The Internet, World Wide Web and Google were borne out of research programs.

Recognizing the value basic research can produce, WPP and Google have launched a marketing research program in conjunction with major universities to fund academic research in the field of online marketing.

Having spent the last ten years researching the field of online marketing while also personally applying, testing, proving and disproving my findings, I was excited to learn what academia may have discovered.

I was pleasantly surprised to learn the WPP Google Marketing Research program winners appear to have begun fielding some of the general questions I have been contemplating over the last four years while fleshing out and writing my book – For Sale By Google.

After listening to the WPP + Google award winners’ responses, I am satisfied with the progress my own personal Google Marketing Research program ie., my upcoming book For Sale By Google has already achieved by comparison.

Whenever I see the success of Vodafone’s Zoozoos being celebrated or the iconic advertising that almost created brands from scratch (like Onida), I am bewildered about the context of the celebration. It’s almost feverishly praising the ‘idea’ and its execution while ignoring the wealth creation in the hands of the owners. It’s shocking how the agency then sells and transfers all this for a mere few lacs to brand owners. It’s an IP slavery model.

Advertising agencies are almost equal partners in some business creations and yet benefit the least. For the older and rock solid brands, they are the true ‘custodians’. I remember meeting an agency head to seek help on some confusing signals about a particular brand of toothpaste from a Unilever brand manager. He chuckled and said ‘These guys are new kids. They will grow and learn. The brand is about………’ and he gave me almost a Wikipedia like 1 hour plus analysis of the brand and what it stood for.

A case:

Imagine that you are the owner of a Rs. 1000 crore industrial air conditioning enterprise. The business is stagnating. Lots of small players are eating into your market share. You have to move from being a service business to becoming a product company that makes air conditioners for consumers – a business that is booming. All the assets to do this are in place. The business cash flow can support this logical expansion. It’s a giant leap but has to be made for you to survive and thrive.

Lots of questions remain unanswered – How will you create a new brand for ACs in the consumer space? What’s the product strategy? What’s your positioning and differentiation?? What is your consumer communication? Which media vehicles work best?  You have sold ACs to purchase guys in factories and malls – how will you sell them directly to discerning consumers?

Sure you could hire some professionals from existing consumer AC companies but that’s a path riddled with hits and misses.

Now, imagine that Advertising Agency ‘Olive & Mason’ that has helped sell ACs  for 50 years finds out about your plans & approaches you to help.  They have worked with over 10 leading AC brands in the past, made them market leaders, they have all the insights, research, market penetration data and the knowledge of what the market wants. Most importantly, they know what the market doesn’t want. Also they are not conflicted to work with you at this stage.

Their proposal is simple – they will charge you only their real costs in terms of research, media and creative costs that they will incur on your behalf.

Their upside is 2 % equity of your company’s extra valuation should this new business of yours succeed. So their entire profit is success based. The nitty-gritty of ‘success’ is of course negotiated hard between you and them and is a sure win-win for you and them.

If I were that owner, I would do that deal.

Your CFO however is much wiser and this is what he does:

Your company casually floats a general inquiry that you will be spending 200 crores in building a consumer AC brand. Of this almost 20 crores  (10%) will be spent only in consumer media (TV, Print etc) to launch the brand. In a few hours the 30 best agencies of India clamor to get into your reception door. Over the months, they pitch so sincerely and hard that you feel like hiring all of them. Finally, the best amongst the best is selected. The lucky agency crafts your product, strategy, creative and media plan. They wisely spend your 20 crores.

It was agreed between you and them that they will earn about 1 crores in the bargain (5% margin on the 20 crores as a blended commission on creative and media) but they secretly make 1.5 crores (ouch).  A few weeks later a media auditor calls your CFO and whispers about the 50 lacs extra surreptitiously earned and all hell breaks loose. You can now legally and morally strangle the agency anytime you wish.

At your end, the AC business has gotten off to a great start. The 200 crores investment is poised to create a 200-300 crore business in the next 3 years and your stock has risen to reward you with a market cap of an extra 500 crores (1.5x of revenue). Life couldn’t have been better.

The guy who fooled the ad agency is you.

If the agency had taken equity as compensation, their 2% would have been worth 6 crores and appreciating. They would have been your partners in many more milestones to cross. Today, they are a vulnerable vendor that has taught you everything and yet earned a negative reputation for themselves. This is classic win – lose.

The trade-off – fees vs. value creation.

Consider this:

* Zenith Optimedia report

** LiveMint report

# Assumed blend between creative and 1-3% media commissions

@ Assumed that 10% of the topline increase was thanks to improved marketing and communication of ads.

The new business model – Ad agencies becomes the Brand VC

The new business model would mean that Ad agencies get capitalized to run operations at their own costs (salaries and overhead expenses) and use the teams to then create and manage brands in exchange for equity. Its equity for knowledge just like VC operate using the equity for cash model. This creates a deeply valuable business model that not only can be externally funded but also create a deep synergy across the value chain – rather than being at conflict today (it’s well known that ad agencies need their clients to spend to survive – sometimes it’s not in the best interest of their clients to spend but that gets compromised). In a world that’s contracting spends and improving returns, we need partners in arms – not enemies in bed.

The risks in this model as Punitha Arumugam – CEO of Madison Media explained to me are manifold: The business of clients (and hence their stock) declining due to reasons other than good marketing; the inability of the agency to really control or influence a client like a financial VC; having the deep cash pockets required to sustain long term cash burns in the hope of accumulating equity etc.

Well, this is the brave new digital world and that calls for brave hearts. If google, twitter and facebook are the new media powers, it’s knowledge over brute media power that will win. More the reason to trade IP – not sell it to the highest bidder. As a starter, the big 5 agencies could incubate a VC agency model to service new start-ups and less risky business models as an experiment.

Mr. Martin Sorrell – are you game to become VC yet?

With just days to go before a High Court hearing they seemed doomed to lose, the founding partners of agency hotshop Adam & Eve have settled out of court with WPP.

The predicted grovelling apology was forthcoming and has been prominently displayed on WPP’s website, like some traitor’s head spiked at the Tower of London. In it, partners James Murphy, David Golding and Ben Priest fulsomely acknowledge that they broke the terms of their gardening leave when they quit WPP-owned Young & Rubicam to set up A&E. Further, if “unintentionally”, that they absconded with WPP-owned data.

There was also a price to pay, said to be somewhat under £1m, plus considerable legal expenses: perhaps £1m in all. That is cheap compared with the $10m (before costs) WPP recently extracted from two former George Patterson executives and the agency’s ex-owner, PEP, in Australia. But it is no small change for the embattled A&E partners, who are under personal guarantee. Their only consolation is that A&E has escaped to fight another day.

ผลการสำรวจความเห็นชาวอเมริกันชิ้นล่าสุด ชี้ให้เห็นว่าอินเตอร์เน็ตเป็นเทคโนโลยีที่เข้ามามีบทบาทและอิทธิพลต่อชาวอเมริกันจำนวนมาก โดยอเมริกันชนส่วนใหญ่มีความรู้สึกว่าไม่สามารถดำเนินชีวิตได้โดยปราศจากการออนไลน์ และ 1 ใน 3 ระบุว่ายอมสละเพื่อนและเซ็กส์ เพื่อใช้ชีวิตท่องเว็บอย่างไม่เสียดาย

ไม่มีเน็ต อยู่ไม่ได้

จากการสำรวจของบริษัทด้านการตลาด JWT ระหว่างวันที่ 7-11 กันยายน โดยสอบถามจากชาวอเมริกันทั้งหมด 1,011 คน ผลปรากฎว่า กลุ่มตัวอย่างจำนวนถึง 15 เปอร์เซ็นต์ยอมห่างจากอินเตอร์เน็ตเพียง 1 วันหรือน้อยกว่านั้น ราว 1 ใน 5 ของกลุ่มตัวอย่างเท่านั้นที่ยอมห่างจากอินเทอร์เน็ตเกิน 1 สัปดาห์

JWT นั้นป้อนคำถามว่า ระยะเวลาเท่าใดที่ผู้บริโภคยอมรับได้หากไม่ได้ใช้งานอินเทอร์เน็ต กลุ่มตัวอย่าง 15 เปอร์เซ็นต์บอกว่า 1 วันหรือน้อยกว่านั้น อีก 21 เปอร์เซ็นต์ ระบุว่า 2 วัน ราว 19 เปอร์เซ็นต์ตอบว่า 2-3 วัน ซึ่งจากการสำรวจทั้งหมดมีเพียง 1 ใน 5 หรือ 20 เปอร์เซ็นต์เท่านั้นที่สามารถใช้ชีวิตโดยปราศจากอินเตอร์เน็ตเป็นเวลา 1 สัปดาห์ได้

“จากการบอกเล่าของหลายคน พวกเขาจะรู้สึกกลุ้มใจ เบื่อหน่าย และรู้สึกแย่ทุกครั้งเวลาถูกบังคับให้ปิดอินเตอร์เน็ต” แอน แม็ค (Ann Mack) หัวหน้าวิเคราะห์ทิศทางตลาดบริษัท JWT ผู้ควบคุมการสำรวจครั้งนี้กล่าว โดยมีจุดประสงค์เพื่อศึกษาว่าเทคโนโลยีมีผลต่อการเปลี่ยนแปลงพฤติกรรมมนุษย์ อย่างไร

“ผลคือพวกเขาขาดการติดต่อจากโลกภายนอก จากเพื่อน และครอบครัว”

ผลสำรวจยังชี้ให้เห็นว่า การใช้โทรศัพท์และอินเตอร์เน็ตเป็นสิ่งสำคัญต่อชีวิตประจำวันมากขึ้นเรื่อยๆ กลุ่มตัวอย่างเกือบครึ่งหนึ่งเห็นด้วยว่า การลืมออนไลน์คือความผิดพลาดที่แสนสาหัส

คบเพื่อน-มีเซ็กส์น้อยลง

กลุ่มตัวอย่างกว่า 28 เปอร์เซ็นต์ระบุว่าใช้เวลาพบปะสมาคมผู้คนน้อยลงเพราะเอาเวลาเกือบทั้งหมดไป ใช้ในโลกออนไลน์ ตัวเลขนี้ค่อนข้างสูงเนื่องจากเทียบเป็นสัดส่วนเกินกว่า 1 ใน 4 ของกลุ่มตัวอย่าง โดยอีก 20 เปอร์เซนต์ ระบุว่าพวกเขาใช้เวลาเพียงเล็กน้อยให้กับเรื่องเซ็กส์เพียงเพราะต้องการท่อง โลกออนไลน์เช่นกัน

กลุ่มตัวอย่างยกให้อุปกรณ์เชื่อมต่ออินเตอร์เน็ตเป็นอุปกรณ์อันดับ หนึ่งที่ขาดไม่ได้ ชนะโทรศัพท์มือถือ และโทรทัศน์ที่ได้อันดับสามไปครอง สอดคล้องกับความเห็นหลักของกลุ่มตัวอย่างที่ว่า อินเตอร์เน็ตคือสิ่งจำเป็นมากที่สุด

“กิจกรรมต่างๆไม่ว่าจะเป็นการมีเซ็กส์ สมาคมพบปะผู้คน ดูทีวี อ่านหนังสือพิมพ์หรือนิตยสาร สิ่งเหล่านี้ล้วนแย่งเวลาจากการเล่นอินเตอร์เน็ต นักเสพติดเน็ตจึงไม่ต้องการที่จะแบ่งเวลาให้กับสิ่งเหล่านี้” แม็ค กล่าว

เทรนด์แรง ใช้เน็ตขณะเคลื่อนที่

แม็คแบ่งผลสรุปจากการสำรวจครั้งนี้ออกเป็น 2 ประเด็น ประเด็นแรกคือผู้บริโภคต้องการใช้อินเตอร์เน็ตขณะเคลื่อนที่มากขึ้น โดยเฉพาะผู้ที่ไม่ต้องการใช้อินเตอร์เน็ตความเร็วสูงจากบ้านเพียงอย่างเดียว ประเด็นสองคือผู้บริโภคต้องการอุปกรณ์ที่ใช้เชื่อมต่ออินเตอร์เน็ตแบบพกพา เช่น iPhones และ BlackBerrys เพื่อให้สามารถออนไลน์ได้จากทุกที่ทุกเวลา

สำหรับ JWT นั้นเป็นบริษัทลูกของ WPP โดยที่ผ่านมา JWT มีการให้ความสำคัญกับพฤติกรรมผู้บริโภคที่เปลี่ยนแปลงไปด้วยการจัดตั้งโฆษณา ประเภทใหม่ เพื่อให้เข้าถึงกลุ่มผู้ชื่นชอบเทคโนโลยีล้ำยุคได้มากขึ้น

“เราเรียกคนกลุ่มนี้ว่าสาวกดิจิตอล คนกลุ่มนี้จะมองโทรศัพท์มือถือของตนเองเป็นส่วนหนึ่งของชีวิต ใช้ชีวิตกับอินเตอร์เน็ตทั้งออนไลน์และออฟไลน์ปะปนกันไป และเป็นผู้ที่เลือกใช้อินเตอร์ความเร็วสูงมากกว่าการดูทีวี” แม็คกล่าว

โดย ASTVผู้จัดการออนไลน์

As some of you know I’m currently in the USA. Since I’ve been here I’ve attended AdTech NY ‘09 and am now in San Francisco visiting Efficient Frontier, our tech partner.

Trip has been great so far & plan to post a few new articles coming out of AdTech covering:

- WPP’s view on the state of the industry, trends and emerging markets.
- The rise of the Second Channel digital ad market as the growth driver of the market.
- The state of the digital economy from a US perspective, with views from UBS & Pubmatic.com
- The outlook for Search Marketing, Local Search, Video Search etc.

Look out for new posts over the next few days.

WPP chief executive Sir Martin Sorrell claims that brands are not spending enough online because the people who run their agencies are too old and resistant to change.  Delivering the opening keynote session at ad:tech New York, Sorrell criticised brands for investing an average of just 13 per cent of their marketing budget online despite the rapid increase in digital media consumption.

The WPP boss claimed that brands are being prevented from spending online due to a lack of understanding on behalf of the agencies handling their media budgets.

“The people who run agencies tend to be of an older vintage – to put it politely,” said Sorrell. “They tend to be resistant to change and want to spend the last three to four years of their careers travelling around the world rather than dealing with fundamental strategic issues on a daily basis.”

Digital media already accounts for 25 per cent of WPP’s $14 billion revenues, but Sorrell claims this will increase significantly over the next five years. He estimates that brands will boost their online spend to upwards of 20 per cent of their media budgets by 2015.

Outlining WPP’s five year plan, Sorrell said the company will be more focussed on developing Eastern markets, more involved in non-traditional media and more geared towards helping clients qualitatively justify their media spend.

“WPP’s strategy can be summed up in one simple sentence: new markets, new media and consumer insight,” he told ad:tech delegates.

Sorrell also claimed the shift from traditional to digital media will be helped by the fact that brands are becoming increasingly focussed on ROI.

“I have never seen clients more focused on cost than they are now,” he said. “New media gives us a way to quantatively evaluate media in a way that we’ve never seen before.”

Sorrell claimed that WPP is “certainly not an advertising agency any more” and insisted that “technology is at the centre” of its development. “The companies that win are those that innovate successfully,” he said.

http://www.brandrepublic.com/BrandRepublicNews/News/964347/Agency-bosses-old-change-resistant-claims-Sorrell/?DCMP=EMC-DailyNewsBulletin

NEW YORK – WPP chief executive Sir Martin Sorrell claims that brands are not spending enough online because the people who run their agencies are too old and resistant to change.

See the full story and discussion on the Brand Republic site.

I think that if the agencies are to blame for failing to understand and offer innovation and opportunities to brands by adopting digital and social media then the clients have to take some of the responsibility too.

Two years ago this week I was in New York, along with 10,000 others, attending Ad:Tech. From memory (ex capite) 3 floors of the New York  Hilton were decked out with 300+ exhibitors.

The atmosphere was electric. Full of energy and hope. For four whole days digital  media and advertising’s best minds gathered to share in the vision: “The Art of Conversation: Building Great Brands in the Digital Age”

That year Nick Brien, the Worldwide CEO of Universal McCann gave the opening key-note address on The New Media Universe: Forging a Model of Interdependence.

He was out to prove to the audience that, although it had taken almost 2 decades, the Ad Industry now got the “whole online, interactive, new media thing” and how it was rapidly reshaping the media landscape. 

I remember him speaking eloquently and energetically about the new strategic dynamic facing the ad industry. The new terms of engagement:

Yesterday advertising was all about the old persuaders. Today it is all about the new influencers.

How timing was now everything. The 80’s had been about content (i.e. Making great ads), the 90’s about contact (i.e. Relationship management) and today it was all about context.

The idea that the customer doesn’t want to be interrupted unless they are ready… and when you do interrupt it better be personal. Today it’s all about me not you!

All good strategic  insights but when it came to the punchline the story just didn’t gel.

Why? Simply because he pulled out an award winning TV Commercial and Billboard campaign from Australia to demonstrate how his Global Agency was leading the industry in interacting with this brave new world of young influencers.

What he was saying was: “Look everybody we finally get it”. What he was showing us was: “We make great TV commercials and now we can post them online too!”

A week earlier I had been in Chicago attending a conference where Professor Erik Brynjolfsson of MIT Sloan School of Digital Business gave a key-note presentation on Digital Organisations. As he closed the show he suggested that the best way to understand the nature of the enormous strategic challenges facing the USA was to simply consider this salient lesson from history.

Britain had invented the Industrial Revolution but it was the USA that had ultimately perfected and profited from it.

History tells us that the US became the world’s industrial powerhouse thanks to practical innovations like the production line.  What is not recorded is the idea that the British failed to fully capitalise on the industrial revolution because the very culture that allowed them to invent and give birth to the industrial revolution eventually became the primary barrier to Britain perfecting and profiting from it.

Listening to Nick, and watching his TV campaign, I could not help wondering what the future held for these pioneers of the Information Revolution.

End Note:

The advertising industry has a symbiotic relationship with the mass media. If newspaper and T.V. advertising revenues fall so do advertising agency revenues. The simple fact is the Advertising Industry and the Mass Media are facing and sharing the same challenges.

For example

• Is the internet really responsible for the decline of the newspapers?
• What If: Subscriptions become the New York Times’ main revenue stream?
• Who holds the key to MobCon profitability?
• What is the MobCon?
• The real problem is FLINK!
• Why putting ads on the menu won’t pay for lunch

Two Years on and eConsultancy is reporting that the “free versus paid” debate is  the key point of discussion on the first day of Ad:Tech NY 09. 

In the key note address Sir Martin Sorrell, CEO of WPP has apparently backed Rupert Murdoch’s idea of making customers pay for media content online.  Others, like Conde Nast’s Josh Stinchcomb, think the emerging mobile market offers the best hope for subscription content.  Mixed revenue models are being openly discussed and there is a recognition that there will be a lot of experimentation in the marketplace before the right formula is discovered for monetizing digital media.

Sir Martin Sorrell, the world’s most influential adman, yesterday offered a new expression to describe prospects for the world’s economy as he predicted a “LUV”-shaped recovery. Sir Martin, who famously used the expression bath-shaped to predict a previous economic downturn, said that the world could expect a three-speed recovery in 2010.

He said the recovery would be L-shaped for Western Europe, U-shaped for North America and V-shaped for Brazil, Russia, India and China and the so-called Next 11 nations, which include Turkey, Indonesia and Vietnam. He cheerfully admitted the LUV acronym — “the most acute description in the alphabet soup debate on the shape of the current economic cycle” — was not his own invention but had been coined recently by Stella Dawson, who blogs on economic matters for Thomson Reuters, the financial data and news provider.

Sir Martin, the founder and chief executive of WPP, the world’s biggest advertising and marketing group, told The Times: “There is a fair degree of confidence among chief executives and chief marketing officers — but, unfortunately, that hasn’t yet translated into spending. “Whilst their hearts are stronger and their minds clearer, increased confidence is still not transferring to their cheque-writing hands.”

He was speaking as WPP reported revenues of £2.01 billion from July to September. This was up 6.7 per cent on the same months last year and reflected last year’s acquisition of Taylor Nelson Sofres, the market research firm, as well as the recent strength of the dollar and the euro against sterling. Like-for-like sales, which strip out the impact of currency movements and acquisitions and which are regarded as a more meaningful measure, were down 8.7 per cent, although this was a marked improvement on the 10.5 per cent fall suffered during the April to June quarter. Like-for-like gross margins, which Sir Martin said was a better measure of competitive performance, were also better than the previous three months.

Sir Martin said that things were “less worse” from July to September than from April to June, adding: “You would expect that to be the case, given the massive fiscal and monetary stimuli pumped into the world’s economy. If that hadn’t worked, we would be in real trouble.” Sir Martin cautioned against suggestions that major economies were now set fair for unblemished growth in 2010. “The big test is what happens when governments start to withdraw their stimulus packages. The ship is turning but I won’t declare victory until we see like-for-like growth.”

WPP won new business totalling £730 million during the quarter, including contracts in the United States with Microsoft — to promote Bing, its new search engine — and Mattel, the toymaker. Sir Martin said he had drawn some comfort from the fact that WPP’s US operation, where revenues were down 6.1 per cent, had enjoyed its best quarterly performance this year

From a personal point of view, I guess Sorell is also worried that if the economy goes into freefall after the next General Election, when incoming governments like the UK Conservative Party kick away as many forms of economic stimulus as they can (a bit like a hooligan kicking away the walking sticks of a man recovering from a hip operation) – his next analogy will be ‘EU economies spiralling down the plug hole’ – this blog is always the first with summer 2010 news!

http://business.timesonline.co.uk/tol/business/economics/article6897532.ece

I see the diaspora of talent from BBH has claimed another emigré. This time, it’s from the creative department. Mick Mahoney, a creative director, has quit to become ECD at Euro RSCG – which has been bereft of a creative chief since Mark Hunter went to TBWA\London, back in April.

At least Mahoney didn’t defect to a WPP agency. For a while, it was beginning to look personal; or, alternatively, as if WPP lacked imagination in the talent department.

I’m fortunate enough to be off to NYC next week to attend AdTech NYC 2009.  I attended AdTech SFO earlier in the year and found it hugely beneficial, mainly in terms of getting a wider perspective on digital trends from the USA from both leading advertisers and major agencies.

Sessions I’m attending include:

Day 1

• Opening Keynote with Sir Martin Sorrell (WPP) 2010: What’s coming down the line
• Defining the New Media Currency—How to Bring Traditional Media Metrics Online, Or Should We?
• The Modern Agency
• Advertising Operations in the Digital Age: How to Build, Scale and Leverage a Next Generation AdOps System
• The New Consumer Funnel: Engagement Mapping and the Death of the Last Click Reporting Standard
• Marketing 3.0—Building Great Brands in the Digital Age
• TV 3.0: Reach + Targetability—The Promise of Addressable Advertising

Day 2

• Keynote: Jonathan Miller, Chief Digital Officer, Chairman and CEO, Digital Media Group, News Corporation
• The Rise of the Audience Marketplace
• Digital Branding: Measuring the Effectiveness of Online Brand Advertising
• The Twitter Effect: Leveraging Twitter to Drive Brand Engagement and Bottom-Line Results
• Creative Showcase I: Going Beyond Digital—Contagious Ideas That Change the Conversation
• Creative Showcase II: Cool Stuff—That Works!

I hope to post interesting updates and views from each day, stay tuned if you are interested or as always drop me an email & I’ll send an update or session pack if I get one.

So, quick round up of  some of todays bitties…

• Twice now I’ve seen a massive cruise ship sail up the harbour. If you are in the right spot, it goes under the bridge (looking like it won’t fit), fills all the sea / room between the bridge and the Opera House, then looks as though it’s going to crash into the Opera House. It doesn’t, sails on past…
• Had some lovely food. Although reasonably priced, the $2.55 I was getting to the pound in 2006 was more agreeable than the $1.80 I am getting now…
• There don’t seem to be many fat people here, the outdoorsy way of life helps with that
• North Sydney Olympic pool (2 mins from me by the water) is fresh water. And the people who swim there take their swimming seriously (will leave my armbands at home on Monday)
• The TV here is a mix of British and US. As the non-sporting events rarely pull in more than a million or two viewers, it’s why there is so little home grown TV
• When the sun shines, the harbour area is one of the most beautiful in the world (the hot men wearing little help)
• The way Aussies pronounce ‘Australia; is strail-yaaa (two syllables, very drawn out finish)
• The people are friendly, and will talk to you for hours
• There are loads of Brits here. If we all went home, the creative industry (for one) would most likely fold
• Sir Martin Sorrell just described this place as a backwater. Whilst he may have a point from a business perspective, you can’ t deny the work life balance is (generally) better

So, another sunset with the harbour bridge, opera house and water in my midst. This time from the north shore, looking over the skyscrapers. Just stunning, cannot believe how lucky I am for the few weeks I am here!

Iain is off out for a gentle Saturday evening…

What’s really interesting about the appointment of Hugh Baillie as chief executive of Ogilvy Advertising is that he’s part of a breakaway. And the break is away from Bartle Bogle Hegarty.

Former group business director Baillie is being joined by Rachel Hatton as group head of strategic planning, and planning director at the ad agency. Hatton was head of planning at BBH during what may come to be seen as its heyday, when it won all those awards, culminating in the IPA Grand Prix and Agency of the Year title in 2008. Baillie helped to win the global Johnnie Walker business and has led some of the agency’s key accounts, Axe/Lynx, Britvic and Surf among them. Both are BBH stalwarts, Baillie having joined from Saatchi & Saatchi in 1998, and Hatton from Boase Massimi Pollitt (BMP) in 2000.

So, this is a significant coup for Ogilvy and a significant set-back for BBH. Baillie and Hatton come as a team (for example, they both worked on Britvic). It’s a little like that buddy-buddy wrench at DDB London when Paul Hammersley, then ceo, and David Hackworthy, planner, quit to go to The Red Brick Road in 2005.

What makes this worse for BBH is that the defection of senior staff to WPP agencies is becoming a habit. Richard Exon, ceo of RKCR/Y&R, once occupied a similar position to Baillie at BBH. True, he was seduced across at managing director level, and got the top job only after James Murphy set up his own agency, Adam & Eve. But let’s not split hairs. There was also the unfortunate matter of John O’ Keefe, who sat in the BBH creative pantheon only one echelon below Sir John Hegarty. He decided to seek his fortune as global creative director at WPP. Then there’s Guy Murphy, head of global planning, and Russell Ramsey, executive creative director, JWT London. Why has JWT come knocking on BBH’s door? Well, who else’s? BBH is the one to beat in JWT’s competitive creative set, and has the most clients in common (Unilever, Diageo and Vodafone spring to mind). If you can’t beat them, get them to join you, you might say.

Nor is the BBH exodus confined to WPP. Derek Robson quit to go to Goodby, in the USA, as a managing partner; Penny Herriman is managing director and – some would say – soon to be ceo of WCRS; Chris Harris was poached as managing director of Leagas Delaney.

Swallows not making a summer? Well maybe. Any agency which has attained the status of BBH is fair game for the headhunter. In a  sense, it’s a back-handed  compliment that rival agencies feel the need to pillage BBH for top talent.

Nonetheless, another conclusion can also be drawn. And I would be very surprised if this did not condition the thinking of at least some of those senior people who have recently defected. BBH is now 27 years old and in the throes of generational change. It has greatly expanded (into a micro-network) – which in itself offers fresh opportunity for younger talent. And in fairness it has tried hard to bring on a cohort of younger managers – of which London chief executive Gwyn Jones is perhaps the most prominent example. This has not been enough to quell mutinous thoughts in the marzipan layer, a few to the point of defecting. Of course, some of these people may have been talented, but not talented enough. BBH, like everyone else, has had to make some harsh decisions about the size of its workforce, which has been, literally, decimated. One in ten has gone or is going. Nevertheless, I cannot believe that every one of the top-flight defectors has had an assisted exit. After all, it’s also the case that the route upstairs, managerially speaking, is now blocked; and for ambitious people that is a signal to start looking elsewhere.

It is hard to think of BBH without Nigel Bogle, Jim Carroll or Simon Sherwood. On the other hand, if they do not outline their retirement plans in the foreseeable future, the result will be rebellion or atrophy. BBH, at very best, will become less an agency, more a law firm overloaded with “partners”. Not an enticing prospect for the UK’s premier creative shop.

GroupM Search and Web researcher comScore have released the results of a study by comScore looking at the relationship between social media exposure and search behaviors.

Conducted in tandem with social media agency M80, the study is titled, “The Influenced: Social Media, Search and the Interplay of Consideration and Consumption.” A white paper exploring the results and implications of the study is available on the GroupM Search blog, SearchFuel.

GroupM Search is the search marketing division of GroupM, the media buying and planning arm of WPP.

“Every day consumers express their intent via search. Now, we better understand how that intent is established via social media and the interplay between the channels,” said Chris Copeland, chief executive officer of GroupM Search.

The research explored the correlation between social media exposure and search behavior over a three month period across different verticals, including automotive, consumer packaged goods, and telecommunications. In addition to looking at total internet users, consumers were divided into three segments:

• Consumers exposed only to a brand’s paid search 
• Consumers exposed to social media relevant to a brand’s category  

o    A blog, message board/forum, user review, social networking site (e.g., Facebook, MySpace, LinkedIn), Twitter/micro-blogging, or video-sharing site (e.g., YouTube, Google Video), as well as a brand’s social marketing program’s “target” sites, or sites which have the most natural potential to hold content about a brand

• Consumers exposed to influenced social media specific to a brand  

o    Identified sites containing distributed social marketing content of a brand’s social media program

Search behavior was broken into segments based on where queries fell among stages of the purchase funnel. This included upper-funnel terms expressing awareness and consideration (industry relevant terms, general product attributes) to lower-funnel terms expressing action and loyalty (campaign brand terms, brand product terms). 

The study showed searchers who engage with social media, especially those exposed to a brand’s influenced social media, are far more likely to search for lower-funnel terms compared to consumers who do not engage with social media. Further, consumers exposed to a brand’s influenced social media and paid search programs are 2.8x more likely to search for that brand’s products compared to users who only saw paid search. 

The study also showed a 50% CTR (click-through-rates) increase in paid search when consumers were exposed to influenced social media and paid search. This revealed consumers exposed to social media are more likely to click on a brand’s paid search ad compared to those exposed to the brand’s paid search alone.  

Among searchers using a brand’s product name in the query, the CTR increased from 4.5% to 11.8% when users were exposed to both influenced social media and paid search around a brand.

In organic search, consumers searching on brand product terms who have been exposed to a brand’s social marketing campaign are 2.4x more likely to click on organic links leading to the advertiser’s site than the average user seeing a brand’s paid search ad alone.

“Social media-exposed consumers are far more likely to search for brand and product-related terms, and click on a brand’s paid search ad,” said Graham Mudd, vice president of comScore, Inc. “This finding provides strong evidence that investing in social media marketing can both increase initial brand consideration and drive higher conversion rates once the consumer has decided to purchase.”

Surveying the intention of these segments, searchers who use social media are more engaged overall and more likely to be looking for places to buy and brands to consider. Consumers using social media are 1.7x more likely to search with the intention of making a list of brands or products to consider purchasing compared to those who do not use social media.

“Advertisers need to explore their social media initiatives and how they impact user engagement and performance in other channels. This data suggest that social media marketing does positively affect consumer purchase consideration, specifically through the search channel,” said Todd Steinman, chief operating offer at M80.

According to comScore, the findings introduce several implications for the search marketing and social marketing industries.

On Wednesday this week I attended a free half-day seminar organised by Reed Business Information (publisher of Contract Journal and many other B2B titles), entitled What Works Online. Targeted at B2B marketers, this was a useful reminder of the range of online tools that we now have at our disposal, from search engine optimisation (SEO), through website design and online advertising to using e-newsletters for lead generation.

One of the introductory slides showed online advertising spend, but will now, I’m sure, be updated, as this week saw the release of figures from the Internet Advertising Bureau (IAB), showing that UK internet ad spend (£1.75bn in the first six months of 2009) surpassed television ad spend for the first time, accounting for almost 24% of all expenditure on advertising. I then read a more detailed account of the figures in the Guardian on the train home afterwards.

Of course, the economic downturn is probably at least partly responsible for pushing online ad spend ahead of television spend now, but the long-term trend has been evident for some time (advertisers recognising that people are accessing more and more online content). But the shift towards online may not continue inexorably upwards. The Guardian article talked to WPP’s Adam Smith:

Smith cited factors such as the increasing share of time that users spend on social networking websites, which have not attracted huge advertising spend, and the increasing saturation of internet penetration in the UK as potential limiting factors.

Perhaps this suggests marketers should focus a bit more attention on social media. This may extend to businesses advertising on social networking sites that are used by their target audiences, but I would hope that it also means business people also engaging more with both existing and potential customers (and their other publics) through the content and conversations on such sites.

There was plenty of talk about Facebook and Twitter at the RBI seminar, but attitudes varied depending on the markets being talked about. HR marketers seemed very positive about using social media but there was less enthusiasm among the couple of construction folk I talked to, largely,  I think, because the decision-makers they had to deal with (one was in-house, the other agency-based) were somewhat sceptical about the value.

Stand by for some crowing. Not from me, from WPP. It looks as if one of its agencies, OgilvyOne, has won a colossal piece of digital business from luxury goods company Louis Vuitton.

Reasons to be cheerful? Part One: this is a global account and, according to some, the largest digital budget awarded this year. Part Two: the LV pitch was held in Paris (as it would be, since LV is French-owned) and prominent on the shortlist were two agencies we are now intensely familiar with, Digitas and Razorfish (hint: they are now both owned by Publicis Groupe). WPP, you may recall, was the runner-up in the auction to buy Razorfish. So there’s a special piquancy in winning such a prestigious piece of business from right under the nose of Publicis group ceo Maurice Levy on his home ground.

More interesting perhaps is the question: why is this such a big account? After all luxury goods brands, however exclusive, are not generally known for the size of their budgets. A bit of decorous advertising in some upmarket magazines usually defines the limits of their imagination.

Not so LV – the luggage to watches to shoes and handbags operation owned by one of France’s most powerful businessmen, Bernard Arnault. Arnault departed from tradition a year back with the company’s first commercial, a two-and-a-half minute epic (originally) featuring Polish model Monica Krol and meditating on the theme Where Will Life Take You? More familiar perhaps will be the employment of uber celebrities such as Mikhail Gorbachev and Catherine Deneuve in the press ads.

Now Arnault seems to have found digital in a big way. In a study just out from New York University’s Stern School of Business, Louis Vuitton, Porsche and Tiffany have emerged as some of the very few luxury brands that “get” online. Among those that don’t are Trump, Bulova, Fabergé and Graff. The study surveyed 109 brands in all, and discovered that where only 33% were selling online a year ago, 66% are doing so now. Digitally savvy, or just desperate as a result of the recession?

Arnault himself take the internet very seriously indeed. He has involved LV in a titanic trademark dispute with Google, over the introduction of its AdWords service which – according to Arnault – recklessly encourages counterfeiting. The score so far? One all. Arnault won his case in the French courts but the finding was recently quashed by the EU’s highest court, which ruled that Google did not have a case to answer. We’ll see. Arnault is nothing if not tenacious.

Fall Season Start Not That Great; despite the rosy stories about strong debuts, NBC, ABC and the CW’s ratings are down. (TV by the Numbers)

Get Some Sony Movies on the Go; new feature on select Blu-ray discs will allow users to transfer movies from PS3 to their PSPs. (Video Business)

WGA East Signs New Digital Media Signatories; Dinosaur Diorama (The Burg) among the 11 new web creators that are now WGAE members, part of an active digital media push being made by the guild. (WGA East)

YouTubers Launch Record Label; DFTBA Records to focus on releasing music from up and coming YouTube musicians. (YouTube Blog)

Big Ten Signs thePlatform for Online Video; the cable sports network will use the Comcast sub’s video platform to offer live and on-demand game coverage from the Big Ten Conference. (Broadcasting & Cable)

WPP Case Against SpotRunner Dismissed; WPP’s securities fraud and breach of contract case against the TV ad firm was based on the selling of SpotRunner shares; WPP plans to appeal. (paidContent)

EyeTV Releases iPhone App; lets users access live and recorded content from Macs. (Zatz Not Funny!)

New evidence has emerged that Razorfish, the digital agency which Publicis acquired from Microsoft for $530m, was not be quite the snip it appeared at first sight.

In an earlier post, I expressed surprise at WPP’s reluctance to test Publicis’ resilience in the last round of bidding and suggested there may have been anxiety about Razorfish’s underlying performance.

I am not alone in this suspicion. Microsoft has just released more detailed figures on Razorfish financials and analysts at Citi have been quick to point out that they do not tally with the sunny, upbeat, picture portrayed by Publicis at the time of the acquisition in August. Specifically, revenue has been declining throughout the year, where Publicis said it had improved year on year; and the agency is set to make a loss of $50m, where Publicis claimed it would make a 6-8% margin. Citi cites potentially extenuating circumstances for the discrepancy, the more important being incentives for senior Razorfish executives which Publicis may have failed to count in. “While this doesn’t derail our positive assessment of the deal, it is strange,” concludes the Citi circular. Strange indeed. Particularly, one assumes, for Publicis shareholders.

With big contributions from search and mobile, combined with continuing shifts in spending away from traditional ad channels by marketers, WPP’s GroupM is projecting that global Internet spending will surge 11% next year to almost $65 billion and account for nearly 15% of all measured media. By comparison, global spending in the sector this year will garner a 13 percent share of measured media

GroupM issued the findings today in a new report titled “Interaction.” The study covers 36 countries and shows digital advertising’s share of total ad investment rising from 3.1 percent in 2001 to 14.6 percent in 2010. It also shows that Internet advertising has been the principal source of spending growth in Western nations since 2001 as spending in traditional media has leveled off and lately declined.

In the U.S., digital advertising is expected to climb 7 percent next year to $24.4 billion, grabbing a 17 percent share of total spending, compared to 15.4 percent in 2009, according to the report. Most of the U.S. growth will be driven by search and video, which compensates for declines in Internet display advertising and sponsorships. The report also indicates that much of the U.S. growth will be fueled by sharp declines in traditional print advertising, particularly newspapers.

“For several years the focus has been on the rapid rise of Google and the implications of its auction-based pricing to advertisers and agencies,” said Rob Norman, CEO of GroupM Interaction. “Today, search remains a key driver of digital marketing as advertisers compete to capture a disproportionate share of the intention that search behavior represents.

“Now, however,” continued Norman, “the importance of influencing the organic listings has increased significantly, as has the focus on creating and capturing intent expressed in social media and micro-blogging actions. Search marketing is becoming intention marketing and is moving beyond results pages to activating and responding to the social graph.”

Meanwhile, as spending on search and mobile surges, the growth in Internet display advertising has lost momentum over the past several years as supply has run ahead of demand, the report states. In 2010, display spending is projected to have a smaller share of total digital spending, with a 34 percent share, down from 35 percent in 2009 and 39 percent in 2006. Worldwide display advertising is expected to grow just 5 percent next year to about $20 billion. By contrast, global search advertising will soar 12 percent to approximately $25 billion, GroupM said.

Mobile advertising will rise 19 percent next year to $3.3 billion, accounting for 6 percent of all digital spending. In the U.S., the number of people accessing news on their mobile devices daily has more than doubled to 22 million and those accessing a social networking site have increased fourfold to 9 million compared to just a year ago, GroupM said, citing comScore data from March 2009. As usage grows, marketers will likely spend more in the sector, GroupM said

http://www.editorandpublisher.com:80/eandp/news/article_display.jsp?vnu_content_id=1004014574

I was disappointed when I read in Ad Age that Ford asked WPP to stop one of their agencies, Grey, from pitching the Chrysler account. Asked may be a little soft here as I’m sure the language they used was a bit more insistent. I’ve read many comments (like these on adage & Auto News) by people applauding this as a legitimate move by the auto maker. The conflict, as Ford identifies it, is that they have given WPP a significant amount of business and have built a “Mega Agency” by leveraging multiple WPP agencies.

This type of consolidation and efficiencies has been the talk of the town lately as marketers have been slashing budgets and the holding companies have been trying to scoop up as much business as possible. Touting global services and acting in an “Across-the-group” role, holding companies like WPP are doing everything possible to keep their profits up and hold on to as much business as possible. I applaud this approach and think it is truly why holding companies can offer a competitive advantage over independent rivals.

HOWEVER, unless clients negotiate category exclusivity in advance, they cross the line when they insist that a holding company tell an owned agency to pass on a potential piece of new business, or ask them off a business entirely. Restricting the ability of an agency to bid on work because of a sister agency’s client roster will limit competition, stifle creativity, and ultimately hurt companies like Ford. If the shoe was on the other foot, they would be losing out on the opportunity to have a great agency work on their business.

Recently, Deutsch & IPG were the subject of a similar request. Deutsch had been quietly working on Bud Light. Another IPG agency, DraftFCB, was currently handling advertising for MillerCoors. It was solely in MillerCoors interests to try to stifle the creativity of Bud and have Deutsch off the business. So, they told IPG to have Deutsch resign the Bud Light business. Not wanting to lose a high-profile and lucrative account, IPG/Deutsch complied.

This was a strong-arm tactic that, IMHO, doesn’t have a place in this business. Agencies have a hard enough time being competitive with each other. Production consultants & cost consultants are constantly driving down prices. Clients are shortening budgets and slashing project scope. Creative is practically being given away. And now you have to look at the family tree to decide if you’d be insulting someone else’s client by going after business. Unless the holding companies are going to start handing out assignments, it’s the job of each agency to build their own client roster to the best of their ability.

In this particular case, I think Ford at least had a leg to stand on (unlike MillerCoors). They had pieced together a “dream team” of an agency using many of WPP’s assets. What it does though is set a terrible precedent in the business, especially given the consolidation and range of the holding companies and their clients. P&G, General Mills, Microsoft, or countless others could suddenly turn on one of their AOR’s holding companies and tell them to force an agency to resign a piece of business because it competes with one of their many business units. It becomes a Walmart effect of sorts where they have the ability to complete set their own terms.

I hope our clients will be merciful to us and I wish Sir Martin Sorrell the best of luck.

Almost a year after Barack Obama’s victory, I’m re-posting an article I wrote for the WPP site about his digital direct marketing. How’s he done since then? Pretty good to keep talking to his base, posting videos more often than Kevin Rudd, streaming some White House meetings live through the facebook app and maintaining his ‘rapid response’ to social media posts. As to his government….Now that I’ve managed to stop blubbing, hugging my children and watching re-runs of election night speeches, it’s time to reflect on all the commentary to date and on what is possibly the best case study for digital direct marketing I have ever witnessed. Many journalists and commentators have referred to the incredible marketing “machine” used by Obama’s campaign, and the “brilliance” of his digital communications. From a digital marketing standpoint, it was not so much brilliant as comprehensive. It was the 2.3 million Facebook supports AND the 18 million You Tube views AND the millions of My Space friends AND the 112,000 Twitter followers AND the advertising in Xbox 360 Live games AND the iPhone application etc. etc. The list goes on.

I was lucky enough to work on the KEVIN07 digital campaign last year, and in my initial recommendations, I was trying to persuade the ALP that for the first time, they’d be able to reach, educate, converse with & influence at a grassroots level – at a fraction of traditional media costs. I realise this turned out to be more prophetic of Barack’s campaign than Kevin’s. Notwithstanding, I’m very proud of what we did (not least that we were the first to run a political campaign mobi site, kevin07.mobi, a technique then “copied” in obama.mobi!) but the Obama campaign took it to a whole new level.

Obviously, the democratic nature of the digital world (you don’t get much more “by the people,of the people and for the people”) means it lends itself to the more left wing party; as Obama said in an early video email “We want to change this country from the ground up” (before inviting people to donate $5 for the privilege of entering into a draw the prize to which was dinner with him – and yes, he did have dinner with the winners – you can see it on You Tube). In Australia, the differences in the digital campaigning symbolised the difference between Howard and Rudd – the past and the future. In America, where time had moved on (so digital campaigning was, in and of itself, a given), the digital channels were more symbolic of the movement for change itself, which they both mobilised and facilitated.

Having said which, the difference in digital attitudes between the two candidates was stark, which Obama’s team exploited in their ads, and Mark Soohoo (on McCain’s e-campaign team) epitomised by saying “John McCain is aware of the internet”. In this one sentence, Soohoo branded McCain as a man no longer of our time. The internet is not something you are merely ‘aware of’. It’s a fundamental part of our economy. Just imagine if, when questioned during the recent financial meltdown, Kevin Rudd had responded: “I am aware of the banks.”

The brilliance of Obama’s digital campaign was not its size, but what he did with it. From the very beginning, across every touch point, it was about lead generation. He slowly and consistently built up his database over time. He then cut and sliced it, analysed it, and targeted the relevant segments. You will notice that, despite the highest turn out in electoral history, and gaining control of the Senate and House of Representatives, he did not get an overwhelming % of the popular vote (53% to McCain’s 47%) but that’s largely because he targeted, appropriately, all his efforts and funds on swing voters within swing states. In Florida, he identified 600,000 African Americans who had not voted in the previous election, and sent them a targeted communication to get them motivated. A Republican commentator a few days ago on CNN, pointing out the uplift Obama received from the Oprah Winfrey endorsement, said that Obama’s volunteers had “captured the email addresses” of everyone who attended the Oprah rally (as if this was in some way “unfair”). And as he amassed the names, so he put them to work. I like to think I coined the phrase “one click canvassing” but Obama facilitated the viral impact through digital channels like no one else – even creating an iPhone application that automatically trawled contacts for those in swing states, to help supporters communicate quickly, and showing a perfect understanding the immediacy of mobile. And as the database grew exponentially, so did the donations – like he said – from the ground up, dollar by dollar he out-did the Republican fundraising machine so emphatically that he was able to walk away from public financing and the restrictions it imposed. And this is where it gets really clever – Obama changed the game. The quality of his digital and direct marketing was such, that he was able to outspend McCain by up to 4:1 in TV advertising, and blow millions on a 30 minute ad that then dominated the media for 24 hours in the crucial last days. And there’s more. The database he developed gives him significant leverage in government. As David Von Drehle said last week in Time Magazine, it will give him particular sway with special interest groups: “a capital that used to be impressed by the Bush family’s thousands-strong Christmas-card slit boggles at the millions of names in Obama’s digital address book”. And of course, the outer skin of his digital onion was the communications generated by his army of digital volunteers and support organisations themselves – congratulations to moveon.org for the best personalised viral ever.

I like to think the considered, systematic, long term, rational and logical way Obama executed his digital and direct marketing strategy is symptomatic of his overall approach. And who would have thought that so much could come from digital and direct marketing, which in fact ended up funding their traditionally more glamorous cousin, above-the-line advertising? Perhaps digital has come of age – perhaps this is our moment; for the first time, during the campaign, there were far more views of Saturday Night Live (thanks to Tina Fey) that weren’t live at all, but online. So what is the likelihood in the future of digital and direct rather than above-the-line driving strategy? About as likely as an African-American entering the White House? Yes we can.