Boston-based marketing services and consulting company Sapient reported a nearly 12% revenue gain in the fourth quarter of 2012 to $293.2 million. Net income was down 28% to $19.5 million. The company said its digital agency SapientNitro accounted for just over $200 million of fourth-quarter revenue, an increase of 9% over the same prior-year period. The agency’s profit in the quarter was $65.6, roughly flat with Q4 2011.For full-year 2012, company revenues totaled $1.12 billion -- up almost 10% -- while agency revenues totaled $772 million, up 13% and nearly 70% of the company’s total revenues.On a conference call with analysts and investors, Sapient CEO Alan Herrick indicated that while the business environment remains “challenging overall,” he expects the company to generate revenue growth “even or better” than 2012, meaning 10% or higher. First-quarter 2013 revenue is expected to be in the range of $295 million to $300 million, or at least 13% higher than the same period a year ago.“The overall tone from clients is improving” slightly, Herrick said. The company assumes that the second half of 2013 will be better than its 2012 counterpart, since there will be fewer issues, like the U.S. presidential election and the uncertainty surrounding the fiscal cliff. That said, Herrick stressed, “it’s still a choppy time out there.”Last month, SapientNitro acquired two firms that will bolster the agency’s offering including (M)Phasize, a cross-channel analytics shop that counts Johnson & Johnson and Avon among its clients. It also acquired a majority stake in Brazilian digital agency iThink, giving SapientNitro a presence in all of the BRIC countries. In addition to Brazil, those countries are Russia, India and China. Clients of iThink include J&J and Kraft, Herrick said. The Brazilian presence will enable the agency to take better advantage of marketing opportunities for clients during the upcoming World Cup in 2014, he added.
One of the most unusual alliances between two of the advertising world’s biggest companies -- Paris-based Publicis and Tokyo-based Dentsu -- has come to an end, as Publicis bought back the last of its shares owned by Dentsu, just as the Japanese agency holding company is poised to align with another big Western European ad group, Aegis. Dentsu this morning reported extraordinary income on the sale of the shares, which represented about 1.85% of Publicis, ending a relationship that began nine years ago when Publicis acquired BCom3, which owned flagship Madison Avenue shops such as Leo Burnett, its Starcom MediaVest Group subsidiary, D’Arcy and the U.K..’s Bartle Bogle Hegarty. At the time of that deal, Dentsu owned about 22% of BCom3. In a joint statement released this morning, Dentsu and Publicis said they would continue to “proactively consider all opportunities for future collaboration on their individual merits,” and noted that they will continue to jointly own two ventures -- Tokyo-based Beacon Communications and Dentsu Razorfish.
Smartphones and tablets now drive one out of every three minutes spent with digital media. As digital consumers become more reliant on mobile devices, the advertising and marketing industry can only expect content consumption to rise. Smartphones are surpassing 50% U.S. market penetration in 2012, reports comScore, which detailed digital media trends in its U.S. Digital Future In Focus 2013 report. It points to the shift in use and attribution patterns for mobile and desktop Web. Companies will need to become smarter about scaling their content to other platforms by developing integration strategies that deliver unique offerings to advertisers. As the e-commerce and m-commerce channel shifts accelerate, companies that are unable to maintain market shares from one channel to the next will suffer. During a SEMPO L.A. roundtable on retargeting Wednesday night at Google in Venice, Calif., Magnetic CEO James Green said attribution across channels will become one of the most important strategies for 2013. The industry continues to witness the decline of traditional media sources. Despite the 5% increase in the total U.S. Internet population, in the past two years, newspaper media consumption across the Web fell 5%; maps, 2%; weather, 12%; directories, 23%; comparison shopping, 4%; and instant messengers, 52%, according to comScore. The report explains reasons for the declines. For example, softness in Web-based comparison shopping reflects the growing showrooming phenomenon, where consumers use their smartphones while in brick-and-mortar retail stores to obtain competitive pricing information. comScore calls mobile commerce a threat on multiple fronts: to brick-and-mortar retailers competing with e-commerce retailers on mobile devices, and to less established e-commerce retailers that must compete for mobile transactions, despite being unlikely to own app real estate on smartphones. Apps dominate smartphone media use, accounting for four in every five minutes spent on smartphones, with mobile Web use taking the rest. When it comes to apps, Facebook finished 2012 in the No. 1 position among use, reaching 76% of the smartphone market. The social site also garnered the heaviest engagement from smartphone users, accounting for 23% of all time spent on mobile apps. Following Facebook’s lead in the app market, Google apps dominated the remainder of the list of top apps visited in the U.S., with Google Maps, Google Play, Google Search, Gmail and YouTube ranking as the most heavily visited apps, next to Facebook, according to comScore. The data company said Google apps also accounted for approximately 10% of all time spent on apps in December 2012.
“Angry Birds” creator Rovio isn’t playing around when it comes to advertising. The Finland-based company on Thursday announced the expansion of its global advertising team with senior hires from various companies, including Apple, Millennial Media and inMobi. Through the talent infusion, Rovio aims to forge closer ties with the world’s largest brands and advertisers. That effort includes upgrading ad offerings tied to its blockbuster game franchise across platforms, as well as merchandising and amusement parks. “Our new Brand Advertising Partnership Team in the U.S. will enable us to now partner directly with other lifestyle brands,” said Michele Tobin, head of North American Brand Advertising Partnerships. “The model of simply placing standard display ads in online and mobile properties is not necessarily strategic for the majority of tier one brands, and that model was in need of disruption.” The new team in the U.S. includes Betsy Flounders Novak, who joins from mobile video ad network Rhythm New Media. She will be responsible for the West and Midwest regions. Her background also includes top sales positions at MTV, Millennial Media and People.com. Matt Pfeffer, another Millennial veteran, will oversee East Coast sales operations in New York City. Pfeffer has also done stints at People.com, Ziff Davis and Golf. Outside the U.S., Todd Tran -- formerly EMEA general manager of Apple’s mobile ad business -- was brought on to lead Rovio’s EMEA and APAC brand partnership team. Tran’s resume also includes launching a digital and mobile agency for WPP in Europe. Joining Tran’s group is Raphaelle Tripet, formerly of inMobi. She has held digital ad sales posts at Nokia Interactive Advertising and MEC. In Angry Birds, the new beefed-up staff has a powerful brand of its own right to leverage. The entertainment phenomenon includes nine hit games, a YouTube channel with nearly 1 billion video views, a successful plush toy line, and an Angry Birds movie slated for a 2016 release. Tobin told TechCrunch that Rovio plans to build on existing partnerships with McDonald’s (in China), Warner Bros., Campbell’s, M&M and others. Until now, the company has only run standard display ads in mobile and online through third-party networks. Angry Birds began running ads in 2011 in its iPhone and Android apps through mobile ad exchange Nexage. Tobin suggested Rovio would develop more custom, or “native,” ad placements as well as integrated brand partnerships as part of its new ad push.
Despite the best efforts of Microsoft and BlackBerry, Android and Apple continue to tighten their stranglehold on the mobile market. Worldwide, Google’s mobile operating system and iOS combined for 91% of all smartphone shipments during the fourth quarter of 2012, according to International Data Corporation’s latest Worldwide Quarterly Mobile Phone Tracker report. “The dominance of Android and Apple reached a new watermark in the fourth quarter,” said Ramon Llamas, research manager with IDC's Mobile Phone team. Apple and Android smartphone vendors shipped a total of 207 million units worldwide during the fourth quarter of 2012 -- up 70% from the 122 million units shipped during the same period in 2011. "Android boasted a broad selection of smartphones, and an equally deep list of smartphone vendor partners,” according to Llamas. “Finding an Android smartphone for nearly any budget, taste, size and price was all but guaranteed during 2012.” Potentially improving Android's position even more, reports emerged this week that Hewlett-Packard is planning to adopt Google’s operating system to run a new line of mobile devices. However, neither HP or Google have yet to confirm the partnership. Separately, despite Apple’s Maps debacle, “demand for Apple's iPhone 5 kept iOS out in front and in the hands of many smartphone users," Llamas said. "At the same time, lower prices on the iPhone 4 and the iPhone 4S brought iOS within reach of more users and sustained volume success of older models.” For calendar year 2012, Android and iOS combined for 87% of the 722 million smartphones shipped worldwide -- up from 68% of the 494 million units shipped during calendar year 2011. Going forward, whether BlackBerry or Microsoft can challenge Apple and Google remains to be seen, according to IDC. Windows Phone/Windows Mobile, for one, made “market-beating” progress in the fourth quarter of 2012, according to IDC. The addition of Nokia's strong commitment behind the platform was seen as the key driver in Microsoft's success. Beyond Nokia, however, IDC sees a short list of other vendors that have been experimenting with Windows Phone while also supporting Android. Following several delays, BlackBerry has unveiled its BB10 mobile OS, hoping current BlackBerry users will upgrade rather than migrate elsewhere, while persuading smartphone users of other platforms, including previous BlackBerry users, to switch. “There is no question the road ahead is uphill for both Microsoft and BlackBerry, but history shows us consumers are open to change,” said Ryan Reith, program manager with IDC's Mobile Device Tracker. Platform diversity is something not only the consumers have asked for, but also the operators."
One out of every five visits to ecommerce Web sites now comes from either a tablet or smartphone, signaling that attribution paths and technology will become increasingly important in 2013. Tablets and smartphones began showing significant market share improvements during the 2012 holiday season -- including on Cyber Monday, when Web site visits from both devices more than doubled in one year, from 7.9% to 18.9%, according to Monetate, which assists companies like Delta, Best Buy and Macy's use data to market online. The Apparel and Accessories category proved the most popular for online shopping during the holidays -- followed by books, tickets, daily deals and consumer electronics, according to Monetate. Web site experiences for smartphones are not typically optimized, so while shoppers use smartphones to research products, most move to computers or tablets to make the purchase. In fact, conversion rates from tablets were slightly higher on the Tuesday at 6.72% following Cyber Monday at 6.31%. Tablet search could drive upwards of $5 billion in revenue for Google in 2013, according to Marin Software, which filed an S-1 Wednesday with the U.S. Securities and Exchange Commission to take the company public. The report estimates that cost-per-click prices for tablet search ads rose 25% in 2012. Some of the biggest challenges marketers will face in 2013 involve following consumer attribution paths to mcommerce sites, as well as the differences in targeting and bidding ad formats. Content and location leading consumers to purchase on mobile devices will become more important than device type in 2013. With the emergence of newer ad formats, such as click-to-call ads, mobile ad campaigns will continue to become more sophisticated, with Microsoft suggesting the addition of video Skype features in click-to-call mobile ads.
Lawmakers in the House and Senate reintroduced a bill on Thursday that would pave the way for tax collection by online retailers. The Marketplace Fairness Act authorizes state governments to require most out-of-state retailers to collect tax from consumers. The bill, which was introduced by Sen. Mike Enzi (R-Wyo.) and Rep. Steve Womack (R-Ark.), has garnered bipartisan support from more than 50 Senators and Representatives. Backers say the bill will make brick-and-mortar stores -- which must collect sales tax -- more competitive with online retailers. Currently, out-of-state stores, including online retailers, can't be required to collect sales tax unless they have an in-state presence, such as a physical location. While consumers are supposed to self-report their online purchases and pay sales taxes, observers think that many people don't fully do so. The measure unveiled on Thursday is similar to a bill introduced in 2011, but with a few revisions. Among the most significant is that the current bill has an exception for small businesses with less than $1 million in sales, while the previous measure only exempted businesses who took in less than $500,000. A host of retail organizations support the bill, as does online commerce giant Amazon. But the Direct Marketing Association, which criticized the 2011 measure, says that the current proposal still imposes unwieldy administrative burdens on businesses. "Our position hasn't changed much on this," says Jerry Cerasale, senior vice president for government affairs at the DMA. He adds that the bill could require businesses to comply with new sets of complicated tax rules, not to mention deadlines and forms, in numerous jurisdictions. Several states, including New York, recently passed laws requiring Amazon and other retailers to collect sales tax if they pay commissions to in-state affiliate marketers -- including Web publishers that offer links to the sites. It's not yet known whether those measures will survive court challenges. New York state's highest court heard arguments about the issue last week and is expected to issue a decision in the next few months.
Marketers would do well to ramp up investment in mobile this year, as the consumer shift from the PC to portable devices requires a change in strategy. Asserting that mobile is driving a “second Internet revolution,” the new report from Forrester outlines several key mobile trends for 2013 and steps that marketers should take in response. It points out that advanced mobile services rely on Web services, analytics and real-time data that demand investment. Forrester cites the recent decision of Mondelez International (formerly Kraft Foods) to allocate 10% of its global marketing budget to mobile as an example of a company that is making mobile a strategic priority. The research firm projects that tablets will have a major impact on e-commerce as they increasingly become a replacement for PCs. Conversion rates are already higher on tablets than smartphones and will continue to gain wider adoption. Brands and retailers should not lump the devices together as “mobile” but treat them as separate platforms. For global corporations, mobile will play a key role in expanding into emerging markets in Asia, Latin America and Africa. Forrester estimates more than 900 tablets and 3 billion smartphones will be in circulation by 2017, with most of the growth coming in these developing regions. To capitalize, companies should find local partners and marketing specialists to build their mobile presence. Internally, companies will take over more responsibility for managing mobile operations from agencies and vendors. Forrester envisions the rise of mobile marketing managers within organizations to spearhead and track programs. While offering advice based on emerging trends, Forrester analysts and report authors Thomas Husson and Julie Ask also warn about hyped mobile technologies that will not will gain much traction this year. These include NFC (Near Field Communication), cross-channel attribution, automated targeting solutions and responsive design. They note that companies need different app and Web strategies; not every mobile device will have a browser. Apart from not-ready-for-prime-time technologies, Forrester does not expect to come across many “great user experiences” in mobile this year. “In part, this is because too many marketing professionals are designing for mobile with PC-centric use cases in mind."
To help promote the premiere of its first original docudrama, "Killing Lincoln," the National Geographic Channel is turning to tablets. The network will run a one-day promotion on Sunday -- the same day the film airs -- geared exclusively to tablet users on home Wi-Fi networks. Handling the ad effort for the primetime program based on the book by Bill O’Reilly and Martin Dugard are mediahub/Mullen, along with mobile ad network Millennial Media. “Tablets have carved out a role in the modern home, and for many consumers, they have become an important part of the TV-watching experience,” said Laurel Boyd, VP, group media director at mediahub/Mullen. The ad creative for “Killing Lincoln” features images of the principal characters, a link to background material and an option to view full-screen video highlights. The ads will begin running on Sunday at midday and when the two-hour movie debuts at 8 p.m. EST, the video preview in the ad will become, in effect, “live” highlights from video being aired on TV. “The tablet experience provides a platform to not only market the film, but also give viewers a chance to find additional content live as the show is airing,” said Hayes Tauber, SVP, consumer marketing for the National Geographic Channel. Nielsen estimates tablets are used in 20% of U.S. homes, and that 40% of Americans use their smartphones or tablets while watching TV on a daily basis. Furthermore, 36% of those ages 35-44 and 44% of people 55-64 use their tablets to enhance the viewing experience through apps and social media. The book the National Geographic film draws on came under criticism from the Ford’s Theater National Historical Site when initially released for containing a series of factual errors. O’Reilly has said the mistakes were corrected in subsequent editions. Lending some star power to the movie is Tom Hanks, who serves as on-camera narrator and host of “Killing Lincoln.” Billy Campbell portrays Lincoln and Jesse Johnson is John Wilkes Booth. A Millennial Media spokesperson would not identify any sites or apps in which the “Lincoln” ad would appear but said the promo wasn’t a run-of-network buy. Millennial estimates that about 20% of its impressions come from connected devices such as tablets and e-book readers. The mobile ad network reaches a total monthly audience of about 150 million.
Netflix says it doesn’t release any ratings for its original content -- even “House of Cards” -- choosing instead to measure its success with "a balance of intuition and analytics,” including “really big data” on engagement levels with each individual piece of content, as well as the mix of content each subscriber is watching. “When you say ten million people watch a show, that really doesn’t tell you anything,” Netflix Chief Content Officer Ted Sarandos said at the All Things Digital’s Dive into Media gathering this week. Apparently a ratings-free approach is also appealing to creatives (even though they would have to work with a different economic model). “The model is going to change,” said “Arrested Development” creator Michael Hurwitz at the same event. “The trade-off is that we are encouraged to make a more interesting show as opposed to flattening it out [to meet the expectations and standards of the major broadcast networks]," he said, as reported in coverage of the event. I doubt anyone at the Nielsen/Arbitron audience measurement combine is losing any sleep over this concept. Ratings have been the lingua franca of the television business for nearly its entire history, used to determine which new shows survive from year to year and which ones get the lion's share of marketer ad dollars. Sarandos suggests that data can provide richer insights and he can live without the overnights. Hurwitz sounds pretty pumped about not having ratings decide the fate of his shows, allowing him to create edgier programming that might appeal to smaller audiences. Allow me to float a turd in this punchbowl: scale. At the end of the day, ratings -- as flawed and imprecise as they may be -- are what we have to live with until data becomes actionable enough to replace them. There are lots of folks out there -- including my client Simulmedia -- developing ways to translate better viewing data into improved advertising efficiency. But even with data as the new lingua franca of advertising, it all breaks down if programming can't deliver audiences of significant scale. While Netflix may be enjoying a moment in the sun thanks to its $100 million purchase of two "seasons" of nastiness from Kevin Spacey and Robin Wright, it remains to be seen if it can attract enough new subscribers to stay in business without advertising support. Can individual subs outflank the revenue that premium cable gets per subscriber from the MSOs? I don't think so. The theory of matching the scale of audiences provided by top network shows with an amalgam of viewers spread all over the distribution map -- from mobile phones to tablets, from Internet-delivered to newfangled roof antenna -- suggests that a media buyer would rather spend three weeks piecing together the parts (and the various creative units necessary to optimize on each platform) than make one phone call to a network. Look no further than the prices paid for Super Bowl spots and the fact that overall TV spending is up (perhaps because it costs more to buy less these days), and you have your answer. Make no mistake -- I am more than willing to pay for better programming (violent death, ubiquitous profanity, full-frontal nudity, complex plots, etc.), especially if there are no ads (which is why my cable, Netflix and Amazon TV bills run to over $300 a month) -- but are there enough of me out there for the ad-supported nets and Nielsen to worry about? Perhaps not today. But there is always tomorrow.