Martin Sorrell's View of the Key Developments Facing Advertisers and Media Firms

Martin Sorrell, who grew up and lives in the UK, is head of WPP, the largest marketing-communication conglomerate. As such it decides which media firms to support around the world. List list is from "Jack Myers’ Think Tank," a newsletter. Meyers evidently got it from a speech Sorrell recently gave.

1. Global Shifts in economic, political, social and cultural power.
2. Continuing Auto Production Capacity and the under-capacity of people/customers. While U.S. auto capacity has declined, the capacity in China and India has expanded. Over capacity of supply and under capacity in the supply of people makes the role of agencies and marketing even more important.
3. The Web. The reason the Consumer Electronics Show is important is that the tech companies are now media owners. The Web disintermediates legacy players and is a more attractive destination for talent.
4. Internal Communications. Communicating strategic and structural change is an internal challenge for organizations as much as -- or more than -- an external challenge.
5. Retail Power. Major retailers are gaining power, especially when there is little inflation. Retail companies put pressure on manufacturers, pushing companies like P&G into direct consumer marketing through websites.
6. Global Centralization. As companies expand and gain global influence, they are integrating their organizations at the center.
7. Procurement and rise of the finance function puts more emphasis on cost management.
8. Governments, as both regulators and as clients.
9. Corporate social responsibility. Doing good is good business.
10. Content. We have to think about content in the context of how business is fundamentally changing. Consumers have to pay for content. There is not enough advertising to finance the business models of all the new media. There needs to be more consolidation for the health and development of the media business. State subsidies have to play a greater role to maintain professional journalism.

- From Jack Meyers, "Sir Martin Sorrell's Ten Priorities for Media, Agencies and Advertisers," From Jack Meyers Think Tank, February 1, 2010.

Crowd-sourced radio

A company called Jelli creates a crowd-sourced radio format. "Listeners can vote on audio content in real-time at the station's Web site . . . or by downloading Jelli's iPhone app. The Jelli system lets users push a song to the top of the playlist by voting that it "rocks," or vote a song off the playlist by voting that it "sucks." If enough people vote a song down, it may even be yanked off the air in mid-tune. Jelli rewards listener engagement and loyalty by giving frequent users extra-powerful votes in the form of "Rockets" and "Bombs."

A recent station to introduce the format is Clear Channel's WKLS in Atlanta, from 7pm to midnight.

From Erik Sass, "Jelli Enters Atlanta Radio Market," Media Daily News, January 19, 2011.

Are Traditional Book Publishers Obsolete?

Matt Shatz argues they might well be. In the digital world, "self-publishing" through sites such as Amazon may be more useful than going through a traditional publisher such as Random House. Those sites know lots about their visitors and can send suggestions of appropriate titles to the right people, Shatz points out. If traditional publishers don't figure out ways to learn about their target audiences, they will be at the mercy of web distributors such as Amazon.

See Matt Shatz, "Why Online Retailers Will Squeeze Out Publishers in the Book Business," PaidContent.org, January 18, 2011.

The Net Neutrality Furor

PaidContent.org has a useful summary of the furor from the left and the right over the FCC's recent decision on "net neutrality." That is the idea that internet service providers must not show preferences to certain websites by degrading or sling down other websites. Some critics are angry that the FCC passed a ruling of this sort at all. Other critics of the ruling say it didn't go far enough to protect internet competition and the rights of consumers.

See Joe Mullin, "FCC Pushes Through Net Neutrality—And Draws Fire From Right And Left," PaidContent.org, December 21, 2010.

How the Venerable Atlantic Changed for the Digital Age

The Atlantic, an issues-oriented magazine that was founded 153 years and in recent years has been a consistent money loser, is on track to turn a tidy profit of $1.8 million this year. Jeremy Peters of The New York Times suggests that the reason the magazine has turned itself around relates to a decision of its young management to attach their property to the web enthusiastically at a time when major magazine firms were still wary about hurting their print product. So, for example, in a move rare in the magazine industry the publisher told the advertising sales staff that it did not matter whether they sold ads for the digital or printed edition.

The Atlantic reduced its staff and made other monetary accommodations that are allowing it to prosper in the digital world. Moreover, Peters notes that this periodical with less than half a million circulation and an entire business and editorial staff of about one hundred can break even at levels lower than the big magazines produced by the likes of Time and Conde Nast. Nevertheless, the developments point to the activities periodicals must consider to survive in the new media environment.

From Jeremy W. Peters, "Web Focus Helps Revitalize the Atlantic," New York Times, December 12, 2010. Thanks for Scott Weiss of St. Francis College for suggesting this piece for the blog.

Drugs, Tweets, and Responsibility

The Food and Drug Adminiistration (FDA) requires pharmaceutical firms to make sure that when drugs are "promoted" to the public "statements stick to approved uses for drugs only and maintain a “fair balance” of information about their risks and benefits." The actual rules about this can get complex in today's world, where there are so many ways that people can learn about medicines.

"For example, the 'social' part of social media means that third parties — bloggers, commenters, Twitter users — are also part of the message. (Kanye West tweeted this summer that 'clothes are my drug,' but what if he’d instead said that Lipitor was his drug? Should the FDA pay any attention to that? What if he or another celebrity were paid for the tweet?"

Two Boston physicians recently suggested that "To maintain a fair balance of benefit and risk information, the FDA might 'try to ban pharmaceutical promotion entirely from these media.'"

From: Katherine Hobson, "Who’s Responsible for Tweets About a Drug," Wall Street Journal, November 26, 2010.

"The Grass Horse Has Been Harmonized"

Recently, Chinese government authorities a cancelled a conference for bloggers in Shaghai. Blogging is wildly popular in China, which has the largest number of internet users in the world. But a small percentage of bloggers discuss politics critically, and that annoys authorities. Some bloggers have been arrested and are serving prison time.

When the conference website was shut down, "organizers found a way to poke fun at censors: when visitors to the conference's censored home page pressed Ctrl-A—the common computer command for 'select all'—it highlighted previously hidden text that read, in Chinese, 'The grass mud horse has been harmonized.' Grass mud horse is a famous anticensorship pun in China's Internet world—its characters form a homophone for an obscene phrase—and 'harmonize' is a euphemism for censorship, playing off President Hu Jintao's longstanding campaign to create a 'harmonious society.'

See Juliet Ye and Jason Dean,"China Blogger Conference Is Canceled Under Pressure," Wall Street Journal, November 21, 2010.

Battle for the Digital Home

PaidContent.org just ran a conference on the “battle for the digital home.” Its coverage of its own conference is interesting and brings up many of the leading players and issues in this space. The overarching questions have to do with consumer-friendly digital technologies and copyright permissions.

The winners will need both, and to that extent content providers hold important cards. That’s a key reason Comcast bought NBC-U.

The Fight Over Google TV

In an important sense, it’s a fight over the future relationship between the internet and the big set in the home. Google is not the first company to try to bring Web video to the TV. Microsoft Media Center can do it, as can Boxee (an Israeli-US startup). Netflix and Apple TV it stream TV shows and movies, but typically for rental or YouTube, though the forthcoming Apple AirPlay will be able to stream all web video into the TV.

Google’s notion, more sophisticated, is to organize the web choices and present them to you via a search engine. That has the networks (typically the content owners) and cable firms particularly concerned. They have been trying to stop Boxee for a number of years. Google has more clout than Boxee but is still boxed in by some forces, at least for now. But Time Warner, which has been trying to put its programming behind paywalls everywhere (and has spun off its cable firm), sees Google TV as an opportunity.

From Jessica Vascellero, "Time Warner Sees Ally in Web," Wall Street Journal, October 6, 2010.

Sam Schechner and Amir Efrati, "Networks Block Web Programs From Being Viewed on Google TV," Wall Street Journal, October 22, 2010.

The New Face of Living Room TV

Clearly, it’s not just in the living room; bedrooms and rec rooms have them too. A new development is that people are increasingly buying flatscreens connected to the internet, and just as with mobile devices the app-loaded real estate on the top of the deck is taking on big marketing value. Google is deep into this via Google TV (an open source TV search engine aimed at changing the way people think of viewing), but so are set manufacturers.

Digital-media expert Shelly Palmer reflects on some of the implications in "Fighting For the Digital Living Room- Wrong!!!"

Two Kindle E-Books Cost More Than Amazon Hardcovers

For the first time, Amazon is selling electronic versions of books for its Kindle at prices higher than the hardcover versions. The two are "Fall of Giants" by Ken Follet, published by Dutton,and "Don't Blink," by James Patterson and Howard Roughan, published by Little Brown.

"The skirmish over prices is possible because of deals that publishers negotiated with Amazon this year that allowed the publishers to set their own prices on e-books, while Amazon continues to choose the discount from the list price on hardcovers. That upended a previous understanding by Kindle customers, who were used to paying only $9.99 for an e-book." Also, the hardcovers were discounted by Amazon.

Responding to angry readers, Amazon was placing the blame on the publishers. Yet the publishers contended people were buying the titles at a healthy clip.

Is this a trend? One view is that if you want to read an e-version, what choice do you have? If publishers feel that there are enough people to make the ebook a success at a higher price--that is, that this part of the market is price elastic--they’ll go for it.

See Julie Bosman, "2 E-Books Cost More Than Amazon Hardcovers," New York Times, October 4, 2010.

The Marketers' Constitution

The Association of National Advertisers (ANA) is the advertising industry’s oldest trade association,"founded on June 24, 1910 in Detroit, Michigan by 45 companies to safeguard and advance the interests of advertisers and consumers." In celebration of its 100th anniversary, the ANA has created The Marketers' Constitution. According to its CEO, Bob Liodice, "Its goal is twofold: to acknowledge the marketing industry's many contributions to our society, and to help the marketing profession move beyond the inefficiencies, limitations, restrictions and unknowns of the past to a new, effective, transparent, economical and socially responsible model of marketing and media for the future."

The ten principles of the "Constitution" follow. The ANA website elaborates on them. They are useful guideposts to the evolving logic of marketing and, by extension, advertising in an increasingly digital media world.

* Marketing must become increasingly targeted, focused and personal.
* Marketing must build real, tangible and enduring brand value.
* Marketing must become more effective - more creative, insightful and accountable.
* Marketing must become more integrated and proficient in managing expanding media platforms.
* The marketing supply chain must become more efficient and productive.
* The marketing ecosystem - including agencies, media and suppliers - must become increasingly capable.
* Marketing professionals must become better, highly skilled, diverse leaders.
* Marketing must be indisputably socially responsible.

News Corp's Daily Planet

According to The Wall Street Journal, a digital news offering that News Corporation is preparing as an app for Apple's iPad is known inside the company as the “Daily Planet.” That, of course, is the name of the paper in newspaper that Clark Kent works for in the Superman saga created by Siegel and Schuster and owned by Time Warner. Oddly, according to the Journal, management within News Corp has been exhorting employees not to call the Daily Planet a newspaper. The strategy clearly is to have it stand as a new product altogether.

From: Joe Pompeo,
"News Corp Has Name For New Internet-Killing iPad Newspaper: "Daily Planet," Business Insider, September 1, 2010.

The FTC's Rebuke of a PR Agency

The Federal Trade Commission recently issued its first rebuke under new guidelines that prohibit "social media" and "word of mouth" marketers from passing themselves off as ordinary consumers touting a product and that require endorsers to make clear when they have financial connections to sellers. The FTC found that PR agency Reverb had engaged in this sort of "deceptive advertising" by having employees pose as ordinary citizens while posting game reviews online and not disclosing that the reviews came from paid employees working on behalf of the game developers.

"Word of Mouth" executive Ed Keller works through some of the ramifications of this decision in a thoughtful essay.

See Ed Keller, "FTC to Social Marketers: Keep It Real or We'll Take Action," MediaBizBloggers, September 1, 2010.

Playing Doctor

You might be interested in my new book about the history of the prime-time doctor show formula and its relation to the sociopolitics of medicine. Called Playing Doctor: Television, Storytelling and Medical Power, it’s a revision and expansion of my book that Oxford University Press published in 1989.

Annenberg’s PR people put together a video in which I discuss some themes of the book. With clips from shows (implemented in a fair-use fashion), it clocks in a 9 minutes, 39 seconds.

http://www.youtube.com/annenbergschool#p/a/u/0/w6_HCSFXWww

The University of Michigan Press site for the book is here:

http://www.press.umich.edu/titleDetailDesc.do;jsessionid=2292CD6C5545748970148891827D8741?id=354930

China Says No to Film Ratings

China's top movie-industry regulator, the State Administration of Radio, Film and Television, has put a lid on the notion of a film classification system. A spokesman said that the government believes such a system is "inappropriate."

At present, censorship is the pathe used to decide about the release of films. "[F]lmmakers in China believe that if the censor's scissors were replaced with a reliable ratings system, helmers and producers could take more risks with content and story. The censorship process also takes a long time, meaning there can often be a hiatus between a pic's international bow and its Chinese preem, giving pirates ample time to flood the market with good DVD copies of the movie for impatient filmgoers."

From Clifford Coonan, "China Says No to Film Ratings," Variety, August 23, 2010.

Clearspring Not So Clear on Privacy

Clearspring Technologies is using its "Add This" button to follow people and sell the resulting data to marketers. " The button allows users to alert friends and contacts to interesting or useful material on the Web. For instance, with a click, a news article could be sent to a friend over email or posted to a site like Facebook Inc." Critics, however, see the activity as a secret way to intrude on people's privacy.

Some industry practitioners have no qualms about the practice. "There's a new sharing economy," says ShareThis CEO Tim Schigel," another firm that carries it out.

- From Emily Steel, "As Web Surfers Share, Marketers Track," Wall Street Journal, August 19, 2010

Internet vs Mobile Device in Emerging Countries

Interesting Nielsen report on the relative use and growth of the internet and cell phone.

One of the key points: “Instead of a $20,000 threshold [GDP which is the 50% threshold for internet connectivity], in many countries mobile phone penetration exceeds 50% with a per capita GDP as low as $5,000. In middle income countries such as Russia and Saudi Arabia, mobile phone penetration rates are even higher than those of more advanced economies such as the U.S. and Canada because mobile is an affordable, accessible alternative to the Internet. Altogether, the analysis on every dimension suggests that mobile communication is a truly disruptive phenomenon, acting on a global scale.”

From Venkatsh Bala, "Going Global Means Going Mobile in Emerging Markets," NielsenWire, April 17, 2010

Gannett's Hyperlocal-Sports Play

Gannett is among the many newspaper groups that are broadening their online strategies in search of more online visitors and therefore more advertising as readership and advertising of the print product continues to decline. A popular tack among papers is to go "hyperlocal" online, and Gannett is adding high school sports to its coverage. The company owns HighSchoolSports.net, and will distribute its stories into 100 separate sites that aim of attract people (and advertisers) in particular areas where Gannett owns community papers. The sites will stand alone but will also be linked to the community papers, given them more online material for readers and advertisers. Gannett hopes to reach about 9.4 million people with this hyperlocal play.

From: "Gannett Goes Hyperlocal WIth HighSchoolSports.Net," PaidContent.org, August 18, 2010.

Ad Spending on Internet Tops TV in UK

This is the first major market where online has overtaken television to become the biggest single medium.

- Guy Phillipson, head of the British the Internet Advertising Bureau (IAB)

In Kate Holden, "UK Internet ad spend overtakes TV for first time," Reuters, September 30, 2009

The recession in the UK has caused a general advertising slump, and that has affected the growth of internet advertising there. Nevertheless, advertisers have continued to built their presence on the internet at a faster pace than in other media. "Spending on Internet advertising in Britain grew 4.6 percent in the first half of 2009, outperforming the wider ad sector, which slumped 17 percent, and making it the country's biggest ad medium ahead of TV." One consequence is that the internet has pulled ahead of television as the medium drawing the most advertising pounds.

According to the report from the UK's IAB, "ad spending on the Internet grew to 1.75 billion pounds, with the medium accounting for 23.5 percent of all spend, ahead of television for the first time." One commentator suggested that the shift to online reflects a belief that search advertising and other "clickable" ads show better than with traditional media how successful the ad spending has been. It will be important to see whether this trend continues when the recession ends.