Are Social Media Agencies a Fad or a growing Revolution?

July 18, 2011

Good day!  I just read over this article http://www.clickz.com/clickz/column/2093839/social-media-agency-fad-revolution, written by Gary Stein, and wanted to share it with everyone to discuss the growing number of social media agencies.  Social media has exploded onto the scene and has become a viable channel for companies to market their products and services.  The question is, are these agencies a flash in the pan or is this industry going to continue its vast expansion?  I wouldn’t be surprised to see more companies develop their own in-house division in order to maintain more control over content and message.  Please click on the link and feel free to share your thoughts with us.  Have a great day!

Have you noticed a growing number of companies hiring “social media” agencies?

I certainly have. In fact, I’ve been responding to calls from companies for social media agencies for at least two years or so and some of these calls have been for pretty lucrative projects and long-term engagements. But, to be honest, I’ve wondered if this was a fad that would hit hard but quick, or if we were experiencing something new. That is, were we actually experiencing the formation of a different sort of an agency being brought to life through a new kind of need?

Whatever the case was at that point, we (meaning me and many others in this industry) certainly jumped on the opportunity, responding back to those requests for proposals and carefully crafting new agency raps extolling our abilities. I don’t mean to say that we were merely opportunists, but rather we responded to the current need that our clients had and (the best of us) saw this as a new-but-unique channel through which we could drive business and achieve goals. That is to say, none of us really knew in 2008 if we would be getting social media request for proposals (RFPs) in 2011.

Well, guess what: we are. In fact, the pace of this line of business seems to be picking up. The agency Big Fuel (which has modern advertising legend Jon Bond as its CEO) recently won what was reported to be a seven-figure engagement to perform social media duties for T-Mobile. This assignment from T-Mobile is not to replace its interactive, creative, or media agency. This is a net-new piece of work, and a significant one at that.

Our industry has expanded. It’s time to figure out what it means.

Social Media Services

The problem with social media (and therefore, the problem with hiring a company to do social media for you) is that social media is not so much a thing as it is a way. What we generally call social is really a collection of business practices from advertising to support to retention services to satisfaction and advocacy. While the consumer has a solid and clear understanding of the difference between a commercial on television and a call to customer service, the same can’t necessarily be said of their concept of a Twitter feed.

When the calls go out for a social media agency, there tends to be at least five big areas of services that a brand is looking for:

  • Acquisition (brands want help increasing their audience in social media)
  • Engagement (brands want help getting fans involved in the conversation)
  • Advocacy (brands want help having messages spread through the network)
  • Governance (brands want clear rules on operating in social media)
  • Creative (brands want content that can be used in social media)

Of course, the best RFPs and the most serious brands are going to look first and foremost for a strategy that is going to underpin all of this. I’d love to say that, over the years, social media RFPs have evolved away from simple tactics (“we want a Facebook page”) and gotten more sophisticated. But the RFPs that ask for social media services to serve a particular goal remain in the minority. Of course, those are also the ones that produce the best work. The reason is simple: if you can get smart marketing people to think about a goal, and then give them a tool, you’ll get success. It doesn’t matter what the tool is, as long as the smart people understand it. If you go the other way (give smart people a tool and ask them to do something with it), your chances of success are no better than a roll of the dice.

How to Send Out/Respond to a Social Media RFP

I do believe that we will continue to see more social media RFPs in the near future, which really means that we’ll see more brands establishing specific social media practices in the near future. While this is a net-new agency service, I don’t think it is necessarily an entirely new practice. Not considering strategy, which should be a consistent element through all work, we should think of social media services as a mashup of a few other, more familiar services. If you are on either end of a social media RFP (sending or receiving), you should think about these core practices first.

The first service is creative development. There are certainly some new formats and guidelines for the building content to go on social media. But don’t think about it as just some tweet or set of images. These are impressions that you are placing upon your audience and they should be of the best quality you can muster.

The other is media placement. I have long used the language of media to describe the work done within a social campaign. For example, we don’t “post” content, we “traffic” it, just like we would with an ad. That means it is planned, placed, and measured.

The last big one is community management. This is a tricky one. I’ve had community managers working on projects for a long, long time. But we always thought of their work based on their title: they managed a community. They kept it focused on the topic, kicked off the bad people, and provided topics for discussion. Now, we want them to do all that, but the goal is not to manage the community; it is to manage the community to grow value for our clients. These people are now the most front-facing component of a campaign. They can’t just be there to manage the community, because “the community” is the entire point of the campaign.

And that, I suppose, is the bottom line on all of this. There are more social media RFPs coming because more brands are taking social media very seriously. And they are taking it very seriously because they are not just seeking to fill a new channel with their message. They are not thinking about social media as a thing, but as a way – a way to connect more closely with their consumers.

Which is really a good thing for all of us. Let’s agree to make sure that we take the opportunity to either bring in an agency or be the agency brought in to social media to make sure that this isn’t just a trend, but in fact a revolution. The dollars are there to justify, for sure. But most importantly, so is the opportunity.

 


Five Digital Shops in the Heartland

July 14, 2011

I found this article on http://www.clickz.com/clickz/news/2092650/digital-shops-heartland and wanted to post it.  This article talks about the expansion of digital media agencies to places besides New York and San Francisco, such as: Sioux Falls, SD; Austin, TX; and Kansas City, MO. This article shows how digital media is expanding to smaller areas and how through the advancements in technology and telecommunications, the workplace is spreading out and evolving.  No longer do digital media agencies have to be centralized in major cities and smaller firms can exist and ultimately succeed in smaller cities.

 

Not every aspiring agency founder in land-locked states packs up a U-Haul and moves to The Big Apple, San Fran or LA. Some stay put, raise funds and start their own shops.

While that was certainly true pre-Internet, the digital age seems to have opened up opportunities for heartland agencies to gain the attention of big-time clients with quality creative and technology solutions. Sometimes you wouldn’t know it, but there’s a digital advertising world out there that doesn’t involve names like Razorfish, AKQA, Deep Focus, SapientNitro, or 360i.

To compete with those coastal entities, ad men and women between Appalachia and the Rockies tend to shoot their campaign pitches with proverbial guns locked and loaded. And every once in a while, explains Charles Hull, managing director at Archrival in Lincoln, NE, client relations can literally mean bringing out the bullets.

“A few weeks ago, we had a big project meeting with client reps coming in from Europe and Los Angeles for a three-day strategy session,” Hull told ClickZ News. “To have some fun, we took them out in the country to fire semi-automatic assault rifles at a huge assortment of fruit. It was the highlight of their trip, and something they still talk about. [It's] tough to do that in Los Angeles or New York City.”

Archrival is a Facebook preferred developer and social media/youth marketing shop that was purchased by Dachis Group last November. (The 14-year-old company’s official name is now Archrival Dachis Group.) During the past year, Archrival’s 20-odd staffers have run campaigns for Red Bull, Colt 45, Harper Collins, Foursquare, and other brands.

“In the early days,” Hull said, “we thought we needed to open up a Los Angeles or New York office for business development and image purposes. But as we got bigger and our clients got bigger, the less we felt that need. Today, we actually use our [low-key] Nebraska location to our advantage – many of our clients who are from Los Angeles and large urban markets enjoy getting out of the grind and coming to visit us for days at a time.”

Dave Knox is chief marketing officer at Rockfish Interactive, which is located in the Northwest Arkansas town of Rogers, nestled in the Ozarks. Knox said there are numerous advantages to being located more than 1,000 miles from either the East or West Coast.

“For starters, when you look at the top national advertisers, an overwhelming number of them are located in the Midwest,” he said. “This proximity becomes increasingly important given the speed of digital marketing. Second, there is access to incredible talent in the heartland, especially people with deep backgrounds in brand building and retail marketing. And this talent doesn’t have to make sacrifices between their personal and professional lives given the more affordable cost of living. Finally, these agencies have the ability to see first-hand the digital behavior of consumers, avoiding the echo chamber sometimes created by early adopters on the coasts.”

rockfish-s-in-house-coffee-shopTo Knox’s first point, Rockfish’s brand clients include the Arkansas-based Sam’s Club, Walmart, White Cloud, and Tyson Foods, as well as other non-coastal names like The Nutro Company (Tennessee), UnitedHealth Group (Minnesota), and P.F. Chang’s (Arizona). It also counts Los Angeles-based EA Sports as a customer, as well as Cisco in San Francisco. Since the beginning of 2009, Rockfish has opened offices in Dallas, San Francisco, Cincinnati, and Little Rock, AR, while building a staff of 150-plus. Its Rogers employees enjoy the perk of having a Silver Joe’s coffee shop on campus (pictured above).

“There are pros and cons no matter where you are located,” Knox said. “There are no significant disadvantages [to being in the heartland], especially given the geographic location of so many large brands and companies.”

Rockfish and Archrival are among numerous digital shops likely deserving a little ink while being situated between the coasts. For good measure, based on industry sources, here are three more doing quality work for brand-name clients.

VML, Kansas City, MO: This is one of the larger and more well-known centrally located shops, boasting dozens of name-brand clients like Microsoft, ESPN, Kellogg’s, Southwest Airlines, and Colgate. But as one competitor admitted to ClickZ, the agency “doesn’t get as much credit as they should.” A recent example of VML’s creativity: For Colgate, its London division orchestrated an effort that entailed uploaded photos by Facebook “likers” being randomly displayed on digital billboards across London, Birmingham, and Liverpool.

Tocquigny, Austin: Long before its Texas state capital hometown became a technology hub, this agency was helping Dell achieve juggernaut status in the computer hardware space. And it certainly doesn’t appear to have fallen behind the times, also calling Jeep, Caterpillar, IDG, The Washington Times, and Teradata clients. For a Teradata effort, Tocquigny was nominated this year for a South by Southwest Interactive award in the “Kiosk/Installation” category. It featured a videoed wall utilizing 52 LED monitors and three large LCD panels, which pulled information from YouTube, Flickr, Twitter, stock market indices, and 20 other crowdsourcing points of interest.

Electric Pulp, Sioux Falls, SD: This Web design, iPhone/iPad marketing, and e-commerce agency has more in common with Archrival than the other examples, employing a skeleton crew of 10 staffers that work on an eclectic mix of brands. They include Ford, Justin Bieber, Comedy Central (book sites for Jon Stewart and Stephen Colbert), New York’s Apollo Theatre, and Incase, an iPhone accessories manufacturer.

Stefan Hartwig, a partner at Electric Pulp, said brands that want to keep innovative campaigns hush-hush appreciate the fact that his company is located “from a lot of people’s perspective, in the middle of nowhere.” And the Sioux Falls native described the satisfaction of being able to build an advertising firm that attracts national clients in the small city he knows intimately.

“It’s more than we ever expected we could do from here,” Hartwig said. “It’s cool knowing you don’t have to take that huge jump, that you don’t need that address. Your track record of being able to deliver is more important than being from San Francisco or New York.”

 


Google sees interaction as key to display ad future

July 13, 2011

I found this article on http://www.adweek.com/news/advertising-branding/google-searching-displays-savior-133347 and wanted to post it. This article explains how Google thinks that making an ad interactive will boost the percentage of users engaged in the ad. One thing that Google changed is the “masthead” ad. With the new interactive feature, people are four times more likely to go to the brand’s site or watch their YouTube video.  As a result, as Google said, we need to turn advertising into interacting.  This article speaks volumes about how our patented ad technology can enhance user interaction and thus, increase performance for advertisers and publishers.

 

Poor display advertising. Search still dominates digital ad spending, in part because of the strong metrics a search campaign offers. Google wants to change that.

The search giant is attempting to bring better analysis to display, starting with YouTube, where a home page ad has the potential of 60 million impressions per day. In a new study, Google and Compete analyzed more than 300 “masthead” campaigns (those rich media display ads at the top of the video sharing site’s home page). Google’s in-house studio has tricked out the ads with opt-in features like “click for sound” and “click to continue,” making it easier to gauge engagement.

The study found that users exposed to the rich media masthead ads were four times more likely to go to a brand’s website, search for it on Google, or watch its video on YouTube. Still, banner ad engagement hovers below 1 percent (rich media display ads are at 3 percent), and display ads are widely reviled.

And now social sites like Twitter and Facebook are offering more alternatives with higher engagement. Says Suzie Reider, national director of display sales for Google, “Display needs to move beyond advertising and into interacting.”

 


20 Million Google+ Users May Exist by the Weekend

July 12, 2011

I found this article on http://www.pcworld.com/article/235468/20_million_google_users_may_exist_by_the_weekend.html and wanted to post it. This article show the incredible increase in users for the new social media service, Google+. So they say, Google+ has had a 350% increase in users between July 4th to July10th, 1.7 million users to 7.3 million users. Google+, with their statistics, are going to hit 20 million users by this weekend. This article shows how social media is gradually increasing in interactivity world-wide.

 

Most critics believe Google+ is gaining popularity online, but at least one study figures Google’s latest social experiment is growing at rates that rival Facebook’s. The search giant’s two-week-old social network, currently in a limited field test, reportedly grew by 350 percent between July 4 and July 10 from 1.7 million users to 7.3 million. Google+ is also set to hit 10 million by Tuesday and 20 million by the weekend, according to one study.

Those growth numbers assume that Google won’t restrict users from inviting their friends this week, as Google did the week prior.

The Google+ population estimate comes from Paul Allen, founder of Ancestry.com, who posted his findings on (where else?) Google+. Allen based his work by counting surnames on Google+ and then comparing that count to Census Bureau data.

If he’s right, then Google+ is currently signing up an average of more than one million new people every day since its June 28 launch. By comparison, Facebook in 2009 — arguably the height of the social network’s rapid growth — was gaining nearly a million new users a day, according to The New York Times.

Google has yet to officially announce how many users are on Google+.

Allen’s key

Allen started his work by comparing Census Bureau data about surname popularity to US Google+ users with each surname. Then he took a sampling of 100 to 200 surnames on Google+ to estimate what percentage of the US population is on the new social network (he didn’t disclose that number). To get the international Google+ population, Allen assumed there were 2.12 non-US users for every American on Google+.

Allen maintains his model by tracking the growth rate of a smaller sampling of 100 unusual US surnames on Google+. He then assumes a similar growth rate for the rest of the surnames in the US on Google+ and then multiplies that estimate by 2.12 to get the international user count. Allen doesn’t claim his estimate is perfectly accurate, but believes his numbers are at least in the ballpark. It’s an interesting approach to estimating Google+ users and one you would expect from a person with such a deep interest in genealogy.

Whether you believe Allen’s approach is valid or not, Google+ does appear to be popular and is still at the height of its love affair with the tech press.

Related Slideshow: 10 Google+ Tips for Beginners

10 google plus tips for beginners

But even if Google+ is growing at an incredible rate right now, it’s not clear how many of those Google+ users are signing on to use the service regularly. Facebook says it has 750 million active users; however, the world’s largest social network doesn’t say how often someone has to interact with Facebook to be considered an “active user.”

The other question is whether Google will be able to sustain Facebook-like adoption numbers over the long term. Google+ may be gaining an incredible number of users every day, but will those people stay to use the site or just sign up, try it out and leave?

 


How Social Media Influences m-commerce

July 11, 2011

I found this post on http://www.emarketer.com/Article.aspx?R=1008487 and wanted to post it.  This article talks about how social media is affecting shopping habits.  Knowledge Networks and MediaPost Communications surveyed teen and adult social media users for “The Faces of Social Media” study and found that, in September 2010 to May 2011, their was an increase from 28% to 40% in respondents who accessed social media from their mobile phones.  Social media, as an outlet for advertising and marketing, is rapidly expanding.

 

As more consumers access social media via mobile devices, it changes the way they research and shop for products and services offline.

Knowledge Networks and MediaPost Communications surveyed teen and adult social media users for “The Faces of Social Media” study and found that, in May 2011, 40% of respondents accessed social media via their mobile phones. This was an increase from 28% who reported doing the same in September 2010.

Additionally, 37% of US social media users trust what their friends and family members say about a brand or product on social media, compared to only 10% who trust what strangers say. Drilling down to specific social elements, 26% trust what friends and family members say in blog posts, 25% trust their posts on social media sites and 20% trust their tweets. This is compared to 7% who trust the blogs and posts of strangers, and 5% who trust strangers’ tweets.

 

US Social Media Users Who Trust Brand/Product Information Shared on Social Media by Friends vs. Strangers, May 2011 (% of respondents)

 

Additionally, an April 2011 study from ROI Research found that 60% of US social network users were at least somewhat likely to take action when a friend posted something about a product, service, company or brand on a social media site.

As more consumers access social media on the go, their in-store shopping decisions will be affected by these same influential brand discussions. The Knowledge Networks study found that 27% of US mobile internet users turned to social media to compare or check prices before, during or after shopping, while 24% checked reviews and 16% got coupons or discounts for local businesses. Overall, half of mobile web users interacted with social media at some point in the shopping process.

 

Reasons that US Mobile Internet Users Interact with Social Media on a Mobile Phone Before, While or After Shopping, May 2011 (% of respondents)

 

This makes social media, where consumers connect with their friends and family, an important destination for researching purchasing decisions in-store. This is an added challenge for retailers and marketers, as they must focus on keeping customers happy on the go and remember how much influence a customer’s social media posts can have on their friends and family members.


GroupM: Digital’s 2011 Ad Spend Share Larger than Predicted

July 7, 2011

I found this article on http://www.clickz.com/clickz/news/2086373/groupm-digitals-2011-spend-share-larger-predicted and wanted to post it. This article explains how Ad Spend is growing larger than other people thought it would grow. For example: GroupM forecasts measured digital advertising will account for 17 percent of global advertising in 2011, a point ahead of the 16 percent it had previously predicted in December. In addition, the group estimated the digital ad sector is growing at between 15 and 16 percent annually, and that it will exceed $100 billion in spend, worldwide, by 2012.

 

Online will attract a greater portion of global ad spend this year than previously expected, according to WPP-owned media buying outfit GroupM. The company forecasts measured digital advertising will account for 17 percent of global advertising in 2011, a point ahead of the 16 percent it had previously predicted in December.

In addition, the group estimated the digital ad sector is growing at between 15 and 16 percent annually, and that it will exceed $100 billion in spend, worldwide, by 2012.

“Digital advertising spending accounts for 20 percent and more of measured advertising in countries where it is most developed, but it still has real growth potential even in those nations,” commented GroupM Futures Director Adam Smith, citing the continued use of technologies such as behavioral targeting and video advertising as key drivers for that spend.

In terms of overall media spend, however, GroupM revised its global predictions down to 4.8 percent year-over-year growth, a considerable drop from the 5.8 percent it predicted late last year. The company said world events including the earthquake in Japan and political unrest in the Middle East explained its more conservative outlook.

That overall drop in ad spend could also explain the predicted growth in spending share for digital, with advertisers perhaps cutting back more on traditional channels such as print and out of home in order to retain their digital investments.

The forecast also predicted that ad spending across all channels will reach $540.3 billion in 2012, a 6.8 percent increase over 2011, owing largely to increased spending around the summer Olympics and the 2012 U.S. political campaigns and elections.

 


US Online Ad Spending: The Floodgates Are Open

July 6, 2011

I found this article/ statistics chart on http://www.emarketer.com/Reports/All/Emarketer_2000787.aspx?utm_source=IABSmartBrief&utm_medium=TextReport_USOnlineAdSpend&utm_campaign=IAB0508&aff=IABSmartBrief and wanted to post it. This article/chart says that online ad spending in the US will grow by over 20% this year, passing the $30 billion mark. By 2013, it will exceed $40 billion. See how these spending trends affect marketers and their budget planning for the next several years.

 

Growth for US online ad spending will crest this year at 20.2% and remain solidly in double digits through 2014. By 2015, total online ad spending will approach $50 billion.

The main drivers for online ad spending’s steady annual growth are plentiful.

  • The continued rise of video advertising, which gives brand marketers the familiar messaging medium of TV combined with online’s targeting and measurement capabilities.
  • Banner advertising’s steady expansion. As more people view more pages, banner inventory growth will outpace pricing growth—but the bottom line leads to more overall dollars as more marketers, including local ones, buy more display ads.
  • Search is foundational, used increasingly for branding objectives even as direct-response marketers continue to invest heavily in the format.
  • Mobile will contribute more to both banner and search ad spending, and eventually to video, too.
  • As Google expands its display offerings, its huge base of search customers will take advantage of one-stop shopping for a full range of online advertising.
  • Facebook is attracting more ad spending, while Microsoft, Yahoo! and AOL are reporting high display ad revenue growth.

Despite these gains, the idea that advertising follows audience is still not true for the internet, where US adults spent 25% of their media time in 2010 yet online marketers spent only 20% of their total major media dollars. But marketers that see their target audiences abandoning other media are also driving more online ad spending, even if many of those new outlays are still experimental.

 

US Online Ad Spending, 2010-2015 (billions and % change)

Key questions this report answers:

  • What are the forces driving online ad spending growth?
  • Why will display become larger than search?
  • How will market consolidation affect advertisers?

 


Banner Ads Evolve to Get Users’ Attention

July 5, 2011

I found this article on http://www.dmnews.com/banner-ads-evolve-to-get-users-attention/article/205848/ and wanted to post it. This article talks about the new version of banner advertising that has been used by both AOL and Yahoo to improve interactivity with consumers and to get rid of competition such as Facebook.  The creator  of this new banner ad is the company Pictela, and this ad takes up 33% of the page so it’s more noticeable than it’s old version which wasn’t very noticeable at all. In fact, the old banner ad had a 0.1 click-through rate while the new version, and the ad budgets increased from 29% in 2009 to 33% now.

 

Display advertising leaders AOL and Yahoo are stepping up their banner ad innovation to improve interactivity with consumers and fend off competition from targeted ad solutions from companies such as Facebook.

Consumers have long been unwilling to disengage with their chosen content just to click on an ad, to the point that many users ignore the ads that frame a Web page, says Greg Rogers, cofounder and CEO of advertising platform Pictela, which was acquired by AOL last December. “This notion of asking someone to click on an ad to go somewhere else is very hard, and it’s very rare that somebody will click on an ad nowadays,” he says.

To improve interaction, Pictela developed the IAB Portrait ad unit, which streamlines Web pages from four or five ads to one supersized, feature-filled banner that runs to the right of sought-after content. Because Portrait ads occupy 33% of the page, they’re more noticeable and let brands serve up to three varieties of interactive content to consumers, including video, social network feeds, slideshows and store locators.

“We’ve seen engagement go up tremendously,” explains Laura Schooling, director of marketing services at Hearst Digital Media, which signed on as the first third-party publisher to run IAB Portrait ads on its sites. “It acts as another content experience on the page,” she says. “We’ve seen consumers spend an average of 47 additional seconds with the IAB Portrait ad [and] play 24 seconds more video.”

Getting consumers to interact with display ads is one of marketers’ top challenges, say industry experts. Market research firm IDC said in May that display’s share of overall ad budgets increased to 33% last year, from 29% in 2009. A July 2010 study from Google’s ad management service DoubleClick reported that US display ads generate only a 0.1% click-through rate.

Yahoo has also augmented its display offerings. A year after Facebook overtook it for the top share of online display ad impressions, the company expanded its Yahoo Smart Ads unit this May to include behaviorally targeted video ads.

Consumers can participate in surveys, join email lists and share content to their social networks through the ads, in addition to viewing branded videos. Although Facebook leads the other companies in share of impressions, industry experts say display 
ads are trending away from click-throughs to become destinations in and of themselves.

“In terms of the creative execution, on Facebook you’re really limited,” says Vik Kathuria, managing partner of corporate strategy and digital investment at MediaCom. “It’s a small box that you can’t do a whole lot with, versus on Yahoo, the canvas is much larger and you can actually do some really cool rich media creative executions, which is really important.”

Kathuria adds that Yahoo and AOL’s fortification of their display units may see them through the current shift in online advertising. “I don’t think at any point that folks like Yahoo need to be worried about Facebook cannibalizing them, because from our perspective, we’re using them for two very different strategies,” he says.

However, Tom Arrix, VP of US sales at Facebook, says that his company’s ad offerings provide ads in the context of their friends’ “likes” and dislikes. “We want the ads to be incredibly relevant. We want the ad experience to look more like content than to follow more of a disruptive track than you see out there,” he says. “I think Facebook’s approach is very consistent with how content is showcased on the site.”

Arrix adds that Facebook’s launch of Sponsored Stories, which pulls content from consumers’ posts for promotional purposes, lets advertisers have consumers work for them.

“Now it’s about people amplifying the message versus the brand amplifying the message,” he says. “I know that in the world of rich media, there are vendors like AOL where there’s activity across the page. We don’t do that. It’s the more engaging experiences that we would showcase in our ads.”

 


M&A Activity In Ad Market Will Surge Through End Of ‘11

July 1, 2011

I found this article on http://paidcontent.org/article/419-ad-digital-agencies-will-keep-ma-activity-surging-through-end-of-11/ and wanted to post it. This article is showing the recent growth rates of M&A advertising over the past couple months and the differences from before.

 

The deals just kept coming in the first half of the year and thanks to increasing competition in the advertising agency and digital marketing businesses, the continued growth of social media and the need for analytics to make it all work, the next six months should resemble the previous ones, according to The Jordan, Edmiston Group, Inc.‘s tally of media M&A activity this year.

Highlights from the report:

— Buyers spent $23 billion in 1H 2011. That’s a 15 percent gain over the same period the year before, on a similar volume of M&A deals. The first half of 2010 produced a 61 percent surge in deal volume and a nearly four times increase in deal value over recession-weakened 2009 M&A activity.

—Interactive, marketing services and technology markets continue to account for the majority of deal activity and value. The B2B and B2C Online Media & Technology, Marketing & Interactive Services, and Mobile Media & Technology sectors made up 71 percent of total deals and 63 percent of deal value in the first half of 2011.

—Digital agencies ($806 million worth deals in aggregate) did 22 deals in the first half of the year—the most of any other category. Social marketing ($250 million) was next with 17, followed by 15 each for ad agencies ($827 million) and “data & analytics” ($473 million).

Despite the economic uncertainty, there are two reasons to expect more of the same for media M&A through 2012: major media companies, from ad agency holding companies like WPP Group and Publicis Groupe are constantly looking to expand their analytics and other digital capabilities, while extending their global reach as well.

Secondly, JEGI points out that private equity firms have over $400 billion in cash to put to work in the marketplace via the acquisition of both platform companies and add‐on acquisitions to existing platforms. In addition to providing the wherewithal to do more deals, the values of doing a transaction are likely to keep pace with demand of both PE firms and media companies to capture “the next big thing,” especially in social and mobile.

 


Kraft Spiffs Up Its Old Brands

June 30, 2011

I found this article on http://online.wsj.com/article/SB10001424052702304450604576416051591186240.html?mod=dist_smartbrief and wanted to post it. The article explains the fact that Kraft’s sales for their older brands like Miracle Whip and Athenos brand were starting to go down, so what they did was they “spiffed” up their marketing of the products by making interesting commercials for the products that really convinced people to buy those products. The sales for Macaroni & Cheese went up 10% and the Athenos brand went up 11% between March and May. Bottom line, Kraft’s new marketing approach is working very effectively.

 

In a new Kraft Foods Inc. commercial, a Greek grandmother tells a party hostess she looks like a prostitute.

The snarky Athenos hummus ad is part of Kraft’s effort to shuck its stodgy image and adapt decades-old brands like Miracle Whip and Macaroni & Cheese to the denizens of Facebook and Twitter.

The 108-year-old cheese maker has stirred up online discussions about the virtues of its Miracle Whip, dished out free mac-and-cheese through a Twitter contest, and made the grandmother, oryiayia, in its commercial popular enough to claim more than 150,000 Facebook friends.

[KRAFT]

Next month, Kraft will begin national ads for a contest in which divorcing couples can win money to pay for their split if, at least in part, it resulted from their differences over Miracle Whip. “We’ve seen Twitter posts about how people have broken up over this,” says Chris Kempczinski, Kraft senior vice president of meals and enhancers, explaining the campaign.

Schmoozing with customers online and reaching out to younger ones are key to Kraft CEO Irene Rosenfeld‘s effort to get the food company growing after years of stagnation.

They’re also the sort of thing activist investor Nelson Peltz likes to see at the companies in which he invests. A Securities and Exchange Commission filing this week showed Mr. Peltz’s Trian Fund Management LP is back in Kraft, with 12.2 million shares, or about 1%.

Mr. Peltz first bought into Kraft in 2007 and urged the company to focus on its best brands, but he agreed to keep a low profile and last year sold his Kraft stock. His renewed interest could mean he plans to push again. He declined to comment.

KRAFT_1

Associated PressKraft is trying bolder marketing to promote its products.

In any case, Kraft’s new marketing efforts are out of character for a company that long relied on wholesome ads depicting moms making lunch for kids and dads demonstrating how to dunk Oreo cookies.

And the new approach appears to be working. In the first quarter, Macaroni & Cheese sales rose 10%, and sales of Athenos hummus rose 11% between March and May.

The ads for Kraft’s Athenos line of hummus, feta cheese and Greek yogurt–aimed at younger, urban consumers–are a big departure for the company.

In addition to insulting the party hostess, the Greek grandmother calls a stay-at-home dad a “wife” and tells a co-habiting unmarried couple they’re going to hell. Indeed, the only thing yiayiaseems to like is Athenos brand products.

The ads have drawn criticism from Greek cultural groups that accused Kraft of pushing stereotypes. “We weren’t trying to be controversial,” responds Jill Baskin, Kraft’s senior director of cheese marketing communication. In any case, Kraft didn’t change the ads, and yiayia became a Facebook hit, with many fans posting comments saying she reminded them of their grandmother. Kraft also created a YouTube channel, “yiatube,” that has had almost three million uploads.

Kraft discovered that Twitter postings about its iconic Macaroni & Cheese number in the thousands on some days, so it created a contest called Mac & Jinx. When two people tweeted about the product simultaneously, they received a message alerting them to the “jinx.” The first to respond won free boxes of Macaroni & Cheese.

Separate research showed that parents who make Macaroni & Cheese for their children often sneak a bite rather than making their own because they don’t think it’s an appropriate meal for the whole family.

So Kraft introduced a “homestyle” Macaroni & Cheese that resembles a casserole and aired commercials showing parents being arrested for grabbing bites of their kids’ Macaroni & Cheese.

But it’s Miracle Whip, a tangy version of mayonnaise that was introduced at the 1933 World’s Fair, that has whipped up some of the most intense consumer reaction.

Kraft says Miracle Whip sales have been declining about 5% a year for many years, but with annual retail sales of more than $260 million (not counting sales at Wal-Mart Stores Inc., which doesn’t supply such data), it’s still an important brand.

Younger households, possibly influenced by gourmet cooking shows, have been turning to oils instead of such “spoonables” as Miracle Whip and mayo, Mr. Kempczinski says. In 2009 Kraft began airing TV ads with the tagline “Don’t be so mayo” that attempted to distinguish Miracle Whip from mayonnaise by showing hip young adults dancing.

After seeing conversations on Twitter and Facebook suggesting that people are sharply divided on the likability of Miracle Whip, Kraft poked fun at itself by featuring real people on both sides of the debate in commercials. In one, Pauly D from the reality show “Jersey Shore” says he couldn’t date a girl who likes Miracle Whip.

“Conventional wisdom would say that we were putting a spotlight on people who don’t like Miracle Whip, but the discussion was happening whether we liked it or not,” Mr. Kempczinski says.

Kraft plans new commercials about newlyweds who disagree about Miracle Whip. One will offer $25,000 toward the wedding of the couple that submits the best story about how they will manage their differences.