By Shawn Langlois is a reporter for MarketWatch in San Francisco., MarketWatch March 31, 2010.
SAN FRANCISCO (MarketWatch) -- Generous incentive spending, spurred by the once-thrifty Toyota Motor Corp., likely led to a huge spike in March U.S. vehicle sales, with retail demand expected to reach levels not seen in about two years.
Automakers will hand in their monthly tally on Thursday and analysts are looking for Ford Motor Co. /quotes/comstock/13*!f/quotes/nls/f (F 12.65, +0.08, +0.64%) to pace a broad industry surge.
Chrysler is seen as the only possible exception, as its dearth of new products could lead to the only decline among the major manufacturers.
Toyota /quotes/comstock/13*!tm/quotes/nls/tm (TM 80.35, -0.07, -0.09%) is expected to ride its record level of promotional spending to a 37% jump from a year ago, according to Edmunds.com. While not quite as bad as analysts had forecast, Toyota's sales in February still fell 8.7% to 100,027 vehicles. See full story.
Toyota, working to rebound from its recall fiasco, is offering zero-percent financing and some leasing deals on several of its top-selling models through April 5, triggering competing deals from most of its rivals.
TrueCar.com forecast that Toyota's spending rose to $2,318 per vehicle, up by a third from February, its highest ever, and by 47% from a year ago. Meanwhile, General Motors Co. and Chrysler both likely spent more than $3,300 per vehicle. See full story.
Ford's sales are pegged to rise 56%, with Nissan Motors /quotes/comstock/11i!nsan.y (NSAN.Y 17.17, +0.26, +1.54%) and Hyundai /quotes/comstock/11i!hymlf (HYMLF 66.60, -66.60, -50.00%) not far behind. Ford surpassed rival GM in monthly sales last month for the first time in a dozen years.
GM and Honda Motor Co. /quotes/comstock/13*!hmc/quotes/nls/hmc (HMC 35.30, -0.17, -0.48%) are expected to post increases of more than 20% each for March.
The industry's seasonally adjusted annual rate of sales is seen reaching 12.4 million cars and trucks, according to Goldman Sachs. The broker pointed to not only the financing promotions but also the carryover of demand from February as bad weather and the recall mess led customers to defer sales into March.
Jeremy Anwyl, CEO of Edmunds.com, also pegged the number at 12.4 million but cautioned that it's "too early to wave the flag" and claim the economy has finally turned the corner.
"Incentives drove sales this month," he said. "But those were defensive moves in response to Toyota stepping up incentives and are unlikely to last because inventories are simply not high enough to justify them in the long term."
Barclays Capital was even more sanguine with its outlook, calling for a total SAAR of 12.5 million and a retail SAAR, which excludes fleet sales, topping 10 million cars and trucks for the first time since 2008.
"The shape of the U.S. SAAR over the rest of the year will largely depend on how long the industry's pricing battle goes on for, in our view, which in turn could hinge on Toyota's next move," analyst Brian Johnson said.
Wednesday, March 31, 2010
Tuesday, March 30, 2010
Engaging Gen-Y:They Are Your Friends When They Talk To You
By Kristine Shine Friday, March 26, 2010
Social media have become an essential component of every campaign associated with Generation Y. Consumer adoption is running wild and marketers are trying to play catch up. Generation Y, as the most rabid user of the medium, is largely responsible for this revolution. This is their medium and, as marketers try to navigate a presence in this space, it is important to understand and respect the medium and be strategic about how to utilize it for your brand. The following are a few things to think about as you build your plan:
1. A follower is not always a friend: For any brand with a desire to speak with Gen Y, building a Twitter following is essential but be conscious of putting too much effort behind it. Twitter is a great tool, but keep in mind, 40% of Twitter users have zero tweets and 35% have used it fewer than nine times. Recognize its limitations and know that a twitter follower is not always a friend. Friends stick around. Many twitter followers don't.
2. You know they are your friends when they talk to you: When it comes to social networking sites, brands must be careful about acting like the annoying kid trying to butt into the conversation with their awkward remarks that often are not relevant (you remember that kid from grade school!). People go to social networks to talk to their friends. When a brand invites itself into the conversation, it can seem disruptive and offensive. Like all friendships, it is about quality over quantity and social media is no different. Measure your success on the depth of the dialogue. One good friend is more valuable than 10 acquaintances. Friends in social media are only acquaintances -- until you get them to interact with you.
3. A community builds itself -- brands don't build a community: PopSugar Media's social fabric originated with a large community coupled with premium content. Because of this, we are frequently asked about how to develop a community. By definition, a community is a "group of people with a common background or shared interest within society." People desire to be part of a community because it offers them comfort, understanding, dialogue, laughter and more. To force the building of a community around a brand's interest is self-serving and disrespectful of the social medium. Communities are organically built, typically around credible content -- UGC or premium editorial. Marketers need to work harder at developing smarter ways to be invited into communities that are relevant to the message. It is rare that a brand can successfully build its own community -- but they can tap into an existing one and become part of the conversation.
4. Gen Y are expressionists -- let them do the talking: Let this generation lead the conversation. These individuals were raised to have confidence and strong opinions and they want their voices to be heard. Social media provides them with a platform to do so. As a brand, it's best to let them lead the dialogue. Prompt them with questions, entice them with exposure and give them a chance to share their opinion. When including any social tool, platform or content in your marketing campaign, be generous with the podium and give this audience ample time and opportunity for self-expression.
It is a delicate balance for a brand to be an active and desired participant in this world and not an intrusive and disruptive one. The essential thing is to understand the entire social landscape and to develop a tailored brand strategy that is organic at its foundation.
This commentary is insightful. I recommend it to others.
Social media have become an essential component of every campaign associated with Generation Y. Consumer adoption is running wild and marketers are trying to play catch up. Generation Y, as the most rabid user of the medium, is largely responsible for this revolution. This is their medium and, as marketers try to navigate a presence in this space, it is important to understand and respect the medium and be strategic about how to utilize it for your brand. The following are a few things to think about as you build your plan:
1. A follower is not always a friend: For any brand with a desire to speak with Gen Y, building a Twitter following is essential but be conscious of putting too much effort behind it. Twitter is a great tool, but keep in mind, 40% of Twitter users have zero tweets and 35% have used it fewer than nine times. Recognize its limitations and know that a twitter follower is not always a friend. Friends stick around. Many twitter followers don't.
2. You know they are your friends when they talk to you: When it comes to social networking sites, brands must be careful about acting like the annoying kid trying to butt into the conversation with their awkward remarks that often are not relevant (you remember that kid from grade school!). People go to social networks to talk to their friends. When a brand invites itself into the conversation, it can seem disruptive and offensive. Like all friendships, it is about quality over quantity and social media is no different. Measure your success on the depth of the dialogue. One good friend is more valuable than 10 acquaintances. Friends in social media are only acquaintances -- until you get them to interact with you.
3. A community builds itself -- brands don't build a community: PopSugar Media's social fabric originated with a large community coupled with premium content. Because of this, we are frequently asked about how to develop a community. By definition, a community is a "group of people with a common background or shared interest within society." People desire to be part of a community because it offers them comfort, understanding, dialogue, laughter and more. To force the building of a community around a brand's interest is self-serving and disrespectful of the social medium. Communities are organically built, typically around credible content -- UGC or premium editorial. Marketers need to work harder at developing smarter ways to be invited into communities that are relevant to the message. It is rare that a brand can successfully build its own community -- but they can tap into an existing one and become part of the conversation.
4. Gen Y are expressionists -- let them do the talking: Let this generation lead the conversation. These individuals were raised to have confidence and strong opinions and they want their voices to be heard. Social media provides them with a platform to do so. As a brand, it's best to let them lead the dialogue. Prompt them with questions, entice them with exposure and give them a chance to share their opinion. When including any social tool, platform or content in your marketing campaign, be generous with the podium and give this audience ample time and opportunity for self-expression.
It is a delicate balance for a brand to be an active and desired participant in this world and not an intrusive and disruptive one. The essential thing is to understand the entire social landscape and to develop a tailored brand strategy that is organic at its foundation.
This commentary is insightful. I recommend it to others.
Watching TV Away From Home Popular With Younger Demos
by Wayne Friedman, Yesterday, 3:12 PM
Young TV viewers already watch a lot of video on their computers and other digital devices. Now, it seems, they also watch a lot of TV outside the home overall.
A recent analysis by The Nielsen Company of a Council on Research Excellence study (CRE is group of Nielsen media clients) found that 18-34 viewers are 26% more likely to be exposed to live out-of-home viewing than 35-54s a year ago. And their viewing is 13% higher than those who are 55-plus.
Viewing in restaurants, stores, taxis, store checkout lines -- other non-home locations -- tally more viewing than "other people's homes": 3.9% versus 1.6% of total live minutes of viewing.
In "other people's homes," the biggest viewing is with entertainment programming at 52.7%. In "other locations," sports tend to be the big draw -- 38.3% of the time.
As other research has noted, viewers may not be fully attentive, which is a concern for advertisers.
The research has shown that about 25% of live TV at work is muted while 22% of viewing in bars or restaurants takes place without sound. Only about 1% of viewing inside one's home -- or another person's home -- is muted.
Overall, the study reports that around 7.1% of all live TV viewing minutes happens outside the home; 3.9% in locations such as restaurants, bars, malls, or outdoors; 1.6% in other people's homes and 1.6% at work, with less than 1% of live TV viewing in a car.
Live television viewing accounts for 71.7% of total minutes of viewing outside the home. This is followed by "environmental video" (13.5%), DVD/VHS (10.2%), DVRs (3.0%), video on computers (1.5%) and video on mobile devices (less than 1%).
Young TV viewers already watch a lot of video on their computers and other digital devices. Now, it seems, they also watch a lot of TV outside the home overall.
A recent analysis by The Nielsen Company of a Council on Research Excellence study (CRE is group of Nielsen media clients) found that 18-34 viewers are 26% more likely to be exposed to live out-of-home viewing than 35-54s a year ago. And their viewing is 13% higher than those who are 55-plus.
Viewing in restaurants, stores, taxis, store checkout lines -- other non-home locations -- tally more viewing than "other people's homes": 3.9% versus 1.6% of total live minutes of viewing.
In "other people's homes," the biggest viewing is with entertainment programming at 52.7%. In "other locations," sports tend to be the big draw -- 38.3% of the time.
As other research has noted, viewers may not be fully attentive, which is a concern for advertisers.
The research has shown that about 25% of live TV at work is muted while 22% of viewing in bars or restaurants takes place without sound. Only about 1% of viewing inside one's home -- or another person's home -- is muted.
Overall, the study reports that around 7.1% of all live TV viewing minutes happens outside the home; 3.9% in locations such as restaurants, bars, malls, or outdoors; 1.6% in other people's homes and 1.6% at work, with less than 1% of live TV viewing in a car.
Live television viewing accounts for 71.7% of total minutes of viewing outside the home. This is followed by "environmental video" (13.5%), DVD/VHS (10.2%), DVRs (3.0%), video on computers (1.5%) and video on mobile devices (less than 1%).
TV's Disappearing Status Quo
By Diane Mermigas Tuesday, March 30, 2010
Broadcasters scoffed at the notion that cable would ever threaten their domain -- until it occurred less than two decades later. Now, cable and broadcast are similarly discounting the Internet's ability to circumvent their TV stranglehold -- despite creeping evidence to the contrary.
Recent data points render still more evidence that media's status quo is fleeting. The issue now is how long and how much media companies are willing to bet against transformative change.
* The Federal Communications Commission's proposed expansive broadband plan will require multichannel video program distributors to install a gateway device or equivalent in all new subscriber homes and in homes requiring set-top box replacement beginning Dec. 31, 2012. The move, aimed at making home video more competitive, will survive anticipated legal challenges from cable and telco operators whose set-top boxes dominate 76 million US households, according to Andrew Lipman, partner at Bingham McCutchen's Telecommunications, Media and Technology Group. Cisco and Motorola manufacture 95% of the boxes.
* An involuntary open broadband infrastructure will universally support new addressable ad business models and metrics. Broad adoption will shift advertisers from buying TV programs and mass demographics to paying premiums for niche audiences and individual consumers, according to Parks Associates analyst Heather Way. Cable operators' $150 million Canoe Ventures addressable advertising solution will not work through its complex compatibility issues across legacy cable systems before Google and others come rushing into the interactive TV ad space. Per TechCrunch, Google has started to remarket AdWords client campaigns to follow target consumers across the Web in pursuit of an e-transaction.
*A "sharp deceleration in growth" in telco TV business (Verizon FiOS and AT&T U-Verse) and cable's moderating video subscriber losses, according to a new report from Bernstein Research analyst Craig Moffett, will have heavily capitalized incumbents struggling to retain share of a competitive market. Moffett forecasts that modest subscriber gains could settle in by 2012, in time for the anticipated mandate that cable, telco and satellite providers share their set-top-box space with a flood of rivals. "New pathways to the home for video or other entertainment could also reduce the value of cable's video distribution bottleneck," Moffett warns.
* Broadcasters will surrender unused spectrum over the next decade as consolidated TV stations continue moving toward a multi-pronged revenue system drawing on retransmission fees, on demand and advertising. With less than 10% of the nation's households watching TV over the air, the reallocation of spectrum will provide growing room for all manner of new Internet video and advertising, mobile and hyper-local competitors. Broadcasters already are seeing an end to their historical government-created monopoly and "license" to print money that, as Bernstein's Michael Nathanson notes, continues to assure some TV station operators among the healthiest margins anywhere in American business.
* The much ballyhooed April 3 release of Apple's iPad will heighten the challenges and opportunities to traditional video players showing increased signs of anxiety. As if increasingly strained relations among Hulu's broadcast partners wasn't bad enough, TV content players are resisting Apple's efforts to catapult video into digital high gear with 99-cent uploads or TV monthly fees, new apps and other inventive iPad strategies in a battle over control. Analysts suggest the iPad could expand revenues for video by creating new digital economic models and a revolutionary portable device for enjoying content on the go, just as Apple's iPhone did with the video game market. That's one reason Disney CEO Bob Iger says the iPad will be a "game changer" -- with or without the traditional media players onboard.
Broadcasters scoffed at the notion that cable would ever threaten their domain -- until it occurred less than two decades later. Now, cable and broadcast are similarly discounting the Internet's ability to circumvent their TV stranglehold -- despite creeping evidence to the contrary.
Recent data points render still more evidence that media's status quo is fleeting. The issue now is how long and how much media companies are willing to bet against transformative change.
* The Federal Communications Commission's proposed expansive broadband plan will require multichannel video program distributors to install a gateway device or equivalent in all new subscriber homes and in homes requiring set-top box replacement beginning Dec. 31, 2012. The move, aimed at making home video more competitive, will survive anticipated legal challenges from cable and telco operators whose set-top boxes dominate 76 million US households, according to Andrew Lipman, partner at Bingham McCutchen's Telecommunications, Media and Technology Group. Cisco and Motorola manufacture 95% of the boxes.
* An involuntary open broadband infrastructure will universally support new addressable ad business models and metrics. Broad adoption will shift advertisers from buying TV programs and mass demographics to paying premiums for niche audiences and individual consumers, according to Parks Associates analyst Heather Way. Cable operators' $150 million Canoe Ventures addressable advertising solution will not work through its complex compatibility issues across legacy cable systems before Google and others come rushing into the interactive TV ad space. Per TechCrunch, Google has started to remarket AdWords client campaigns to follow target consumers across the Web in pursuit of an e-transaction.
*A "sharp deceleration in growth" in telco TV business (Verizon FiOS and AT&T U-Verse) and cable's moderating video subscriber losses, according to a new report from Bernstein Research analyst Craig Moffett, will have heavily capitalized incumbents struggling to retain share of a competitive market. Moffett forecasts that modest subscriber gains could settle in by 2012, in time for the anticipated mandate that cable, telco and satellite providers share their set-top-box space with a flood of rivals. "New pathways to the home for video or other entertainment could also reduce the value of cable's video distribution bottleneck," Moffett warns.
* Broadcasters will surrender unused spectrum over the next decade as consolidated TV stations continue moving toward a multi-pronged revenue system drawing on retransmission fees, on demand and advertising. With less than 10% of the nation's households watching TV over the air, the reallocation of spectrum will provide growing room for all manner of new Internet video and advertising, mobile and hyper-local competitors. Broadcasters already are seeing an end to their historical government-created monopoly and "license" to print money that, as Bernstein's Michael Nathanson notes, continues to assure some TV station operators among the healthiest margins anywhere in American business.
* The much ballyhooed April 3 release of Apple's iPad will heighten the challenges and opportunities to traditional video players showing increased signs of anxiety. As if increasingly strained relations among Hulu's broadcast partners wasn't bad enough, TV content players are resisting Apple's efforts to catapult video into digital high gear with 99-cent uploads or TV monthly fees, new apps and other inventive iPad strategies in a battle over control. Analysts suggest the iPad could expand revenues for video by creating new digital economic models and a revolutionary portable device for enjoying content on the go, just as Apple's iPhone did with the video game market. That's one reason Disney CEO Bob Iger says the iPad will be a "game changer" -- with or without the traditional media players onboard.
Thursday, March 18, 2010
Why So Few TV Ads Are Viral Hits
- Brian Morrissey March 18, 2010
The Holy Grail for many marketers is having their big-budget TV spot become a viral hit online, providing millions of dollars worth of free exposure from consumer pass-along.
The bad news is the chance of this happening is pretty slim, and even if it does, there's a good chance the spot won't do much to persuade viewers.
Those are the conclusions of a Millward Brown study of TV commercials posted online. The researcher found that less than 15 percent of 102 ads studied were viral hits. (Millward Brown defines a viral hit as a spot that generates more than 1,000 views per week in the United Kingdom market or 5,000 in the U.S.) In other words, for every Old Spice "The man your man could smell like" spot that has generated more than 4.5 million YouTube views, there are five duds.
What's worse, Millward Brown found that even those spots that do achieve viral success don't necessarily mean consumers get the intended commercial message. It has developed a scorecard for determining spots' "viral potential" based on factors like its buzz, distinctiveness and celebrity.
"There was no relation between persuasion and viral potential," said Ann Green, svp of marketing solutions at Millward Brown. "It's interesting to notice these viral ads are very engaging, but they may not be ultimately persuasive."
Millward Brown is now offering its creative viral potential measurement as part of the copy-testing process. It has crafted 10 tips for making a TV spot viral, few of which come as a surprise. They include great creativity, wide dissemination, good search optimization and, perhaps most important, the need to "cross your fingers."
Of the ads Millward Brown studied, spots for E-Trade, Audi, Snickers, Walmart and Coca-Cola were viral hits.
The Holy Grail for many marketers is having their big-budget TV spot become a viral hit online, providing millions of dollars worth of free exposure from consumer pass-along.
The bad news is the chance of this happening is pretty slim, and even if it does, there's a good chance the spot won't do much to persuade viewers.
Those are the conclusions of a Millward Brown study of TV commercials posted online. The researcher found that less than 15 percent of 102 ads studied were viral hits. (Millward Brown defines a viral hit as a spot that generates more than 1,000 views per week in the United Kingdom market or 5,000 in the U.S.) In other words, for every Old Spice "The man your man could smell like" spot that has generated more than 4.5 million YouTube views, there are five duds.
What's worse, Millward Brown found that even those spots that do achieve viral success don't necessarily mean consumers get the intended commercial message. It has developed a scorecard for determining spots' "viral potential" based on factors like its buzz, distinctiveness and celebrity.
"There was no relation between persuasion and viral potential," said Ann Green, svp of marketing solutions at Millward Brown. "It's interesting to notice these viral ads are very engaging, but they may not be ultimately persuasive."
Millward Brown is now offering its creative viral potential measurement as part of the copy-testing process. It has crafted 10 tips for making a TV spot viral, few of which come as a surprise. They include great creativity, wide dissemination, good search optimization and, perhaps most important, the need to "cross your fingers."
Of the ads Millward Brown studied, spots for E-Trade, Audi, Snickers, Walmart and Coca-Cola were viral hits.
Monday, March 15, 2010
Was It Something I Said?
By Brent Bouchez Monday, March 15, 2010
I recently wrote a column for a BusinessWeek about Super Bowl commercials and the missed opportunity of the 50+ market. Hardly controversial, or so you would think.
Just a simple contrarian point-of-view to all of the post Super Bowl pundits tongue wagging about what brand was funniest or most outrageous or simply boring in the one program of the year during which the commercials are paid as much attention as the show.
I made the case that a large portion of the Super Bowl audience is over age 50, with twice the discretionary spending power of any other group and yet not one spot was targeted anywhere near them. Unless the person over 50 was pining for their 20s again ... and that's assuming that when in their 20s they were male, with the libido of a jack rabbit and the intellect of a beer keg.
Many comments were positive and thankful; a fair number even added their own 50+ observations, wondering when the marketing world would figure out that 90 million people accounting for over half of all spending in America is a very rich goldmine just waiting to be tapped, which it is.
The shocker was the number of comments that were negative. Many people actually took the time to not just disagree, but to disagree virulently. A few of the more memorable writings go something like this ...
"Baby boomers want everyone to keep kissing their collective butts, but the fact of the matter is you only have another ten to fifteen years of buying power...We gave the 50 plus age bracket Blackberry[s] at work, HA WHAT A JOKE....Does it really require a geezer in an ad for a geezer to buy something?...you're just trying to whine...The baby boomer generation is the most over-served, self-righteous, boo-hoo generation of the last 100 years. Not only has it poisoned the planet...95% of all males over the age of 50 would rather be 35...You are old and will be forgotten soon. And it's about time."
Whoa ... dudes ... what's up? Why the anger? It's just marketing. It's not like I was advocating taking away your Twitter accounts or taxing your Guitar Hero points. Can't we all just get along?
But seriously, folks ... The PEW Center released a study at the end of last year suggesting that the current generation gap is the largest in the almost 50-year history of the study. Even larger than during the Vietnam war era. Today, an astounding 79% of Americans believe that there is a generation gap in the ways young and old think and believe.
And then there's this ...
The average age of an advertising agency creative person is 28. The average age of a media planner is 24. And less than 4% of advertising agency personnel in America is over the age of 50.
I know why all the ads look and sound the way they do. I know why none of them talk to the 50+ audience. A friend of mine offered up this paraphrased quote from the Greek philosopher Xenophanes: "If horses had gods, they would look like horses."
Thirty-five year old creative people are always going to create messages that look like them, sound like them and act like them. Why? Because they're 35.
As marketers begin to realize the huge profit potential in the 50+ segment (and there are signs that some of the smarter ones are starting to do just that), they need to realize something else; Asking their general advertising agencies to create messaging for this group is like asking them to flap their arms and fly.
When can you understand what it's like to be an over 50 consumer? Not one minute, hour or day before your 50th birthday. Creating messaging for the 50+ target is no different than creating it for the Hispanic target, the African American target or the gay target; to do it right and well requires experience being a part of that target.
And before those of you under 50 stress your fingers feverishly typing a comment in the box below about my being ageist in reverse and discriminatory and one-sided and a typical boomer, remember this ... I was 35 once so when I talk about being 35, I speak from experience. Can you say the same?
I recently wrote a column for a BusinessWeek about Super Bowl commercials and the missed opportunity of the 50+ market. Hardly controversial, or so you would think.
Just a simple contrarian point-of-view to all of the post Super Bowl pundits tongue wagging about what brand was funniest or most outrageous or simply boring in the one program of the year during which the commercials are paid as much attention as the show.
I made the case that a large portion of the Super Bowl audience is over age 50, with twice the discretionary spending power of any other group and yet not one spot was targeted anywhere near them. Unless the person over 50 was pining for their 20s again ... and that's assuming that when in their 20s they were male, with the libido of a jack rabbit and the intellect of a beer keg.
Many comments were positive and thankful; a fair number even added their own 50+ observations, wondering when the marketing world would figure out that 90 million people accounting for over half of all spending in America is a very rich goldmine just waiting to be tapped, which it is.
The shocker was the number of comments that were negative. Many people actually took the time to not just disagree, but to disagree virulently. A few of the more memorable writings go something like this ...
"Baby boomers want everyone to keep kissing their collective butts, but the fact of the matter is you only have another ten to fifteen years of buying power...We gave the 50 plus age bracket Blackberry[s] at work, HA WHAT A JOKE....Does it really require a geezer in an ad for a geezer to buy something?...you're just trying to whine...The baby boomer generation is the most over-served, self-righteous, boo-hoo generation of the last 100 years. Not only has it poisoned the planet...95% of all males over the age of 50 would rather be 35...You are old and will be forgotten soon. And it's about time."
Whoa ... dudes ... what's up? Why the anger? It's just marketing. It's not like I was advocating taking away your Twitter accounts or taxing your Guitar Hero points. Can't we all just get along?
But seriously, folks ... The PEW Center released a study at the end of last year suggesting that the current generation gap is the largest in the almost 50-year history of the study. Even larger than during the Vietnam war era. Today, an astounding 79% of Americans believe that there is a generation gap in the ways young and old think and believe.
And then there's this ...
The average age of an advertising agency creative person is 28. The average age of a media planner is 24. And less than 4% of advertising agency personnel in America is over the age of 50.
I know why all the ads look and sound the way they do. I know why none of them talk to the 50+ audience. A friend of mine offered up this paraphrased quote from the Greek philosopher Xenophanes: "If horses had gods, they would look like horses."
Thirty-five year old creative people are always going to create messages that look like them, sound like them and act like them. Why? Because they're 35.
As marketers begin to realize the huge profit potential in the 50+ segment (and there are signs that some of the smarter ones are starting to do just that), they need to realize something else; Asking their general advertising agencies to create messaging for this group is like asking them to flap their arms and fly.
When can you understand what it's like to be an over 50 consumer? Not one minute, hour or day before your 50th birthday. Creating messaging for the 50+ target is no different than creating it for the Hispanic target, the African American target or the gay target; to do it right and well requires experience being a part of that target.
And before those of you under 50 stress your fingers feverishly typing a comment in the box below about my being ageist in reverse and discriminatory and one-sided and a typical boomer, remember this ... I was 35 once so when I talk about being 35, I speak from experience. Can you say the same?
Wednesday, March 3, 2010
Making mobile video work for your brand
Mobile Focus: The Moving Picture
by Martin Hayward, MediaPost Publications: OMMA Magazine/ Online Media Marketing and Advertising
While consumer interest in mobile video continues to skyrocket, the new on-the-go medium is also creating unprecedented challenges for marketers looking to connect with customers. The new role that mobile video can play in marketing campaigns is inviting but can be overwhelming, unless marketers know how to create, implement and utilize the content and mobile medium correctly. The good news is that those who master the art of online video will have a truly compelling way to engage customers.
Mobile video viewing grew a significant 52 percent in the first quarter of 2009 from the previous year, up to 13.4 million Americans. With these viewing numbers, reports estimate that mobile video will be worth $11 billion by 2011 - and will become one of the fastest growing mobile entertainment sectors.
Much like the App Store phenomenon, which sent marketers running to create the next best mobile app, mobile video is presenting marketers with a tremendous opportunity to get more content on their customers' handsets before the market becomes overcrowded. Yet companies are actually running into a number of technology- and content-delivery roadblocks along the way. Bandwidth issues, the intricacies of streaming versus on-demand video, and the increasing diversity of handsets (think iPhone, Palm Pre, BlackBerry, etc.) among a brand's audience create significant challenges for marketers to strike while the iron is hot. Moreover, brands need to approach this new medium differently than they would traditional marketing channels.
Ensuring Optimum Video Performance
Nothing is worse than investing the time and money to create interesting videos, only to have them not display properly. We've all experienced video buffering delays and jittery video playback. Users quickly lose patience and bail on your video.
To make sure your videos play properly across platforms, they need to be properly encoded. There are different protocols for delivering videos over mobile devices than there are for delivering them on a Web site. Moreover, each mobile device has its own idiosyncrasies. For example, Flash videos won't display on iPhones, Palm Pres or BlackBerrys; however, a content-delivery network (CDN) with multiprotocol streaming servers can automatically stream a single H.264/AAC media source to these mobile devices, as well as to IPTV set-top boxes and to desktop screens with just one video asset - and without any special processing.
The file size is also extremely important when delivering video to mobile devices. Device makers like Apple have restrictions on video file sizes and how they're encoded. If you encode the video at too high a bit rate, users will experience buffering, and won't get a smooth experience. Worse, Apple will reject the video application altogether if the videos don't meet their specifications.
If you're creating online videos, look for technologies that will encode them in one simple step so that they're optimized for any type of mobile device, regardless of screen size. Be sure the technology is also capable of encoding at lower bit rates so that the viewing experience is good, regardless of the user's available device bandwidth.
Shift in Mobile Marketing Mindset
Unlike mobile marketing campaigns that chase and spam consumers with unsolicited messages and offers, mobile video can and should be integrated into brand campaigns and communications that mobile users have opted-in to receive. With the proliferation of mobile spam, consumers are more cautious and unwilling to accept unsolicited SMS and MMS messages. Unless they have opted-in to receive such text messages from trusted brands, the chance that these messages will go unanswered - or reported as spam - outweigh the potential of having them drive interest and sales. Mobile video, on the other hand, is providing the means for brands to bypass SMS and MMS marketing companies that spam and alienate mobile subscribers. If integrated properly, mobile video allows consumers to view demos, explore features, and attain an enhanced understanding and perspective on how a brand's product or service would work.
Online news subscribers, for example, might opt-in to receive mobile videos of top news stories of the day, while home shoppers might give their real estate agent permission to send videos of new listings that meet their search criteria. It's a way to engage users with content they want, when they want it. Mobile video can also serve to educate and inform users, beyond just product pitches. For example, a hardware store could share videos with new customers about the different ways they can use the new band saw they just bought. In this way, they're improving the customer's experience, increasing the odds that the customer will return.
Brand Consistency
As with any element of a marketing program, it's important that mobile video campaigns integrate with the overall marketing strategy. Maintaining consistency across all channels, including video, is important for strengthening and reinforcing your brand. Be sure your company logo and other identifying elements are carried through in corporate and marketing-based online videos. But also remember that even user-generated videos - either those created by individual departments and employees, or loyal customers - have great brand potential and can be folded into the marketing (including mobile) campaign if done properly. The same rules apply, though; when you are sending video through your mobile channels, make sure it aligns with your brand - in style, content and format.
New Revenue Opportunities
Mobile video also takes mobile promotions one step further. These promotions are proven ways to generate sales, but what if marketers could also provide consumers with mobile video of the items on sale? Think about how slick - and irresistible - a demo of a digital camera would seem next to a coupon offering 10 percent off. Watching products and services in action increases buying power and interest among consumers. And giving buyers a clear call to action helps to convert those interested parties to actual buyers.
Mobile video is a great way to pique the interest of prospects, and convert them into buyers. To
keep users' attention, be sure your videos are packaged and encoded properly to deliver optimum performance. Sharing valuable information with customers, giving them the choice to opt-in, and providing convenient "buy now" options integrated in the video are all powerful ways to drive and retain customer loyalty.
by Martin Hayward, MediaPost Publications: OMMA Magazine/ Online Media Marketing and Advertising
While consumer interest in mobile video continues to skyrocket, the new on-the-go medium is also creating unprecedented challenges for marketers looking to connect with customers. The new role that mobile video can play in marketing campaigns is inviting but can be overwhelming, unless marketers know how to create, implement and utilize the content and mobile medium correctly. The good news is that those who master the art of online video will have a truly compelling way to engage customers.
Mobile video viewing grew a significant 52 percent in the first quarter of 2009 from the previous year, up to 13.4 million Americans. With these viewing numbers, reports estimate that mobile video will be worth $11 billion by 2011 - and will become one of the fastest growing mobile entertainment sectors.
Much like the App Store phenomenon, which sent marketers running to create the next best mobile app, mobile video is presenting marketers with a tremendous opportunity to get more content on their customers' handsets before the market becomes overcrowded. Yet companies are actually running into a number of technology- and content-delivery roadblocks along the way. Bandwidth issues, the intricacies of streaming versus on-demand video, and the increasing diversity of handsets (think iPhone, Palm Pre, BlackBerry, etc.) among a brand's audience create significant challenges for marketers to strike while the iron is hot. Moreover, brands need to approach this new medium differently than they would traditional marketing channels.
Ensuring Optimum Video Performance
Nothing is worse than investing the time and money to create interesting videos, only to have them not display properly. We've all experienced video buffering delays and jittery video playback. Users quickly lose patience and bail on your video.
To make sure your videos play properly across platforms, they need to be properly encoded. There are different protocols for delivering videos over mobile devices than there are for delivering them on a Web site. Moreover, each mobile device has its own idiosyncrasies. For example, Flash videos won't display on iPhones, Palm Pres or BlackBerrys; however, a content-delivery network (CDN) with multiprotocol streaming servers can automatically stream a single H.264/AAC media source to these mobile devices, as well as to IPTV set-top boxes and to desktop screens with just one video asset - and without any special processing.
The file size is also extremely important when delivering video to mobile devices. Device makers like Apple have restrictions on video file sizes and how they're encoded. If you encode the video at too high a bit rate, users will experience buffering, and won't get a smooth experience. Worse, Apple will reject the video application altogether if the videos don't meet their specifications.
If you're creating online videos, look for technologies that will encode them in one simple step so that they're optimized for any type of mobile device, regardless of screen size. Be sure the technology is also capable of encoding at lower bit rates so that the viewing experience is good, regardless of the user's available device bandwidth.
Shift in Mobile Marketing Mindset
Unlike mobile marketing campaigns that chase and spam consumers with unsolicited messages and offers, mobile video can and should be integrated into brand campaigns and communications that mobile users have opted-in to receive. With the proliferation of mobile spam, consumers are more cautious and unwilling to accept unsolicited SMS and MMS messages. Unless they have opted-in to receive such text messages from trusted brands, the chance that these messages will go unanswered - or reported as spam - outweigh the potential of having them drive interest and sales. Mobile video, on the other hand, is providing the means for brands to bypass SMS and MMS marketing companies that spam and alienate mobile subscribers. If integrated properly, mobile video allows consumers to view demos, explore features, and attain an enhanced understanding and perspective on how a brand's product or service would work.
Online news subscribers, for example, might opt-in to receive mobile videos of top news stories of the day, while home shoppers might give their real estate agent permission to send videos of new listings that meet their search criteria. It's a way to engage users with content they want, when they want it. Mobile video can also serve to educate and inform users, beyond just product pitches. For example, a hardware store could share videos with new customers about the different ways they can use the new band saw they just bought. In this way, they're improving the customer's experience, increasing the odds that the customer will return.
Brand Consistency
As with any element of a marketing program, it's important that mobile video campaigns integrate with the overall marketing strategy. Maintaining consistency across all channels, including video, is important for strengthening and reinforcing your brand. Be sure your company logo and other identifying elements are carried through in corporate and marketing-based online videos. But also remember that even user-generated videos - either those created by individual departments and employees, or loyal customers - have great brand potential and can be folded into the marketing (including mobile) campaign if done properly. The same rules apply, though; when you are sending video through your mobile channels, make sure it aligns with your brand - in style, content and format.
New Revenue Opportunities
Mobile video also takes mobile promotions one step further. These promotions are proven ways to generate sales, but what if marketers could also provide consumers with mobile video of the items on sale? Think about how slick - and irresistible - a demo of a digital camera would seem next to a coupon offering 10 percent off. Watching products and services in action increases buying power and interest among consumers. And giving buyers a clear call to action helps to convert those interested parties to actual buyers.
Mobile video is a great way to pique the interest of prospects, and convert them into buyers. To
keep users' attention, be sure your videos are packaged and encoded properly to deliver optimum performance. Sharing valuable information with customers, giving them the choice to opt-in, and providing convenient "buy now" options integrated in the video are all powerful ways to drive and retain customer loyalty.
Tuesday, March 2, 2010
Burke: Ad Market Is On The Rebound
Comcast's Burke: Making NBC A Cable Network "Unthinkable"
Sees ad market uptick as company readies to take over broadcast net
By Claire Atkinson -- Broadcasting & Cable, 3/2/2010 12:51:56 PM
Comcast Corp. isn't seeing many signs of an economic recovery, but one bright exception is advertising. Speaking at the American Association of Advertising Agencies annual get-together in San Francisco on March 2, Comcast COO Steve Burke said, "We survived a near-death experience a year ago and people haven't really recovered, but the one place it has recovered is advertising."
Burke addressed a crowd of around 1,000 executives from ad agencies and marketing and media companies, telling them, "I think we'll see a real resurgence in TV advertising. As you start to see pricing get better, you'll start to see new people come into the market. Addressability will make it more affordable, targetable and hence more attractive. TV remains the best way to convince people to do something. Our deal with NBC is a bet that the advertising business will remain robust."
Answering a question about progress at Canoe Ventures, Burke responded that he was extremely excited about the future of interactive advertising and that the delays at the organization were caused by the plumbing. "That's what's taking the time," he said. "It's not funding. We've spent $100 million. It's one of the easiest checks we write because there is a huge opportunity."
Canoe Ventures, backed by six of the biggest cable operators in the country, offers advertisers the promise of both interactivity and addressability at scale across multiple cable systems.
As part of a sit-down interview with Michael Kassan, CEO of media consultancy MediaLink, Burke went on to describe the big opportunity of creating a cross-platform sell with NBC Universal and Comcast's cable channels. "We'll have the ability to say whether you want cable or broadcast, national or local, local spot or cable spot. It [cross-platform sales] has to be done carefully."
Burke also cited the ability to create packages focused on women and sports. "One of the things we looked at when we analyzed the deal was our ability to reach women. If you combined Bravo, Oxygen, E! Entertainment, Today Show, iVillage, Daily Candy, [you get] the ability to sit with one person and say ‘We can speak for an entire group of assets which target a certain age, or a certain profile.' It's unsurpassed."
Burke revealed that the NBC network could be as big a brand as any cable network. "I could see NBC trying to build on the Olympics and create a brand filter for NBC, I think you'll see that."
When asked to play a word association game that included the statement "Leno at 10," Burke's response was "over." He continued: "Everybody is happy he's back where he was."
Since transformation was the theme of the conference, Burke said companies had to be willing to take risks. "If you do nothing, the Internet will be your foe."
He suggested CBS had missed a big opportunity in failing to be in cable. "When cable was first introduced, CBS said, ‘We hope cable goes away.' Look at what CBS has today; it has much less cable channel content than NBC, ABC or Fox. Places like ABC embraced it, and you have ESPN and at NBC, MSNBC and Bravo. You only get in trouble if you do nothing."
Dr. Philip Jay LeNoble, who publishes "LeNoble's Media Sales Insights"...knows that the pillars of revenue generation and gross margin profitability retention must contain a strong effort toward developing new long-term, local direct business.
Sees ad market uptick as company readies to take over broadcast net
By Claire Atkinson -- Broadcasting & Cable, 3/2/2010 12:51:56 PM
Comcast Corp. isn't seeing many signs of an economic recovery, but one bright exception is advertising. Speaking at the American Association of Advertising Agencies annual get-together in San Francisco on March 2, Comcast COO Steve Burke said, "We survived a near-death experience a year ago and people haven't really recovered, but the one place it has recovered is advertising."
Burke addressed a crowd of around 1,000 executives from ad agencies and marketing and media companies, telling them, "I think we'll see a real resurgence in TV advertising. As you start to see pricing get better, you'll start to see new people come into the market. Addressability will make it more affordable, targetable and hence more attractive. TV remains the best way to convince people to do something. Our deal with NBC is a bet that the advertising business will remain robust."
Answering a question about progress at Canoe Ventures, Burke responded that he was extremely excited about the future of interactive advertising and that the delays at the organization were caused by the plumbing. "That's what's taking the time," he said. "It's not funding. We've spent $100 million. It's one of the easiest checks we write because there is a huge opportunity."
Canoe Ventures, backed by six of the biggest cable operators in the country, offers advertisers the promise of both interactivity and addressability at scale across multiple cable systems.
As part of a sit-down interview with Michael Kassan, CEO of media consultancy MediaLink, Burke went on to describe the big opportunity of creating a cross-platform sell with NBC Universal and Comcast's cable channels. "We'll have the ability to say whether you want cable or broadcast, national or local, local spot or cable spot. It [cross-platform sales] has to be done carefully."
Burke also cited the ability to create packages focused on women and sports. "One of the things we looked at when we analyzed the deal was our ability to reach women. If you combined Bravo, Oxygen, E! Entertainment, Today Show, iVillage, Daily Candy, [you get] the ability to sit with one person and say ‘We can speak for an entire group of assets which target a certain age, or a certain profile.' It's unsurpassed."
Burke revealed that the NBC network could be as big a brand as any cable network. "I could see NBC trying to build on the Olympics and create a brand filter for NBC, I think you'll see that."
When asked to play a word association game that included the statement "Leno at 10," Burke's response was "over." He continued: "Everybody is happy he's back where he was."
Since transformation was the theme of the conference, Burke said companies had to be willing to take risks. "If you do nothing, the Internet will be your foe."
He suggested CBS had missed a big opportunity in failing to be in cable. "When cable was first introduced, CBS said, ‘We hope cable goes away.' Look at what CBS has today; it has much less cable channel content than NBC, ABC or Fox. Places like ABC embraced it, and you have ESPN and at NBC, MSNBC and Bravo. You only get in trouble if you do nothing."
Dr. Philip Jay LeNoble, who publishes "LeNoble's Media Sales Insights"...knows that the pillars of revenue generation and gross margin profitability retention must contain a strong effort toward developing new long-term, local direct business.
Monday, March 1, 2010
New Weapon In TV Vs. Google Ad War
By Janet Stilson
TVNewsCheck, Mar 1 2010, 12:57 PM ET
There's a sales tool called AfterMath that just hit the market. And its creators are bent on correcting what they believe are client misperceptions about the relative value of TV commercials and Google AdWords per-click buys.
AfterMath is the brainchild of the sales consultancy Eckstein, Summers, Armbruster & Co. It's releasing AfterMath to its sponsor stations now in advance of a wider rollout in the months to come.
"We estimate that over a $1 billion is spent incorrectly with Google. We can change all that," claims Adam Armbruster, an ESA partner.
Armbruster contends that when search-advertising services like AdWords may seem fairly inexpensive, they aren't when measured by the actual revenue they generate.
"We came up with a cost per customer," Armbruster says, noting that demos, dayparts and markets are all part of the analysis.
AfterMath has determined that, in general, a $1.50-per-click rate with Google is equivalent to what it costs to advertise on TV stations. "When you go above $1.50, the advantage quickly tips to television, meaning you should get out of Google and buy television in a specific city," Ambruster says.
Armbruster notes that lawyers who go straight to Google pay way more than $1.50 — between $25 and $50 per click, depending on the market.
Some sales executives may take some convincing.
Brooke Knight Warner, general manager of WBOC Interactive in Salisbury, Md., notes the branding power of online promotions. "The relationships you can build [online] — those bonds are so strong they don't always convert immediately," she says.
Warner hasn't heard the AfterMath sales pitch yet. But Jeffrey Ulrich, senior director of digital sales strategy and training at Cox Media Group, has and he considers it a one-of-a-kind sales tool. ESA "has thoroughly analyzed the numbers and the ratios," he says.
But, he adds, he will not be using it to sell against Google. In fact, he says, Cox resells Google to clients and considers it to be just one arrow in its sales quiver.
Ulrich sees AfterMath as a way to have "honest discussions with clients about all the tools that are out there."
Armbruster is on the same page. As long as clients are buying from stations' toolbox, all is well. But "clients are going off on their own willy-nilly and are just getting taken" by buying directly from Google. That's what ESA is trying to counteract.
Not everyone needs AfterMath to understand TV's relative value. "I know that if I spend $2,000 on television, I'll get more signed-up clients than if I spend $2,000 on online," says Joe Laub, president of Laub & Laub LLC, a law practice with offices in Nevada and California.
Ellen Dykes, director of marketing and advertising at Great American Home Store, a furniture retailer in Tennessee, can also tell from the business that walks in the door that "TV commercials are far more efficient than any other form of media we could buy."
The metrics of AfterMath come at a critical time. Gordon Borrell, of Borrell Associates, notes that the economic triggers that played out in 2009 caused many clients to reassess the value of their online ad strategy. And he expects that many will tilt back toward traditional media, including TV, over the course of 2010.
TVNewsCheck, Mar 1 2010, 12:57 PM ET
There's a sales tool called AfterMath that just hit the market. And its creators are bent on correcting what they believe are client misperceptions about the relative value of TV commercials and Google AdWords per-click buys.
AfterMath is the brainchild of the sales consultancy Eckstein, Summers, Armbruster & Co. It's releasing AfterMath to its sponsor stations now in advance of a wider rollout in the months to come.
"We estimate that over a $1 billion is spent incorrectly with Google. We can change all that," claims Adam Armbruster, an ESA partner.
Armbruster contends that when search-advertising services like AdWords may seem fairly inexpensive, they aren't when measured by the actual revenue they generate.
"We came up with a cost per customer," Armbruster says, noting that demos, dayparts and markets are all part of the analysis.
AfterMath has determined that, in general, a $1.50-per-click rate with Google is equivalent to what it costs to advertise on TV stations. "When you go above $1.50, the advantage quickly tips to television, meaning you should get out of Google and buy television in a specific city," Ambruster says.
Armbruster notes that lawyers who go straight to Google pay way more than $1.50 — between $25 and $50 per click, depending on the market.
Some sales executives may take some convincing.
Brooke Knight Warner, general manager of WBOC Interactive in Salisbury, Md., notes the branding power of online promotions. "The relationships you can build [online] — those bonds are so strong they don't always convert immediately," she says.
Warner hasn't heard the AfterMath sales pitch yet. But Jeffrey Ulrich, senior director of digital sales strategy and training at Cox Media Group, has and he considers it a one-of-a-kind sales tool. ESA "has thoroughly analyzed the numbers and the ratios," he says.
But, he adds, he will not be using it to sell against Google. In fact, he says, Cox resells Google to clients and considers it to be just one arrow in its sales quiver.
Ulrich sees AfterMath as a way to have "honest discussions with clients about all the tools that are out there."
Armbruster is on the same page. As long as clients are buying from stations' toolbox, all is well. But "clients are going off on their own willy-nilly and are just getting taken" by buying directly from Google. That's what ESA is trying to counteract.
Not everyone needs AfterMath to understand TV's relative value. "I know that if I spend $2,000 on television, I'll get more signed-up clients than if I spend $2,000 on online," says Joe Laub, president of Laub & Laub LLC, a law practice with offices in Nevada and California.
Ellen Dykes, director of marketing and advertising at Great American Home Store, a furniture retailer in Tennessee, can also tell from the business that walks in the door that "TV commercials are far more efficient than any other form of media we could buy."
The metrics of AfterMath come at a critical time. Gordon Borrell, of Borrell Associates, notes that the economic triggers that played out in 2009 caused many clients to reassess the value of their online ad strategy. And he expects that many will tilt back toward traditional media, including TV, over the course of 2010.
Who's Liable For Ad Sales Payments?
Hey All: Im' back but still on my back....Good to be home and sharing mnore assets with you...Dr. Philip Jay
By Mary Collins
TVNewsCheck, Feb 26 2010, 6:03 AM ET
While preparing for MFM's 50th annual conference, I was struck by the issues that haven't changed much since the first conference for the Institute of Broadcasting Financial Management, MFM's original name.
Many of the topics that are part of this year's "Media Outlook 2010" conference for MFM and its BCCA subsidiary are similar to the key issues that led to the formal incorporation of the association. They included such challenges as the correct way to recognize various revenues and expenses.
One challenge that was noticeably absent from the Association's 1961 agenda, but is a huge topic for MFM/BCCA this year, is addressing liability for advertising payments.
It wasn't until the 1970s that ad agencies stopped taking the liability for media buys they placed on behalf of a client. Up until the tough economic times that led to the downfall of the Mad Men days, agencies handled all aspects of their clients' accounts, including vetting these accounts and then presenting their orders to the television stations.
In fact, research shows that a standard contract developed in the 1930s by the American Association of Advertising Agencies (4As) included an agency "sole liability clause."
An article in Szabo Associates' Sept. 30, 2009, Collective Wisdom newsletter explains what happened next. According to Szabo, in 1991 the 4As changed its stance on payment responsibility from "sole liability" to "sequential liability."
In adopting sequential liability, the agencies took the position that they were responsible for payment only if they had been paid by the advertiser. MFM/BCCA (then known as BCFM/BCCA) immediately responded with a position of "joint and several" or "dual" liability; both the agency and advertiser were considered responsible until the media outlet had been paid.
Although the 4As' shift to sequential liability dates back nearly 20 years, it wasn't until fairly recently that agencies began to resist the use of joint and several liability, sometimes striking that language from standard contracts and replacing it with the sequential liability clause. What changed?
According to a number of credit and collections managers polled by MFM's The Financial Manager (TFM) magazine for our March-April issue, one factor has been consolidation within the agency community, which has led to agencies requiring a uniform adoption of the 4As' language. There is also a greater push by agency conglomerates to protect their own balance sheets as they experience a growing number of bankruptcies by clients, whose recent ranks have included such major advertisers as General Motors.
MFM opened the next chapter in the liability language debate earlier this week, with a Distance Learning Seminar entitled "Sequential Liability ... Now What? — Different Media, Different Treatment." The seminar was moderated by Scott Jenkins, director of customer marketing and sales within ESPN's controller's department and BCCA's representative on the MFM board of directors, and Bonnie Krabbenhoft, manager of credit and collections at Scripps Networks and president of C.A.S.H., a credit group for Cable and Satellite History. Their discussion began by addressing the two key reasons that have made advertisers more reluctant to accept the joint and several liability language.
The first argument is with respect to the payment itself. The agency doesn't want to agree to make a payment for the services that were rendered if it hasn't already been paid.
The second objection concerns its exposure. Since the agency is receiving a commission of, say, only some 15% on the media buy, it doesn't want to carry the entire liability. For example, a $20,000 campaign represents a $20,000 asset for a TV station, but at 15% commission it's only a $3,000 asset for the agency.
So what's a TV station to do?
First and foremost, our seminar moderators recommended that media businesses ensure that they have established a sound credit policy. This means the policy should encompass all aspects that affect credit, from liability to final approval.
The legal department should review the policy to ensure that it adheres to all legal requirements. In addition, the station's controller or business manager should be consulted to make sure that the credit policy is in agreement with company goals.
The moderators stressed that it is also very important to get the ad sales team's input and acceptance of any policies that may be enacted. In the view of MFM's BCCA members, their role as credit and collections managers is to help make the sale, and it is vital that they aren't viewed as putting up obstacles to the sales process.
Jenkins and Krabbenhoft stressed the fundamental role played by the inter-relationship between credit and sales in meeting the company's business goals. Credit managers rely on their sales staff to bring legitimate, creditworthy clients to the business. Account reps must not oversell clients beyond their ability to pay and need to alert their credit and collections staff when there are changes in the client's ability to pay....
By Mary Collins
TVNewsCheck, Feb 26 2010, 6:03 AM ET
While preparing for MFM's 50th annual conference, I was struck by the issues that haven't changed much since the first conference for the Institute of Broadcasting Financial Management, MFM's original name.
Many of the topics that are part of this year's "Media Outlook 2010" conference for MFM and its BCCA subsidiary are similar to the key issues that led to the formal incorporation of the association. They included such challenges as the correct way to recognize various revenues and expenses.
One challenge that was noticeably absent from the Association's 1961 agenda, but is a huge topic for MFM/BCCA this year, is addressing liability for advertising payments.
It wasn't until the 1970s that ad agencies stopped taking the liability for media buys they placed on behalf of a client. Up until the tough economic times that led to the downfall of the Mad Men days, agencies handled all aspects of their clients' accounts, including vetting these accounts and then presenting their orders to the television stations.
In fact, research shows that a standard contract developed in the 1930s by the American Association of Advertising Agencies (4As) included an agency "sole liability clause."
An article in Szabo Associates' Sept. 30, 2009, Collective Wisdom newsletter explains what happened next. According to Szabo, in 1991 the 4As changed its stance on payment responsibility from "sole liability" to "sequential liability."
In adopting sequential liability, the agencies took the position that they were responsible for payment only if they had been paid by the advertiser. MFM/BCCA (then known as BCFM/BCCA) immediately responded with a position of "joint and several" or "dual" liability; both the agency and advertiser were considered responsible until the media outlet had been paid.
Although the 4As' shift to sequential liability dates back nearly 20 years, it wasn't until fairly recently that agencies began to resist the use of joint and several liability, sometimes striking that language from standard contracts and replacing it with the sequential liability clause. What changed?
According to a number of credit and collections managers polled by MFM's The Financial Manager (TFM) magazine for our March-April issue, one factor has been consolidation within the agency community, which has led to agencies requiring a uniform adoption of the 4As' language. There is also a greater push by agency conglomerates to protect their own balance sheets as they experience a growing number of bankruptcies by clients, whose recent ranks have included such major advertisers as General Motors.
MFM opened the next chapter in the liability language debate earlier this week, with a Distance Learning Seminar entitled "Sequential Liability ... Now What? — Different Media, Different Treatment." The seminar was moderated by Scott Jenkins, director of customer marketing and sales within ESPN's controller's department and BCCA's representative on the MFM board of directors, and Bonnie Krabbenhoft, manager of credit and collections at Scripps Networks and president of C.A.S.H., a credit group for Cable and Satellite History. Their discussion began by addressing the two key reasons that have made advertisers more reluctant to accept the joint and several liability language.
The first argument is with respect to the payment itself. The agency doesn't want to agree to make a payment for the services that were rendered if it hasn't already been paid.
The second objection concerns its exposure. Since the agency is receiving a commission of, say, only some 15% on the media buy, it doesn't want to carry the entire liability. For example, a $20,000 campaign represents a $20,000 asset for a TV station, but at 15% commission it's only a $3,000 asset for the agency.
So what's a TV station to do?
First and foremost, our seminar moderators recommended that media businesses ensure that they have established a sound credit policy. This means the policy should encompass all aspects that affect credit, from liability to final approval.
The legal department should review the policy to ensure that it adheres to all legal requirements. In addition, the station's controller or business manager should be consulted to make sure that the credit policy is in agreement with company goals.
The moderators stressed that it is also very important to get the ad sales team's input and acceptance of any policies that may be enacted. In the view of MFM's BCCA members, their role as credit and collections managers is to help make the sale, and it is vital that they aren't viewed as putting up obstacles to the sales process.
Jenkins and Krabbenhoft stressed the fundamental role played by the inter-relationship between credit and sales in meeting the company's business goals. Credit managers rely on their sales staff to bring legitimate, creditworthy clients to the business. Account reps must not oversell clients beyond their ability to pay and need to alert their credit and collections staff when there are changes in the client's ability to pay....
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