Why Digital Agencies Are Indeed Ready to Lead

They Understand the Technology, the Speed of Iteration and Analytics

By Jacques-Herve Roubert 

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Jacques-Herve Roubert

Over the past 18 months, a great debate has consumed our industry: Are digital agencies poised to sit at the head of the advertising table? Depending on whom you ask and what you read, the answer seems to flip flop — with a majority of people still having reservations and making claims that digital agencies aren’t ready to lead.

So why does the debate continue? Does offline or online really matter to an oblivious consumer who’s only interested in “no-line” communications? Are we spending too much time focusing on who should lead and not enough asking: What’s next?

Ana Andjelic’s DigitalNext post, provocatively titled “Why Digital Agencies Aren’t Ready to Lead,” mentions several reasons why digital agencies aren’t ready to lead, one of which was their lack of experience in the business (as compared with the “decades of experience” that traditional agencies are known for). I’m sure there are instances where decades of experience can directly translate into success, but there are certainly instances (uh, Lehman Brothers?) where deep roots had no bearing on their ability to produce — and produce well. Furthermore, a certain percentage of the individuals now working and thriving in digital agencies came from traditional agencies.

Additionally, most of the world’s most ingenious inventions were not created overnight, but took years of hard work, research, observation, trial and error, and collaboration to fine tune. The digital ecosystem has required much of the same exploration — and, in most cases, into technologies that are new to all of us. As James March himself said, “Exploration involves being an amateur for a while, but only as a step on the way to being a professional.”

And while the structure of an interactive agency may often mimic “one big crazy family” (by the way: Whose family isn’t crazy?), how could making sure everyone’s opinion is heard be a bad thing? Most interactive agencies subscribe to the notion that you never know where the big idea or concept will come from. Sometimes the big idea can come from the exploration of a new technology or method that enhances consumer connection.

Here’s why:

• That was then, this is now. Like it or not, the days of the ingenious, 30-second TV spot are over. Today’s creative ingenuity lies within the idea, the technology, the concept, the innovation and, perhaps most important, the Holy Grail: consumer connection. Word of mouth is more prevalent than ever and interactive communities have an increasingly louder and more influential voice and are stronger (and sometimes the only) sources of breaking news stories. No one understands this better — nor is better equipped to handle the swift demands required — than the digital agency.

   

• Teaching an old dog new tricks. The “new trick” is immediacy. It’s about faster response times and the concept of immediacy. E-mail, IM, Twitter, Facebook, cellphones — all of these technologies set the stage for consumers wanting and expecting immediate responses, not to mention, immediate access to products and services. Traditional advertising agencies are not adapting to this mentality because they are still working with processes and organizational structures that were developed in a time when the internet and the concept of immediacy simply did not exist.Digital agencies understand that brands are being held to higher-than-ever consumer expectations. The plethora of data we can garner from a $50,000 media buy can leave traditional agencies’ heads spinning with insight and analysis. The truth of the matter is: Interactive agencies are forcing traditional agencies to integrate with digital media to better track and measure campaign results through custom URLs, short codes, etc.

   

• Kickin’ it old school. Not only are the days of the 30-second TV spot gone, so too are the traditional advertising agency gurus like David Ogilvy and Bill Bernbach. Today, those figures have been replaced, instead, by financially backed entities. Rather than exploration and exploitation, digital agencies need their own gurus and legends that can lead by example.

Five or 10 years ago, I might agree with the argument that digital agencies weren’t ready to lead, but after sitting at the table with other agencies for the past decade — traditional, branding, public relations, marketing — it’s clear that digital agencies have proven their value, not to mention their ability to innovate, inspire, and create the big idea.

Perhaps the synergy and balance between exploitation and exploration is off kilter for digital agencies, but more and more we’re starting to see the agency structure itself change with new hires in technology and social media. And marketers are noticing:

• According to Media magazine, AKQA was named the lead agency for Nike India earlier this year.
• Precor named Ascentium its agency of record in October 2009. According to Forrester’s Q2 2009 Interactive Agency Wave, Ascentium “received the highest client satisfaction scores in this year’s review.” The assignment with Precor includes strategic planning and execution of all offline and online campaigns.
• McAfee hiring Tribal DDB as its agency of record in 2008. This assignment included all TV, print, outdoor, and digital.

The balance may not be there today, tomorrow or next month. The truth of the matter is digital agencies have earned their right to sit at the head of the table because they’ve brought what consumers and marketers are looking for: new innovations in measurement; flexibility and nimbleness; and, most importantly, ideas that bring what a magazine spread or 30-second TV spot cannot.

ABOUT THE AUTHOR

Now president-CEO of Nurun, a global interactive marketing agency, Jacques-Hervé Roubert began his career in advertising at Havas Conseil and subsequently held senior executive positions with BDDP and Young & Rubicam.

Digital Marketing Factbook: A Glimpse Inside

Source: MarketingProfs.com

How US consumers spend their time online has shifted significantly in the past five years, according to Online Publishers Association (OPA) data presented in the Digital Marketing Factbook (Q4 2009) recently published by MarketingProfs.

The Digital Marketing Factbook, designed to be a comprehensive source of data and research for online marketers, includes chapters on email, search, and social media—with 144 pages of findings, including 110 charts and graphs from 60+ sources.

In 2004, US consumers spent 42% of their online time on communications-related activities such as reading and sending email, whereas now they spend only 27% of their time doing so, according to the OPA data cited in the Factbook.

What’s filled the gap? Community-focused social networking sites such as Facebook, which now account for 13% of users’ time, up from virtually nothing in 2004:

Key findings:

• In addition to devoting more of their online time to community sites, consumers today are spending more time on content sites and search, and less time on commerce sites, than they were in 2004.
• As for what specific activities US adults perform online today:
  —90% send or read emails
  —88% use search engines
  —76% check the weather
  —75% buy a product
  —72% get news
  —66% to make or buy a travel reservation
  —60% to look for news or information about politics
  (According to April 2009 data from the Pew Internet & American Life project included in the Factbook.)

Overview

The “Online Overview” that opens the Digital Marketing Factbook presents the information above, as well as data on Internet usage worldwide, typical marketing budgets, most successful and most used tactics, and marketing ROI—including, in all, 21 charts.

Following the overview are chapters on email, search, and social media marketing, all of which are sampled in this article.

“The Digital Marketing Factbook is more than just a compendium of charts. Marketers can use this information-packed resource to plan their online marketing campaigns and implement go-to-marketing tactics,” said MarketingProfs President Roy Young.

“Armed with data regarding consumers’ online habits, preferences and inclinations, you’ll be able to best craft your digital message to reach loyal customers, reach new ones and retain them.”

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The Factbook is available for purchase by nonmembers for $199—or $119 for MarketingProfs Premium Members. Basic Members (just provide your email address to become one) can obtain a copy for $159 until Saturday, Oct. 31.

 

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What Marketers Say

 

Senior marketers were asked which components of their current digital marketing programs—search, email, display advertising, social networking, and mobile advertising—delivered the best results. Only 11% cited social networking—an especially striking figure when you consider that consumers spend 13% of their online time on social networks, and this percentage is likely to grow.

Here’s what senior marketers said of the results they get from components of their campaigns:

Key findings:

• Search marketing delivers the best results (33%); search and email still constitute the core of a solid online media plan.
• Mobile advertising… whoa.

Email Marketing

Nearly everyone uses email, and this medium is repeatedly ranked as one of the most cost-effective (and effective) forms of marketing.

The Email Marketing section of the Digital Marketing Factbook covers how, when, and why consumers and businesses use email, as well as providing marketing benchmarks, such as average open rates, that can help you judge your own efforts. In all, this section of the Factbook contains 18 charts.

What Consumers Say

Global email users were asked the following question: As a result of opening permission-based emails, how often do you normally take each of the following actions?

Key findings:

• Consumers in Asia appear more responsive to email offers than those in other regions, though a higher percent of consumers in North America would enter a sweepstakes or promotion.
• Asian consumers are also more likely to forward emails than consumers based elsewhere: 51% forward emails, compared with 39% of North Americans and 32% of Europeans.
• In another question, consumers were asked about what makes a subject line effective. The results showed that discount offers have universal appeal, but many subject lines are much more popular in Asia than in Europe or the United States (familiar brand names, new product announcements).
• European and North American consumers respond much the same to subject lines, although Europeans are more likely than Americans to find free product offers attractive (66% vs. 57%).

What Marketers Say

Looking at the most important email marketing initiatives that businesses consider implementing, we see that the top-ranked ones reflect a desire to improve relevancy. Some 66% of respondents are looking to increase the performance of their campaigns and 52% are looking to improve segmentation and targeting:

Other findings:

• According to a survey of 623 email marketers, almost 50% of respondents report that sending emails at midday (10 a.m. to 2 p.m.) is the best time of day to do so.
• The start of the business day (6 a.m. to 10 a.m.) is considered second best at 31.5%. Though every emailer should test for himself or herself what the best time of day is, this can help guide initial efforts.

Search Engine Marketing

The first stop for just about any type of information imaginable is an online search. This section of the Digital Marketing Factbook is full of information about how consumers seek information and how businesses are ensuring that their potential customers find it: e.g., which search engines are the favorites worldwide, how those favorites perform in different regions, and how to improve search marketing efforts.

This section of the Factbook contains 34 charts.

What Consumers Say

A survey of 320 Internet users found that search engines were the most valuable information source for someone making a purchasing decision:

Key findings:

• Survey respondents ranked online rating systems second and discussion forums third.
• Consumers ranked social networking sites low among the options; it will be interesting to see whether consumers come to rely more on these sites in the months and years ahead.

Not all searches take place on search engines. Though not nearly as large as Google, a site like eBay hosts about as many monthly searches as Microsoft or Ask. With such volume, search marketers should be taking these sites into consideration when planning PPC strategies:

Other findings:

• Data from comScore suggests an interesting trend: a steadily increasing length in the phrases people use when searching for something. This means that the long tail of lesser-used, but more productive search phrases of 3+ words is growing. More exact searches mean more efficient targeting. More sophisticated usage as search becomes more mainstream is the most likely factor responsible.
• Hitwise data based on a sample of 10 million U.S. Internet users shows the same phenomenon: the length of search queries has increased over the past year. Searches of eight or more words increased the most (18%), although two-word searches made up the majority of searches, amounting to 23% of all queries in 2009. Understanding the middle of the long tail is a key part of maximizing the efficiency of a PPC campaign.

What Marketers Say

The search marketing firm SearchIgnite put together an aggregate analysis of its clients’ activity in Q2 2008 compared with Q2 2009 to see the effects of the market downturn. What it found is that its clients have been able to get more PPC impressions and clicks while spending less.

For marketers with intact budgets, this is good news, because it means decreased competition and more cost-efficient PPC ads:

Social Media Marketing

The Social Media Marketing section of the Digital Marketing Factbook features the latest stats on usage of social media, including data for how usage differs across various demographics. Learn about who is reading blogs, chatting with friends or business contacts, putting up a blog, tweeting or creating a Facebook or MySpace page.

This section contains 37 charts.

What Consumers Say

Of the 418 social network users surveyed online by Knowledge Networks, almost one-quarter “sometimes” turn to social media for information on travel or travel services and “sometimes” got purchase advice on clothing or shoes, but very few do so “regularly.”

Other findings:

• According to BIGresearch’s Simultaneous Media Usage Survey of 22,000 consumers, women are far more active on social networks than men, with the exception of the career-oriented LinkedIn.
• According to a study of 711 women social network users, nearly half of all social networking women belong to four or more networks. Based on focus groups conducted by ShesConnected, the primary reason given for joining multiple sites was “no one site meets all of my needs or interests.” This insight may be particularly useful for marketers trying to help meet certain product-specific information needs.
• Some 57% of white-collar Baby Boomers report they use the networking site LinkedIn, while another 55% have a Facebook profile. This data comes from a survey of 1,660 business professionals age 45 to 63.

What Marketers Say

According to a survey of CMOs, 65% of companies use social networking sites for marketing. Those firms that do use social media do so toward a wide range of marketing objectives:

About the data: The Digital Marketing Factbook, designed to be a comprehensive source of data and research for online marketers, includes chapters on email, search, and social media—with 144 pages of findings, including 110 charts and graphs from 60+ sources.

The Factbook is available for purchase by nonmembers for $199—or $119 for MarketingProfs Premium Members. Basic Members (just provide your email address to become one) can obtain a copy for $159 until Saturday, Oct. 31.

A Look Ahead at the Money in the Communications Industry

By STEPHANIE CLIFFORD

IN 2009, communications spending is likely to show a 1 percent decline for the year, the first notable decline in at least four decades. In five years, advertising spending in magazines will finally have rebounded after five years of decline — but at $9.8 billion, it will still be nowhere near the $12.9 billion it was in 2008. And by 2013, the video game market will be almost the size of the shrinking newspaper industry.

Multimedia

At least those are some of the predictions in the Communications Industry Forecast from the private equity firm Veronis Suhler Stevenson, scheduled for release on Tuesday.

Veronis Suhler invests in information, education and media, and those fields are what it measured in the forecast, the 23rd annual version. The company looks at the total spending on communications, including advertising, spending from consumers or businesses and items like retransmission fees for television. It includes traditional and new media along with information providers to businesses (like Lexis-Nexis), trade shows and education and training information, making its analysis broader than most other media reports.

In 2008, total communications spending actually increased 2.3 percent, to $882.6 billion, but that was the sector’s slowest growth rate since 2001.

Advertising, as is clear by now, is contracting. Spending dropped 2.9 percent in 2008, to $210 billion. For 2009, Veronis Suhler expects advertising to end up declining 7.6 percent, with a 1 percent decline to follow in 2010. Advertising will again grow in 2011, the firm projects.

The segments where advertising will decline most rapidly in 2009, according to the firm’s estimates, are newspapers (down 18.7 percent, to $35.5 billion); consumer magazines (down 14.8 percent, to $11 billion); radio (down 11.7 percent, to $15.8 billion); and broadcast television (down 10.1 percent, to $43.0 billion). Veronis Suhler expects a few sectors to increase their advertising dollars this year, including mobile (up 18.1 percent, to $1.3 billion) and the Internet (up 9.2 percent, to $23.8 billion).

Still, advertising is a decreasingly important part of the communications sector, compared with the other overall categories Veronis Suhler looks at — marketing services, consumer and products and information sold to businesses.

“What’s really stark is that advertising, which not so long ago was the biggest part of the overall pie, is now the smallest part of the pie and is shrinking at a pretty good clip,” said James P. Rutherfurd, executive vice president and managing director of the firm.

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Even assuming an economic recovery over the next five years, “newspapers, consumer magazines, TV and radio are shrinking and will not, in that period of time, get back to what they saw before,” he said.

John S. Suhler, the firm’s co-founder, president and general partner, said that while the declines for print media were severe, it was not a death sentence.

“Will there arguably be, maybe, fewer of them? Possibly,” he said. “Will some markets only be served by an online news service? Possibly. But these businesses are going to be around for many, many years to come, if not decades or multiple decades. It’s just their growth prospects are diminished.”

Despite all the bad news about the media industry, it is expected to be the third-fastest-growing economic sector over the next five years, after mining and construction. Almost none of that growth is forecast to come from shrinking traditional media, however. Instead, it will be drawn from areas like word-of-mouth marketing and public relations (with a 9.2 percent compound annual growth rate from 2008 through 2013), branded entertainment (9.3 percent) and the Internet and mobile devices (10.2 percent).

The institutional category, under which Veronis Suhler puts business information services like Bloomberg and software or text providers to schools, became the largest part of the media world in 2007. It will be the fastest-growing sector through 2013, Veronis Suhler estimates.

In the report, Veronis Suhler breaks down the expected performance of the elements of each area of marketing and communications. Some of the fastest-growing ones are creative strategies that have lately gained favor among marketers. They include paid product placement, with a compound annual growth rate from 2008 to 2013 of 17.6 percent; e-mail marketing and in-game advertisements (both 18.5 percent); mobile advertising outside of texting (33 percent); paid interactive television gaming (38.7 percent); mobile advertising and content tied to broadcast television (35.5 percent); mobile gaming and advertising (46.2 percent); and Internet and mobile home video downloads (34.4 percent).

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An interesting shift occurred in 2008, the report said. For the first time, consumers spent more time with media they paid for, like books or cable television, than with primarily ad-supported media, like newspapers and magazines.

“It’s not that people aren’t willing to pay for content, because they are paying for video games, fantasy sports information, music downloads,” Mr. Rutherfurd said. “There’s just some content they’re not willing to pay for.”

Over all, consumer media use in 2008 was flat from 2007, at 3,545 hours per person for the year. Though people spent less time with broadcast TV, radio, print media and out-of-home media (like billboards or bus shelter ads), they spent more time online, with mobile media, and paid television like cable, premium channels and video on demand.

Hollywood will have troubles ahead, the report suggested. DVD sales, a profit engine for the industry, declined 5.8 percent in 2008, and they are expected to shrink to $ 19.5 billion by 2013, well below 2008’s level of $24 billion. On the positive side, box-office ticket sales, which were up 1.7 percent in 2008, are expected to grow 8.3 percent this year. While they will dip and rise over the next few years, the overall trend is positive, with admissions expected to grow to $10.4 billion in 2013, up from $9.8 billion in 2008.

Advertising Will Change Forever

Digital Spending Will Nearly Double in 5 Years, But Ad Budgets Won’t

Posted by Josh Bernoff on 07.20.09 @ 02:30 PM

Josh Bernoff

Here’s one of the things we do at Forrester Research: we interview as many marketers as we can about their plans, identify trends and project future likely conditions, and then we put together some numbers to make a projection. If you’ve ever seen a Forrester projection, it comes from a process like this.

This means that inside every projection is an idea or ten about the future. Those ideas can be powerful, and they come from research with marketers and consumers.

My colleague at Forrester, Shar Van Boskirk, just published our five-year interactive marketing forecast. The idea inside it is the real kicker.

In this recession, marketers have learned that interactive marketing is more effective, and advertising less effective, per dollar spent. While budgets for online have decreased, they decreased less than other budgets. Six out of ten marketers we surveyed agreed with the statement “we will increase budget for interactive by shifting money away from traditional marketing.” Only 7% said “we have no plans to increase our marketing budget.”

Unlike the last recession, digital marketing is no longer experimental. Now it looks more like advertising is inefficient, relative to digital. More than half of the marketers we surveyed said that effectiveness of direct mail, TV, magazines, outdoor, newspapers, and radio would stay the same or decrease within three years. In contrast, well over 70% expected the effectiveness of channels like created social media, online video, and mobile marketing to increase.

The result is that digital, which will be about 12% of overall advertising spend in 2009, is likely to grow to about 21% in five years. Along the way overall advertising budgets won’t grow much.

This is huge.

It means we are all digital marketers now, since digital is at the center of many campaigns anyway.

It means media is in trouble, or at least in the middle of a transformation. For example, online video ads, which will be about $870 million this year, will grow to over $3 billion in 2014. What will this do to networks plans to put more of their shows online in places like Hulu. How will it accelerate some newspapers plans to become more and more centered around online?

And it means that social “media,” which will account for $716 million this year between social network campaigns and agency fees, will generate $3 billion in five years. And this doesn’t even count displays ads on social networks (which are in the display ads category.) Of all the parts of digital marketing, social network marketing one is poised for the most explosive growth.

Pundits have been declaring the end of mass media and advertising for years now. From my 14 years of experience analyzing this stuff, I’ve learned that things die very slowly, but there are real trends you can see. If you’re in advertising, you’d better learn to speak digital, because that’s the way the world is going.

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Josh Bernoff is the co-author of “Groundswell: Winning in a World Transformed by Social Technologies,” a comprehensive analysis of corporate strategy for dealing with social technologies such as blogs, social networks and wikis, and is a VP-principal analyst at Forrester Research. He blogs at blogs.forrester.com/groundswell.

Consumers rarely watch TV alone

EA takes Grand Slam Tennis to Facebook

Source: Adverblog.com

Advergames are moving to Facebook or, better, are moving where people are. EA Games has just launched “Quick Challenge”, an interactive Facebook application, to support the release of its new title: EA Sports Grand Slam Tennis.

Quick challenge is a revised version in a tennis mood of the popular game (among our granpas’) “rock, paper, scissors”. The gaming mechanism is therefore pretty straightforward: you pick an avatar (both Rafa Nadal and John McEnroe are available!), you select your three shots: lob, slam, drop shot and then watch it play out against your opponent who gets challenged within Facebook itself.

Once your friend has accepted the challenge, the cool part begins, as you see the three shots in action with real game images taken from the videogame (and this is a nice new way to experience the game they want you to buy).

I must say that I’m always rather skeptical when I receive invites from friends on Facebook, and I tend to ignore them. I believe the brand can really make the difference in driving acceptance of such invitations. In three days the game has been played over 40.000 times, and we can definitel expect it to go viral, given the quality of the execution and the ease of its mechanism.

The agency is Wieden + Kennedy Amsterdam.

Tangled Web of Technology Can Be Both Boon and Bane

J&J, Others Wrestle With Ways to Localize Broad Digital-Marketing Efforts

by Abbey Klaasen

NEW YORK (AdAge.com) — Twenty-five million births a year make India a fertile market for BabyCenter. But until recently the Johnson & Johnson-owned company reached fewer than 5% of Indian parents — its scope limited by the country’s low internet penetration.

Its solution: the phone. India’s mobile-subscriber base jumped almost 50% in the past year to reach 38% of the country’s population. But it wasn’t as simple as creating a mobile app or WAP site. Due to low mobile-web access and, in some areas, literacy, BabyCenter opted for an old-school approach: a “voice portal,” whereby Indian moms call a local number to hear audio versions of the site’s newsletters and other due-date-specific information.

Some advice

TEST AWAY: If Profero CEO Wayne Arnold was a global CMO, he’d “be using places like Korea and Japan as a test bed. Put a quarter-million dollars into testing in Korea and save $10 to $12 million.” GIVE YOURSELF TIME: Hinde Pagani, senior mobile-marketing manager, Coca-Cola: “The key learning is that when you do global campaigns with mobile, because of the differences in technologies in each region, you have to almost double the time to test your campaign.” BEWARE BLEEDING-EDGE: “That woman in the Third World who doesn’t have an internet connection but has a phone — and maybe doesn’t even have a landline? That phone can be a far more transformational device than the iPhone is for a person here,” said Jon Stross, general manager, BabyCenter.

The undertaking is indicative of the challenges media companies and marketers face when trying to package a global mission into local experiences. For marketers with this strategy, technology is both help and hindrance. Sure, it gives marketers new opportunities to reach places where even TVs aren’t found and to forge personal relationships with far-flung consumers. But it also requires them to be infinitely more flexible, adapting to extreme variations in consumer behavior and technological capability and literacy.

“All these markets are so different, you need local expertise. You can have the same brand, focusing on same types of population, but you have to use different products,” said Alexandre Mars, CEO of Publicis’ PhoneValley. He’s not alone in calling this approach “glocal” — it’s a global mission but local execution.

With 4 billion phones worldwide and only 1 billion internet users, mobile especially is perceived as a great enabler for global marketers. In many developing countries, for example, access to mobile phones is lapping online services, said Allison Mooney, VP-director of trends and insights at MobileBehavior, Omnicom Group’s mobile shop. And people’s behavior changes depending not only what kind of a phone they have — smart or “dumb” — but also on their other media-access points: Do they also have a landline or a TV or access to the PC web?

Localizing digital campaigns
Wayne Arnold, CEO of Profero, has worked with several global brands to localize digital strategies. One example he cites is Filipinos, who are among the biggest users of mobile data. So when Profero targeted Filipino expats in Hawaii for global client Western Union, it used mobile-based applications and CRM programs, even though few U.S. campaigns would yet make mobile such an integral strategy.

Likewise, the company’s work for Guinness reflects market considerations: Its overarching strategy is to be seen as fun and innovative and, in Tokyo, a city with heavy GPS penetration (and confusing street-grid system), that mission manifested itself as a pub-finder-and-directions tool.

The list could go on: In Peru, a gaming strategy is crucial to any marketer using digital, since most internet usage occurs in cafés and gaming is a core activity within that access point. In Brazil, personalization is a huge trend.

“You can create an overall marketing framework, but there are these anomalies,” Mr. Arnold said.

Marketers like Unilever with its Axe brand, Coca-Cola and Puma are among those working within global frameworks but executing locally. Coca-Cola launched a major holiday push that had consumers sending each other Coke-theme holiday cards via the mobile phone and social networks in markets as technologically diverse as South America, South Korea and Japan. In places such as Brazil, Argentina and Chile, it pushed the social-networking application and concentrated on SMS on the phone. In Europe it offered downloadable technologies and custom “ringbacks,” something not yet implemented outside that region.

For BabyCenter, even low-tech countries provide insights. The challenges the media company faces in India, said Jon Stross, general manager of BabyCenter International, is not just an Indian problem. “If 80% of moms in the U.S. are online, that means one in five isn’t,” he said. “And the one in five makes up a larger percentage of the pregnancies in trouble.”

‘Passion for Digital’ Pumps P&G’s Spending

Marketer Doubles Outlay for Display Despite Trim in Media Dollars Overall

by Jack Neff

BATAVIA, Ohio (AdAge.com) — The first quarter of 2009 will be remembered for many things, mostly bad. But it may also mark a turning point when the world’s biggest marketer and its broader industry finally got serious about digital media.

Even as Procter & Gamble Co. cut measured U.S. media spending 18% overall last quarter, it more than doubled spending on internet display ads, according to data from TNS Media Intelligence.

Digital has been a focus area for Marc Pritchard since he became global marketing officer last year and as he prepares to assume broader duties over design and PR as global brand-building officer next month. “I’ve got a lot of passion for digital,” Mr. Pritchard said. “It really is such an incredible way to connect with consumers and really have much deeper ongoing relationships with them. … Our media strategy is pretty simple: Follow the consumer. And the consumer is becoming more and more             engaged in the digital world.”

Or course, the jump is relative. P&G’s big spike in internet spending, coupled with such factors as a whopping 44% decline in network-TV spending, still only brought online display to 4% of P&G’s $672 million quarterly measured outlay. And because measured-media data don’t capture many of the fastest-growing digital-spending buckets, such as online-video ads, behaviorally targeted ads, mobile or search, P&G’s digital outlay as a whole probably exceeded 5% of its media spending last quarter.

But the implications beyond the quarter are huge. The ramp-up in digital dollars means many P&G brands are finally spending enough to have a measurable impact on sales, which could allow them to justify even more spending on digital down the road.

Time to model
Once a brand spends about 5% of its media on digital or any medium, it’s usually possible to apply the package-goods industry’s return-on-investment measurement of choice: marketing-mix modeling, said Gregg Ambach, managing director of the Cincinnati office of Analytic Partners, which handles such modeling for P&G and others.

“The general trend is that internet is becoming a bigger part of the advertising budget,” said Mr. Ambach of his package-goods clients. “And we’re definitely measuring more and more of it.”

P&G isn’t the only package-goods titan suddenly spending bigger online — just the biggest. Rival Johnson & Johnson hiked its measured spending overall last quarter 28%, but it nearly doubled its internet-display spending to $15.5 million. That brought J&J, like P&G, to 4% of its $397 million outlay.

More broadly, consumer-package-goods marketers began a runup in digital spending last year by one measure. The Interactive Advertising Bureau, which gets data from digital media companies via PriceWaterhouseCoopers, estimated that CPG digital spending shot up more than 60% last year to $1.5 billion, increasing its still-modest share of all digital media spending by two percentage points in a year to 6%.

Executives familiar with Google and Yahoo said spending by CPG companies on search rose double- to triple-digit percentages last year and that 24 of the 25 biggest players spend heavily on behaviorally targeted ads, whose cost isn’t fully reflected in measured media.

Fast-growing segment
Better data ultimately will be what it takes to get package-goods brands to spend more on digital. Gian Fulgoni, chairman of ComScore and former CEO of Information Resources Inc., makes the analogy to the advent of scanner data in the 1970s. When CPG marketers suddenly could see the full impact of trade promotion, they started spending more on it, he said.

More recently, he’s been beating the drum for stepped-up CPG spending on digital, and begun incorporating supermarket spending data from loyalty-card programs via Dunnhumby to show sales lifts from digital campaigns. Preliminary results from a study of two dozen CPG brands show that digital ads generate sales lifts better than those in past studies of TV ads in IRI test markets.

Mr. Fulgoni isn’t quite ready to call an inflection point for the industry, but he said CPG is the fastest-growing segment of ComScore’s client base.

A change in the way TNS tracks internet spending accounted for some of P&G’s hike in measured spending last quarter. In March, it added 600 websites to the 3,000 it previously tracked, picking up many niche sites with monthly visitors of around 500,000. Even without that impact, P&G internet spending still more than doubled, up 146% in January and February vs. the same period last year.

But one thing particularly noteworthy for P&G is that it wasn’t just a few brands getting in on the digital act. The spending also had considerable breadth, with a growing number of small outlays by several brands that weren’t active in digital last year.

Mixed results
Several brands stood out as making digital a particularly large part of their mix last quarter. Those include CoverGirl, P&G’s biggest spender on internet display, with about 10% of its $50 million media outlay going there via work from WPP Group’s G2i, primarily for Outlast lip stain.

Bounce’s $2.4 million outlay on internet display last quarter from Publicis Groupe’s Digitas made up 35% of its media spending. Vicks put 45% of its $8.7 million quarterly spending on the internet via WPP’s Bridge Worldwide, while bigger-spending Head & Shoulders put 18% of its $19.7 million outlay into internet display from Digitas.

The results appear mixed. CoverGirl, P&G’s biggest internet spender, continued its run as one of P&G’s best-performing brands of late. And it gained the most share where it focused its digital spending: in lipstick, up two points last quarter, according to IRI data from Deutsche Bank.

PRITCHARD: Says P&G is using marketing-mix modeling to increase its media weight more productively.

But Bounce, faced with rising sales of value and private-label brands, lost 2.4 share points. P&G also lost share in cough and cold, but Head & Shoulders appeared to continue a strong run in share growth.

Those numbers don’t account for impact of promotional activity by P&G or its competitors or competitive spending and pricing — factors marketing-mix models take into account.

To get a better read on digital effectiveness, P&G will have to stick with it beyond what was the worst quarter for the economy since the Great Depression. The IRI data also leave out as much as half of P&G’s brand sales through Walmart, clubs and dollar stores.

Mr. Pritchard said P&G wants to increase its media weight — not necessarily spending — and is using marketing-mix modeling to do so more productively. “We like innovation as well,” he said. “Obviously digital has a lot of opportunity for that. But we’ve been looking for that from our print partners as well as from our TV partners.”

More than half – 53% – of all American adults play video games of some kind

Adults and Video Games

Source: PEW/Internet

12/7/2008 | Memo | Amanda Lenhart Sydney Jones Alexandra Rankin Macgill

More than half – 53% – of all American adults play video games of some kind, whether on a computer, on a gaming console, on a cell phone or other handheld device, on a portable gaming device, or online

Age is the biggest demographic factor in game play by adults. Younger adults are significantly more likely than any other game group to play games, and as age increases game play decreases. Independent of all other factors, younger adults are still more likely to play games.

Among older adults 65+ who play video games, nearly a third play games everyday, a significantly larger percentage than all younger players, of whom about 20% play everyday.

Age is also a factor in determining an individual’s preferred game-playing device. Gaming consoles are the most popular for young adults: 75% of 18-29 year old gamers play on consoles, compared with 68% who use computers, the second most popular device for this age group.

Out of all the gaming devices, computers are the most popular among the total adult gaming population, with 73% of adult gamers using computers to play games, compared with 53% console users, 35% who using cell phones, and 25% using portable gaming devices.