, stating that the "new consumer experiences will benefit advertisers and consumers.” Initially, the deal will cover taxis in nine markets, including New York, Chicago, Boston, Las Vegas, San Francisco, Washington, D.C. and Miami. For example, in New York, taxi customers can see local news and weather updates from WNBC New York and content from NBC Sports Group, NBC News, NBC’s prime-time and late-night offerings, as well as several of its cable networks and Universal Pictures. VeriFone recently upgraded its technology to its entire fleet of 6,800 New York taxis. The companies say advertisers will also have the ability to integrate both mobile and social features into their campaigns, track user engagement and enable riders to select from a range of coupons.
Cable operator Charter said Monday that it has hired former Cablevision executive Tom Rutledge as president-CEO. Last week, it was announced that he would be departing Cablevision as COO. At least one analyst has referred to Rutledge as the most valuable executive in the cable industry. He begins his new post Feb. 13, and will join the board of directors. The 58-year-old Rutledge had been Cablevision COO since 2004 and had led a series of technological innovations and system upgrades, the acquisition of the Bresnan systems and the spinoff of AMC Networks. Cablevision has also been more active than some other operators in fighting the rising costs of content and network carriage fees. Rutledge takes over at Charter for Michael Lovett. Eric L. Zinterhofer, Charter’s chairman, stated that Rutledge has “the rare combination of operational expertise and strategic vision.” Some analysts speculated that Rutledge left Cablevision because he was frustrated by relations with the Dolan family, the controlling shareholders -- but he may have simply received a better offer and the chance to serve as a CEO. Charter serves at least 1.5 million more customers than Cablevision, according to the NCTA.
Transit advertising company Titan has won the exclusive right to sell media along Amtrak’s Northeast Corridor connecting New York City to Washington, D.C., including all Amtrak-owned ad surfaces in Washington’s Union Station, Penn Station in Baltimore, the 30th Street Station in Philadelphia, and Penn Station in New York, as well as over 40 other stations with Amtrak media. Amtrak’s station advertising inventory includes two-sheets, three-sheets, stair risers, floor graphics, wall banners, kiosks, back-lit dioramas, column wraps and clock media. The Amtrak contract complements Titan's existing transit media relationships in the Northeast Corridor, where it also had deals with the Southeastern Pennsylvania Transportation Authority (SEPTA), Port Authority Transit Corporation (PATCO), and New Jersey Transit. The Northeast Corridor is the busiest rail network in the country, according to Amtrak, which handles about 250,000 NEC passengers on a typical weekday, riding an average 4.9 million passenger-miles. In 2010, Amtrak’s Northeast Corridor services carried about 10.4 million passengers total on Acela Express, Regional Service or other trains, including 3.2 million taking the Acela. Passengers who ride Amtrak’s high-speed Acela service form a particularly desirable audience from an advertising standpoint: the average household income of Acela passengers is $147,000, according to the 2010 Acela Ridership Profile, with 92% college graduates and 83% reporting a household income of over $100,000. Over half the Acela passengers fall in the 35-54 age range, skewing 70% male and 30% female. There is 90% travel on Acela for business, with 69% identifying themselves as corporate executives, CEOs, business owners or managers, or high-level professional, technical, sales and marketing occupations.
Rentrak, the would-be challenger to Nielsen in local-market ratings, has cut a deal with another large station group to subscribe to its ratings based on set-top-box (STB) data. Even more newsworthy is that the station group, Post-Newsweek, plans to use the data as a currency for deal-making. Post-Newsweek operates the NBC station in Detroit and CBS affiliate in Orlando. Nielsen has been pursuing its own STB data product for local markets, which it says should be launched next year. "The industry has been waiting for decades for a viable and robust competitive environment in the television measurement arena … we will be using Rentrak ratings as a currency at all of our television stations and urge all broadcasters, agencies and advertisers to support Rentrak's census-based ratings solution," Post-Newsweek CEO Alan Frank stated. Post-Newsweek had been subscribing to the Rentrak numbers for its Miami and Houston stations, and after early results said it has opted to expand. Rentrak culls STB data from cable operators Charter and Midcontinent Communications, Dish Network and AT&T, and says it collects it coast-to-coast from 19 million TV sets. Rentrak recently signed up Carat as it looks to build its roster of national-agency clients. Its strategy in markets such as the ones that Post-Newsweek operates in are to sign up an initial station and then hope the others follow. With Post-Newsweek using the data as a currency, if buyers embrace that, other stations may follow sooner.
While alcohol marketers have agreed to voluntary, self-imposed limits to avoid advertising to underage people, many of the same brands are building digital followings that may include children and teenagers, according to the Center on Alcohol Marketing and Youth at the Johns Hopkins Bloomberg School of Public Health. Although CAMY did not claim that marketers are deliberately targeting younger consumers online, the youthful skew of the Internet audience and the appeal of certain beverages in this demographic makes it more likely that this is the case. Noting the success of digital-marketing efforts for alcohol brands, CAMY found that 10 leading alcohol brands have more than 16.5 million people "liking" their Facebook brand pages. fans of 10 brands known to appeal to youth had uploaded 15,416 user-generated photos of themselves to the brand pages. Pictures uploaded to the Facebook pages included images of Santa, toys and sexually suggestive photos, violating the voluntary marketing standards agreed to by the industry. While none of this proves that marketers are trying to target youth, CAMY noted that youth are disproportionately represented on Facebook. While 13- to-20-year-olds make up 13.6% of the general population, they represent 22% of Facebook users. Separate studies have recently found that a large proportion of 12-year-olds evade the age limit on Facebook by lying about their age -- often with the help of their parents. CAMY also tested the social media “age affirmation” technology that is intended to prevent exposure of alcohol marketing to underage youth, but found these measures “essentially meaningless." The influence of alcohol ads on youth may be especially insidious since they are increasingly disguised as entertainment content. Here the CAMY report quoted Jeff Chester, the executive director of the Center for Digital Democracy, who warned: “The alcohol industry's digital and social media tactics are blurring the boundaries between advertising and content with unprecedented sophistication.” Marketers have been inconsistent in their attempts to cut back alcohol marketing to youth in traditional media, with some media showing greater reductions than others. From 2001-2009, the average exposure of underage readers to alcohol ads in print magazines fell sharply, from about 15,000 gross ratings points to just 8,000, according to CAMY. But over the same period, youth exposure to alcohol ads in TV soared 71%, due to increased advertising for distilled spirits on cable TV. Thus, the average number of TV ads seen by youth increased from 217 in 2001 to 366 in 2009. In fact, youth exposure to TV ads for alcohol increased more rapidly than exposure for adults 21 and over during the same period.
Smart TVs -- those 2D TV sets with Internet-access -- are poised to be purchased by many more holiday shoppers this year than 3D TVs. Demand for smart TVs is nearly twice the demand of 3D TVs, says Dallas-based Parks Associates. Still, the survey notes that 73% of consumers plan to purchase TV sets with advanced features that include 3D, Internet connections, and other capabilities. Kurt Scherf, vice president, principal analyst, Parks Associates, stated: “The combination of a maturing product ecosystem with great holiday deals is putting smart TVs within the reach of the American middle class.” Parks says middle-class homes with annual incomes of $50,000 to $75,000 are responsible for the rise of smart-TV purchases. It says 20% of middle-income homes intend to purchase smart TVs this holiday season, which compares to only 12% of those intending to buy with incomes above $75,000. Cord-cutters alert: Parks says those intending to buy will likely be pay-TV subscribers looking to cancel or downgrade their pay-TV service within the next 12 months. Parks says smart TVs are part of a longer-term plan for budget-conscious entertainment consumers.
One of the nation’s largest newspaper publishers is about to get a little bit smaller, as the New York Times Co. revealed Monday that is in advanced discussions to sell its Regional Media Group, consisting of 16 local newspapers in Southern states and California, to Halifax Media Holdings. The companies didn’t disclose a price for the deal. The NYTCO Regional Media Group’s Florida newspapers include the Sarasota Herald-Tribune, The Ledger in Lakeland, TheStar-Banner in Ocala, The Gainesville Sun, and the News Chief in Winter Haven. Its California newspapers include The Press Democrat and the North Bay Business Journal in Santa Rosa. In North Carolina it owns the Star-News in Wilmington, among others. The Regional Media Group newspapers boast a combined weekday circulation of over 400,000, but like the rest of the newspaper business, it has taken hits in the last couple years. Total revenues declined from $497 million in 2006 to $277 million in 2010, a 44.3% drop in just four years. That was a significantly faster rate of decline than the flagship New York Times Media Group, where revenues slumped 25% from $2.08 billion to $1.56 billion over the same period; total revenues for NYTCO fell 29.4% from $3.21 billion in 2006 to $2.26 billion in 2010. While the rate of decline has slowed, losses continued into 2011. In the first nine months of the year, revenues at the Regional Media Group declined 6.7% to $190.5 million; that compares to an overall decline of 2.2% to $1.6 billion for NYTCO’s total revenues. NYTCO has also said it would consider selling its New England Media Group, centered on The Boston Globe, and has received expressions of interest from a group of local investors, called the 2100 Trust, led by Aaron Kushner, an entrepreneur from Wellesley, MA, whose previous experience includes seven years as CEO of Marian Heath Greeting Cards. To date, this has not resulted in a sale of the New England Media Group. Separately, in July of this year the NYTCO sold over half its stake in the Fenway Sports Group, which owns the Boston Red Sox, the prestigious Fenway Park venue and associated cable TV properties.