New York-based Cendant Corp. Wednesday said it will buy online travel company Orbitz Inc. for $1.25 billion in cash. The real estate and travel services firm will pay $27.50 a share for Orbitz, which was founded and controlled jointly by five major airlines: AMR Corp.'s American Airlines, UAL Corp.'s United, Delta Airlines, Northwest Airlines, and Continental Airlines. Each of these companies will retain ownership stakes. Orbitz's stock closed at $20.77 on Tuesday; Cendant's offer represents an "attractive" 32 percent premium, according to Orbitz Chairman and Chief Executive Jeffrey Katz. On Wednesday, Orbitz's stock surged 31 percent, closing at $27.17 a share. Cendant also owns two other travel sites: consumer-facing CheapTickets and Travelport, a corporate travel site. The company said it will move the operations of CheapTickets and Travelport to Orbitz's technology platform, but each of the companies will remain separate. Cendant may also try to integrate Orbitz with one of its other properties, Galileo International, a reservation database system used by travel agents. However, such a move is likely to be hindered by Orbitz's contract with WorldSpan LP, another travel data provider, which runs out in 2011. The deal comes at a tough time for the airline industry. United recently filed for Chapter 11 for the second time, while Delta and American Airlines are both said to be headed in the same direction. Industry pundits say the sale of Orbitz will provide these struggling companies with a much-needed boost. The five airlines controlled about two-thirds of Orbitz's stock. Since its June 2001 launch, Orbitz has seen substantial growth in visitation and sales. According to comScore Media Metrix, Orbitz ranks third in the travel category for total unique visitors at 13.3 million--behind InterActive Corp's Expedia, with just under 20 million uniques, and Cendant's own Trip Network, with 13.4 million. The travel category as a whole has accounted for 46 percent--or $33.7 billion--of online consumer spending for the year, through August 2004, according to comScore. Orbitz went public in December 2003 at $26 a share. The company is debt-free--and, as of July, had about $200 million in cash. It has been profitable in its two most recent quarters. Cendant predicted Orbitz revenue of between $340 and $380 million for 2005. Samuel L. Katz, Cendant's Travel Distribution Services Division chairman and chief executive, noted that the transaction expands the sector's distribution and technology capabilities and strengthens management.
The newspaper industry might find yet another reliable source of ad revenue slip out of its inky hands, as the Internet increasingly poses more of a threat. More and more real estate brokers are directing their ad dollars online, a media consultancy, Borrell Associates, found in a new report. Real estate advertising, while always a reliable source of ad revenue, has become increasingly important to newspapers as other categories, such as help wanted, have slipped over the edge. Many newspapers rely on this source of income as businesses continue to recover at a creeping pace from the recent ad recession. But according to the report, "2004 Analysis: Online Real Estate Advertising Comes of Age," the growth in real estate revenue, driven by a continually booming housing marketplace, is masking an emerging erosion in the category. "Most newspaper companies are reporting gross real estate revenue and print linage growing at an average rate of 6 percent this year, fending off any fears that the Internet has eroded the businesses," the report said. "But strip away inflation and rate hikes, and add the fact that record numbers of homes are being sold, and the picture changes." That picture is one of divergent trends, as newspaper ad dollars spent per home slips at the same time that Internet advertising grows. Seven years ago, agents, brokers, and developers spent $755 on newspaper advertising for every home sold. This year that dollar figure has shrunk to $605. Meanwhile, online ad spending per home sold during the same period went from $16 to $148. In total this year, agents will spend nearly $1.3 billion, or 11.2 percent of their budgets on Internet media, the report said. The reason for this shift is mostly consumer driven but also financial, according to Gordon Borrell, president and CEO at Borrell. "The Internet has become the medium of choice for people looking for homes." One reason for that choice is the lack of space constraints inherent in the medium, which allows realtors to provide a wider array of listings than is possible in newspaper ads. Plus, return on investment is far better in the online space, which is simply cheaper and more trackable than newspapers, according to Borrell. Yet another factor hurting newspapers is the tense relationship that they and realtors have long maintained, one that Gordon refers to as "adversarial." Borrell sees things getting much worse for newspapers once the housing market comes back to Earth, similar to what happened with help wanted advertising after the 1990's boom ended. According to the report: "The underpinnings of a dramatic shift in ad spending have already been laid. When the superheated home-sales cycle ends, online media may accelerate significantly as real estate advertisers weed out their less-efficient marketing efforts and focus on the most trackable medium with the best return - the Internet." So what can newspapers do to avoid the decline? Attempt to beat realtors sites at their own game, Borrell said. That means investment in infrastructure, something most papers have been unable to pull off. "They need to create definitive real estate Web sites in their market," he said. "They have played second or third fiddle to this point." Also, newspapers need to adapt to a new advertising sales model. "They really have to understand that the business model has changed," said Borrell. "It's gone from pay for listing to pay for lead."
Earlier this month, MediaDailyNews reported that the John Kerry For President campaign and the Democratic National Committee had practically abandoned Web ad efforts altogether in the month of August. People at the DNC, Web publishers, and others close to the campaign say different. Tracking data from Nielsen//NetRatings AdRelevance showed that the Kerry campaign ran 71,000 ad impressions in August, down dramatically from the 72.5 million impressions it ran in July. The DNC, which due to campaign finance regulations has taken up the helm when it comes to fund-raising efforts, ran a mere 10,000 impressions in August, according to the research outfit. Insiders say that number is way off--by millions. In fact, one source says the DNC ran 60 million Web ad impressions promoting Kerry in August on highly trafficked news sites, including washingtonpost.com, AOL Election Guide, and SF Gate, The San Francisco Chronicle Web site. The DNC ran "millions of impressions" and spent roughly $10,000 on MSN Slate Magazine in August, according to the site's publisher, Cyrus Krohn. He expects around a quarter of one million dollars to be spent by the DNC and the John Kerry For President campaign in total on MSN by the election. Although washingtonpost.com would not reveal impression numbers, a representative confirmed that the DNC ran ads on the site in August. An AOL spokesperson confirmed that the DNC has run fund-raising ads in the AOL Election Guide since June, and plans to continue the campaign through election day. Beverly Best, retail/national sales manager at SF Gate, notes that while ads placed by the Kerry camp and the DNC have run on the site, the DNC has "not [run] much." While discrepancies do occur, gaps in AdRelevance numbers this extreme are rare, says Marc Ryan, senior director of analysis at Nielsen//NetRatings. AdRelevance tracks the top 1,000 most trafficked Web sites--as well as other sites--using multiple machines that constantly surf the Web and capture ad data. Once an ad is captured, it is categorized based on the advertiser and URL it links to. Because political ads can be placed by a multitude of organizations, adds Ryan, it is difficult to track just who's doing what. "It gets very confusing within the realm of what's going on in political ads to decipher who's paying for what," he stresses, noting that the primary intent of the AdRelevance system is to track the Web ad activities of Fortune 500 companies. No matter how many ads the Democrats have placed on the Internet recently, some members of the blogging community say it's not enough. After all, claims Jerome Armstrong, MyDD blogger and former director of Internet advertising for Howard Dean's primary campaign, blog site visitors have contributed "over one million dollars" to the Democratic party since January. Rather than trying to rattle the traditional media-minded party establishment, Armstrong and other prominent bloggers including Markos Moulitsas of Daily Kos have put their money where their blog posts are by forming BlogPac, a political action committee dedicated to "waging politics entirely online." The week-old organization has already begun running Web video ads targeting the Dallas area, according to Armstrong. "The idea is, we're raising this money on the Internet; let's keep it on here," explains Armstrong. Since launching the ad Monday, the group has raised $6,000.
Filmmaker and star Albert Brooks started his storied career as a standup comedian. One of his very best routines--one often replayed on Best of Carson reruns--was when he stood before the studio audience one night and admitted that he had run out of new material to perform for them. Paraphrased, the routine begins as follows: "Good evening, ladies and gentlemen. My name is Albert Brooks. I'm 26 years old, at the height of my standup career--and can you believe it, I'm fresh out of material." "Oh, I could make you laugh," he goes on to say. "I could go for the cheap, easy laugh. I could drop my pants to reveal funny faces painted on my knees." Then he drops his pants to reveal--sure enough--funny faces painted on his knees. "But that's not the real me," he cautions. "Or I could have someone rush in from offstage and hit me in the face with a cream pie," followed by the same disclaimer once again, this time delivered with a face covered in whipped cream: "But that's not the real me..." I mention the Albert Brooks routine for two reasons: 1) It's kind of how I feel about my column this week, and 2) It's kind of how I feel about marketing in general nowadays. "Oh, I could sell you something," I'd say. "I could blast a million e-mails in a matter of minutes." But that's not the real me. Or, "I could hire some struggling actors to sit in a bar and pretend to be something they're not." But that's not the real me either. Well, on second thought, maybe it is the real me. As a marketer in today's market, the real me cares more about the advantage than the truth. The real me doesn't think much one way or the other about my own contribution to the degradation of the marketing ecology (see Matthew Syrett's brilliant "The Tragedy of the Advertising Commons" essay). The real me would rather leverage my own expertise alongside the ignorance of my client than explore what we have in common. The real me would rather meet my numbers than meet my obligations to the marketing and advertising community at large. "Oh, I could sell you something," I'd say. Last week I wrote about time displacement as a symptom of addiction. Not only do our addictions and obsessions compel us to do things that we know are contrary to our well being, but they consume time and energy that might otherwise be devoted to other, more meaningful pursuits. Among the first things displaced by our addictions and obsessions is emotional honesty. All addictions help us defer the emotional moment, whatever its flavor and whenever it arrives. For instance, I have long deployed e-mail at work as a foil to defer my own irrational fears of failure and abandonment. Rather than sit down to the work I know needs doing, I'll check my e-mail first every time I sit down to make sure that the world is still spinning. (It always is.) But the act of checking my e-mail always consumes the better part of five minutes, usually just to wade through the junk. Multiply that five minutes by the ten or twenty times a day that I check my e-mail, and it all adds up to some serious time. Of course, that time represents only the minimum daily adult requirement--the time I commit only if I find nothing in my e-mail inbox that elicits an actual response, a determination typically based on how contentious, defiant, or lonely I feel at the moment. Before I know it, my fear of failure has evolved into a self-fulfilling prophecy. Playing with my e-mail has displaced at least some of the time required to do the work. Not only have I heightened my fear of failure and abandonment (the eventual result when I get fired for not doing the work), but now I feel lousy because I didn't get the work done on time, or didn't complete it to my own satisfaction. This is a typical addictive cycle: Our fears drive us to act out; acting out helps us self-medicate and set our fears aside for the moment; then afterwards we feel guilty because we acted out instead of doing what had to be done. In the end, acting out only reinforces our fears and feeds our addictions. In mapping my own behavior, I noted that I had a tendency to check my e-mail whenever I sat down in front of my computer, regardless of the time of day, or the number of times I sat down. In mapping the corresponding emotions, I found myself already growing anxious the very moment I stepped away from the computer. The anxiety would only abate the moment I sat down and checked my e-mail. So I have taken to checking my e-mail only at predetermined times of the day, and I have limited the number of times that I check my e-mail to four each day--sometimes less but never more. No more ad hoc e-mail for me. The idea, of course, was not to eliminate e-mail from my life, but to eliminate the compulsive behavior associated with it and thereby reclaim the time displaced by the selfsame compulsive behavior. That said, I did encounter some significant emotional and physical turbulence the moment I started taking my own medicine. At first, my anxiety away from the computer--my anxiety between e-mail fixes--gave way to a palpable anger. Upon my return to the computer, the anger would dissolve into a kind of existential emptiness; I would just sit down and stare at the screen. After a few moments of intolerable silence, I would feel suddenly lost and rudderless, and could feel the panic rising in my chest once again. Eventually, I would either succumb to my e-mail beast or stand up and walk away, utterly frustrated. Neither behavior got me where I wanted to go, and I rediscovered the difference between abstinence and sobriety: abstinence speaks exclusively to the absence of a certain behavior, while sobriety speaks to the presence of something more-a quality of intent. I rediscovered that the act of avoiding one behavior requires a corresponding intent to engage in another. In other words, it wasn't enough to be mindful of what I didn't want to do; I also needed to replace the old behavior with something else. Accordingly, now I don't sit down in front of my computer unless and until I have a clear intent to do something other than check my e-mail. This intent manifests itself in greater productivity both at and away from the computer. I no longer wonder or worry about who has or hasn't sent me an e-mail. I think less about failure because I have more time to apply to my success. Recovering addicts often apply a generic acronym to their day-to-day experience: HALT-Hungry, Angry, Lonely, and/or Tired. These four conditions--experienced singly or in concert--act as triggers for our acting out behaviors. Nowadays, whenever I feel hungry, angry, lonely, and/or tired, I find a way--either by phone or in person--to reach out and make contact with someone I trust. E-mail just isn't good enough anymore. Many thanks, as always, and best to you and yours... Please note: The Einstein's Corner discussion group at http://health.groups.yahoo.com/group/einsteinscorner/ is dedicated to exploring the adverse effects of our addictions to technology and media on the quality of our lives, both at work and at home. Please feel free to drop by and join the discussion.