Friday, December 23, 2011 | Edited by Daniel Moores
||Obsessed With the New, But Digital Marketers Are Investing In the Old
We in the media industry are infatuated with the new...new media, new technologies, new start-ups, new devices, new apps. In fact, being labeled traditional is the kiss of death for any medium.
How ironic, then, that when it comes to pitching for advertising dollars, being somewhat old-school appears to be the formula to win over marketers' budgets.
Early on in the days of the web we marveled at the precision of the Internet. The opportunity to target audiences beyond demographics to individual behavior profiles and the ability to track and measure all the way to a sale opened up our eyes.
So it surprised me when the Interactive Advertising Bureau and others launched initiatives to get the digital media industry to adopt old-media concepts like ratings and reach. It kind of feels to me like a dumbing down of online advertising's offering. Yet, its par for the course. The hottest digital ad mediums are adaptations from old media.
What's the fastest growing medium in digital at the moment? Online video...or basically TV commercials interrupting other content being sold on a CPM (cost per thousand) basis. That's essentially the medium we have been buying since the days when Don Draper was sketching out story boards.
Tim Westergren founder of online music service Pandora was in our agency a couple of weeks back. His pitch to me was that they were just selling radio. Indeed, Mr. Westergren said recently he doesn't expect to reap major brand dollars until Pandora is measured on the same currency as radio.
Example after example, we see that today's digital new media clamoring to sell us very traditional advertising solutions.
But it doesn't stop with traditional digital media. Social media powerhouse Facebook sees its financial future in selling display advertising space -- a decidedly traditional online advertising model.
And the best ad model on iPads are full screen print or video ads interspersed in editorial, a twist on what magazines have been doing for more than 100 years.
So what does this tell us?
(Source: Antony Young, CEO, Mindshare, for Advertising Age, 11/17/11)
That despite all the bravado of the new media world that was going to disrupt and disintermediate the traditional media model, all it's done is reinforce it.
- From what we're seeing, any media company that doesn't have a scalable advertiser funded proposition really doesn't have a sustainable business model. Media buyers have always known that a lot of eyeballs or uniques isn't worth much unless it has a clear solution to monetize it.
- Even in this ever social media world of participation and personalization, audiences, particularly engaged ones (or even interrupted ones) at scale remain valuable for marketers to help them build brands. Conversely, innovative technologies that talk to niche audiences will find a place, but will struggle to get substantial budgets or advertiser attention. Note: there will always be some exceptions to this rule, but the odds aren't great.
- That the clout of the big media buying agencies continues to be important and enduring. In other words, the upstart media players of the digital age, haven't disrupted the establishment, so much as they've just joined it.
||Online Video Viewing Passes 50% of Total U.S. Population
Having surpassed 50% penetration among the general population in 2011, online video viewing is now a mass-market pursuit. Increasing numbers of Americans are watching more content on more devices than ever before.
Even though growth rates will necessarily slow as the number of users swells from year to year, there is still room for expansion. By 2015, U.S. online video viewers will represent 60% of the general population and 76% of Internet users.
"Audience growth over the next four years will come from all demographic segments, but it will be more pronounced among preteen children, older boomers and seniors," said Paul Verna, eMarketer senior analyst and author of a forthcoming report on premium video content. "These groups have traditionally lagged teens and younger adults in their video viewing activity, but the gaps will start to close as the market matures. This will give marketers opportunities to take advantage of growth pockets among viewers at either end of the age spectrum."
Among online video viewers, watching premium content is becoming increasingly popular. eMarketer estimates that 49% of U.S. adult online video viewers watched full-length TV shows on the web at least monthly this year, rising to 62.8% by 2015. Full-length movies are also becoming popular for web viewing, with 37.1% of US adult online video viewers downloading or streaming at least one feature film monthly in 2011. That viewership rate is expected to increase to 54.1% in 2015.
Mobile video adoption is poised to continue on a steep upward path for at least the next four years. The factors contributing to its success include the ongoing strength of the smartphone market, healthy competition among makers of mobile operating systems -- notably Apple's iOS and Google's Android -- and continuity of content offerings across screens.
"As tablets attract a larger share of video viewing, smartphones are benefiting because most tablet users also own smartphones and typically have the same apps on both devices," noted Verna. "With more video content flowing to these apps, users are choosing their preferred screen at any given time. Often this means toggling between tablets and smartphones, or between laptops and any number of entertainment devices."
In 2011, U.S. smartphone viewers represent 90% of the mobile video population, according to eMarketer estimates. By 2015, this percentage will rise to 98.5%.
eMarketer forms its estimates of online and mobile video viewing habits based on a meta-analysis of survey and study data from dozens of research sources as well as trend data on device ownership and usage.
(Source: eMarketer, 12/08/11 )
||A Rare Apple Compromise
Facing challenges winning over customers for its iAd mobile advertising service, Apple is softening its approach as it loses ground to Google Inc. in the fast-growing mobile-ad market.
Launched in July of last year, and championed by former CEO Steve Jobs, iAd is Apple's service for selling ads within mobile apps on iPhones, iPads and iPod touches.
But response so far has been tepid: Marketers say they have been turned off by iAd's high price tag as well as Apple's hard-charging sales tactics and its stringent control over the creative process.
Google's AdMob service, on the other hand, is priced more reasonably, ad executives say, and is available on a wide array of devices -- not just Apple products.
In response, Apple is making some changes. It is showing more willingness to bargain on the spending commitment it requires of advertisers.
Having originally asked marketers to commit to spend at least $1 million -- an amount later dropped to $500,000 -- Apple is now discussing ad deals with a minimum commitment of just $400,000, according to a person familiar with the matter.
Apple has also introduced more flexibility to a pricing structure that had befuddled advertisers, ad executives say. Instead of charging marketers every time a user taps on an ad -- a policy which often led to ad budgets quickly being exhausted -- Apple is willing to put a cap on what it charges for the taps, according to the person. Advertisers pay $10 every time an ad is viewed a thousand times and $2 every time it is tapped on.
Pricing for Google's mobile-ad products vary widely, according to one ad executive. Ad executives say display ads on apps from a range of providers vary from $4 to $12 per thousand views. Advanced targeting or mobile video can command higher premiums than static banner ads, this person said.
In an effort to woo more advertisers, Apple is establishing a training program, arranged in conjunction with its media buying agency OMD, part of Omnicom Group Inc., to teach the firm and its clients about the mobile marketing landscape.
In recent weeks about 30 senior marketing executives, from firms including PepsiCo Inc., Clorox Co. and J.C. Penney Co., visited Apple's headquarters in Cupertino, Calif. The marketers got a tour and a series of information sessions with Apple designers and product teams.
Participants concluded the tour with a visit to the Apple company store where they were able to make purchases with a discount, according to ad executives who participated.
OMD is planning a trip to Apple in February with more of its advertiser clients, according to a person familiar with the matter.
The event demonstrated that Apple is trying to adapt to the ways of Madison Avenue. Inviting marketers for campus visits has long been a standard tactic for ad-dependent Silicon Valley firms like Google, Yahoo Inc. and Facebook Inc. While it has hosted big customers of its electronics products at its campus, this is one of the first times Apple has tried such an approach with advertisers.
"They are still learning the advertising world," says Shiv Singh, head of digital at PepsiCo Beverages.
Mr. Jobs envisioned iAd more as television advertising than online marketing, which he viewed as irritating, according to people familiar with the matter.
A typical iAd is one for Unilever's Dove Men + Care soap brand. In it, a consumer sees a banner ad at the bottom of an application on a phone or iPad. When the consumer taps on the ad, videos featuring baseball players like Andy Pettitte appear, as well as more information about Dove products.
Some marketers say they are pleased with the results of their iAd campaigns and are eager to renew deals. Unilever, which has bought 13 iAd campaigns for brands including Dove soap, and Ben & Jerry's ice cream, said that consumers spent an "amazing" level of time with the ads, on average 68 seconds in the U.S., across mobile devices.
Apple is hoping to gain back ground that it has lost to Google in the mobile-ad market. Last year, Apple shared the top spot in the mobile display ad market with Google, with each company capturing 19%, according to research firm IDC. This year, Apple fell to the No. 3 spot, behind Google and independent mobile ad firm Millennial Media, capturing 15%, or $95 million, of the $630 million market, IDC says.
A spokesman for Apple declined comment.
While Apple's moves to placate marketers won't greatly affect its business, which is humming on hardware sales, the state of the service could affect developer loyalty to its platforms over time.
The company launched iAds to make building Apple apps more attractive for developers, who are increasingly interested in building software for Android devices and getting advertising checks from Google.
Hordes of developers have activated iAd, but they say that Apple hasn't sold enough to make any meaningful revenue for them. David Barnard, founder of mobile app company App Cubby, says he earned $320 from iAd in the past 30 days and that the service is only filling roughly 13% of his apps requests.
Unilever recently agreed to renew its iAd agreement with Apple for the next year, including launching iAd in developing markets across the globe.
"We got in there early and we're both learning together. They learn from us and we've learned from them," says Unilever Chief Marketing Officer Keith Weed. He declined to discuss pricing.
Even so, marketing executives say Apple needs to modify its approach to win over more.
"Apple said, 'Let's try to disrupt the advertising business.' On this one, they didn't succeed," says Alexandre Mars, head of mobile for Publicis Groupe SA. "They know that they need to adapt themselves now if they want to survive -- even if it is Apple."
One major challenge Apple faces: because the company only sells ads that appear on Apple devices, marketers are forced to buy ads from competitors to reach broader audiences, says IDC analyst Karsten Weide. "Apple we believe will, over time, fade into the background," he says. "It was attempted to make sure that even consumers advertising experience on Apple devices was perfect, but it hasn't really worked."
(Source: The Wall Street Journal, 12/13/11)
Daily Sales Tip: Marketing Books You Should Have Read
In alphabetical order, Advertising Age's picks for the marketing books you should have read in 2011.
1."Brand Relevance: Making Competitors Irrelevant" by David A. Aaker
2. "The Corner Office: Indispensable and Unexpected Lessons from CEOs on How to Lead and Succeed" by Adam Bryant
3. "Enchantment: The Art of Changing Hearts, Minds, and Actions" by Guy Kawasaki
4."Killing Giants: 10 Strategies to Topple the Goliath in Your Industry" by Stephen Denny
5. "Look at More: A Proven Approach to Innovation, Growth, and Change" by Andy Stefanovich
6. "The Method Method: Seven Obsessions That Helped Our Scrappy Startup Turn an Industry Upside Down" by Eric Ryan, Adam Lowry and Lucas Conley
7. "Onward: How Starbucks Fought for Its Life Without Losing Its Soul" by Howard Schultz and Joanne Gordon
8."Social BOOM!: How to Master Business Social Media to Brand Yourself, Sell Yourself, Sell Your Product, Dominate Your Industry Market, Save Your Butt...and Grind Your Competition Into the Dirt" by Jeffrey H. Gitomer
9. "Users, Not Customers: Who Really Determines the Success of Your Business" by Aaron Shapiro
10. "Winning the Zero Moment of Truth -- ZMOT" by Jim Lecinski
Source: Advertising Age, 12/12/11