Could WPP’s acquisition of AKQA for an estimated $540 million spark another round of consolidation in the digital agency world as ad holding companies and the shops they operate try to bolster their digital capabilities? Analysts believe it is a strong possibility. Pivotal Research Senior Analyst Brian Wieser said so in a note to clients today after WPP confirmed the proposed acquisition, which is pending regulatory approval. Forrester Principal Analyst Jim Nail agreed that competing holding companies are likely to react with acquisitions of their own. Wieser cited Sapient and LBi International as two digital agency players that could potentially go into play. Neither company would comment by press time. Nail questioned the feasibility of a Sapient acquisition. As a public company with a $1.5 billion market capitalization, he said: “It’s not the kind of deal you can do over Cosmopolitans at Cannes.” That said, Nail added: “LBi and Agencies of Change are both interesting possibilities -- kind of mini-networks in their own right that could stand alone and absorb other smaller assets, or small enough still to fill out one of the other networks.” One way or another, “it’s likely Interpublic and Omnicom will react,” said Nail. The AKQA acquisition, he said, “definitely puts some distance between WPP and Omnicom, which had been pretty close, and Interpublic, which has a couple of strong assets, but doesn’t have the strategic focus that WPP and Publicis do.” AKQA is a “great pickup for WPP,” said Nail. “Not only is it one of the biggest indies left, but one of the best at blending creative and technology skills in one organization -- a mix that doesn’t always live together easily." Nail believes the acquisition "fills a hole for WPP," since the agency aspires to a category he calls “brand transformers, which are about more than communications and look to leverage digital capabilities to help clients enter new adjacent product and service areas.” Wieser stated that the buy would be excellent for WPP, given its ongoing efforts to expand in the digital realm. The shop probably didn’t overpay for the asset, he noted. Given the industry’s focus on integrated media and marketing solutions, it’s easier for a big entity like WPP to provide such solutions than a stand-alone digital shop. He cited that factor as able to "partially restrain the cost of the acquisition." “We view this news as incrementally positive for WPP,” Wieser wrote in Wednesday’s note to clients. On the flip side, the deal “partially holds back efforts of large competitors -- in particular Publicis, Aegis and Dentsu to add to scale.” Indeed, two years ago Dentsu and AKQA held acquisition talks that fell through.
Microsoft will face an uphill battle when it comes to adoption of its Surface tablet, but with the release of Windows Phone 8, digital agency executives believe ad targeting could improve. ABI Research expects Windows 7, Windows 8 and Windows RT-based tablets to have little impact on the market this year, accounting for only 1.3% of global shipments. That could change in 2013. ABI analysts believe Microsoft will play catch-up in 2012, primarily because it lacks adoption for Windows 7, and got a late start launching the next version, which will not be available until October. The company is introducing a fragmented operating system (OS) strategy with Windows RT and Windows -- something Google has been punished for by Android OS developers. "I don't see Microsoft denting Apple's market share, but it's a good move for consumers," said Rob Griffin, EVP, global director of product development at Havas Digital. "The new Windows mobile OS has been quite popular, so it's a logical extension. For app design, Apple has two things in its favor. One, the install and user base, and two, the controlled Apple environment makes it easier to design." Griffin said ad targeting is a whole other opportunity. Microsoft's scale across digital and mobile helps them support better ad targeting. Targeting requires the ability to tap as few players as possible or it can cause inefficiencies. The tablet will sync with the Xbox 360 and the Windows Phone 8, unveiled at an event Wednesday in San Francisco. The version of Windows Phone 8 will share the underlying technology of the Windows operating system running on tablets, laptops and desktops. That would allow the ability to share content across three screens, similar to Ray Ozzie's vision shared in mid-2000. Microsoft spent the past decade developing portions of Surface. Ozzie, one of Microsoft's three chief technical officers at the time, demonstrated the touchscreen and ability to share content across devices in mid-2000. Then a few years later, Surface, a 30-inch computer tablet-like display, surfaced at the Sheraton in Boston, Chicago, New York, San Francisco and Seattle. Producing its own tablet, Microsoft enters a market dominated by Apple, with six out of 10 tablets being iPads, according to Rhoda Alexander, director of tablet and monitor research at iHS iSuppli. The research firm estimates more than 300 million tablet units will ship annually by 2015. iHS estimates Worldwide Q1 2012 shipments for Apple at 11,800 units; Samsung, 2,195; Amazon, 1,185; Lenovo, 672; Asus, 590; and all others, 3,997. Microsoft will offer two devices, each appealing to a different audience. It won't matter what the device is -- ad networks and paid-search platform providers will have the ability to serve up ads on either. Targeting ads based on the type of tablet could become the only reason a brand might want to know the model. One will run a Windows RT-based ARM tablet powered by an NVIDIA application processor, known for finer graphics. Many consider the other, a Windows 8 Pro tablet based on Intel's x86 architecture, synonymous with desktop computers. ABI believes Microsoft's initial market opportunity resides with business buyers that already work with Windows PCs. The question for the future: will company executives in the "post-PC era" move toward a mobile computing device and ditch traditional desktops?
Facing stiff competition, online video ad networks are introducing new products and services faster than marketers can make sense of them. Adap.tv is expected to debut a new tool on Thursday, designed to give buyers greater visibility into campaign results -- before running a single impression. Called the Campaign Optimizer, the predictive technology uses historical data to analyze billions of impressions. Once buyers set their desired performance goals, the system returns the real-time price and inventory availability needed to achieve them. It is set to hit the market next month. Toby Gabriner, president of Adap.tv, said the service takes the mystery out of planning online video ad campaigns. “Buyers need to see and understand the outcome of their campaigns in order to make intelligent decisions,” he said. According to internal data, the new product works. Indeed, in a recent study, Adap.tv analyzed campaigns over a three-month period and found that on average, optimized campaigns delivered 30% higher completion rates, and 21% lower cost-per-completed-view (CPCV) than those not using the Campaign Optimizer. But don’t take his word for it, said Gabriner. He is encouraging dubious buyers to adjust their performance goals for specific ads -- such as completion rate and level of distribution on preferred sites -- and see the impact on their campaigns. By 2016, domestic digital video ad spending will explode by over 250%, from $2 billion in 2011 to $5.4 billion, Forrester predicts. The potential sums explain why Adap.tv -- along with Tremor Video, YuMe, and other video ad networks -- are so concerned with buyers’ needs. On the back end, Adap.tv technology is automatically allocating inventory, which it believes will efficiently achieve buyers’ pre-set goals.
LG Electronics will use natural language processing to support a voice search service for its smartphones running on Google's Android operating system. Quick Voice will support 11 applications with audio features for Web search such as text, maps and weather. The move should become a wake-up call to search engine marketers who will need to rethink how they optimize Web sites and paid-search campaigns. The Quick Voice feature will initially launch this month in South Korea, joining a growing market spearheaded by Apple with the introduction last fall of Siri for the iPhone 4S. It's unclear how quickly LG will introduce the feature into other markets. Voice search continues to become the natural progression to simplify the request of information across platforms and devices, according to BIA/Kelsey analyst Matt Booth. "Google ran a very advanced voice search 411 business for years at Goog411, even taking out billboard advertisements," he said. "They were really after a large database repository of voice searches that continue to improve voice search queries. We think voice will be playing a pivotal role across Android devices." Booth said these announcements are early indicators that the market is primed to take off, and in four to five years, voice search will become as ubiquitous as turn-by-turn directions on mobile. Quick Voice will support Android 4 updates on the LG Optimus Vu this month, along with the Optimus LTE 2 in July. As a smartphone maker, LG might have set a precedent by introducing voice search for its phones, but it's not the first. Earlier this month, Apple said it would expand Siri to the iPad this fall with the release of iOS 6. About 1 billion of the world's population own smartphones, said Google executive chairman Eric Schmidt at a conference in Israel. He delivered the message to explain the growth of smartphones and how the device can reduce the gap between those who have access to the world's information on the Internet and those who do not.
A coalition of public interest groups said on Wednesday that Merck's campaign for grape-flavored Children's Claritin violates a Federal Trade Commission policy against marketing over-the-counter products directly to children. The campaign, which involves traditional TV ads, as well as social media promotions, features characters from the animated movie "Madagascar 3." For the campaign, Merck allegedly called on its "Children's Claritin MomCrew" -- a group of bloggers that serve as endorsers for the company -- to hold "Madagascar" viewing parties for children. The Mom Crew allegedly distributed Claritin samples along with other party favors at the events, then posted photos of the parties to their blogs. At least one Mom Crew member posted a party picture that appears to show five children holding Claritin samples in their hands, according to the advocates. The critics say these efforts show that the campaign is designed to appeal to children. "Adult caregivers are the appropriate audience for information about such products," the groups argue. Organizations signing the letter include the Campaign for a Commercial-Free Childhood, Center for Digital Democracy, Public Citizen and Public Health Institute. Merck has yet to respond to Online Media Daily's request for comment. But the company reportedly takes the position that the campaign is directed toward parents of children, not the children themselves. The advocates draw on a 1977 FTC decision involving ads in comic books for vitamin supplements. The FTC criticized marketing vitamins directly to children, reasoning that ad campaigns directed at kids could lead them to take an unhealthy quantity of vitamins. "Merck's use of "Madagascar" characters in its marketing campaign for OTC Grape-Flavored Children's Claritin allergy chewable tablets and syrup creates the same danger," the critics argue. They are asking the FTC to investigate and "send a clear message that child-directed marketing of OTC drugs is unfair and deceptive."
A group of ad tech heavyweights from AdConion, Rubicon Project and OpenX have formed a new company called Gradient X to serve as a demand-side platform (DSP) for performance advertising in mobile media. The start-up, which aims to improve mobile monetization for advertisers and publishers, has raised a seed round of $3.7 million from investors, including Rincon Venture Partners, GRP Partners and Crosscut Ventures. The company’s founding trio brings deep experience in building and running online ad platforms: CEO Brian Baumgart is the former chief strategy officer at Adconion Direct; CIO Julie Mattern was co-founder and chief technologist at the Rubicon Project; and CTO Michael Lum previously served as head of engineering at OpenX. What they aim to do at Gradient X is help to extend programmatic media buying to the mobile realm to help close the gap between fast-growing mobile usage and the ability to monetize all the resulting new inventory. Gradient X said it is partnering with premium app publishers and the largest ad exchanges and publisher-side platforms as part of its rollout. The company has yet to launch its service, but plans to have a beta version of its platform ready in three to four months, according to Pando Daily. It said it will use its initial funding to expand its engineering team. The start-up will compete with online DSPs, such as Turn and DataXu, that have extended their offerings to mobile, as well as a mobile-only DSP like StrikeAd. In her now widely publicized presentation, Kleiner Perkins partner and Internet guru Mary Meeker highlighted the lag between mobile usage and advertising, pointing out that mobile accounts for 10% of time spent but only 1% of U.S. ad dollars. But Baumgart suggested that existing demand-side technologies haven’t met the needs of advertisers. “To date, the mobile channel has not been easy to navigate for performance marketers looking to drive sales, leads, subscriptions and new customer acquisition,” he said, in the company’s announcement Wednesday. To that end, it will provide tools -- including analytics, optimization and targeting, along with new ad units customized for mobile screens.
A Federal Trade Commission member is taking issue with Microsoft's plan to turn on do-not-track by default in the next version of the Internet Explorer browser. "Microsoft's default DNT setting means that Microsoft, not consumers, will be exercising choice as to what signal the browser will send," J. Thomas Rosch said in a letter to the Internet standards group World Wide Web Consortium. He specifically said he disagrees with Reps. Ed Markey (D-Mass.) and Joe Barton (R-Texas), who endorse Microsoft's planned default settings. Markey and Barton said Tuesday in a letter to the W3C tracking protection committee that a default-on setting for do-not-track will "provide consumers with better control and choice with respect to their personal information." The W3C, a voluntary group that includes industry representatives as well as privacy advocates, is meeting this week in hopes of forging a consensus about standards for interpreting a browser-based do-not-track signal. The initiative dates to December 2010, when the Federal Trade Commission called on Web companies to develop a mechanism that would enable consumers to easily opt out of all online behavioral advertising. Browser developers responded with do-not-track headers that could be activated. Those headers send a signal to Web companies, but it's up to the companies to decide whether to respect the signal. Shortly after Microsoft announced that it would automatically turn on the do-not-track signal, industry groups indicated that they might ignore headers that were activated by default. Two weeks ago, some members of the W3C said in a conference call that do-not-track should only be turned on by users, but the group hasn't yet issued final standards. Some observers expect that the standards group will decide against default settings -- a move that would probably force Microsoft to retreat from its plan.
With the unveiling of its upgraded mobile operating system Wednesday, Microsoft signaled its entry into the increasingly crowded mobile wallet space. The company’s new Windows Phone 8 software rolling out this fall will include a digital wallet feature for storing debit and credit cards, coupons, boarding passes and the like. The new Wallet Hub will also support near field communication (NFC) to enable mobile payments via smartphones. The move comes on the heels of Apple announcing its own wallet app, dubbed Passbook, as part of the latest version of its iOS software for the iPhone and iPad. But Passbook, which also acts as a repository for various cards and coupons, does not rely on NFC technology, which allows “tap to pay” transactions. Microsoft also joins other companies trying to lead the mobile wallet race including Google, PayPal and Isis -- the joint venture of Verizon Wireless, AT&T and T-Mobile USA, which plans to launch an NFC-capable network this summer. Microsoft said it plans to have a version of its wall that’s compatible with Isis by next year. Joe Belfiore, Microsoft’s vice president for Windows Phone, said at the company’s presentation that its Wallet Hub would differ from Google Wallet in that the “secure element” for payments would be located in a SIM card rather than in a phone’s hardware. (The idea is that security is transferred more easily from one device to another.) French wireless carrier Orange will be the first to support Microsoft’s wallet app. Among other new features in Windows Phone 8, the NFC technology will also allow users to tap two phones together to share things like photos or business cards or even play board games. The upgraded platform will also support larger, higher-resolution screens and a version of Internet Explorer 10, similar to that launching in Windows 8 on the desktop and Microsoft’s forthcoming Surface tablet. Whether the Windows Phone updates will be enough to attract consumers in large numbers is the big question. The much-hyped launch of the platform, replacing Windows Mobile in late 2010 failed to reestablish Microsoft as a legitimate contender to Google and Apple in the smartphone arena. Windows Phone claimed just 4% share of the U.S. smartphone OS market in April, down from 4.4% in January, according to the latest mobile data from comScore. An IDC forecast earlier this month, however, predicts that the strategic alliance between Microsoft and Nokia will eventually help both get back in the smartphone game, with Windows Phone becoming the No. 2 smartphone platform behind Android by 2015. The research firm predicts the Microsoft phone software will capture almost 21% market share worldwide in three years.
WPP has agreed to acquire AKQA, considered a pioneer in the digital agency space and one of the last big independent digital agencies. The holding company said Wednesday that the deal was subject to regulatory approval. The Dublin-based holding company also announced the start-up of a new Silicon Valley-based firm, WPP Ventures, which will explore new digital investment opportunities. AKQA chairman Tom Bedecarré will lead the new start-up, WPP confirmed. Bedecarré will remain in his AKQA role as well. The agency will continue to operate as a stand-alone entity under WPP, led by Bedecarré and agency founder and CEO Ajaz Ahmed, the holding company said. The shop, whose work has been recognized with 19 agency of the year awards and numerous other accolades, was founded in 2001. It provides an array of digital services, including social media, mobile, interactive experiences, gaming and content creation. Commenting on the deal Sir Martin Sorrell, CEO, WPP stated that the holding company has “admired [the agency’s] creativity and technological skills for a long time, along with their outstandingly effective and award-winning work for clients.” Clients include Delta, Diageo, EDF, GAP, Google, Microsoft Xbox, Nike, Target, Unilever and Virgin Money, among others. Terms weren’t disclosed, but WPP said the agency had gross assets of $282 million at the end of last year with revenues of $189 million. Revenues at the agency are expected to grow nearly 22% this year to $230 million. The shop employs 1,160 worldwide with offices in the U.S., Europe and Asia. “With increased resources and access to new geographies, our partnership with WPP will fuel the next level of … opportunity, delivering innovation and creativity at scale,” AKQA founder Ahmed stated.
I was lucky enough to sit down recently with the original Mr. Digital. I caught up with him at one of his rare public appearances, just outside a neighborhood Starbucks. Apparently, he doesn’t get out much anymore, and knows almost nothing from bridge or tunnel tolls. We sat down over $5 coffees. “Never thought I’d see it,” he told me.“See what?” I inquired. “A $5 coffee?”“No,” he said. “Facebook at 30.”“Tell me about the early days of digital,” I said.“The early days of digital,” he began, “were characterized by the rise of the MBA and the demise of common sense. Apparently, the atom bomb, Robert McNamara and Henry Kissinger weren’t enough to persuade us that too much education ain’t always such a great thing.”He paused to stir his coffee and check out a pretty girl seated across from us. “The early days of digital were all about the introduction and evolution of the electronic spreadsheet as the dominant medium,” he continued. “The spreadsheet is where we deposited our dreams as we moved away from the linear confines of a literary culture to the sexier screen-based cultures of Wall Street and the entertainment industry. By the late 1980s, everyone was speaking the language of spreadsheets. We hardly had a chance to pack.”“It was also the age of disco,” I said.He nodded. “Yes. And we thought the '50s made no sense. Then again, lots of things stopped making sense in the confluence of cable TV and the spreadsheet. By the mid-1990s, the advertising and marketing dialogue had shifted almost entirely away from reaching the audience to targeting the audience, away from the message to the medium. The rise of the modern MBA -- a technocrat equally conversant in marketing and technology -- gave rise, in turn, to the Wall Street culture as we know it today.“Not to mention The Real World,” I added.“Now you’re talking impact,” Mr. Digital said. “The entire world was about to take off, like Chuck Yeager, test pilot extraordinaire. Young billionaires like Steve Jobs, Bill Gates and Larry Ellison in high-tech corridors like San Jose and New York City were to the 1980s and '90s what Robert Oppenheimer, Niels Bohr and Edward Teller were to the 1930s and '40s in Chicago and Los Alamos.”“And we all know how well that turned out.”He nodded. “By the mid-1990s, we’d long become tools of our tools and the stage was set for one of history’s most transformative moments. In marketing and advertising terms, we were about to wreck the joint…and throw some great parties, too.”
The Apple app store has hit more than 25 billion downloads, while Android Marketplace continues to grow with more than ten billion. Of those, however, only a small percentage has ongoing appeal to users, and many are abandoned -- some after the initial download. There’s nothing that compels the user to return. High rank in the app store is often self-perpetuating, and success continues to breed success. Without an unlimited advertising budget, unrecognized apps may never bubble up. Launching an app requires an investment -- in design, development and production; in promotion; and in creating ongoing value. Once you have allocated and spent those dollars and deployed the resources, rather than spending them elsewhere, how do you continue to extract value from that investment and maximize your return? Whether your business model is advertising, paid apps or in-app purchases, you need and want to ensure that users keep coming back. Take advantage of the platform Remember that mobile devices are personal and always on. Take advantage of that factor and utilize the capabilities to drive usage of apps. Push alerts are great for driving usage as well as consumer response -- which is the ultimate goal of the marketer. For example, flash sale apps such as Gilt and Fab take full advantage of the notifications. I have sat in meetings at noon when everyone’s phone went off and many of the participants were trying to sneak the phone under the table to catch the hot items before they ran out. Another way that alerts have been used effectively -- specifically on the commerce side -- is in the Girl Scout Cookie Locator app, in which users sign up to be notified when Girl Scout cookie sales are nearby. Not only did this drive app usage, but it also prompted real-world behavior with an actual visit to sales, purchase of cookies and support of local troops. Analysis It’s amazing that with all the metrics collected by connected devices, some marketers still look only at the basics, such as the number of downloads. By digging into the numbers, you can see what is working within the app and what is not, so you can make smart decisions for the next revolution of the application. From determining which platforms your users have embraced to when they are using, good data interpretation can translate into increased dollars if you plan your next iteration of the application based on that knowledge. Push notifications can lead to significant spikes in traffic coinciding with the notification delivery. Usage patterns can reveal that features considered to be must-haves during the design phase did not appeal to users, and these features can be replaced in later iterations. Social analytics can drive the sharing of app content, in turn driving app adoption via strong word of mouth. Iteration One of the biggest lessons of the digital age is that no product shipped is ever final -- there’s always another iteration. It’s important to harness the knowledge that apps can and must be updated. First, pay attention to user feedback and ratings. What’s working and what’s not? Are there elements that have been criticized that you can respond to? Next, are there new campaigns or content that you can use to make the application more appealing to users? Finally, take advantage of the rapid pace of technology and leverage it to add new features and functionality. If they know you’re consistently delivering new elements that surprise and delight, entertain and inform, then get them hooked on coming back. It’s useful to consider the iteration process from the beginning when planning your app -- to build in an extensible way so that new features and functionality do not warrant an entirely new development initiative. Promotion Except in cases of very finite campaign-specific applications, most publishers look at apps as longer-term investments that are core to their digital strategy. Promotion -- not just at launch, but on an ongoing basis -- can help to fuel the fire, driving both adoption and usage. Apps must be knit into the DNA of the brand’s overall marketing plan, not just in a silo at launch. Taking advantage of social media and engaging your consumers to spread the word can do wonders when it succeeds, particularly through periodic promotions that include some element of virality. If the publisher has additional promotional channels through other media, hard goods, retail or elsewhere, use them. Cross-media promotion -- particularly if the mobile experience is integrated, such as live chat during tv programming -- can make the app a critical part of the viewing experience. For packaged goods, on-box tie-ins can be constant reminders to consumers of the value of companion apps. When developing your mobile strategy, keep in mind that getting the app built and launched is just the beginning. It’s no longer just about app creation. Just as critical is app management -- which includes analysis, responding to the key data points you learn, iterating with new content and features and ongoing promotion. Whatever your business model, ongoing usage and engagement means higher ROI, and ongoing promotion enables you to achieve that goal.