Despite an apparent slowdown in the expansion of the advertising economy in recent quarters, U.S. ad spending is now projected to grow 4.9% next year, making it the highest comparable growth rate in a decade, according to an updated outlook from Interpublic's Mediabrands' Magna Global unit. At that rate, advertising is projected to expand at a much greater pace than the GDP, which currently is projected to rise 3.1% in 2015. Among the reasons cited by Magna is the fact that the "personal consumer expenditure" component of the GDP -- one of the most important factors in advertising expansion -- has been upgraded to expand 4.8% in 2015. "This stronger economic outlook leads us to increase our forecast for advertising revenues," Magna states in a report released early this morning. Its current forecast of 4.9% represents a 0.4-point improvement from its previous forecast of 4.5% for 2015. "This will mark a notable acceleration" from 2014, and the U.S. ad industry's greatest normalized rate of expansion since 2005, the report predicts. The report does address circumstances surrounding the surprising slowdown in the U.S. ad economy so far this year, especially in the second quarter, which Magna attributed mainly to lower-than-anticipated spending from political and Olympic advertising budgets. As a result, Magna is slashing its outlook for U.S. ad expansion this year to 5.1% from the 6.0% it forecast previously in April. "The first half of 2014 was marked by a huge contrast between the first and second quarter," the Magna report states, noting that the rate of U.S. ad expansion "slowed down sharply" in the second quarter following a "decent" expansion in the first quarter. Magna said three primary factors contributed to the first-half malaise, including: a “sudden” dip in economic activity during the first quarter that caused some marketers to “freeze” part of their annual budgets; tough comparisons with the first half of 2013; and a decision of some marketers -- especially automotive -- to shift second-quarter budgets into the first quarter due to the Winter Olympics. Among the major media, Magna predicts that share will continue to shift toward “digital” and that a combination of factors will begin to erode demand for network television. “Supply will gradually shrink due to acceleration in the erosion of viewing. Average CPM inflation was lower than previous years, for both broadcast and cable networks, in the recent upfront TV sales for the broadcast year 2014-2015,” Magna noted, adding that a corresponding shift toward “programmatic buying in digital media” and the “stabilization of cost” for premium digital video inventory is beginning to shift demand among “advertisers that were until now very loyal to traditional television, in particular the consumer package goods sector (food, drinks, personal care and household goods), automotive and the entertainment sector (movie releases). Marketers in these sectors have started to explore the increasing opportunities created by the integration of consumer and sales data in digital media buying and targeting.” As a result, Magna now forecasts that “one in three ad dollars will be spent with digital media” in 2015.
Consumer packaged goods companies are at a tipping point. Those that implement effective digital game plans now are likely to establish a significant competitive edge for the years ahead, while those that don't will risk stagnation, loss of share and shrinking sales over the next several years, stresses a new report. The report, "The Digital Future: A Game Plan for Consumer Packaged Goods," was produced by The Boston Consulting Group (BCG), Google and Information Resources, Inc. (IRI) for the Grocery Manufacturers Association (GMA). It points out that digital's current 1% penetration of the overall U.S. CPG market will likely expand to 5% by 2018 (some categories could see penetration of 30% or more by 2018) and could grow to as much as 10% soon after — what the researchers call a "1-5-10" scenario. Digital penetration of 5% will account for nearly half of total CPG growth over the next five years, and early movers will have the opportunity to establish positions that will be hard to dislodge, the researchers emphasize. “Consumers are embracing technologies, devices and services that make everyday tasks such as shopping, cooking and even commuting quicker, easier, more fun and more efficient," observes Patrick Hadlock, partner at BCG and a coauthor of the report. "This is fragmenting the purchasing pathway as consumers regularly switch back and forth between digital and physical channels, and interact digitally both in and outside of stores.” According to the report, while many companies have established a digital presence — a Web site, some digital advertising, a presence in social media — most haven't fully integrated digital into their operating models, built a Big Data analytical capability, pursued a multichannel or omnichannel strategy, or tailored their product offerings to the digital or e-commerce marketplace. GMA commissioned the research to help its members prepare for the digital future. The report concludes that individual companies need to address digital from the top, building new capabilities and making difficult choices and investment trade-offs to defend their margins, share and brand equity. The researchers say that all companies can make a series of low-risk, "no regret" moves to position for digital success. These recommended steps include developing an integrated strategy for how far the company needs to go and how to get there; shifting investments to establish a digital brand presence; building the necessary capabilities and organization for a fast-moving digital world; and shaping the evolution to digital with channel partners. Manufacturers also need to recast existing capabilities like product placement, marketing content development and supply chain management for a digital world. While all of this may sound daunting, the report stresses that the critical key is top management's leadership in getting the entire organization to get on board with an adaptive investment strategy -- a big change for many companies. A traditional three- to five-year planning approach doesn't cut it in an environment in which consumer expectations are being set by technology companies that have deep pockets and thrive on rapid change. Instead, CPG companies need to experiment with various approaches, quickly measure results, drop approaches that aren't working, and focus resources on those that are working. A copy of the report can be read or downloaded at www.bcgperspectives.com.
The mystery of who would acquire Twitch Interactive ended Monday after the company, along with its new parent, Amazon, confirmed the acquisition of the three-year-old video gaming platform. Earlier reports claimed that Google would pay $1 billion to integrate Twitch into YouTube. Terms of the deal were not disclosed. Amazon said that in July more than 55 million unique visitors viewed more than 15 billion minutes of content on Twitch produced by more than 1 million broadcasters, including individual gamers, pro players, publishers, developers, media outlets, conventions and stadium-filling esports organizations. Jeff Bezos, founder and CEO of Amazon.com, said in a prepared statement: "Like Twitch, we obsess over customers and like to think differently, and we look forward to learning from them and helping them move even faster to build new services for the gaming community." Digital video advertising in the U.S. will reach $5.96 billion this year -- up 41.9% from 2013, per eMarketer. By 2018, digital video ads will total $12.71 billion, eMarketer estimates. In the U.S., Amazon accounted for 1.4% of the $43 billion digital ad market in 2013, and should reach 1.7% this year, according to the data firm. Emmett Shear, Twitch CEO, thanked the community on the company's blog. "I personally want to thank you, each and every member of the Twitch community, for what you’ve created," he wrote. "Thank you for putting your faith in us. Thank you for sticking with us through growing pains and stumbles. Thank you for bringing your very best to us and sharing it with the world. Thank you, from a group of gamers who never dreamed they’d get to help shape the face of the industry that we love so much."
Mediahub/Mullen, part of Interpublic ad shop Mullen, has been appointed media agency of record by Viacom’s TV Land network. There was no media AOR incumbent. The network said that Mediahub’s “immediate focus” would be devising multiplatform plans for the marketing and promotion of its program Younger as well as support for other new and returning series. Younger is written, executive produced and directed by Darren Star (“Sex and the City”). The 30-minute single-camera comedy stars Sutton Foster, Hilary Duff , Debi Mazar, Miriam Shor and Nico Tortorella. It will premiere in January 2015. TV Land is the second Viacom-owned network client of Mediahub, which has been leading media planning and buying for VH1 since last year. And the shop has other network TV clients as well, including Nat Geo -- which along with Mullen, just won an Emmy in the “Social TV Experience” category for the program “Live From Space.” "Mediahub's vast experience attracted us to the shop,” said Kim Rosenblum, EVP, marketing and creative, TV Land. “They have a strong competency and knowledge across multiple disciplines and showed tremendous passion for our new programming and brand.” TV Land is targeted to fortysomethings with a menu of original, acquired and digital programming. It is now seen in over 98 million U.S. homes.
Big media companies are moving to lessen their reliance on advertising revenue in favor of other sources of revenue including subscriptions, syndication, and production fees, according to a new analysis by SNL Kagan. Among the examples cited by SNL Kagan is CBS Corp., which has decreased its dependence on advertising revenues in part by spinning off CBS Outdoor, leading CEO Les Moonves to boast: “We're now much closer to a 50/50 split of advertising and non-advertising revenue.” Going forward, CBS Corp. will rely more on licensing and syndication revenues generated by its original content, with Moonves noting that in the long run, “ownership of content is the key to our success.” CBS Corp. is also providing programming to other media companies, including Showtime, The CW and ABC. SNL Kagan also pointed to the Walt Disney Co.’s moves to further diversify its revenue sources, citing a recent statement by Disney CEO Bob Iger: “We've made a conscious decision as a company to essentially not be as reliant on advertising as we were in the past.” According to Iger advertising currently contributes a bit over 20% of the company’s total revenues, reflecting deliberate strategic decisions. Going forward, Iger added:, “you're going to see basically continued pressure on traditional advertising platforms.” Meanwhile revenues from other sources, including theme parks, are growing. Time Warner’s decision to spin off Time Inc. -- its troubled magazine publishing division -- as a stand-alone business, indicates a similar strategic repositioning. In the future, Time Warner will rely more on subscription revenues from sources like HBO and entertainment revenues from Warner Bros. Whether it’s deliberate or not, other media conglomerates are also seeing ad revenues decline as a proportion of their total business, SNL Kagan noted. The list includes NBC Universal, where ad revenues at its broadcast segment fell 1.7%, even as total revenues for the broadcast segment jumped 4.9%, thanks to growth in retransmission and content licensing revenues. Ad revenues at NBCU’s cable networks segment declined 2.2% in the most recent quarter, although total revenues for the segment increased 2.6%. Separate analyses of U.S. advertising spending have revealed growing seasonal variations, due to events including elections and Olympics, and in many cases big media companies are seeking to reduce the impact of these seasonal variations on their bottom line. Digital advertising, the fastest-growing part of the ad business, remains in many cases a fairly small contributor to the bottom line for most major media conglomerates. For example, Disney’s interactive media segment produced revenues of $270 million in the second quarter of 2014, representing just 2.2% of the company’s total revenues of $12.47 billion in the quarter.
The Chinese government plans to launch its own operating system (OS) in October to lessen its dependence on Microsoft and Google, per the government-run Xinhua news agency. The OS will initially support desktop devices and later expand to smartphones and other mobile devices, Ni Guangnan of the Chinese Academy of Engineering told the People's Post and Telecommunications News. The government wants its independence from Android, Windows and other Western technologies. More than a dozen mobile OS developers support mobile in the country, but none have independent intellectual property rights. While the Chinese government-run OS will support the country's push to build IP, it's not clear how the move will affect search engine optimization and paid-search advertising on search engines from outside China. Kenshoo CMO Aaron Goldman views the news as positive for Baidu, China's leading search engine, and believes any new government-development online technology similar to the OS will bolster homegrown Chinese apps and make it more difficult for companies outside China to penetrate the Chinese market. Developers will build the system based on the Linux kernel rather Android, per reports earlier this year. The move follows concerns about U.S. surveillance and a Microsoft monopoly probe. In May, China banned government use of Microsoft Windows 8 OS, and last year voiced concerns that Google had too much control of smartphones being built for the Chinese market. China has been a sore spot in the side of U.S. manufacturers since Western companies contracted with local manufacturers to build computers, laptops, smartphones and other products for less than what companies would paid to manufacture and test these products in the United States. During the past 12 years there have been ongoing reports about misuse of intellectual property and copyright abuse. In May, five Chinese military hackers were charged with cyber espionage against the U.S.
Driver Digital, a cross-platform family company, will represent the YouTube star of “Its JudyTime” and “ItsJudysLife” for new media and product launches. Judy Travis, who made her name on YouTube with nearly a half-billion views, has moved beyond fashion and beauty tips into the lifestyle arena. As part of the agreement, Driver will cast Travis in long-form broadcast and cable TV shows, while expanding her brand into publishing and retail merchandise in a range of categories. “We’re moving forward with our YouTube stars to help transform their brands into 360-degree platforms that will allow them to connect their massive fan base with products and content they can trust,” states Driver Digital cofounder and CEO Scott Weitz. Recently, Driver Digital negotiated sponsorship agreements for Travis with Old Navy, TRESemmé and Kao Corporation’s John Frieda's hair-care line. Weitz says Travis has “great potential to become a household name, synonymous with home, family life and kids,” which matches the company’s mission of family entertainment that extends to games, mobile and Web. Sister company Driver Media recently hired Julie Stone as executive producer, since she has extensive experience in the fashion, beauty and apparel fields, having worked with Victoria’s Secret, Michael Kors, Ralph Lauren, Revlon, Neutrogena and Bath & Bodyworks. Separately, Driver Digital’s “Cool School” channel on YouTube posts 5 million views monthly, reaching kids and their millennial parents, a target audience for its pre-roll advertisers.
As part of its ongoing war on spam, Facebook on Monday vowed to reduce “click-baiting” headlines, and improve the formats in which shared links are presented to users. The social giant defines “click-baiting” as when a publisher posts a link “with a headline that encourages people to click to see more, without telling them much information about what they will see." “Posts like these tend to get a lot of clicks, which means that these posts get shown to more people, and get shown higher up in the News Feed,” Khalid El-Arini, a research scientist at Facebook, and Joyce Tang, a product specialist at the company, explained in a co-authored blog post. The problem, however, is that “when we asked people in an initial survey what type of content they preferred to see in their News Feeds, 80% of the time people preferred headlines that helped them decide if they wanted to read the full article before they had to click through,” the pair noted. “Over time, stories with ‘click-bait’ headlines can drown out content from friends and Pages that people really care about." Facebook says it is sniffing out click-bait by looking at how much time people spend reading articles away from Facebook. The more time they spend reading articles, the more likely they are to be worthwhile content. As part of its mission to deliver more valuable content to users, Facebook is also looking at the ratio of people clicking on content compared to people discussing and sharing it with their friends. “If a lot of people click on the link, but relatively few people click Like, or comment on the story when they return to Facebook, this also suggests that people didn't click through to something that was valuable to them,” according to El-Arini and Tang. Separately, the social network has found that people often prefer to click on links that are displayed in the link format -- which appears when they paste a link while drafting a post -- rather than links that are buried in photo captions. The link format shows some additional information associated with the link, such as the beginning of the article, which makes it easier for people to decide whether they want to click through. This format also makes it easier for people to click through on mobile devices, which have smaller screens. As such, Facebook plans to now prioritize showing links in the link-format, and show fewer links shared in captions or status updates, El-Arini and Tang said on Monday. In their studies, these posts have received twice as many clicks compared to links embedded in photo captions. “In general, we recommend that you use the story type that best fits the message that you want to tell -- whether that's a status, photo, link or video,” they said.As part of a broader effort to improve relevance, Facebook recently began prohibiting the promotion of brand Pages and social plug-ins with what it considers to be “artificial incentives” like “rewards,” and access to apps and content. “We want people to like Pages because they want to connect and hear from the business, not because of artificial incentives,” Harshdeep Singh, a software engineer at Facebook, said at the time of the change. “We believe this update will benefit people and advertisers alike.” Marketers, however, may still incentivize Facebook users to log in to their apps, check in at a particular location and enter a promotion on their app's Page. Executives said the changes should not impact legitimate businesses and might even discourage dishonest marketing tactics on Facebook. “Over the last 12-18 months, major advertisers and big brands have organically moved away from tactics such as ‘like gating’ -- or providing incentives to gain new Likes,” Jamie Tedford, CEO of Brand Networks, one of Facebook's “preferred marketing partners,” told Social Media & Marketing Daily. “This policy is likely to only affect a small group of bad actors who have always, and will continue to try to game the system for short-term gain,” Tedford added. Social experts said the changes seemed inevitable. “As mentioned in the company's [second quarter] earnings call, Facebook remains focused on creating [a] superior user experience,” said Addie Conner, chief innovation officer at SocialCode, a Twitter marketing platform partner. Facebook "recently identified that, when brands explicitly request audiences to ‘like’ a piece of content, it disrupts user experience -- often resulting in users ‘hiding’ posts, marking them as spam, or expressing low relevance in future surveys,” Conner noted. Facebook appears to be encouraging greater engagement levels -- often at the expense of Page-level reach. In fact, Post-level reach declined 27% over the past quarter, according to data released in May by Shareablee. Yet among 150 brands, total organic reach grew 11% between the fourth quarter of 2013 and the first quarter of 2014 -- thanks to a 65% rise in engagement rates -- the social analytics start-up found. Engagement appears to be a big problem across social networks. Indeed, the vast majority of posts on social media sites produce no engagement, according to recent study from SocialFlow, which analyzed 1.6 million organic posts on Facebook, Twitter and Google+ by ordinary users, media companies, publishers, and marketers. Facebook said it is expecting developers to update their apps to comply with the policy changes by Nov. 5.
Turn, a company with both a demand-side platform (DSP) and data management platform (DMP), has upped its ante on programmatic TV via a partnership with AdMore, an automated TV ad-buying platform. The news comes several months after Turn first announced its foray into programmatic TV. This partnership will see AdMore integrated into Turn’s DMP. “Turn recently announced the launch of our programmatic TV offering and we are thrilled to bring it to market with AdMore,” stated Paul Alfieri, SVP of marketing at Turn. Turn clients can now create and target audiences across display, mobile, social, digital video and linear TV. It should be noted that “programmatic” in this case does not mean real-time bidding (RTB); this partnership is about data-driven TV audience targeting and the elimination of many manual processes. Brendan Condon, CEO of AdMore, said to Real-Time Daily that the AdMore-Turn partnership allows national brand advertisers to find TV audiences and “digitally send campaigns to hundreds of TV station partners simultaneously and monitor their performances as the ads run.” He added: “Programmatic TV can only be considered possible when you can dynamically insert an ad campaign into linear programming content -- which is not available today but definitely on the horizon for the industry.” AdMore is a division of Media Properties Holdings. It claims to reach over 110 million households via relationships with over 1,200 local market TV stations, national cable networks, cable systems, cable interconnects and syndicators. Turn has an exclusive agreement with AdMore, per a company representative, meaning it will be the only DMP and DSP that AdMore will be integrated with. "Watching TV" image from Shutterstock.
Live Nation, a live event (i.e. concerts) promotion company, on Monday announced the appointment of Mike Finnegan as VP of programmatic and product innovation, a new position at the company. The appointment is effectively immediately. Finnegan will create ad products for Live Nation’s various digital properties and live events, per a company representative, including ad products centered around Live Nation’s first-party consumer data. Finnegan joins Live Nation from Xaxis, where he served as director of product development.
Albeit in India, Mozilla is getting into the hardware business with the launch of its first smartphone. Setting the Cloud FX apart from your standard offering, “Mozilla has packed in various data monitoring features and several languages are supported out of the box, including Hindi and Tamil,” The Next Web reports. Don’t expect Mozilla to take on Apple any time soon, however. “If there’s a market for the platform, Mozilla believes it’s at the low-end,” TNW writes.
Marco Bertozzi, EMEA and North America president of Audience on Demand, VivaKi’s trading desk, told Beet.TV that buying inventory on open exchanges via real-time bidding (RTB) is not inheretenly bad, and that “where you buy within [the exchanges] is the important question.” The interview comes a couple of months after GroupM’s Ari Bluman told Beet.TV that GroupM plans to exit all open RTB exchanges by the end of 2014, a statement that has generated plenty of debate around the private versus open exchange model.“If you limit yourself by saying, ‘We’re only going to do one thing or the other,’ I don’t think .. you’re really delivering the best value for the advertiser,” Bertozzi said to Beet.TV.
It is understandable that to improve marketing efficiency, there is considerable emphasis on improving the media supply chain process. Yet, as heretical as it sounds, there is too much focus on supply chain efficiency and not enough on improving demand chain effectiveness. Why? The supply chain is full of complexity when you consider the combination of consumer targeting, content delivery and audience measurement. On the other hand, the demand chain is simplicity on steroids .. identify the right message, deliver the right experience. What consumers demand (or at least want), and it's possible to create brand loyalty beyond reason. How do you do that? By focusing, not on big data, but on the "small" data that marketers have about their users, especially their most profitable users. These small data can inform the creation of great messaging and experiences. Then the big data will tell us where the small data driven message content should be placed so it can be measured. When you combine small data and big data you get smart data.. and in this world of exponentially increasing data points, we all need to get smarter and simpler — because simplicity trumps complexity.
Was it me, or did MTV seem to tone down the outrageousness in last night’s presentation of its annual Video Music Awards -- the 30th anniversary of the franchise? There was nothing particularly shocking or offensive about any of it, unless one chooses to express concern over the presentation of women throughout the show. Most of the hugely talented females on the stage -- from Nicki Minaj to Beyonce -- seemed intent on exposing as much skin and being as provocative as possible during their performances. Barely clad behinds were everywhere on view. Experts tell us that all of this behavior influences young female viewers, many of whom were seen in video testimonials pouring out their love and affection for Beyonce before she received the Michael Jackson Video Vanguard Award. I’m not going to take a stand on this one way or another, because when it comes to the ways in which women in music today prefer to present themselves those ships have sailed. Meanwhile, countless young people are utilizing digital technology to express themselves sexually, often in ways far more graphic than anything seen on the VMAs, and with a brazenness that would land their dear grandmothers in the nearest boneyard. The content sometimes seen on MTV is almost tame by comparison. This is the world we are living in, for better or worse or whatever. MTV may be responsible in part for creating that world, given the imagery it has repeatedly pumped into young minds at different times during four different decades, but it is no longer a primary driver of teen and young adult behavior the way it was in the ‘80s and ‘90s. Other media are in charge now. Regardless, I can’t help but wonder why adult women feel the need to package themselves in so explicit a fashion -- one that rarely enhances or connects to their music or a particular message, the way Madonna’s ever-more-provocative behavior always did during the first two decades that MTV was around. Male performers generally don’t behave this way. Something is way out of whack. Overall, the VMAs were really rather entertaining this year; the music was sensational from start to finish -- even those performances by artists I had not heard of (actually there were only two -- Sam Smith and Iggy Azalea). I suppose I should be out of touch – after all, I am old enough to have been in the press room for the very first MTV Awards (as we called them back then) in 1984 at Radio City Music Hall, where I got to interview the huge stars of that era, including Cyndi Lauper, Billy Idol, and most memorably, Madonna in the wedding dress she wore on stage for her now-legendary performance of “Like a Virgin.” As for Miley Cyrus, what a difference a year makes. Like many other reviewers I came down pretty hard on her last year for what I thought was a mess of a disturbing performance with Robin Thicke. (Once again, the male was wearing many clothes and largely standing around while the female was scantily clad and presenting her body in all kinds of desperately provocative positions.) Cyrus looked beautiful (and comparatively understated) this year and remained in the audience throughout the show, even when she won Video of the Year for “Wrecking Ball” (in which she briefly appears without any clothes at all). In a move that recalled Marlon Brando famously sending Sacheen Littlefeather, a civil rights activist of Native American descent, to the podium at the 1973 Academy Awards to collect his award for “The Godfather,” Cyrus had a formerly homeless, model-handsome representative of the nation’s young runaways take to the stage to remind us all that tens of thousands of them are living on the streets (especially in Los Angeles), many fearing for their lives. Regardless of how one might feel about the cause, it was a particular kind of low key, socially relevant, show-stopping moment the likes of which I cannot recall in 30 years of VMA viewing. Many of us wondered what Cyrus could have possibly done for an encore after her combustible contribution to last year’s show. Nobody could have guessed that she would do what she did last night. It was a shrewd and fascinating move. I’ll admit it: I can’t wait to see what she does next.