Acquisitive WPP chief Martin Sorrell is on the prowl again, and this time he's making a play for Nurun Inc., one of Canada's leading online ad services companies. Sorrell has submitted a written offer to Quebecor Media, which controls Nurun, to acquire the interactive marketing services company in a cash deal valued at $5.25 a share, Canadian newspaper Globe and Mail reported this morning. It was unclear at presstime, exactly how big an acquisition Nurun would be, but Quebecor reportedly had been seeking to privatize the company offering $4.75 for the 42% of shares in the company that it does not already own. The newspaper report characterized Sorrell's bid as facing "long odds" despite its higher share value, because Quebecor may already have locked up enough commitments from leading independent shareholders to block WPP's overture. Montreal-based Nurun, which describes itself as a "global interactive marketing agency" operating on three continents, including ant farm interactive in the U.S., China Interactive in China and Crazy Labs in Spain, re-branded all of its operations under the Nurun banner in December 2007. Clients include Groupe DANONE, AT&T, Louis Vuitton, Thales, Pfizer, Home Depot, Pleasant Holidays, L'Oréal, Renault, Microsoft, AutoTrader.com, Equifax, Telecom Italia and the Government of Quebec. The move comes is the first big digital media play for Sorrell since WPP acquired 24/7 Real Media in July 2007 for $649 million.
The sole Federal Trade Commission member who voted against approving Google's acquisition of DoubleClick and a leading privacy advocate are among the witnesses slated to testify today at a European Union hearing about the privacy implications of the pending merger. Marc Rotenberg, executive director of the Electronic Privacy Information Center, said he plans to emphasize to the European Parliament committee on civil liberties, justice and home affairs that U.S. legislators are concerned about the privacy implications of the deal. "We want people to understand that the FTC decision was really a surprise to a lot of people," he said. "There was statement after statement after statement from Congress to the FTC that they had to do something about privacy." In a 4-1 vote, the FTC approved the deal without any restrictions late last year, but the European authorities are still reviewing the proposed $3.1 billion buyout. The deal will not go through if it isn't approved in Europe, despite the FTC clearance. Privacy advocates worry that Google will combine its information about users' search queries with DoubleClick data about which Web sites users visit to create highly detailed consumer profiles. Last November, Senators Herb Kohl, chairman of the antitrust subcommittee, and Orrin Hatch, the high-ranking Republican on the committee, told the FTC they worried that the merger carries "profound and potentially far-reaching" implications for the Internet ad market, and "raises fundamental consumer privacy concerns." In addition, 12 Republican Congress members last November called for a hearing into whether Google's proposed $3.1 billion buyout of DoubleClick would compromise Web users' privacy. FTC Commissioner Pamela Jones Harbour, the sole opponent to the decision clearing the deal, doesn't intend to deliver prepared remarks, according to an aide. Instead, she will speak from notes, depending on the direction the seminar takes. Harbour previously expressed wariness about the merger's privacy ramifications in her dissent. "The truth is, we really do not know what Google/DoubleClick can or will do with its trove of information about consumers' Internet habits. The merger creates a firm with vast knowledge of consumer preferences, subject to very little accountability," she wrote. But Jones also wrote that she thought privacy concerns should be addressed on an industry-wide basis. Representatives from Google, Yahoo, Microsoft as the industry groups Interactive Advertising Bureau in Europe and Network Advertising Initiative also are expected to testify or submit statements. "Google takes the issue of privacy very seriously," Google's privacy counsel Peter Fleischer said via a spokesman. "Online privacy is an issue which affects the entire online industry as well as users so it is important that we all contribute to a dialogue on good industry practices so that we can develop a common framework of self-regulation across the world." Rotenberg said he also plans to call the European authorities attention to FTC chair Deborah Platt Majoras' refusal to recuse herself from the matter even though her husband is a partner at a law firm representing DoubleClick. Majoras last year decided that her husband's involvement with the firm, Jones Day, didn't require her to step aside from the case because he changed his status to non-equity partner in 2006, meaning that he no longer shares in the firm's profits. Majoras also said Jones Day has not appeared before the FTC in the matter.
Yankee Group forecasts that Internet advertising will more than double to $50.3 billion in 2011 from $21.7 billion last year, driven by technology investments that will boost online ad performance. While the size of the U.S. Internet audience will level off in the next few years, ad dollars have yet to catch up with the growth in online media consumption, according to the Yankee study. The research firm estimates that the Internet accounts for about 20% of overall media consumption, but only 7.5% of ad budgets. In three years, that ad share is expected to double to nearly 15%, closing the gap with television. Yankee predicts marketers will spend three-quarters as much per online user as TV viewer ($244 versus $313) by 2011. In 2006, advertisers spent less than one-third as much online as TV per user ($89 versus $276). Helping drive the online shift will be improved ad targeting, an array of new ad platforms, and publishers' increased focus on "yield management"--maximizing revenue without upgrading ad inventory. "We've thought of this as an industry in which advertisers are the ones in the driver's seat, but it's clear that publishers have a lot they can do as well," said Daniel Taylor, senior analyst at Yankee Group, which predicts a 24% annual growth rate for online advertising through 2011. That means investing in new online media formats such as video, gaming and virtual worlds and creating marketer segments that go beyond just direct response and brand advertising. While more refined targeting techniques will help improve revenues, publishers also need to be mindful of users' privacy concerns. The Yankee report likewise urges advertisers and agencies to invest in technology to automate manual internal processes and to integrate interactive budgets into mainstream planning and buying activities. "This is a technology-driven marketplace and agencies should be using technology to manage it," Taylor said. Yankee also recommends that advertisers double online ad budgets each year and take advantage of emerging video and mobile ad opportunities. Taylor emphasized that the development of the Internet is still at an early stage--a "Wild West" landscape of nascent media and advertising models. "The reality is it takes time, and this market is just about reaching adolescence now," he said.
The final stats are in for the OfficeMax holiday campaign, ElfYourself.com. After six weeks of being live, the traffic on the holiday site in 2007 more than quadrupled versus the five weeks the site was up in 2006. The campaign also hit the bull's eye of viral success--it has seeped into pop culture. Broadcasters at The Today Show, Good Morning America and CNN American Morning created their own dancing holiday greeting for viewers, and thousands of blogs, such as TBS The Daily Flog & Rosie O'Donnell's Blog, also added personalized versions. In the six weeks from Nov. 20, 2007 to Jan. 2, 2008, the site had over 193 million visits and over 123 million elves were created--which is 60 elves per second. Users spent a combined average of 2,600 years on the site. In the five weeks from Dec. 1, 2006 to Jan. 7, 2007, the site had over 36 million site visits and over 11 million elves were created (41,00 per hour at its peak.) Users spent a combined equivalent of 600 years on the site. The success of "Elf Yourself," created by EVB San Francisco and Toy NY, is in part due to three fundamentals, according to a spokesperson for the agencies: 1)Keep it simple, 2) Make it personal and 3) Give people a reason to pass it on. "Because we were building on the buzz of 2006's campaign, there was already a digital audience anticipating its return--we received millions of hits to a dead site before launch," the spokesperson said. "From there, it started to spread online and the more people it reached the faster it spread. Because it was so simple, kids and grandparents alike were able to enjoy it. As its popularity grew, bloggers, radio stations and TV stations started including Elf Yourself in their programs/sites, and it continued to spread even faster." In addition to viral impact, OfficeMax included the "Elf Yourself" character in-stores on computer monitors for sale, in its print catalog and on its online catalog.
To stay ahead of the social networking curve in 2008, interactive marketers should put brand monitoring in place, focus on objectives over technologies, and go for speed over perfection in applications deployment. That's the advice from Forrester Research analysts collected in a new report. The adoption of new technologies will lead to changes in how people connect and relate to each other, and in the process, how companies market, promote, and sell to their customers and prospects, according to Forrester's top analysts, including Charlene Li, Jeremiah Owyang, and Peter Kim, along with Josh Bernoff and Scott Wright. "In the fast-changing world of social computing, there's only one constant--that people will continue to connect with each other in new and different ways, causing upheavals in the way companies and institutions relate to them," the report warns. More than ever, corporate participation is expected to bring social applications to the mainstream this year. In the wake of early stumbles like Wal-Mart's "flog," companies are thinking more carefully about genuine social Web contributions, according to Forrester. Emboldened by the success of pioneering efforts like Victoria's Secret's Facebook page and extensive private communities like Procter & Gamble's beinggirl.com, companies will move beyond one-off experiments in social media to establish full-fledged initiatives. YouTube videos, social networking groups, and widgets will become a standard part of online marketing campaigns, further pushing adoption by mainstream consumers. "Early-adopter purists will bug out to ad-free zones, but they'll be replaced by floods of ordinary consumers testing the waters because their friends, and companies they trust, have shown that social applications are not only safe, but also fun and useful," Forrester predicts. By the end of 2008, marketers will be searching for concrete ways to measure return on their investments like the social networking "momentum effect" or a standardized engagement metric. As a result, companies should formalize internal processes so that they can quickly and consistently integrate social media initiatives into online marketing campaigns, Forrester believes. This includes securing buy-in from internal departments like IT, legal, and corporate communications in advance so that these initiatives are not hampered by repeated internal reviews. "The social technology world is evolving at a faster pace than any other technology market we've ever encountered," according to the report. "To best prepare for an unknown future driven by the customer groundswell, companies need the means to monitor and respond to changing customer needs, a clear idea of their objectives, and nimbleness and flexibility in their social initiatives." "There's no excuse not to track the social conversations taking place about your products and services," according to the report. "Don't have budget? Then leverage free tracking and alert tools from Google, Icerocket, and Technorati to track at a minimum key mentions."
Lending Club, a funds exchange and lending network, launched this fall ... on Facebook. As a social network, Facebook helps consumers build trust in the brand partners presented to them, says Lending Club COO John Donovan. Word-of-mouth--or rather word-of-mouse--marketing is a natural outcome of social networks. Consumers compile connections and further feather their nests with friends of friends. Lending Club's business model leverages these links, inspiring borrowers' responsibility by engaging investors from their communities or extended social groups. (Lender funds are aggregated before monies are distributed to borrowers, reducing lender risk further and adding anonymity to the borrower's side of the deal.) "Facebook extends an assumed or inferred endorsement across groups of people," Donovan says. "By pairing borrowers and lenders who share some level of connectedness, borrowers are more likely to receive funding on the one hand and are more likely to repay it on the other hand." Lending Club invested in more than just a profile. It integrated its application into Facebook, within the Facebook platform. The application had attracted $1 million in loans within two weeks of the service's launch. 'The Internet Is All Social Networks' Financial services, consumer packaged goods and cars all make sense to market through social networks such as Facebook, MySpace, Gather and more. Max Lenderman, executive creative director of GMR Marketing in Chicago, says it is imperative that these products and services use social networks to advertise their brands. "To a certain extent, the Internet going forward is all social networks--not just MySpace, Facebook and LinkedIn, but a clear manifestation of the evolution of the Internet are mobile phone connectivity, gaming as a social experience and reputation networks," he says. One of Lenderman's clients--a leading male grooming brand--buys advertising on Facebook and MySpace for every new product introduction, "but it also tries to form a community around the product" with promotions, games and themed music. "Thousands and thousands of 'friends' sign up, fully aware that it's a marketing campaign," he says. Whether introduced by marketers or by consumers--those paid brand ambassadors or voluntary fans--marketers' presence on the sites is growing, and is drawing consumers' free media time less than a year after brands took to the social network scene. The activity must continue, Lenderman reasons. "You have to homestead it," he says, adding that "the key to any social network campaign, the most paramount thing, is authenticity. Be upfront--be true to the brand." This recognizable sincerity comes from the right insight to consumer needs and interests, and a consistent presence in the virtual community. "Wells Fargo, a brand as old as the stagecoach, went into Second Life and created an island where people can do fun stuff, but they have to spend money. They go to the ATM, they take quizzes, they engage with the brand, and they go on," Lenderman says. The brand created an experience, established authenticity, and in time, it translated to a sleeker, tech-savvy reputation. Just Another Commercial? "A lot of brands are looking at this, but I don't think that's necessarily a good thing," says Robert Passikoff, president of Brand Keys consultancy in New York. It's cool, he concedes, and the most enticing consumer demographic checks in with connections at virtual communities. But their participation with brands represented at YouTube, MySpace or Facebook "is not an endorsement whatsoever," he says. Consumers view marketing through social networks as just another commercial. "Signing on as friends of a brand is just part of the process," he says. That it is voluntary engagement with a brand, he says, is like saying consumers opt into advertising by watching the commercials interspersed with their chosen TV programming. "You're dealing with a different consumer base--the bionic consumer of the 21st century," he says. "Smart marketers are beginning to realize that they need to have some sort of predictive engagement metrics in place before they go out and do this. "A flick of the mouse is not loyalty; it's not engagement," he continues. "Ultimately, every brand has to write a reality check," and "a good deal of the sign-up you see is more habitual than interest-based. There is a certain degree of pride in being able to talk about how many friends you sign up."
If MySpace and the U.S. government want to protect kids, they shouldn't be turning to email. They should be using IP addresses. Last week, the social networking giant--clearly prodded by government pressure--announced its latest safety efforts, created alongside attorneys general of 49 states. A critical part of those efforts is centered on email. MySpace plans to let parents submit their kids' email addresses; MySpace will then block those address users from setting up MySpace profiles. If young kids can't create MySpace profiles, the argument goes, they'll be safe from those MySpacers who use kids' MySpace pages to harm them. But the plan has a critical flaw--it's extremely easy for kids to set up free email accounts. And so even if parents submit what they believe to be their kids' sole email address, there's little to keep kids from signing up for a new address without their parents' knowledge. And once kids have a secret email address, there's little to keep them from setting up a secret MySpace profile. That's where IP addresses come in. MySpace should offer a simple interface that lets parents recognize their computer's IP address, and to share that IP address with MySpace (the technology behind this would be relatively basic). Parents could then tell MySpace to reject new profiles created through their IP, and thereby blocking kids' participation in the online networking site. It will be difficult for kids to get an IP address behind their parent's back--and so it will be hard for kids to create a secret MySpace profile, too. Schools and libraries should also block MySpace from their computers. That way, kids whose parents don't want them on the site won't be able to set up secret MySpace profiles from school. Obviously, an IP-blocking strategy won't eliminate all online dangers overnight (if only things were that simple), but it will do significantly more to protect kids than collecting e-mail addresses ever will. And since it's the best we can do for now, we owe it to our kids to make the new plan happen. After all, kids' safety on social networks isn't just an issue within massive MySpace. It's equally critical in the entire world of online social sites--like Facebook, Bebo, Orkut, Club Penguin, myYearbook, and every other social network that exists or that will emerge later. So protecting kids on MySpace means securing the whole future of our youth online, and that's a serious issue. That's also why I say: put IP data to good use now. David Honig is Vice President, Media at Didit. Reach him at david.honig@didit.com.