Friday, November 8, 2013

A David versus Goliath Battle Comes to Adland, But will Goliath Win?

Every high schooler can recite Newton’s third law of motion: “For every action there is an equal and opposite reaction.”

But it’s a rule that applies far beyond physics classrooms. In the advertising world, an attempt at an equal and opposite reaction to this past summer’s mega-merger of Omnicom Group and Publicis Groupe, now Publicis-Omnicom and the world’s largest advertising agency, is already under way.

Like the Alliance of Small Island States or any “big guy versus little guy” organization, several small to mid-sized advertising agencies including Chi & Partners, its media operation M Six, customer relationship shop Rapier, PR agency Halpern and social shop The Social Practice have begun to push back by creating their own joint holding company called The & Partnership, according to AdAge.

Headed by Chi & Partners CEO Johnny Hornby with a North American arm run by Proximity CEO Andrew Bailey (formerly of Proximity Worldwide, an Omnicom company), the new conglomerate is a recognition that small and medium-sized advertising agencies risk losing clients and being squeezed out of the market as mega mergers like Publicis-Omnicom become more common. In reaction, small agencies are fighting fire with fire. 

But are mid-sized mergers really the right solution?

Media analyst and blogger Don Cole doesn’t think so and I agree to an extent. He fears that small to mid-sized agencies won’t have the staffing, creative talent and big data resources to be truly appealing to larger (and more profitable) clients. In the end, mid-sized mergers are like pooling the skills of several minor league baseball teams. More players don’t mean more capabilities. If anything, he cautions, cost cutting (read: layoffs) will be first on their agenda. In this scenario, the Goliath that Publicis-Omnicom has become (and the others that follow) wins out over the smaller Davids.

So if mini mergers aren’t the solution, what is? It’s not as black and white as Don Coles sees it. To return to my baseball analogy, not all minor league players stay minor league forever. Some do make it to the majors. And “making it to the majors” is what all advertising and PR agencies aspire to achieve. While one route to that success is, of course, growing large (and influential) enough to be bought by a conglomerate such as Publicis-Omnicom, another way is to continuously recruit new, young talent and also become expert in specific niche communication fields. That’s what we’re doing at ThinkInk.

It’s important to remember that smaller agencies aren’t devoid of assets. At smaller shops there is often less process, less bureaucracy and less confusion over who has the authority to do what. Small agencies are nimble and can better respond to client crises, when they inevitably occur.

As for The & Partnership, you can be bet adland will be watching its success or failure as closely as it’s watching Publicis-Omnicom. The David and Goliath ad agency battle is just heating up and it’s anyone’s guess which side will win.

Wednesday, November 6, 2013

Are Facebook’s Mobile Ads a Fad or will Successful Monetization Stick?

Whoever coined the phrase “it’s lonely at the top” forgot to mention that that loneliness is often short-lived.

That’s because, at best, aggressive competition means an eventual sharing of the summit (think iOS and Android). At worst, it means a complete dethroning. Remember when AOL was the most popular Web portal?

For now Facebook, still the world’s dominant social media network, can bask in all the mountaintop sunlight it wants.

Not only has active membership continued to grow – it stands 1.2 billion or one-seventh of the world’s population – but desktop and mobile ad revenue is starting to add up. Fully 60% of the publicly-traded company’s third-quarter revenue came from advertising and nearly half of that ad revenue came from mobile devices.

This is especially impressive considering how fast Facebook’s mobile advertising ramp up has been, starting as recently as early 2012. In other words, Facebook has successfully monetized advertising in less than half the time it has taken digital media to achieve even modest advertising revenue results.

But how much longer will Facebook’s mobile advertising miracle continue? The company has already been extremely transparent regarding its own expectations. For starters, Facebook will not continue increasing the percentage of ads in users’ news feeds. With this growth capped, there’s only so many clever ways to incentivize higher click-through rates.

Then there’s the nagging concern that teens are beginning to tune Facebook out, switching to sites like Twitter or embracing a host of direct messaging apps. Some of the pullback is due to Facebook’s own success. What teen really wants to be “friends” with their parents on social media or have them or other authority figures poking around on what was once the equivalent of their digital bedrooms – places considered off limits? According to financial firm Piper Jaffray, only 23% of 8,650 recently surveyed teens preferred Facebook.

While the siphoning of younger support isn’t a big deal for Facebook yet, it underscores just how fleeting social media platform popularity can be and how ad revenues, like a seasonal stream, can dry up as fast as it floods. A decade ago Myspace was the leading social media network. Today, despite a flurry of recent positive news, the site has a very long way to go in its climb back toward greatness – if it ever gets there. Its base of 36 million users is similar in size to the population of the Greater Tokyo Area. One city.

How long Facebook remains on top is anyone’s guess. While I applaud the company’s mobile advertising monetization efforts and hope they continue, could it be a little too late as the next social media fad goes on the attack, chasing that summit?

Monday, November 4, 2013

Sonic Boom: Why Flying Just Got Really Ugly – And (Potentially) Loud

Sound the alarm! The in-flight cabin experience is about to get much louder – or so it would seem.  After months of debate and a government shutdown delay, the day many of us frequent travelers dreaded has arrived: the use of personal electronic devices (smartphones, laptops and tablets) is now allowed throughout the flight’s duration, including landing and takeoff.

While actual phone conversations and texting remain off limits, a new gadget acceptance precedent – one that could soon turn planes into flying commuter trains complete with loud and obnoxious cellphone chatterers – is taking shape.

Urgh. I can hear it now…

“Omigod, did you hear about Robbie’s party last week?! It was sick! Jacquie got plastered, made out with that guy from accounting and puked on her own dress. Total disaster!”

You don’t say. Do I really need to listen to this rubbish at 35,000 feet? No.

Fortunately, I won’t have to…yet. But, as I said, a change is already in the air and I don’t like it. Even with the provisos and caveats the FAA has included in the lifted ban – enhanced gadget use depends on the airline, the weather and the aircraft – the last vestiges of a place where books, magazines and some quiet contemplation don’t look antiquated are rapidly receding.

It’s ironic that a digital “last stand” is being fought onboard passenger planes that feature advanced avionics, Wi-Fi, flash food-prep technology and seatbacks capable of displaying live TV, movies and virtual shopping malls. Sometimes I feel like it’s a battle that should have been lost years ago. 

Only it hasn’t. The question is why?

I think it comes down to what air travel means to most passengers; whether powered by propeller or turbine, air travel has long evoked a sense of welcome disconnection. The fair-or-foul vagaries of weather strongly influence whether you travel at all. Once you’re in the air, pilots control your destiny. And if there’s a midair disaster, odds are you won’t survive. There’s a kind of peace in that morbid realization. Your life is in others’ hands. Cocooned by the whirr of powerful engines, millions of passengers take flight attendants’ advice to heart, literally sitting back and enjoying their flight – uninterrupted.

Even without nonstop texting and phone calls, some of that welcome quietude is about to be disrupted. Now your fellow passengers will board in zombie mode: plugged in to their private little worlds. Except, unlike with books and whispered conversations, smartphone and tablet games will inspire grunts, random screams, shouts of joy and spirited sibling rivalry. Changes like this will also inspire an uptick in Wi-Fi as passengers move – linked, synced and wired – from terminal to plane without worrying about having to power down.

Of course, it’s possible the coming volume invasion will be mitigated by more aggressive airline loyalty programs that section off “quiet” cabin areas and honor requests for hours of low-volume gadget tinkering.

One way or another, these changes are coming and it’s time we all face the music – shouts, screams, and any other cacophony that makes flying a louder, less enjoyable experience.

I must admit I’m dreading it.