At eLink Media, we are used to giving clients advice as to where the market is going and how to stay 2 steps ahead in the competitive world of online advertising. For about a month, we have been advising clients that they should plan early for Q4 because the DR (Direct Response) model is now being following by traditional advertisers who have to be more ROI concious than ever.
This morning, this announcement came over the wire: Expect to see less of Snuggie and ShamWow on TV in weeks ahead as one of the best-ever markets for direct-response buyers lurches in the opposite direction.
A rapidly tightening scatter market is leaving Snuggie and other DRTV marketers in the cold as traditional advertisers snap up the remnant time slots once left to them. "This is probably the tightest time I can remember in my history with direct response," said Scott Boilen, president of Allstar Marketing Group, the company behind the Snuggie. "We were the industry that took what's left," he added. "And there's not a lot left right now."
Mr. Boilen dates the shift to July and said it's continued into the fourth quarter, an apparent outgrowth of deals made in an unusually contentious upfront, when the networks held back more scatter inventory than normal.
The tightening is a result of some established advertisers adding to their upfront buys, along with networks having to offer inventory as "make-goods" to make up for ratings shortfalls over the past years. Larry Novenstern, exec VP-director of national and local broadcast at Publicis Groupe's Omnimedia called this "a combination of slightly reduced supply and slightly increased demand."
The networks are not at all displeased to see DRTV advertisers getting knocked out of some of the roosts they've enjoyed during an economic downturn, because they typically pay lower prices than the norm. "In the malaise that was out there in the first six months of the year ... you saw a lot of direct response popping up in network prime time," said one media-buying executive. "Well, not right now."
Shorter spots with fewer cracks at affordable TV slots, Snuggie, which had launched last year behind primarily 60- and 120-second spots, has down-shifted to 10-, 15- and 30-second commercials, Mr. Boilen said, noting that other DRTV advertisers are also moving to shorter forms.
With fewer affordable slots available, Snuggie has been running shorter commercials. Gerald Bagg, CEO of Quigley-Simpson Brand Response Advertising, likewise has noticed the tightening, but believes the market is already starting to shift again and will normalize by the first quarter now that direct-response time is no longer a bargain.
Media sellers probably discounted their pricing too much in upfront negotiations, he said, leaving more marketer money on the table chasing a shrinking amount of scatter inventory now. "I think everybody overreacted to market conditions," Mr. Bagg said. "It's akin to the stock market collapsing and people, instead of holding onto their shares, selling and losing value. ... But it's a short-term hiccup, and I don't think it's going to prevail much longer."
"All the consumer-products companies and other big advertisers have renegotiated their rates, so they're able to buy more time, and things are back to where they were [before the recession] or even worse for us, because people are advertising more at the lower rates to try to make up for lost sales," said A.J. Khubani, CEO of TeleBrands, marketer of such products as PedEgg and JupiterJack.
Direct-response marketers are still being helped by retailers giving their products more prominence as other categories have softened, Mr. Boilen and Mr. Khubani said. Mr. Khubani said the "as seen on TV" category has surpassed cold and flu as the second-largest category, behind prescription drugs for major drug retailers, and the strength of DRTV products has helped make TeleBrands a vendor of the year at such accounts as Walgreens and Target in 2009.
Monday, October 26, 2009
Friday, October 23, 2009
Advertisers With Agencies or Versus Agencies....
At eLink, we believe in working with the client, not against them or ignoring their input. We ask our clients to trust us, and we in turn trust them. When that trust and rapport is not established, the whole relationship is doomed. Case in point, UPS....
Citing frustration with the client, WPP's JWT has pulled out of contention of shipping giant UPS' $200 million-plus global advertising review, according to executives familiar with the matter. Left as finalists are WPP sibling shops Ogilvy and Y&R, and Havas' EuroRSCG.
"UPS is a big business with a very big problem to tackle," said JWT Chairman CEO Bob Jeffrey in an internal e-mail. "They need to treat us or any agency as a partner and it doesn't seem that is in their culture. We've invested significant time and energy in pitching this business so we are not taking this decision lightly."
Citing frustration with the client, WPP's JWT has pulled out of contention of shipping giant UPS' $200 million-plus global advertising review, according to executives familiar with the matter. Left as finalists are WPP sibling shops Ogilvy and Y&R, and Havas' EuroRSCG.
Representatives for JWT did not immediately return calls. UPS declined to comment on "the details of the process, or about where the shortlist stands."
But JWT's withdrawal comes as a decision on UPS' new global agency of record has been delayed for several weeks -- a consequence, some people familiar with the pitch say, of procurement being heavily involved in the process. UPS' domestic incumbent, Interpublic Group of Cos.' Martin Agency, initially said it would defend the account when it went into review this spring, but later pulled out of the pitch. Whatever the outcome of the pitch, managed by AAR Partners in London, UPS will part ways with Martin and its global incumbents, McCann Erickson, Universal McCann and MRM as of early 2010.
UPS spent nearly $140 million on domestic measured media according to TNS Media Intelligence, but its outlay globally is thought to be more than $200 million.
Tuesday, October 20, 2009
eLink Media & Social Media...
Recently, Heidi Browning left MySpace to return to the agency world at Universal McCann. In a recent interview about the subject she was asked and answered the following interaction:
"What did you learn at MySpace that has equipped you for this role?"
"What did you learn at MySpace that has equipped you for this role?"
Ms. Browning: A lot, like the notion of how, when and why to think about social in campaigns and what it actually takes to deliver on that, because, as we know, a lot of people think about social media on a campaign-by-campaign basis and it's really much bigger than that. It's infused into your entire business: how you communicate with customers, how you influence your product, how you market and how you do promotions. There's so many different aspects that touch your business that are social and so taking that experience and knowledge and knowing what works and doesn't work and being able to apply that to Universal McCann's clients is going to be enormously useful.
Well that's great if the objective is brand extension or brand awareness. The concern coming from a practicality standpoint is "where in that statement does the terms results, focus, or ROI appear?" Social media may be the next new frontier, but until someone can demonstrate how an advertiser can truly monetize the traffic, this remains a shot in the dark.
Monday, October 5, 2009
eLink Media vs. "Traditional" Ad Agencies
Chief creative officers at large U.S. agencies, on average, billed $964 an hour to clients in 2008, while top account and media executives billed an average of $533 and $478 an hour, respectively.
Those are just a few of the enlightening figures contained in a soon-to-be widely available 117-page survey conducted by the 4A's that details labor billing practices at ad agencies around the country.
In the past, the trade group has compiled and distributed such information for its membership, but never shared it broadly. Tom Finneran, exec VP-agency management services at the 4A's, said the decision to spread the data comes partly because the organization has been inundated with requests for information about labor billing rates. It also wants to provide credible benchmarks for these fees -- which, for all the talk of value-based models -- are still the predominant form of agency compensation today.
"Everyone is seeing requests for proposals more and more ask for rate comparison data ... clients are looking for ways to do their due diligence and to have some kind of market-based information," said Neal Grossman, chief operating officer at TBWA/Chiat/Day in Marina Del Rey, Calif., who also serves as chair of the 4A's large-agency finance committee. At the same time, agencies are increasingly under pressure to show that the labor rates they charge are competitive with the marketplace, as clients' procurement departments play a bigger role in selecting agency partners.
The 4A's culled data for the report from its members between May and August 2009, asking them about hourly rates billed to clients in 2008 for some 130 positions across 14 service departments, such as creative, media services, account planning, research and print production.
Bigger pictureOver 230 marketing agencies of varying sizes, geographies and specialties responded to the survey, though the majority netted out to be full-service shops. Among the ones represented in the study: BBDO, TBWA/Chiat/Day, Crispin Porter & Bogusky, McCann Erickson, Digitas, MediaVest, JWT, Y&R and Carat.
It's important to note that the rates reflected in the survey are what agencies quote on their "rate cards," and the rates actually negotiated by clients may come in lower. Still, it's a pretty comprehensive snapshot of how much marketers are paying for agency labor. It offers data points for four different regions of the country, average labor-billing rates and mid-range data for rates (kind of like Olympic scoring, it knocks off the 20% of the highest rates and 20% of the lowest rates).
The survey reveals just how much geography can affect billing differences for highest-level positions, though that doesn't seem to make much of a difference for mid-level or junior positions.
In 2008, a director of client services in the New York Metro area billed an average of $453 an hour compared toh $260 an hour at agencies in the middle part of the country, while an account supervisor billed clients between $140 or $150 on average, no matter where they were located in the country.
Some other geographical differences: An executive director of account planning in the New York Metro area billed $545 vs. between $315 to $355 in other parts of the country. Research directors in the South made about $277 per hour vs $520 in the New York Metro area last year.
With a top creative, the disparity in billing rates is huge: A chief creative based in the New York Metro area billed an average of $751 an hour last year -- more than double what a chief creative in other parts of the Eastern U.S. or in the South billed, at $319 an hour. In the central part of the country, a head creative billed an average of $420 an hour, and in the West, an average of $461.
Not typicalDavid Beals, president-CEO at industry consultancy Jones Lundin Beals, estimates that "very senior positions at large agencies are rarely billed out for more than a percent or two of the person's time ... if a person at this level bills more than 25 to 50 hours of time to a given client, it would be rather unusual for most of the agency's client relationships."
Based on the 4A's survey, that nets out to a minimum of more than $18,000 billed to a client for a top creative in the New York Metro area.
For all the talk about media agencies becoming a more valued partner during the recession, they're not compensated nearly as much as other positions: An executive media director at a media agency bills a mid-range high of $500 and low of $281, while a media buyer makes a mid-range high of $100 and a low of $65.
According to Mr Beals, the numbers track with agency labor-compensation trends for several years: "Typically, the creative folks make the most money on a per-hour basis -- though sometimes a really good strategic planner will be right up there too -- followed by account services, then media services tend to be the lowest paid."
As digital talent continues to become more sought-after, the trend is probably more in a state of flux, Mr. Beals said. In 2008, the range of hourly billing rates at digital specialist agencies was between about $400 an hour for the senior-most roles and $85 an hour for the most junior.
Those are just a few of the enlightening figures contained in a soon-to-be widely available 117-page survey conducted by the 4A's that details labor billing practices at ad agencies around the country.
In the past, the trade group has compiled and distributed such information for its membership, but never shared it broadly. Tom Finneran, exec VP-agency management services at the 4A's, said the decision to spread the data comes partly because the organization has been inundated with requests for information about labor billing rates. It also wants to provide credible benchmarks for these fees -- which, for all the talk of value-based models -- are still the predominant form of agency compensation today.
"Everyone is seeing requests for proposals more and more ask for rate comparison data ... clients are looking for ways to do their due diligence and to have some kind of market-based information," said Neal Grossman, chief operating officer at TBWA/Chiat/Day in Marina Del Rey, Calif., who also serves as chair of the 4A's large-agency finance committee. At the same time, agencies are increasingly under pressure to show that the labor rates they charge are competitive with the marketplace, as clients' procurement departments play a bigger role in selecting agency partners.
The 4A's culled data for the report from its members between May and August 2009, asking them about hourly rates billed to clients in 2008 for some 130 positions across 14 service departments, such as creative, media services, account planning, research and print production.
Bigger pictureOver 230 marketing agencies of varying sizes, geographies and specialties responded to the survey, though the majority netted out to be full-service shops. Among the ones represented in the study: BBDO, TBWA/Chiat/Day, Crispin Porter & Bogusky, McCann Erickson, Digitas, MediaVest, JWT, Y&R and Carat.
It's important to note that the rates reflected in the survey are what agencies quote on their "rate cards," and the rates actually negotiated by clients may come in lower. Still, it's a pretty comprehensive snapshot of how much marketers are paying for agency labor. It offers data points for four different regions of the country, average labor-billing rates and mid-range data for rates (kind of like Olympic scoring, it knocks off the 20% of the highest rates and 20% of the lowest rates).
The survey reveals just how much geography can affect billing differences for highest-level positions, though that doesn't seem to make much of a difference for mid-level or junior positions.
In 2008, a director of client services in the New York Metro area billed an average of $453 an hour compared toh $260 an hour at agencies in the middle part of the country, while an account supervisor billed clients between $140 or $150 on average, no matter where they were located in the country.
Some other geographical differences: An executive director of account planning in the New York Metro area billed $545 vs. between $315 to $355 in other parts of the country. Research directors in the South made about $277 per hour vs $520 in the New York Metro area last year.
With a top creative, the disparity in billing rates is huge: A chief creative based in the New York Metro area billed an average of $751 an hour last year -- more than double what a chief creative in other parts of the Eastern U.S. or in the South billed, at $319 an hour. In the central part of the country, a head creative billed an average of $420 an hour, and in the West, an average of $461.
Not typicalDavid Beals, president-CEO at industry consultancy Jones Lundin Beals, estimates that "very senior positions at large agencies are rarely billed out for more than a percent or two of the person's time ... if a person at this level bills more than 25 to 50 hours of time to a given client, it would be rather unusual for most of the agency's client relationships."
Based on the 4A's survey, that nets out to a minimum of more than $18,000 billed to a client for a top creative in the New York Metro area.
For all the talk about media agencies becoming a more valued partner during the recession, they're not compensated nearly as much as other positions: An executive media director at a media agency bills a mid-range high of $500 and low of $281, while a media buyer makes a mid-range high of $100 and a low of $65.
According to Mr Beals, the numbers track with agency labor-compensation trends for several years: "Typically, the creative folks make the most money on a per-hour basis -- though sometimes a really good strategic planner will be right up there too -- followed by account services, then media services tend to be the lowest paid."
As digital talent continues to become more sought-after, the trend is probably more in a state of flux, Mr. Beals said. In 2008, the range of hourly billing rates at digital specialist agencies was between about $400 an hour for the senior-most roles and $85 an hour for the most junior.
Thursday, October 1, 2009
eLink Media & Display (or lack thereof)...
The number of people online who click display ads has dropped 50% in less than two years, and only 8% of internet users account for 85% of all clicks, according to the most recent "Natural Born Clickers" study from ComScore and media agency Starcom. As the pool of people who click on banner ads rapidly decreases, it begs the question: Is the long-used click-through rate now officially useless?
Clickers only represent 16% of U.S. internet users, according to ComScore data from March. The study initially found that 32% clicked on display advertising in July 2007. If that first study, released last year, crystallized skepticism that click-through rates weren't the be-all end-all success metric for display, this most recent report might just be the last nail in the digital coffin.
What's more, the 8% of internet users that compose a majority of clicks is also down by half from the last study, which found 16% are responsible for 80% of clicks. The 2008 study found half of all clicks come from lower-income young adults, so prizing clicks ignores the vast majority of internet users, especially the types of users many marketers want to reach. This year, the study focused more on alternative measurement, suggesting that a low number of clicks doesn't necessarily mean banners don't work, but that marketers are looking at the wrong success metrics.
From client studies, ComScore found that display ads, regardless of clicks, generate significant lift in brand-site visitation, trademark search (searching for, say, Toyota or Prius) and both online and offline sales among those exposed to the ads. Within one week, consumers exposed to a display ad were 65% more likely to visit the advertiser's site than users who never saw the ad. Even at four weeks, people exposed to displays ads are 45% more likely to visit the brand's site.
"The click has always been of dubious value," said Joshua Spanier, director of communication strategy at Goodby, Silverstein & Partners. "But clicks are easy to understand and easy to measure. We still know that display advertising has unequivocal value; your search performance improves as well. Together, search and display are much stronger than apart."
So what your agency is basically telling you is that it's not that display doesn't work, it's that the entire value of the measurement system is wrong. But keep dumping money into a channel that now delivers very little to no metricable results.
Clickers only represent 16% of U.S. internet users, according to ComScore data from March. The study initially found that 32% clicked on display advertising in July 2007. If that first study, released last year, crystallized skepticism that click-through rates weren't the be-all end-all success metric for display, this most recent report might just be the last nail in the digital coffin.
What's more, the 8% of internet users that compose a majority of clicks is also down by half from the last study, which found 16% are responsible for 80% of clicks. The 2008 study found half of all clicks come from lower-income young adults, so prizing clicks ignores the vast majority of internet users, especially the types of users many marketers want to reach. This year, the study focused more on alternative measurement, suggesting that a low number of clicks doesn't necessarily mean banners don't work, but that marketers are looking at the wrong success metrics.
From client studies, ComScore found that display ads, regardless of clicks, generate significant lift in brand-site visitation, trademark search (searching for, say, Toyota or Prius) and both online and offline sales among those exposed to the ads. Within one week, consumers exposed to a display ad were 65% more likely to visit the advertiser's site than users who never saw the ad. Even at four weeks, people exposed to displays ads are 45% more likely to visit the brand's site.
"The click has always been of dubious value," said Joshua Spanier, director of communication strategy at Goodby, Silverstein & Partners. "But clicks are easy to understand and easy to measure. We still know that display advertising has unequivocal value; your search performance improves as well. Together, search and display are much stronger than apart."
So what your agency is basically telling you is that it's not that display doesn't work, it's that the entire value of the measurement system is wrong. But keep dumping money into a channel that now delivers very little to no metricable results.
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