After years of some of Madison Avenue’s ugliest badmouthing, Donovan Data Systems and MediaBank are no more. Following the U.S. Department of Justice’s approval of their merger, Mediaocean launches today with a mission of integrating the best of each company’s data-processing and ad agency workflow management systems and software into what it claims will become the ad industry’s new “operating system.” Importantly, the new “Mediaocean OS” will take a page out of Silicon Valley, becoming an “open source” API, or application programming interface, that will enable agencies or other third-party developers to create applications that seamlessly plug into future generations of what is now the advertising world’s undisputed backbone for processing information related to advertising, media and paying its supply chain. “That’s exactly right,” says Bill Wise, a digital native who is now CEO of the new organization, referring to Mediaocean’s mission to be open source and to allow third-parties – even companies it competes with – to plug into its API, so long as it’s what Mediaocean’s clients want them to develop. That’s a marked shift from the proprietary legacy systems that have ruled Madison Avenue for the past several decades, and which made Donovan and MediaBank the juggernauts they were. But Wise says the companies recognized the world has changed, and that the era of proprietary systems is over, mainly because it’s what their customers want. Wise says it will take some time for the two organizations – about 950 people – and their systems to become truly integrated, and that they weren’t able to begin digging deep into each other’s systems, products, and client contracts until today, following regulatory approval of their merger agreement. He estimates the first fruit of the merger will be a new digital media processing system that will consolidate the best of the ones Donovan and MediaBank had been developing separately, and that it would likely be ready for release by this summer. He says digital media has always been the big driver behind both company’s innovation, and has been the biggest source of complexity for their clients. If you want to think about that complexity, just do a Google search for the LUMAscapes chart on the display ad technology ecosystem, and you’ll get the idea. But Wise says the complexity will be magnified many times by the emergence of parallel systems for managing other rapidly emerging digital media processors and platforms including social, mobile, search, and whatever comes next, which is the main reason for the shift toward Mediaocean’s OS. Wise says the OS will likely roll out immediately after the deployment of the company’s digital media processing system this summer, and he said it will include new service and support organizations to work with both agencies as well as third-party developers, to ensure they plug in and out of the operating system as efficiently as possible. While Mediaocean’s API will be analogous to big consumer digital media platforms like Apple, Facebook and Google, Wise says it has some added complexity, mainly because it will also need to integrate with another key, but separate part of its ecosystem, the so-called “bill/pay” system that enable agencies to pay suppliers for media, and creative, as well as their own employees’ payrolls. Wise says Mediaocean also will integrate and update those bill/pay systems and will take them global shortly after the launch of its new OS, mainly because the ad industry is shifting from a heavy emphasis on local to global media payments, which itself is being driven partly by the shift toward digital media. Beyond that, he says Mediaocean will also move aggressively to develop new applications and ways of managing media and media-related data that will compete with the other third-party developers that will be building on top of its backbone. Among the first of these, he says, will be a “planning product, or an [request for proposal] automation product.” Wise acknowledges there is “some risk” associated with opening Mediaocean’s API to third-party developers, but he says the company believes it will help spark innovation internally and externally throughout the industry, and that if Mediaocean doesn’t do it, someone else will. Some of Madison Avenue’s biggest media suppliers – companies like Google, and its DoubleClick and AdMeld units – already effectively compete in that space, so by making it easier for its agency clients to work with the tools they consider most productive for their own workflow management, Wise believes Mediaocean will win. “There’s a lot of inefficiency in buying media today. And some of that has been caused by some of our systems. That needs to change,” he vows.
Michael Roth, CEO of the Interpublic Group of Companies, said the company would have slightly elevated levels of severance in 2012, due largely to slower-performing operations in a number of markets -- particularly in Europe, where severance costs tend to be higher. Speaking at the Deutsche Bank Media and Telecom Conference Wednesday in Palm Beach, Roth said the IPG shops must have “the right employee base with their revenue streams” if they are going to reach their profit margin targets for the year. “We want agencies to get ahead of the curve [on reaching their goals] and they have to take action,” he said. Europe, said Roth, accounts for about 13% of IPG revenue. That excludes the UK, which accounts for another 7% or 8% of revenue. In 2011, the revenue generation in the region was flat, and the assumption for 2012 is the same. “We managed through 2011 without a robust Europe, and we’ll continue to do that again” this year, he said. While much has been made of the economic potential of the so-called BRIC countries -- Brazil, Russia, India, and China -- the next big frontiers for Adland will be Turkey and Africa, Roth said. “Istanbul will be a great future global hub if it’s not already there.” In the U.S., Roth said the company has planned for organic growth of approximately 3%. Despite some well publicized client losses for McCann Erickson, IPG’s flagship agency network, the shop expanded its margins and grew revenues in 2011. The CEO said he expects more of the same -- or better -- from the agency this year. “McCann is a global powerhouse,” he said. “You hear about the losses, but what you don’t see is the wins all over the world.” Asked which agency has the biggest challenge this year in terms of meeting financial targets, Roth cited Draftfcb because the shop is still in the process of absorbing the loss of S.C. Johnson. But, he added, the entire organization is compensated based on organic growth and margin improvement. “We’re all marching to the same drummer." Earlier in the week, IPG received upgrades from Standard & Poor's and Deutsche Bank. S&P revised its outlook on the advertising and marketing services holding company from “stable” to “positive,” citing among other indicators the company’s steadily rising pre-tax profit margin and its reduced debt level. Deutsche Bank upgraded its rating on the holding company from a “hold” to a “buy,” based on “increased evidence that IPG is securely on track to peer level margins despite micro and macro headwinds.” At the same time, Deutsche said, IPG is returning substantial amounts of cash to shareholders.
We've all heard traditional TV will gain ground because of social media. Now it seems just the online availability of TV shows drives more TV consumption -- and likeability. TV shows that have online access for consumers are "significant and growing, but they may pass under the radar of traditional metrics," says a new Knowledge Networks study. Some 42% say the availability of this video makes them think "more highly of a TV network." This is up from 30% four years ago. Twenty-two percent say "they would never have watched some shows if they were not accessible online." This compares to 10% in 2008. There is more time with TV shows because of online access: 20% say they spent more time watching a network’s content after it became available online -- up from 9% in 2008. Among streamers, TV network sites are the preferred source of network content. This came from 57% of those who watch streaming network video. Knowledge Network says this compares to 37% who cited non-network sites, such as Hulu, as their preferred source. But people who download TV content are apt to spend more time watching TV than streamers: 30% to 20%.
Miles Nadal, CEO, MDC Partners, outlined plans for boosting the company’s stock price at the Deutsche Bank Media and Telecom Conference on Wednesday. Those plans include creating incentive rewards for managers who deliver above-target profit margins. MDC’s corporate goal is to be at a 15% profit margin in five years, up from the current 12.8%. The strategy also includes moderating M&A activity in 2012 and training new-to-the-fold companies how to better manage the flow of working capital, particularly the process of billing and collecting fees. Going forward, Nadal said, the company will also demand a greater amount of client “underwriting” before it expands further outside the U.S. He told conference attendees that the company will refinance its debt load in 2013, which will free up an estimated $15 million to $20 million a year in cash flow. The company has been on a buying spree over the past two years, spending $150 million to purchase 20 additional agencies. The cost of borrowing to make those acquisitions was expensive, given the recessionary climate at the time, Nadal acknowledged at the conference. Now trading at just under $13 per share, the company’s stock has lost one-third of its value over the past year. Wall Street wasn’t particularly pleased with MDC’s third-quarter results. While the company’s full-year organic revenue growth was a healthy 17%, annual pre-tax profits came in under the targets set by many analysts. Investors have told Nadal they want a “better balance” of investment versus return. MDC posted a nearly $85 million loss for 2011. “It’s harvesting time,” he said. Another cost area that the company will address is talent. Up until now, MDC has spent 4% to 5% more than its competitors. Nadal contended that the company has done a good job of driving growth over the past seven years at both the revenue and pre-tax profit levels. “But we didn’t manage as judiciously in between,” he acknowledged. Labor costs, he said, will be managed down so they are more in line with industry averages.
No one can accuse Reed Hastings of thinking small. The Netflix CEO reiterated his company’s estimate that it just might double or triple HBO’s distribution, which could mean 80% of U.S. homes have a subscription on the high end. Content flexibility and branding are two reasons why. “Our brand is broader,” Hastings said this week at an investor event. “HBO’s strength, just like Oxygen’s strength or Discovery’s strength, is that they stand for a very particular type of content. That’s what you need to do on a linear feed, but if you’re a personalized service without a linear feed, you can be multiple types of content for multiple demographics.” Another reason for the potential spread is Netflix’s lower price -- at $7.99 a month -- for its streaming service, compared to HBO, which comes on top of a cable bill. Hastings also cited Netflix’s more personalized features. If Netflix makes good on its estimate -– and Hastings was clear to note it is an estimate -- it could have 60 million to 90 million domestic customers. It now has about 25 million, compared to HBO’s 28 million. Looking ahead more broadly, Hastings suggested that as broadband expands globally, a mass of new Internet networks will emerge with immense growth opportunity. Current linear networks will also head in that direction, similar to HBO Go and WatchESPN, as the nature of TV hardware changes. “Just as broadcast networks became cable networks essentially, the current cable networks –- HBO, ESPN -- they’ll become Internet networks,” he said. “And they’ll all have incredible user interface with apps. The TV you buy in the next couple of years is basically like a giant iPad. Think of an iPad that’s stretched up against the wall.” “It’s got apps, some kind of touch or pointer or voice or gesture -- all the different new modalities for natural user interface,” he added. “An incredible period of innovation with smart TVs and an incredible period of innovation with new Internet networks [will be] created.” Hastings said Netflix is working to make its user experience better on smart TVs. He said there is still a slight delay between the time a person clicks the Netflix start button and when the service launches. Internet-based networks offer an opportunity to be more transformative than linear networks. A chance to “do something bigger and broader -- whether that’s social or because it’s global or because of the content production -- than anyone’s done before,” he said. Hastings suggested Netflix could partner with a cable or satellite operator down the line to distribute Netflix as part of their package. Netflix may no longer be perceived as a threat. Plus, it has a large assortment of original content that could benefit the operators. (Which would make it easy for consumers to write a single check.) “A long time ago, there was the fear that we were an Internet MSO or just an unknown,” Hastings said. “The more that we just focus on movies and TV shows -- and we’re doing more and more original content -- the more HBO-like. And they know how to deal with HBO. Many of them would like to have a competitor for HBO and they’ll bid us off against HBO in various ways.”
Even with its strong ratings, CBS made the surprising decision to end “Without A Trace” several seasons back, partly due to heavy production costs and the chance to replace it with a younger show. Expect the network to make a similar decision for its schedule next fall. “That will happen with at least one show this season,” CBS CEO Leslie Moonves said Wednesday. He declined to cite any possibilities, although “CSI: Miami” or “CSI: NY” might be less surprising than the cancellation of “Without A Trace” (2009) or “Cold Case” (2010) was. Moonves, speaking at an investor event, cast aside any of the persistent questions that CBS is overly reliant on procedural crime dramas. From a business perspective that might be less of an issue now, since those shows can be very attractive in traditional and emerging online syndication platforms. “They have a huge afterlife,” he said. As far as the ad market for CBS, he said the scatter market pacing is stronger in the current quarter than at the end of last year. CBS has “no make goods” it must give advertisers. On the potential of TV Everywhere or online distribution bringing in significantly extra ad dollars, he said that could accelerate once Nielsen has a system in place to capture all viewership, adding that Nielsen is “rapidly" getting there. As for the potential of CBS purchasing the TV Guide Network or starting a cable network as a venue to offer more new and library programs, Moonves said that has been discussed, but the current TV Guide Network pricing remains too high.
Entercom Communications, which owns about 100 radio stations nationwide, reported that total revenues decreased 7% to $95.1 million in the fourth quarter of 2011. For the full year, revenues slipped 2% from to $382.7 million. Like other big radio groups, Entercom attributed the fourth-quarter declines to the absence of political advertising associated with the 2010 midterm elections; excluding political ad revenue, fourth-quarter revenues would have been flat. By the same token, CEO David Field cited the presence of political advertising this year as a reason for optimism going forward, along with improving economic conditions and better performance from newly reformatted stations. However, he conceded that first-quarter revenues have shown modest declines so far. The radio business as a whole had a mixed 2011. In Q4, total ad revenues declined 2% to $4.5 billion, according to the Radio Advertising Bureau, following earlier year-over-year increases of 3%, 1%, and 2% in the first, second, and third quarters, respectively. For the full year, total revenues grew 1% to $17.4 billion. Overall, spot revenue declined 4% in the fourth quarter to $3.6 billion, while network increased 5% to $312 million, digital revenues jumped 8% to $185 million, and off-air revenues grew 6% to $397 million. For the full year, spot revenue was down 1% to $14.06 billion, network increased 3% to $1.14 billion, digital was up 15% to $709 million, and off-air grew 7% to $1.49 billion.
Shifting its usual Tuesday lineup -- switching "American Idol" for "Glee" in particular -- gave Fox an easy win on the night. Fox grabbed a 5.0/13 for the night, a vast improvement from a 2.8/7 a week ago. CBS dipped one-tenth of rating point to a 2.8/7 from a 2.9/8; ABC was about the same at a 1.7/5. NBC gave up more than ABC, now down to a 1.6/4 from a 2.1/5. Univision was up to a 1.5/4 up from a 1.4/4; and CW gave back one-tenth of a rating point, to a 0.4/1 from a 0.5/1. A two-hour "Idol" between 8 p.m. and 10 p.m. scored a 5.1 rating/13 share, although still down significantly from its numbers of a year ago. Still, "Idol" was above other competitors. For example, at 8 p.m., CBS' big "NCIS" slipped to a season-low 3.5/9, and NBC's "Biggest Loser" is now down to a season-low 2.0/5. But later in the evening, other shows had better luck. CBS' "NCIS: Los Angeles" at 9 p.m. gained a bit from the week before to a 3.1/8 at 9 p.m. Later on, at 10 p.m., NBC had better news with the season finale of "Parenthood" -- up to a 1.9/5 from a 1.7 rating a week ago. ABC remained even with its best-performing Tuesday show "Last Man Standing," with a 2.2/6, at 8 p.m. But "Cougar Town," "The River" and "Body of Proof" kept falling -- down to a 1.6/4, 1.5/4, and a 1.4/4, respectively. CBS' "Unforgettable" dropped to 5% for a series low, at 1.9/5. CW's "Ringer" fell to another series low with a 0.4/1 among adult 18-49 viewers, down from a 0.5 rating a week ago. A repeat of "Hart Of Dixie" took in a 0.3/1.
With tablet computer sales growing by leaps and bounds, it was only a matter of time before someone launched a magazine devoted to tablets. That moment has arrived with the launch of TabTimes, a digital news magazine devoted to the seemingly ubiquitous mobile devices -- highlighting their business and work applications along with some less serious uses. With a mix of news, features, reviews, how-to stories and analyses, TabTimes will report on the tablet industry itself, according to editor George Jones, as well as “the many ways tablets are changing how people communicate, work, shop, play, learn and organize their lives.” Reviews will cover devices, accessories, and apps, with a focus on business and productivity. TabTimes is launching as an HTML5 Web app optimized for tablets, including the iPad and Samsung Galaxy Tab 10.1. Other tablet owners can access the same content in blog format on the TabTimes.com Web site. The Web app is launching with Alfresco, an open-source enterprise content management system, as the launch sponsor. Tablet computers are taking the U.S. and the world by storm. To date, Apple has sold 55 million iPads, with 23 million units moving in 2010 and 32 million in 2011. And that’s just part of the market, according to Gartner -- which estimated total tablet sales at around 64 million in 2011, and predicts sales will rise to 320 million by 2015. By then, about 900 million tablets are expected to be in circulation.
Those who’ve known me over the years know, among other things, that I’m patently incapable of writing about or discussing digital marketing or advertising (or anything else) in any way except to challenge and refute conventional wisdom. Especially when what passes as conventional wisdom nowadays is often too expedient and too foolish to qualify as either conventional or wise. As a serial outlier -- now on the cusp of my 60th birthday and just a year or two shy of completing my third and perhaps final decade in digital marketing -- I find myself with little or no patience for the self-proclaimed experts and change agents that routinely pollute the media ecosystem with endless streams of heavily capitalized but mostly worthless technologies, empty platitudes and false promises. Truth be told, I didn’t start with much patience when I began my digital marketing career 28 years ago. People still ask how it was that my old partner JG Sandom and I co-founded what many believe was the nation’s first digital marketing agency, Einstein and Sandom Interactive, way back in 1984. “Simple,” I tell them. “We noticed computer screens everywhere we went, but no advertising on any of them anywhere. So we decided to do something about it.” In retrospect, my response may not be the sort of legendary business epiphany cited in white papers by the empty suits noted above, but sometimes history is just too pedestrian to bust through the clutter -- particularly in an age when a search for Kim Kardashian’s ass on Google returns more than 1.3 million listings (or so I’m told). Besides, popular culture can only survive to the extent that it obliterates and rewrites history on the fly. I can only hope that someone thoughtful takes a few seconds between tweets to rewrite mine someday. Looking back, my evolution into the Andy Rooney of the digital era now seems preordained, in no small measure because I never much cared what my industry colleagues and peers thought about my opinions, and always assumed -- per Upton Sinclair’s sage observation a century ago -- that most of us (at least those with jobs) are paid less to innovate and more not to understand new things. That said, please feel free to comment anyway, especially if and when you disagree vehemently with what I say or how I say it. (Those of you who agree can just send cash.) My professional mistake, of course, was to assume that there would always be a place in the industry for an original thinker who takes to heart Albert Einstein’s observation that no problem can be solved by the same thinking that created the problem. (50% ofthe Albert Keeler Principle). Apparently, however, that’s no longer a safe assumption (at least not if my current client list -- or lack thereof -- is any indication), and this column is a concession of sorts to my own reality: It’s simply way too late now to change my liver spots, and there appears to be less financial incentive to do so. Therefore, let me apologize in advance for offending anyone and -- eventually -- everyone. In my own meager defense, let me admit right to a serious and persistent drug problem: I just can’t afford any. And speaking of persistent drug problems, some of you may remember me as the crackpot who first introduced and explored the hypothesis of media as addiction some years ago, right here on MediaPost. Of course what started as mere hypothesis back then is already indisputable fact today. Media consumption -- in all its various electronic forms -- now defines and controls almost all of our daily behaviors and dialogs in virtually every meaningful way, and consumes a full 75% of our waking time, each day every day. Every form of addiction is bad, no matter whether the narcotic be alcohol or morphine or idealism.-- Carl Jung Or media. It’s time to move beyond the suspended adolescence of our obsessions and addictions and start behaving like adults. It’s time to realize that both citizenship in a free society and sobriety in a mega-addictive state begin with skepticism of the status quo. If you’re looking for faster, smarter and better ways to leverage the processing power of your smartphone (mine is a blithering idiot), you might want to look elsewhere because you probably won’t find them here. What you will find, however, is a remarkably consistent and always contrarian critique of the digitally driven assumptions, myths and lifestyles that most of us have adopted in recent years as the latest orthodoxy du jour and now take for granted. What you will find is someone old enough to remember Sal Mineo, and someone old enough to remember when a positive consumer experience for a major media franchise was defined more soberly as quiet time in the morning with a cup of coffee and a newspaper. Now, the coffee costs five bucks, the newspaper is purely anachronistic and there’s no more quiet time in the morning. What you will find is the deliberate resurrection of one of the first real victims of the digital age: quiet common sense.