Summit Notebook

Recession’s perfect storm speeds up change in ad industry

Why is it that the United States’ advertising as a proportion of marketing services is at its lowest point since 1977, maybe even lower than since the Second World War?

You may have guessed it it’s the recession.

But it will get better, Martin Sorrell, CEO of advertising giant WPP, said.

“The recession is less worse,” Sorrell said, repeating a favourite phrase of late, and while it’s the biggest recession since 1929 it is also “a perfect storm” that has brought forward change. 

“The recession has accelerated structural changes that were already happening,” Sorrell said at the Reuters Global Media Summit.

Will advertising ever go back to where it was? Yes, if you are looking at new media advertising on Kindles and mobile.

Will the United States rebound? Western Europe? Yes, to both.

Geneva is for wealth management

Even for an American who’s not wealthy, Geneva has a reputation as a global centre for wealth management – the place the world’s rich come to stash their money and (they hope) make it grow.

    But you don’t necessarily expect it to be so aggressive — after all, the rich tend to be demure when it comes to their banking.

    Imagine one reporter’s surprise, then, on arriving in the airport in Geneva and seeing bank ads everywhere. Think of the casino adds in Las Vegas’s McCarron Airport or the technology ads in San Jose’s Mineta Airport: it’s the exactly the same in Geneva, only with wealth managers.

    Look left – there’s UBS. Look right – there’s Julius Baer. Look up in the baggage queue – there’s a Swiss bank that emphasises a focus on the Arab world. A complete unscientific guesstimate suggests the display ads in the terminal run about 75 percent wealth management and 25 percent fine watches. (No surprise that every other storefront in the Ville Centre area of Geneva has watches on offer.)

    There is one plus to all of the bank ads in the airport for the less wealthy though. Tell your cab driver to head toward their addresses and you’re likely to find the city’s best cafes.

from MediaFile:

Cautious splurge: the art of luxury advertising

Advertising at the highest end of the luxury market may be the last to get hit in an economic slump, but it's still going to get scathed before the ad market turns around, Nick Brien, who heads up Interpublic Group's Mediabrands, a holding company for media buying and planning agencies,  told the Reuters Media Summit in New York.

"There will always be some brands and marketers who are going to want to live beyond the realities that are going on for the masses of people," said Brien, who's responsible for agencies like Universal McCann, Initiative, Magna, and J3 . "That will go on... (but) will it be as pronounced as it was, will be it as mainstream?"

Brien didn't think so. Not when even Russian billionaires -- with their boats and Rolexes -- are feeling the pinch, he said. "Even if their wealth is coming down from a billion to half a billion, that's what it is -- it's coming down," Brien said.

As a result, "the messaging is going to change very considerably." Brien said Mediabrands clients globally have expressed concern recently that consumers are facing too much choice, especially at a time when "they have less funds, they have less confidence and they're going to be much more considered and careful about the choices they make." As CEO of Mediabrands, Brien oversees agencies that control billions of dollars in ad spend globally, though notes that most of his clients aren't in the super high-end luxury goods business.

So for high-end luxury goods advertisers, it's now going to be less about what media channel to use to spread their message of decadent living, and more about reworking marketing strategies to ensure big spenders still distribute their (slightly) shrinking wealth among pricey trinkets in these times of stress.

(Photo: Reuters)

Baseball’s Bud Selig: Won’t be Commish again. Really.

It’s easy to tell that Bud Selig, Major League Baseball’s commissioner, is a lifer, a true old-school fan with his dream job. He tells great stories about being a fan, a lifelong friend of icons like Hank Aaron, and is famous for being energetic when watching games live.

He loves it so much that this year he re-upped for 4 more years as its top dog, even after he said he would not. But at the Reuters Media Summit, he says that in 2012, he’s done. It’s over. Seriously. Done. Selig, signing off. Over and out. Right Bud?

Reuters: Two years ago you told us that none of your cohorts would believe you when you said that in two years time when your contract was up, that you were going to walk away…

Selig: (interrupting) I am done this time. I’m going to be 78 years old — if anybody thinks I’m doing it after that… I know, I’ve said it seven times and I understand all the concerns, and you are right to have them, but this time (pounding his fist on the table) I’m done. I’ve got four more years. That’s enough. “

For what it’s worth, the next few years won’t be so easy, with a troubled economy threatening to shrink ticket sales and advertising revenue. He’s cautiously optimistic, and hopes to leave the game is good shape, when he (ahem) leaves in a few years.

“The sport has had remarkable growth. And it’s more popular than it’s ever been. I look at my job…. I just want to keep it on an even keel as we go through some very troubled waters.”

(Photo: Reuters)

from MediaFile:

Dial M For MySpace mobile advertising

MySpace co-founder Chris DeWolfe is bullish on the mobile advertising market, but says ad agencies and corporate sponsors haven't figured out to dial into it.

Speaking at the Reuters Media Summit, DeWolfe outlined MySpace's mobile efforts, such as its Blackberry application. He said the company was targeting more download applications for mobile devices. He said he saw big opportunities in the mobile-based advertising sector once there's some standardization.

We think the future of mobile is more advertising based. But the marketplace on the advertiser side has not quite caught up to the inventory out there... It's relatively undeveloped, but we think it's a market that will grow.

He said countries like Japan were ahead of the curve in mobile advertising, but that it will take the U.S. a couple of years to catch up.

We're generating revenues right now on the mobile side from advertising and will generate more next year. ... It's a function of whether the agencies and brands coming up with standardized ad units and are making investments to do that.

So far there's been enough inventory on the MySpace side, but not enough advertisers with creatives that have wanted to jump in or a critical mass of Web sites that they've wanted to reach. But we'll see more demand and its a function of educating the marketplace.

from MediaFile:

Desperately seeking hits: MPG

Are people going to watch more TV because they've no money to go out? According to media buying and planning agency MPG -- a subsidiary of Havas, the world's sixth-largest ad firm -- the answer is no, unless the TV networks come up with better shows.

"That's inventory for us, that's our supply," MPG Chief Operating Officer Steve Lanzano told the Reuters Media Summit in New York. "The thing is, there are no hit shows out there on the big networks," he added. "And if there's no supply in the marketplace, that just makes it harder and harder for us."

With the economy seizing up and people seeking more stay-at-home entertainment, this could be the perfect time for the big networks to hook people on to some new shows and boost ratings. That would bring in advertising revenue at a time when many advertisers are scaling back spending.

But the networks don't seem quite up for it yet, Lanzano said. ""They need hits and nobody has them right now."

Fox, Lanzano said, was a bit edgier than the others. "Clearly, they have these must-see shows that they've been able to promote."

Meanwhile, CBS -- which probably has the largest number of total viewers -- could do with some younger programming, Lanzano said. "Have they been able to lower their age a bit?"

As for NBC, "they've been fortunate because of Sarah Palin." Shows like 30 Rock and of course, SNL, have gotten a boost because of Tina Fey's turn as the former Republican vice-presidential candidate, but with Jay Leno going off the air soon, they might be stuck looking around for another winner.

AT&T: It’s all about the athletes

AT&T is an official sponsor of the U.S. Olympic team, which generally makes for great brand building. This year, however, marketing promises to be a little more complicated because of political tensions. Look no further than the protests that accompanied the international torch relay.

This led us to ask Chief Financial Officer Rick Lindner about whether they’ve changed their minds about their Olympic advertising.

We certainly talk about our Olympics sponsorship. The key message we try to convey to people, particularly those that may have concerns, is that we’re not sponsoring the games. We’re sponsoring our Olympic team. That’s where our dollars and commitment goes. It’s the right place.

It’s sponsoring those athletes that are going to be competing. We’ve got to do a good job of communicating our position. We feel we’re doing the right things. I’m not aware that we’ve made any changes to our plans from an advertising standpoint.

Seagate likes it easy, cheap and free

Seagate Chief Executive Bill Watkins has a reason to like easy, free ways to consume information on the Internet.

After all, his company is the world’s largest computer disk-drive maker, something that comes in handy for all the storage space required to back up online audio and video.

Here’s Watkins’s reasoning, which he gave us at the Reuters Technology, Media and Telecommunications Summit on Wednesday:

People will watch lousy content if it’s easy and cheap and free… . If you think about TV back in the ’50s … Hollywood and all those guys, they said “no way we’re going to let our actors get on TV.” … New York stage did the same thing. Radio did the same thing. So what did TV do? They invented their own content. It was the farm report, the Howdy-Doody show. And all of a sudden, people started watching it because it was easy and free. And then the advertising dollars started following TV. And so what happened? Everyone started having to put their content on TV. Radio had to give up. … You’re watching the same thing happening here on the Internet. And if people got nothing to do with their time, they’ll sit there and watch commercials. I mean, people watch commercials on the Internet and then they share them with friends. But that’s a great thing for us.

They may be empty calories, but they sure do fill up the bottom line.

Virgin Mobile USA’s trillions and trillions

Will mobile advertising make you rich?

Virgin Mobile USA CEO Dan Schulman told the Reuters Global Technology, Media and Telecoms Summit today about a new advertising partnership with AOL’s Third Screen Media.

We asked him how big a deal it was. Schulman was enthusiastic, to say the least.

“We think it will drive a trillion dollars to us in the next four to six months.”

On the more serious side, Schulman explained that mobile advertising was still in its infancy as carriers have yet to really figure out the right way of offering people ads on their phones without becoming a nuisance.

“It’s small (in terms of revenue) and I wouldn’t even put it in the meaningful category yet. We’re experimenting with it. Mobile advertising is something you need to be quite careful with. A cell phone is a relatively intimate device.”

Virgin Mobile USA has had some success with its advertising forays. Schulman said more than 700,000 of its 5 million customers had signed up for its “Sugar Mama” promotion that let them earn free phone minutes in return for watching ads online.