In a rare instance of backing down, Rupert Murdoch’s 21st Century Fox has withdrawn its offer to buy Time Warner. "Time Warner management and its board refused to engage with us to explore an offer which was highly compelling,” says Murdoch, chairman/chief executive officer of Fox, in a release on Tuesday. “Additionally, the reaction in our share price since our proposal was made undervalues our stock and makes the transaction unattractive to Fox shareholders." Ever since Fox made its unwelcome bid to buy Time Warner -- parent company of Warner Bros. studio, Turner Broadcasting, HBO and other entertainment assets -- for $80 billion, made public on July 16, Fox’s stock has steadily dropped, from just over $34 a share to a little over $31 on Monday, August 4. After hours trading on Tuesday, August 5 of Fox stock shot up 8% to $33.79 on the news of the withdrawal. At the same time, Time Warner’s stock dropped nearly 10% on the news to $76.80. A proposed Fox price for Time Warner was valued at around $85.00 a share. Time Warner issued a statement: “Time Warner’s board and management team are committed to enhancing long-term value... Time Warner is well positioned for success with our iconic assets, including the world’s leading premium television brand, the world’s strongest ad-supported cable network group, and the world’s largest film and television studio.” Ever since the proposed deal was revealed, public media advocates have railed against the move, which would have consolidated more TV and movie studio content under one roof -- including 40% of the cable TV market and 30% of the movie studio releases, according to one estimate.
Following similar moves of other media companies, Gannett Co. will split into two publicly traded companies -- one for its TV/digital assets and one for its publishing businesses. Gannett doesn’t have a name yet for its broadcasting and digital business. Gracia Martore, president and chief executive officer of Gannett Co., will be chief executive officer of the company when the separation is completed. Martore stated: "The bold actions we are announcing today are significant next steps in our ongoing initiatives to increase shareholder value by building scale, increasing cash flow, sharpening management focus, and strengthening all of our businesses to compete effectively in today's increasingly digital landscape.” Last year, Gannett made a major move to shore up its TV business by acquiring Belo Corp. for $1.5 billion. The group will have 46 television stations that Gannett owns or services -- the largest independent station group of major network affiliates in the top 25 markets. In a boost for its digital business, Gannett also announced it is acquiring complete ownership of Cars.com -- by acquiring an additional 73% equity interest in Classified Ventures LLC for $1.8 billion in cash. Its other large digital business includes CareerBuilder.com. Gannett’s publishing business will retain the Gannett name. In addition to its national newspaper, USA Today, Gannett has 81 local U.S. daily publications. Robert J. Dickey, currently president of Gannett's U.S. Community Publishing division, will become the company’s chief executive officer. Shares of Gannett stock were up 0.3% to $34.40.
Yahoo on Tuesday said it has fully integrated comScore’s audience verification service into its ad buying and reporting platforms. The two companies first announced their partnership at Yahoo’s NewFronts event in April The Web giant will use comScore’s validated Campaign Essentials (vCE) solution for measuring audience delivery across display and video campaigns, whether bought directly or programmatically. The deal is aimed at giving media buyers unified campaign data and analytics, including viewability, brand safety and whether an ad was seen by the desired target audience. “Integrating comScore vCE with Yahoo ad platforms provides advertisers with one place to buy, measure and analyze campaigns against all available data,” stated Eric Lange, vice president of product at Yahoo. The companies plan to extend the ratings service to mobile campaigns and expand the offering internationally in the next several months. In June, Yahoo announced the rollout of its Media Rating Council (MRC)-accredited viewability measurement solution called Prime View. Through the new service, advertisers can ensure that they only pay for display ads people can actually see. Through such steps, Yahoo aims to keep up with rivals like Google -- which integrated comScore’s vCE into DoubleClick earlier this year--and entice big brands to spend more on its platforms. In the second quarter, the company reported an 8% decline in display ad revenue, which CEO Marissa Mayer blamed on softness in the PC-based display market, and its transition to new ad systems internally.
This week brought more consolidation in the outdoor advertising industry, with Lamar Advertising Co.’s purchase of Marco Outdoor Advertising, which owns over 150 signs around New Orleans, including six digital displays. The acquisition strengthens Lamar’s presence in the south, especially in the region’s metro areas. Terms of the deal were not disclosed. The Marco signs are concentrated along major roadways around New Orleans, including the Pontchartrain Expressway, a section of Interstate 10 and U.S. Route 90, which serves high-traffic destinations including the city’s Central Business District and the Superdome, as well as along roads serving suburbs on the north shore of Lake Pontchartrain. Lamar itself is based in Baton Rouge, LA. The newly acquired signage qualifies as part of a real estate investment trust, in line with Lamar’s new corporate structure as an REIT, which should allow the outdoor advertising company to substantially reduce its federal tax burden. Companies can qualify as REITs if their business is based primarily on real estate holdings and they also distribute at least 90% of their annual taxable income to investors through dividends. Lamar -- whose property, plant and equipment across the U.S. is worth $3 billion -- first revealed it was considering converting itself into an REIT in August 2012 and submitted a formal request to the IRS in November 2012. Lamar received approval from the IRS to proceed with its conversion to an REIT in April of this year, and expects the transition to be complete in time for the 2014 tax year. Lamar has been making strategic acquisitions to fill in coverage and extend its reach across the southern half of the U.S. Last August the company announced acquisitions across the Southwest and California, among them Empire Outdoor’s roadside billboards in Riverside, San Bernardino, and San Diego counties, as well as in the L.A. metro area and the Inland Empire region, extending to the Nevada and Arizona borders. Lamar’s competitors are also consolidating through acquisitions. Last month, CBS Outdoor Americas, recently spun off by CBS Corp. as a stand-alone company, acquired the outdoor ad assets of Van Wagner Communications for $690 million in cash.
Marking further industry consolidation, programmatic ad platform Rocket Fuel on Tuesday announced its intention to acquire [x+1], a demand-side platform (DSP), for approximately $230 million. Rocket Fuel will acquire [x+1] in a cash and stock transaction, per a release. Rocket Fuel will pay $100 million in cash and roughly 5.4 million shares of Rocket Fuel. [x+1] also has a data management platform (DMP), meaning that Rocket Fuel is buying both media-buying technology and data storage technology (and data) in one fell swoop. Mark Zagorski, CEO of eXelate, another DMP, believes the acquisition “exemplifies the continued emphasis on data and data management solutions as the key part of the marketer solution stack.” “The addition of [x+1] will allow Rocket Fuel to expand its portfolio of solutions to a larger addressable market,” stated George John, chairman and CEO of Rocket Fuel. “We look forward to welcoming the [x+1] employees, with whom we share a passion for solving tough problems for our customers, to our team.” John Nardone, CEO of [x+1], will step into the role of executive vice president and general manager at Rocket Fuel. “We are all very excited about adding the [x+1] team and products,” said Richard Frankel, president at Rocket Fuel, in the company’s Q2 earnings conference call. "We believe this transaction makes our company much stronger," he said, adding that it moves the company in the direction clients want it to go -- particularly in regard to data management and content optimization features. The news comes on the same day as Rocket Fuel’s Q2 2014 earnings report. The company saw its revenue grow 70% and its gross profit grow 80% year-over-year. The company had revenue of $92.6 million in Q2 2014, and gross profit of $45.7 million. Despite these growth figures, shares of Rocket Fuel have tumbled nearly 25% after hours. The company reported a net loss of $9.8 million and revenue missed projections. It attributes the Q2 miss to "tighter control of client spend by the agencies' internal trading desks and a shift toward direct licensing by advertisers, as well as recent customer concerns about inventory quality on exchanges that impact the entire industry." The company has lowered its revenue projections for the second half of 2014 and expects to see revenue between $96 and $100 million in Q3 2014. Its full-year revenue projection is now between $403 million and $427 million, down from $420 million to $435 million. Rocket Fuel plans to close the [x+1] transaction “as quickly as possible,” per a release. The company’s Q2 earnings report notes that the transaction is expected to close in Q4 2014. Once the deal closes, Rocket Fuel expects [x+1] to account for $18 to $22 million of revenue, per quarter. The ad tech industry has seen a flurry of ad tech M&A activity in the past month, including this Rocket Fuel and [x+1] deal, Facebook's purchase of LiveRail, RTL Group's majority stake purchase of SpotXchange, Taboola's acquisition of Perfect Market, LinkedIn's purchase of Bizo and Yahoo's acquisition of Flurry.
Yahoo didn't run afoul of an anti-spam law by allegedly sending thousands of SMS messages to the wrong person, the company argues in new court papers. The company says in new appellate papers that it didn't violate the Telephone Consumer Protection Act, which prohibits companies from using automated dialers to send SMS messages without the recipients' consent. Yahoo says its SMS system, which converted emails to text messages and sent them to users' phones, didn't rely on automated dialers. “Messages sent through the Email SMS Service were not sent randomly, in bulk or to sequential numbers -- only to specific phone numbers manually inputted by individual Yahoo users,” Yahoo argues in a brief filed last week with the 3rd Circuit Court of Appeals. The company is asking the court to uphold U.S. District Court Judge Michael Baylson's decision dismissing the lawsuit, which was filed last year by Philadelphia resident Bill Dominguez. Dominguez, who is asking the appeals court to revive his lawsuit, alleged that Yahoo daily sent him dozens of unwanted SMS messages after he purchased a used smartphone from T-Mobile. He said in his complaint that he believed the phone's previous owner arranged to receive SMS alerts from Yahoo whenever he received emails. Dominguez -- who doesn't have a Yahoo email address -- says that he received almost 5,000 SMS messages from Yahoo in the five months preceding his lawsuit. Dominguez said he complained to Yahoo, but was informed that only the phone's former owner could arrange to stop the texts. He asserted in the complaint that at one point he threatened to resort to litigation. The Yahoo supervisor Dominguez was speaking with allegedly replied: “So sue me.” Yahoo suggests in its most recent papers that Dominguez should have asked T-Mobile to give him a new phone number. “Rather than simply asking his carrier to assign him a new number, Dominguez filed a complaint seeking to recover ... statutory damages against Yahoo for allegedly violating the TCPA,” Yahoo says. Even though Bayson agreed with Yahoo's argument that its system didn't meet the definition of an automated dialer, a different trial judge presiding over a separate lawsuit ruled that Yahoo's SMS-sending system was an automated dialer. California resident Rafael David Sherman alleged in that matter that Yahoo told him via SMS that he had received an instant message from someone else. Sherman said in his complaint that he never gave Yahoo his cell phone number or consented to receive SMS messages from the company. U.S. District Court Judge Gonzalo Curiel in the Southern District of California denied Yahoo's request for summary judgment in that lawsuit. Curiel specifically rejected Yahoo's argument that it didn't use an automated dialer system to send Sherman a message. Earlier this month, Curiel denied Yahoo's request to reconsider his ruling.
Omnicom's branding firm Siegel+Gale has formed a strategic relationship with Gramco Company, the largest branding firm in Japan. S+G and Gramco will continue to operate independently, partnering when appropriate opportunities arise, the firms said. As part of the alliance, a Gramco executive will be based in S+G's headquarters in New York City and S+G senior executives in the Asia-Pacific region will be interfacing with their equivalents at Gramco on a biweekly basis as a means of cultivating opportunities from both firms. Terms of the deal were not disclosed. There are two primary reasons this deal is happening now, says Jason Cieslak, president, S+G’s Pacific Rim region. "Gramco has seen an increasing lift in their Japanese-based clients that are looking at North America as a strategic priority. This aligns with Japan's economy starting to recover." Moreover, each side benefits from this partnership. For S+G, it underlines its priority to grow market share in the Asia-Pacific region. "For Siegel+Gale it works well as we continue to focus on trying to scale and grow our business in Asia, and China specifically," says Cieslak. "Gramco's offering in that market will complement what we are doing there. They have been in China for more than 10 years, so they have stronger relationships, bigger business, and some services that we don't offer in the region." Gramco, whose strength is with creative and planning, now benefits from S+G's reach, as well as its experience in research, analysis, and strategy. "Gramco's commitment to developing memorable, clearly defined brands, together with Siegel+Gale's ethos of simplicity, makes this a perfect cultural alignment that will provide tangible value to our clients," said David Srere, co-CEO and chief strategy officer at S+G. Gramco initially reached out to S+G to inquire about this collaboration. Gramco has previously used alliances in the past to help service their clients in regions where they don't have offices. There were no discussions regarding an acquisition or a majority stake. "This was a pretty easy alliance to form given the fact that we complement each other in the three main markets where this is going to happen—China, U.S. and Japan," says Cieslak. The 27-year-old Gramco established its subsidiary in Shanghai in 2004, and opened a branch office in Beijing in 2006. Shanghai headquarters provides many Japanese and Chinese enterprises with consulting and design services, while the Beijing office mainly provides "Spatial Branding" services, as well as general branding services. As part of the DAS Group of Companies, a division of Omnicom Group, Siegel+Gale has offices in New York, Los Angeles, San Francisco, London, Dubai, Shanghai and Beijing.
Cablevision Systems Corp. posted better revenue, and more revenue per customer, for its second-quarter reporting period -- yet it continued to lose cable video customers. The Long Island, NY-based cable operator overall revenues grew by 3.7% to $1.6 billion with cable revenues up the same 3.7% to $1.5 billion. It had a net loss of 28,000 video customers to now total 2.77 million. Cablevision’s average monthly cable revenue per customer rose 5.5% to $152.72. Some of this came from a sports surcharge for its video customers. Cablevision’s cable revenues include video, high-speed data and voice customers. While Cablevision has been generally losing cable customers over some time, it also lost 9,000 broadband customers (now at 2.779 million) and 7,000 voice customers (to 2.27 million). Midday trading of Cablevision’s stock was down almost 5% to $18.50 on Tuesday. Overall company net income dropped to $94.5 million from $135.7 in the second quarter of 2013. But $107.5 million of its second quarter 2013 results came from discontinued operations. Net income from continued operations in the second quarter 2014 was triple its level in the second quarter 2013 -- to $91 million from $28.2 million. Cablevision’s local advertising sales grew 12% to $41 million. Cablevision’s other businesses -- which include its newspaper Newsday and its local TV news channel group, News 12 Networks, had essentially flat revenues at 0.4% to $94.9 million. Cablevision continues to build up its broadband and WiFi areas. James Dolan, president/chief executive officer of Cablevision Systems, said, in an earnings call: “It’s connectivity that consumers really wants.”
ChoiceStream, a demand-side platform (DSP), on Tuesday announced the launch of an analytics and reporting dashboard, dubbed cs.Console. The company announced the console at VentureBeat’s GrowthBeat event. ChoiceStream built the dashboard's underlying measurement technology, according to CEO Eric Bosco. The data is available in real-time, and Bosco said it also includes data from campaigns that advertisers ran with ChoiceStream in the past. Real-time analytics have been hot in 2014, as advertisers look to keep pace with the media they are buying. While ChoiceStream's new console is for analysis and reporting only -- meaning that advertisers can’t adjust campaigns based on the analytics straight from the cs.Console -- Bosco said in an earlier statement that the company’s algorithms already adjust campaigns in real-time. In other words, the new analytics hub is intended to give marketers a deeper look into campaign performance, rather than blindly trusting what algorithms do behind closed doors. In one sense, it's putting more power into the hands of the people.
Demonstrating the power of organic listings in search engines on a company's financial profits, online deals supplier RetailMeNot reported a sharp decline in Q2 2014 earnings Monday, and attributed the loss in organic search traffic -- and presumably, ranking as one main factor. Revenue came in slightly below the street. "The cause was the well-publicized Google SEO algorithm (Panda) changes," RBC Capital Markets Analyst Mark Mahaney wrote in a research note. Although its organic and paid-search techniques are attuned to search engine algorithms, the company's dependence on search engines for traffic means any changes to Google's algorithms could negatively impact RetailMeNot's Web site traffic. Desktop revenue grew 27% year-on-year to $49 million in the June quarter, slightly lower than RBC estimates of $50 million, mainly due to lower desktop revenue per visit, "likely due to the Google algorithm change," per Mahaney. RetailMeNot CEO Cotter Cunningham said during the earnings call that company executives believe the worst has passed. He said the site's organic search traffic continues to improve from the lows, but the "unexpected change did reduce the growth rate of our organic search traffic." Calling the downslide a "headwind against our existing plan for the second half of the year," Cotter explained the company estimates the top line impact for our full year outlook will come in at 5% of projected revenue and the impact on the second half outlook is approximately 8%, compared with guidance the company gave in May. Mobile revenue of $10.7 million grew 114%, compared with the prior-year quarter, "decelerating vs. 133% Y/Y growth in Q1," per RBC. Mobile visits of 53 million in the June quarter rose above RBC expectation of 50 million. RetailMeNot reported that mobile app downloads grew 161%, compared with the prior-year quarter, to about 18 million by the end of the June quarter. Consumers can expect a new app before the 2014/2015 school year.
The Media Rating Council (MRC) recently announced a new initiative focused on curbing digital ad fraud. Specifically, the project intends to “modernize and strengthen industry standards for the filtration and disclosure of invalid digital traffic,” per a release. The MRC spells out several ways it plans to improve the filtration and disclosure of fraudulent traffic, including an expansion of filtration requirements that will ask more of “downstream” partners in the ad ecosystem. The MRC also wants to see more consistency -- even among different MRC accredited vendors -- when it comes to filtration results. No specifics were given as to how the MRC plans to do this. Per the release, the project is already underway and will take place over the next several months. The MRC plans to release its findings by the end of 2014.
The mantra for the digital age is “content is king.” But without context, content is a king without a crown. Context is the surrounding environment adding relevance and meaning to content. Unless content is placed in the right context, with consideration to the reader’s intent, it will be worthless. Before advertising started to turn to third-party advertising networks and audience re-targeting, the relationship between content and context was clearer. Certain publications targeted specific audiences, and advertising could be placed where it made the most sense while reaching what was assumed to be the right audience. Think Norwegian Cruise Lines being advertised in Condé Nast Traveler, for instance. Now that digital display is focusing more on audience targeting, advertisers seem to be hitting the right audience, but unfortunately, often at completely the wrong moment. The finesse is in serving content that is not just fine-tuned for the specific audience but also to the context of the surrounding content the audience is viewing. After all, a site visitor might not be interested in deals on cruises when she is looking for advice on a snapped Achilles tendon. The user is in a completely different frame of mind. Another classic example of advertising being placed out of context is when premium brands unknowingly place their ads on sites that are anything but premium themselves. Think Swiss Bank advertising on Uncle Tony’s summer fun blog. Re-targeting can also provoke a stalking sensation, which should be another wake-up call for the industry. I booked, paid for and took a trip to New Zealand two months ago. Despite how much I enjoyed it, I am unlikely to need another hotel there any time soon. Please stop showing me ads if they are no longer relevant! Making context integral to content In this framework, context is the measure of matching a user’s profile with relevant content in the right environment. As targeted advertising and programmatic buying become de facto in ad sales, systems need to become more sophisticated and more human. Brands need to move beyond targeting people based solely on who they are, and shift toward targeting based on what that individual is doing right now. Content (advertising or otherwise) needs to be responsive to the total environment in which it is served. Digital advertising and content recommendations precisely targeted to the right users are complex processes, but emerging technologies manage the complexity and source insight from existing and real-time behavioral and contextual data. Reconnecting the disconnect While media buying becomes more programmatic – focusing largely on cookie-based, isolated information about a user – emerging tools enable publishers to target not only the right users, but the right users while they are in the right frame of mind. Publishers are at last in a position to offer efficiency, targeting accuracy, and effectiveness based on an understanding of a user’s intent at a given moment. These systems are built specifically to create great contextual user experiences: ensuring that the mighty “content” king is never left without his “context” crown again.
So far “native advertising” has been an inside baseball argument. Few ordinary citizens know the term, even if almost all of them get tricked regularly into clicking content they think is an informative “article” but turns out to be a shameless pitch to close a sale. My wife complains about this regularly. A denizen of health articles and all of the latest studies on vitamin benefits (our kitchen cabinet runneth over), she resents bring misled by pieces that appear to open with objective research and only over time reveal themselves to be coming out of the mouths of supplement manufacturers who are just peddling pills. She is a computer scientist who is fond of doing the math and finding the right sum of this equation that adds editorial stylings to advertising. “I don’t know who is talking to me and why,” she sums up eloquently. The sum total of blurring these lines is the diminished credibility of any and all content. But now people like my wife will be able to put a name to the blame as the “native” moniker starts creeping outside of industry parlance and into the mainstream. John Oliver of HBO’s “Last Week Tonight” delivered an epic takedown of the practice this weekend that not only spoke from example but named names and called out media. Oliver began by pointing out the privileged position he occupies as a member of HBO, an ad-free “business model, which no one has been able to adequately explain to me yet.” He characterized the business and editorial sides of the standard media model as the difference between “Twizzlers and guacamole,” because each is tasty on their own, but when mixed together ”you make something really gross.” Oliver had great fun with the ineffectiveness of traditional banner ads. Did you know, for instance, that if you mistakenly do click on an online ad (and mistake is the only rational explanation), you will land on a page that asks if you are all right and if they should call for help? This notorious ad invisibility, of course, is what leads us to “native advertising.” To Oliver’s credit, he chose his targets well in calling out two of the key figures in the rise of the “natives.” After showing a clip of BuzzFeed founder Jonah Peretti, he then described the young entrepreneur’s face as embodying Buzzfeed itself: youthful, appealing “and yet somehow you want to punch it.” Mocking Buzzfeed’s sponsored listicles, Oliver admitted that his own show used the format to promote itself before its premiere. But Oliver saved the most direct call-outs for the big old media. Of Time Inc. CEO Joe Ripp’s claim he sees no problem with native advertising that is clearly labeled, Oliver responded with an IAB study showing most visitors “cannot tell the difference” between ads and editorial. Oliver stated the obvious that only media kingpins in deep denial can’t admit: “Of course they can’t, because it is supposed to blend in. It is like a camouflage manufacturer saying that only an idiot cannot tell the difference between that man and foliage.” Anyway, deer are too smart to be deceived: “You have to respect deer.” He sealed the deal with a clip I had never seen before, in which Ripp pretty much disavows any understanding of what “church and state” even meant in the first place. Yikes. New York Times ad chief Meredith Levien got called out for denying any diminished consumer trust as a result of sponsored articles. “It is not meant to be trickery,” she was shown saying. “It is meant to be publishers sharing its storytelling tools with marketers.” “And that’s not bulls**t,” Oliver mocked. “It is recycled bovine waste.” Admitting that part of the problem is that we consumers are unwilling to fund directly independent newsgathering, Oliver’s epic takedown ended with a modest proposal: Put news into the ads. After all, if the advertising is creeping into the editorial, isn’t it only fair that the news should take a place in the ads? The clip, which has already garnered nearly a quarter of a million YouTube views, is worth all 12 minutes of your time, if only for the mock Coke/News spot.