Q&A: Tim Hanlon Executive Vice President, VivaKi Ventures

Q&A-Tim Hanlon, EVP, VivaKi VenturesTim Hanlon, one of Madison Ave.'s formidable digital gurus and executive vice president of VivaKi Ventures, has a clear vision of where media and marketers need to be in the digital world - even if he has to drag them kicking and screaming. On a summer Chi-town afternoon, in a window seat at Keefer's across from the storied Harry Caray's Bar on Kinzie Street, Hanlon is all about deep thought on media trends to which he gives his own labels like "IP-ization," "atomization" and "dimensionalization." He is a former journalist with a strategist's mind, and he's not afraid to use it.

Mermigas: How do you reinvent advertising and media when the recession and digital transformation are taking such a dramatic toll?
Hanlon: We're in what I call the era of transparency. We're in an environment where marketers can target their traditional ad messaging more effectively, so the classic approach to advertising has gotten much more complicated and much more sophisticated. That alone is a big hairball for the agency community. We have to get that right and, arguably, we are making strides.
There is also the other part of the equation now, where marketers and their agencies can go directly to consumers without intermediaries, and that includes consumers reaching out to the brand. Now, whether that is a vicious cycle or a virtuous circle depends on where you are coming from. If you are in the traditional media or agency space trying to retrofit, it can look like a vicious, endless spiral of fear and death - which in many cases requires strategic fortitude and thinking outside the box.
Mermigas: What worries you most?
Hanlon: It is an ad industry that is largely intertwined with mass media for media buys and avails to get our messages out. With those mass media entities imploding, it is difficult to think that marketers and agencies won't get hit by some of the shrapnel. As dire as that sounds, there is ample opportunity to reinvent content, messaging and marketing - it is within our grasp. And that's unnerving to the media industry.
Mermigas: How much of a barrier is media's legacy structure and processes?
Hanlon: If you are retrofitting and coming from a classic brand marketing perspective, you are trying to do the best of what you can in the face of it all. But that denies the last 15 years of the evolvement in digital, which almost started the exact opposite: target audience and finely graduated groups. If it doesn't scale, big agencies and marketers push back and say they are not interested. But that is really a cop-out because they are failing to view them as a quality audience of fewer, better numbers.
Mermigas: So how do Big Media and Madison Ave. reconcile a dysfunctional business?
Hanlon: At some point it will collapse. I think we are in the beginning of a creative destruction period where you are going to see legacy media and agency companies either evolve and shift relatively quickly and adjust to the realities of a digitally driven market. Or others in this cyclical downturn will hold on to previously held notions and conventions of media like scarcity, which died in the mid-1980s with cable, and face obscurity.
Reconciliation of the two requires guidance and navigation to help the re-aggregation process; to enable marketers, agencies and consumers to make some kind of sense of the blizzard of choice that is out there. Everything now has a digital core to it, and you cannot retrofit to that. You start with digital and data becomes the fuel for the machinery of advertising and media. The intelligent use of data is necessary to smartly target, to create flexible ad messaging, and to understand outbound as well as inbound information when consumers react.
The media industry we have grown up with has been very top down. It has created messages for audiences we hope are interested and hope we get results. Now, that's not the only way. There is a reflexive aspect to it that allows us to talk back and dialogue with consumers.
Mermigas: What do you think are the top trends shaping digital media?
Hanlon: Guidance and navigation, in a world where everything is choice, is the ability for consumers to find what they want, either through recommendations or, prospectively, where things are found for you. Everything is a choice, so guidance and navigation is just as important for the media company or advertiser that wants to be found.
Second is the dimensionalization of media, or cross-media facilitation, in which different media forms interoperate with each other. So a printed page and a digital billboard can be digitally related through their interaction with a mobile device.
Third is the desperate need for more granular data on ways media is being consumed. The media, marketer and agency world has to be more adept at absorbing data from many sources and deriving intelligence from that to create proprietary currency - not wait around for the next Nielsen or Arbitron currency.
Fourth is the evolution of broadband wireless as a game changer in delivery. It makes all content mobile, malleable and personal. It eliminates waste by the consumer and the marketer. That's a win-win for everybody.
Mermigas: If interactive media revenues increase 11% to $26 billion this year, according to Forrester Research, where do we go from here?
Hanlon: I think all of media - radio, television, newspapers, everything - becomes interactive and is fueled by it. In that sense, it morphs into a huge business. Digital is the core of all marketing activity within the next 3 to 5 years. If you don't approach it that way, you will be misaligned with where consumers really are. Digital will be at the core of its creation, its distribution and follow-through. There is no question digital becomes the center of the marketing and media universe.
Mermigas: How will we see this take concrete shape?
Hanlon: We are going to see a recasting of the media equilibrium where marketers and media sellers and agencies in between have a much more balanced and cross-channel view of the world and media consumption. Television is no long the center of the universe. There is a fundamental reinvention that each player in the media business must go through. It's not an exercise any more.
Gannett is a classic newspaper publisher, but to its credit, it has made investments and acquisitions that are not part of, or obvious to, its core competencies. They now own Captivate Networks in the digital out-of-home space, and Live Stream. Gannett gets it compared to its publishing peers, most of who are cyclically dragged down. Gannett looks more like it has a fighting chance than a publisher simply converting its offline to online.
Mermigas: What about in the agency space?
Hanlon: VivaKi is an example. VivaKi is a corporate digital entity designed to get a big chunk of Publicis moving faster on to digital. To put a finer point on it, by the end of 2010, 25 percent of Publicis Groupe revenues will be derived from digital - that's the goal. We're about 16 percent now. That is better than our peers if you think that peers are who you need to compete against - which is another ad issue. This is not about Publicis against wpp or Omnicom or ipg. It's Publicis versus lots of entities that are newly expert in marketing, media, targeting and different options.
Mermigas: What is still missing?
Hanlon: Where I don't think we have it figured out yet is on creative side. The new world gives us the ability to serve targeted ads, but that is dependent on coming up with the right creative solution. That means convincing a creative person in an agency environment to create nonlinear asset that can be compiled by a machine or an algorithm, versus a 30-second ad that gets randomly placed.
There are only a handful of folks that are doing it: Visible World, Target Spot, Tumri or Dapper - the last two may be the salvation of display advertising because they are componentizing the creative play based on audiences, data and inventory. It's very hard to permeate big ideas. That is a structural challenge for the agency world right now, where media and digital targeting capabilities are ahead of the creative capability, or the ability to take advantage of them.
Most people in the advertising and media business didn't sign up for algorithms, computer science and number crunching. Digital basically means that marketing becomes a quite complicated and sophisticated process. The creative, right-brain part of the business is more important than ever, but it is turning into something more scientific.
Mermigas: Will Canoe's addressable advertising impact more than just cable tv?
Hanlon: It really comes down to recasting the value of media everywhere. For example, Sirius xm Radio has shown in radio that consumers want choice and will pay a subscription for 150 channels. It is indicative of the way that all media companies will evolve and recast themselves - in this case, Sirius is not a radio company, it is an audio company that happens to express itself in satellite online. Every tv station, every newspaper, every classic media form needs to have its own digital translation. At the very least, it is more bandwidth to do more stuff. It's the ability to take a digital signal and digitally drizzle stuff to smarter devices.
It's what I call the "ip-ization" of media: video, audio, print. I think it happens in our lifetime. You're already seeing it with the evolution of wireless broadband. Best of breed media companies in the future will be the best users of bandwidth. However content and communications get through to the consumer, they will have it when they want it. I call that the dimensionalization of media when a consumer can go much further with a message that means something to them because we have targeted in a much more sophisticated manner. The return on targeted delivery and interest should be much higher.
Mermigas: Won't mobile interactivity be the absolute sweet spot?
Hanlon: There will be a renaissance of interactive content, and mobile devices will be the catalyst and primary platform that we carry with us at all times. The age 30 and younger crowd manages their lives on portable devices with the expectation of making their offline lives better and more sustainable.
But if you are a multi-billion dollar media company that is publicly traded, and whose quarterly plan is predicated on a declining business model, that's not exciting; it's scary. There are people middle-aged and older who have their hands on the control levers who completely miss that. All they have to do is to look and listen to the consumer expression around them. I look at it as the exquisite expression of opportunity. Brands, agencies, and media companies have amazingly ample opportunities not only to survive, but to thrive if they are willing to do things differently.

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