Microsoft To Acquire LinkedIn For $26.2 Billion, Extends Cloud Network

by Laurie Sullivan @lauriesullivan, June 13, 2016, 10:56 AM                                            

                                                   

Microsoft has reached a deal to acquire LinkedIn for $26.2 billion. The all-cash transaction agreement, announced Monday, values LinkedIn shares at about $196 each.

It puts Microsoft in a much better position to grow its enterprise suite of software and extend Bing Ads into the social network.

"The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” said Microsoft CEO Satya Nadella in a prepared statement to employees.

“Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet.”

Microsoft says LinkedIn will retain its own brand and independence, and existing CEO Jeff Weiner will remain and will report directly to Nadella.

Microsoft invested in Facebook early on before the company went public and continued to support its infrastructure. Still, Facebook struggled to enter the enterprise space. LinkedIn puts Microsoft in a position to expand on its enterprise services and suite of business software.

Nadella said as the LinkedIn and Office 365 engagement grows, "new opportunities will be created for monetization through individual and organization subscriptions and targeted advertising."
LinkedIn has more than 430 million members.

eMarketer estimates LinkedIn will generate $667.5 million in ad revenue this year on desktop and mobile devices in the U.S., rising to nearly $821 million in 2018.  Worldwide LinkedIn will generate $1.06 billion in ad revenue this year.

Microsoft will finance the purchase, in part, through new debt, but company officials said it still intends to finish buying back $40 billion in stock by the end of this year.

Newspaper National Network Folds

by Erik Sass @eriksass1, June 14, 2016, 2:17 PM                                            

After more than two decades selling advertising on behalf of the nation’s biggest newspaper publishers, the Newspaper National Network is closing up shop at the end of this month, the organization announced Tuesday.

 

Explaining the decision, David Chavern, president and CEO of the Newspaper Association of America, which is a partial owner of the NNN, stated: “The partners felt the need to invest in an alternative go to market strategy, focused on emerging digital opportunities and ROP [run of paper] advertising, rather than significant capital investments in NNN at this time.”

 

Founded by a consortium of newspaper publishers in 1994, when the Internet was in its infancy and print newspapers still dominated news consumption, NNN provided a crucial service for publishers, media agencies and brands by enabling advertisers to execute national ad campaigns across multiple publishers, eliminating the need to make each buy separately.

 

This was especially important for a mature medium like print newspapers, divided into regional fiefdoms and further separated by ruthless competition within markets, making cooperation even more difficult.

 

At the time of its demise, NNN is owned by 20 newspaper publishers, as well as the NAA. Over the years, the NNN claims to have generated around $3 billion in ad sales for newspapers through national ad sales.

 

The NNN also played an important role by introducing new research tools that allowed publishers to demonstrate the value of newspaper advertising to clients and helped advertisers craft national campaigns across varied markets.

 

More recently, NNN launched N3 Digital to enable advertisers to execute local digital ad campaigns on a national scale.

 

The newspaper industry continues to operate under duress, challenged by the decline of print circulation and advertising revenue, as well as slow digital ad growth that has mostly failed to offset these drops.

 

Although the NAA stopped reporting annual figures for newspaper industry revenue several years ago, the U.S. Census Bureau reported that total revenues fell 3.8% from $28.1 billion in 2014 to $27 billion in 2015. The latter figure is down 44% from total revenues of $48.3 billion in 2007.

More Young People Get News From Social Than TV

Good thing your television and radio companies have jumped on the bandwagon of digital, social, which includes all important mobile and search as the research herein shows its importance. Every client proposal going out should have a digital recommendation accompanying it. Philip Jay LeNoble, Ph.D. CA

by Erik Sass, , Staff Writer @eriksass1, Yesterday, 12:37 PM                                            

Social media has passed television as the most popular source of news for young adults, according to a new survey by the Reuters Institute for the Study of Journalism, which asked approximately 50,000 people around the world about their news consumption habits. The findings echo the results of other studies indicating a sweeping change in how people of all ages -- but especially in younger age demos -- get their news.

Among American adults ages 18-24 polled by Reuters, 28% said they get most of their news from social media, ahead of TV, cited by 24% of the same age group. Unsurprisingly, the proportion is even higher when people look for news on smartphones, with 48% of U.S. online adults naming social media as their main news source on mobile, followed by a news Web site or app at just 23%; other options including news aggregators, email and online video received even smaller percentages.
Also no surprise, Facebook was by far the most popular source of news among social media sites, cited by 44% of respondents who get their news from social media, ahead of YouTube at 19%, Twitter at 10%, and WhatsApp at 8%.

Nor are consumers necessarily averse to having their news filtered by algorithms based on their own habits: 36% of all respondents globally said they would prefer news chosen based on what they’ve already read, and 22% said they would be fine reading news based on their friends’ reading habits. However 30% believed human oversight is still necessary in picking which news is most relevant.
Nearly two-thirds of Americans (62%) get news from social media at least occasionally, up from 49% in 2012, according to a separate survey conducted by the Pew Research Center and the John S. and James L. Knight Foundation, who polled 4,654 respondents in January and February of this year.
Other findings from the Reuters survey will not give news publishers much cause for cheer: around the world, just 10% of respondents from countries where English is spoken said they have ever paid for online news in the last year. Alongside data from some other recent surveys, this suggests that news publishers may indeed have shot themselves in the foot by giving away content for free in the early days of the Internet.

Scatter Market Soars, Signals Robust Upfront Ad Demand

 

• by Joe Mandese @mp_joemandese, Yesterday, 9:56 AM                                            

If a historical upfront marketplace adage is true -- that a tight scatter market presages strong upfront demand -- then the 2016-17 upfront marketplace could well be a robust one, according to never-before-seen data analyzing the share of spending growth of upfront vs. scatter markets.

The data, provided by Standard Media Index, shows that while upfront spending has risen 3% through the first seven months of the 2015-16 broadcast year (October-through-April), the scatter marketplace has expanded nearly four times that rate: +19%.

The SMI data represents actual media buys processed by five of the six major agency holding companies (excluding WPP), and is considered directionally representative of the overall advertising marketplace in the U.S.

 

Scatter markets are the near-term quarterly markets that occur after long-term upfront ad commitments are made, and generally are considered an indication of demand going into the next season, because they reflect how much of the networks’ unsold inventory is being gobbled up -- either from brands that held back on the amount of inventory they needed during the preceding upfront, or because new scatter market-only players are entering the marketplace.

The markets are not directly comparable for a lot of reasons, including the fact that upfront deals have better terms and conditions (including ratings guarantees, cancellation options and the ability to selected preferred inventory before it is sold in scatter), but the total of the two marketplaces represents aggregate network ad revenues and the absolute demand of the network TV ad marketplace.

 

“SMI’s numbers show the new broadcast year took off like a speeding train. Scatter spending in 2015’s fourth quarter zoomed ahead 27%, while upfront dollars rose a mere 3%. Then the spending eased off a bit in this year’s first quarter, to a 10% rise for scatter and flat for upfront spending,” writes SMI chief James Fennessy in a post on SMI’s blog analyzing the data today.

 

“The seven-month results for the current broadcast year are a dramatic improvement for TV sellers over the trend they were experiencing a year ago,” he continues, adding, “Scatter revenue was down 2% for national networks during the full broadcast year 2014-15 in comparison with 2013-14.  Upfront dollars were off by 6%, for an overall decrease of 5% in national TV revenue.”

Study: Increased TV Spending Yields Higher Sales For 12 Large Marketers

by Wayne Friedman, Yesterday, 3:32 PM                                            

The recent increase in TV spending -- after a period of decline -- was a key factor in driving sales for a dozen of large advertisers, according to a new study. Over a two-year period, seven consumer product group [CPG] brands and five non-CPG brands saw revenues jump by 14.6% on average, according to research from Standard Media Index (SMI) and Research Measurement Technologies [RMT].
These 12 advertisers averaged a 25.8% rise in their TV ad spend over the period. Three CPG companies averaged a sales increase of 4.6 times the incremental TV ad spend after they switched dollars back to TV.

Working with consumer research company IRI and public corporate financial earnings data, SMI and Harvey’s research analyzed media spend shifts among 100 major advertisers from the first quarter 2014 to first quarter 2016.

The research confirms recent reports of advertisers that have seen declines in the return on investments from increasing digital media spending and lower TV spending. Many have now reversed their TV-digital media spending allocations.

SMI captures 70% of total national U.S. agency spend from the booking systems of global media holding groups, as well as leading media independents. RMT is a new media research consultancy, its chairman and co-founder is research veteran Bill Harvey.

How About A Golden Age Of Advertising?

Commentary

by Gary Holmes, , Op-Ed Contributor, June 6, 2016, 8:17 PM                                            

This year’s upfronts produced the usual amount of hand-wringing about the future of television advertising.  Oh, for the days when it was only the DVR that was going to destroy the TV business model!  Now we have to worry about digital devices, cord-averse Millenniums, unreliable online measurement systems, and other end-of-ages issues.
It fell to CBS’s David Poltrack, one of the smartest people in TV, to calm everyone down.  According to Poltrack, more people are watching TV than ever before, Millennials haven’t abandoned television in hordes, and TV advertising is more valuable than ever.

Of course it’s Poltrack’s job to make that very case so advertisers will keep coming back to TV networks, but he backed it up with data instead of anecdotes, which is how most of the rest of us develop our opinions.

Nothing he reported was particularly new.   Nielsen data have shown for years that a huge number of people still watch commercials, that only about half the people who play back DVR’d shows skip through the commercials, and that Millennials are still watching a lot of network TV.  What was great about Poltrack’s presentation was the consolidation of previously known and new data into one easy-to-digest package.

Poltrack also tried to make the case that “people like advertising.”  According to Poltrack, “They're not craving for a world without advertising.” What audiences don't like, he said, are "ads that aren't relevant to them. But they enjoy ads that are relevant to them."

Well, this is one of those assertions that’s hard to prove, no matter how many surveys you give.  Respondents may respond, but they might only be parroting back what they think they’re “supposed” to say. Or more likely they don’t really know their own minds because they simultaneously hate and love ads depending on their mood or how recently they’ve watched TV..  Probably the only way to know for sure is to hook consumers up to a brain scan for a week to see whether the pleasure-experiencing areas of the brain are stimulated by ads.

Regardless, if advertisers are mad at consumers for fast-forwarding through their commercials, here’s a suggestion: Make better ads.

People will watch ads they like.  Often multiple times. One of the reasons the Super Bowl is the highest-rated broadcast of the year is that even people who don’t like football know they will be seeing the best ads that Madison Avenue has to offer.  The post-mortem for the commercials is almost as intense as the analysis of the game itself.

Obviously the advertising world cannot sustain Super Bowl intensity all year long – or across 500 different channels, no less.  But the reason people skip commercials is that they are annoyed by so many of ads and then get in the fast-forwarding habit.  Isn’t it possible to make them less irritating?
And what’s annoying about the ads?  How about: lack of originality, repetition, unappealing or overexposed spokespeople, repetition, unrealistic situations, shouting, moronic behavior, repetition, cheesy production values (especially in local ads),  confusing messages, outdated formulas, people acting like idiots, repetition.  Then there are erectile dysfunction ads when you are trying to watch baseball with your son, or adult diaper ads when you’re watching the news with your parents.  Awkward.

Familiarity breeds contempt, which is why running ads too many times is such a turn-off.  An ad that was once charming can become odious after 20 or 30 viewings.  I know there’s a science to the number of impressions necessary to imprint a message on a viewer, but certainly there must also be research on how many impressions it takes to make viewers hate the product.

With that in mind, here’s a hint to network executives: Put the best and freshest ad at the beginning of the commercial pod. Especially the show’s first pod.  My personal experience is that if I if like the first ad, I’ll watch more of them until it finally becomes unbearable.  Then I might not watch another ad for the whole show.

I’d also like to see research into whether people who watch alone or in the company of others watch the most ads.  And whether it makes any difference whether the husband, wife or kids control the clicker.

In my home, I usually manage the remote control. It’s my wife’s job to yell if I let too many ads slip through, but I don’t know if that’s a universal condition.  I would guess that the more people watching a show, the more likely it is that someone in the room will give the remote holder a lot of grief for poor fast-forwarding skills.

It’s easy to say “make better ads,” especially when you’re not the one worrying about budgets, production schedules and making clients happy.   But if advertisers really want people to watch their ads, they should up their game.  The Golden Age of Television should be supported by a Golden Age of Advertising.

Is Talk Radio To Blame For The Rise of Trump?

 

June 8, 2016

 

 

 

 

McConnell,Mitch-012309-18422-jf 0024

The Washington Examiner has the details from the Senate Majority Leader Mitch McConnell who said the reason Republican base voters have unrealistic expectations is because of talk radio. And when politicians say talk radio, that usually means Rush Limbaugh, Sean Hannity, Mark Levin, Glenn Beck and other conservative talkers. McConnell also said talk radio may have contributed to Donald Trump’s win in the party’s presidential primary.

Glenn Beck

While some talk radio hosts, such as Glenn Beck and others, have been dead set against Donald Trump, others such as Rush Limbaugh have not endorsed any candidate. That has been taken by some as a tacit endorsement of the long-time businessman, especially when there were other staunch conservatives in the field before Trump won the nomination and those conservative talkers did not come right out and support them, such as Ted Cruz.

Conservative talker Mark Levin

Here’s what McConnell had to say Tuesday, as reprinted in The Washington Examiner. “A lot of base voters have been really misled by a lot of talk show hosts and others about what’s achievable when you don’t have the White House. There is a president, the only one … who can sign something into law or veto a bill. The notion of shutting down government to defund Obamacare, even if that would achieve the result … is what my friend George Will would call the politics of futile gesture, or put another way, doing dumb things. I’m not in favor of futile gestures and doing dumb things. I think the reason people are unhappy is because of the condition of the country. And because they’ve been fed the notion that somehow a Republican Congress can overcome a Democratic president and somehow bring him to his knees when it’s not possible.”

While McConnell did not mention anyone by name, Limbaugh has repeatedly said Republicans should not be afraid to shut down the government. It’s also important to note that Limbaugh never endorses a candidate running for election in a primary despite being lobbied by many of them.

Report: Funny Business Going On In The Agency World

How much should your clients trust their advertising agencies. Well, according to a new report, not much. On Tuesday, the Association of National Advertisers released a very damaging 58-page report that hits advertising agencies hard in how they conduct business and look upon their clients.

Results of the study, conducted in conjunction with K2 Intelligence, state that there are many non-transparent business practices taking place, including “cash rebates to media agencies,” and other shenanigans.

The K2 study, conducted from October 2015 through May 2016, reveals “evidence of a fundamental disconnect in the advertising industry regarding the basic nature of the advertiser-agency relationship.” The report states that while advertisers expressed a belief that their agencies were duty-bound to act in their best interest, many agency executives said their relationship with advertisers was solely defined by the contract between the two parties.

Even more alarming was evidence in the report of agencies purchasing media on its own behalf and later reselling it to a client after a markup. The study also revealed that senior executives across the agency network were aware of, and mandated, some non-transparent business practices. Contracts for rebates and other non-transparent business practices were negotiated and sometimes signed by high-level agency executives. The study also found dual rate cards in which agencies and holding companies negotiated separate rates with media suppliers when acting as principals and as agents.

ANA Chairman Tony Pace said the report unearthed a “fundamental disconnect” between advertisers and their media agencies. “As media practices have become more complex, stewardship and oversight needs to become more precise, more thorough, and more fully transparent.”
The 4A’s, a trade association for agencies, responded to the findings in a statement that AdAge published: “A healthy and constructive debate about media buying can only happen with a bipartisan, engaged, industry-wide approach — and that is precisely the opposite of what the ANA has pursued. The immense shortcomings of the K2 report released today – anonymous, inconclusive, and one-sided – undercut the integrity of its findings. We call upon the ANA in the strongest terms to make available to specific agencies on a confidential basis all of the materials related to them.”