|HOME||MEDIAVILLAGE.com||WOMEN ADVANCING||HOOKED UP||MEMBERSHIP INFO||MEMBER COMPANIES||MEDIA BUSINESS REPORT||ECONOMIC FORECASTS||RESEARCH|
Published: September 23, 2008 at 07:06 PM GMT
Last Updated: September 23, 2008 at 07:06 PM GMT
Advertising represents less than 30 percent of the average marketer's total communications budget. The other 70% + is invested in consumer sales promotion, trade promotion and price incentives, event marketing, public relations, cause related marketing, direct marketing, consumer research and other performance-based marketing programs. Unlike advertising, most of these investments have a direct connection to return-on-investment metrics. Media companies and agencies are focusing significant resources on defining the R-O-I valuations of media spending, but traditional advertising models remain entrenched as the core foundation of the business. Several companies are looking toward greener pastures and evolving their businesses away from traditional advertising/media models while embracing alternate forms of marketing communications.
Antony Young, president of the Optimedia U.S. division of Publicis, points out "marketers have many places to put their budgets and there is not enough debate about how those budgets should be allocated." He told Jack Myers Media Business Report, "with what's happening with the economy, we see a lot of 'advertising in a recession' studies that say you need to keep spending. That will not cut the mustard with corporate marketing and brand executives." An ANA study last month reported 53 percent of marketers expected to cut back budgets in the next six months, on top of those who have already done so. "Agencies like Optimedia and media sellers need to be able to better understand what elements of communications are driving brand responsiveness in the short term – with a higher level of focus on outcomes rather than outputs." In the past 18 months, Optimedia has tripled the size of its Strategy Resources Group and more than 70 percent of the company's staff are strategy/planning/research executives
AT IDG, publisher of Macworld, Computerworld and PC World, only 40 percent of total revenues are generated by the traditional magazine business, compared to 80 percent just five years ago. Bob Carrigan, IDG president, advises "the tail is now wagging the dog. We used to use databases to drive subscriptions. Now we use magazines to drive databases. We actually make significantly more money per user from event and online related activity against a name than from a magazine subscription." This year, IDG will host more than 750 events globally including 250 in the U.S., including Macworld where Apple chairman Steve Jobs makes his famed annual appearance. IDG generates attendee revenues and sells high value sponsorships, "using databases to put the butts in seats," explains Carrigan. This model has translated into increased profits for IDG as the share of business from digital, database marketing and events has increased.
American Express Publishing's president Ed Kelly reports that 40 percent of profits are generated by non-magazine businesses, including books, events and membership/affinity clubs. This compares to an estimated magazine industry average of 10 percent of revenues generated from non-magazine business. However, unlike IDG, Kelly tells Jack Myers Media Business Report that the company's online investments are not yet profitable due to expensive infrastructure costs and intensive cost-per-thousand competition. Amex Publishing has, however, used online to support more than 600,000 members of affinity clubs, with members paying up to $80 annual fees. Only half of all club members are subscribers to Amex's publications, which include Travel + Leisure, Food & Wine and Departures.
Optimedia's Young has established a significant competitive advantage through the company's database of 60,000 consumer interviews conducted over the past three years. Young explains the research enables media and communications planners to evaluate consumers' marketing communications touch points in 44 business categories. "This offers a much higher level of confidence about where budgets should be allocated," he says. "Our strategy is about being clearly focused on driving results and not just about executing plans."
Young exclusively shared with Jack Myers Media Business Report that seven of the top 10 most influential touch-points in terms of purchase and brand performance for marketers are promotional or in-store activities such as in-store sampling, coupons on packaging, in-store promotions, free standing coupon inserts and free gifts. "We see shopper marketing increasing in importance and the need to recognize these as media alongside television and print advertising," Young advises. Among paid advertising media, television was the strongest in terms of influence on purchase followed by specialist magazine ads, Internet search, consumer magazine ads, newspapers, TV sponsorship and then radio ads. Internet display ads performed poorly in terms of sales influence. Consumer opinion sites & blogs rated slightly more effective than newspaper advertising
Seven of the top 20 touch-points were independent sources of information, endorsement or recommendation e.g. family/friends recommendation, doctor recommendations, comparison websites, print articles - demonstrating the declining reliance on brands and paid advertising. "As an industry, we are needing to be more clever in recognizing this movement and reflecting this in our strategies."
Young suggests the economy will challenge agencies and marketers in two areas. First, he says, "is a much greater urgency to prove return-on-investment. That will require CMOs to reestablish their own credentials within their own organizations. They will be held more to account to define marketing's outcome." The second area Young outlines is a "focus on the question of efficiencies. Optimedia has focused on putting strategy at the heart of the agency. Of course we execute media buys and plans as the core of our business but more and more there is a call to be more strategic about how we approach communications. Often silos prevent that discussion. When we talk about efficiencies it's about cutting across silos and having more of a strategic discussion. Clients aren't asking Optimedia to buy a media plan more efficiently," he advises. "They are asking about the total marketing mix."
Carrigan uses IDG's massive databases on behalf of its clients for lead generation and aggressive online promotion. "Names are like gold," he exclaims. "We collect names, earn their permission, and introduce them to white papers, web casts, and other content that we blend with our editorial information. It's a gigantic business." He acknowledges "print will be a viable business for many years, but it is not what it used to be. We can continue in our legacy business but we need to innovate and grow new businesses that leverage our past experience." Carrigan compares IDG's evolving business models to Apple's development of the iPod and iPhone and Microsoft's expansion into the gaming space. "We can build different businesses that leverage the best of our company and take us in new directions."
Carrigan and Kelly will join Meredith Publishing president Jack Griffin on the opening panel of next month's American Magazine Conference http://www.magazine.org/EVENTS/conferences/american_magazine_conference/index.aspx, which I will be moderating.
About Jack Myers: For more than two decades, Jack Myers has been the media industry's leading analyst, researcher and advisor on relationships among marketers, agencies and media sellers, providing business development services and custom insights on relationship best practices to more than 200 marketers, agencies, media companies and industry service providers. Jack can be reached at email@example.com
The Growing eSports Marketplace for Brands
This week on Mindshare’s Culture Vulture Live, Alexis Fragile explores the rise of eSports in North America.
Q&A: Dentsu Aegis SE Asia on Automation, Programmatic and TV
The Summer of Sears continues! Jay Sears, Senior Vice President Marketplace Development of Rubicon Project discusses "Automation, Programmatic and TV" with Anna Chan of Dentsu Aegis' Amnet Asia. The two executives appeared at Rubicon Project's 2nd Annual Real Time Trading Update from SE Asia's Buy Side in Bintan, Indonesia in July 2015.
“AGT” Presents One of the Most Amazing Things You Will Ever See on Any Screen
NBC’s summer hit “America’s Got Talent” has offered up countless impressive acts during its decade-long run … but there was one on the show Tuesday night that in my opinion topped them all. In fact, it was so amazing that it doesn’t seem adequate to qualify it against other “AGT” acts only, so let me say this: It was one of the most incredible things I have ever seen on television – and, in part, on Instagram – period. My neighbors and I were as slack-jawed as judges Howard Stern, Heidi Klum, Mel B and Howie Mandel, and host Nick Cannon, at the end of the segment.
SMI: Vibrant July Gets Ad Spend Market Back on Track
Following a challenging start to the year for most media owners, July delivered the biggest growth numbers of 2015 so far, fueled by digital and a resurgent out-of-home market.
“Fear the Walking Dead,” “I Am Cait,” “Mr. Robot”
Shortly after the publication of my column last Friday, which was filled with hindsight reflections on the recently concluded Summer 2015 Television Critics Association tour, I heard from a former TCA member with an interesting observation of his own.
Will There Be a New Media Distribution Consensus?
It’s been awhile since DISH CEO Charles Ergen began accumulating spectrum to augment his ability to provide robust programming to subscribers via mobile broadband. Last week, I noted that AT&T CEO Randall Stephenson was, more or less kind of, leapfrogging Charlie and putting the strategic idea together by absorbing DirecTV. And, on the cheaper side of the immediate future, major cable MSO/ISPs Comcast, Charter (presumably with the Time Warner Cable and Bright House acquisitions), Cablevision, Cox and others already provide Internet access via Wi-Fi hotspots everywhere (and all together) and are moving to use almost any set-top box (or dongle or device) via the cloud. (Charter’s Thomas Rutledge was a mover behind the remote DVR at Cablevision.) Also at the end of last week, Investor’s Business Daily reported that Oppenheimer analyst Tim Horan was predicting that Verizon, Sprint and T-Mobile would, one way or another, find a way to partner a la AT&T/DirecTV, too.
“TREotM”: The 2nd Decade of the 21st Century
Chapter 12, Part 1
What We Know About Frequency in TV and Digital Advertising: Pt. 2
By Gian Fulgoni, Bill Harvey and Andrew Lipsman
Ashley Madison and the Future of Men
The recent Ashley Madison hack revealed that 86% of the site's users were men, casting men and the online dating culture into the spotlight--and not in a good way.
"Fear the Walking Dead" is Here at Last!
Without a doubt the most feverishly anticipated new series of 2015 is "Fear the Walking Dead," AMC's fearsome prequel to "The Walking Dead." And tonight, at long last, it's showtime!
Is The Agency Model Broken?
Bill Koenigsberg, CEO of Horizon Media, was probably right when he recently pointed out that the old agency model is broken. But it has happened for many reasons that are not only associated with approximately $30 billion in client billings now in review.
The Millennial Dilemma
We’ve been called lazy, arrogant, narcissistic -- and most definitely tech-absorbed. When older generations hear the word “Millennials,” they often groan or shake their heads. We are the spoiled generation, connected constantly to our phones and missing out on real relationships, real connections. Or so they say.
At TCA Tours, Broadcast is Still the Game to Beat
It’s been a week since the 2015 Summer Television Critics Association tour came to an end – with a full day of panels by NBC, an experience that left many of the critics and reporters there believing that a broadcast network should never occupy the last day of any tour, especially in the summer. That’s because broadcast network days are still regarded by many of their editors and publishers, if not by the journalists and bloggers themselves, as the most important, simply because they tend to be jammed with panels for new fall or midseason series.
Mr. Mom. A Nice Theory. Ask the Kids About It.
Meet Samantha Gloria Sabo (pictured above). She is three and a half years old. Here are her priorities:
What Marketers Should Know About Back-to-School Season
This week, on Mindshare’s Culture Vulture Live, Kristine Munsen discusses back-to-school season and omnichannel retail.