Predicting Trends: Ad Agencies Brace For 2010

Earlier this month, David Poltrack, chief research officer for CBS, predicted broadcast advertising revenue will increase 5 percent next year. Poltrack made the case that with the exception to some cable networks and NBC paying too much attention to overnight ratings, an increase in broadcast ad buys is good news for agencies.

While this might be good news for advertising agencies, Martin Sorrell, CEO of WPP Group, isn't as excited about incremental improvements. Like Sorrell, several holding company CEOs are pointing to extreme client cost-cutting as the main reason they expect flat organic growth in 2010. Most predict broadcast ad spending to increase less than one percent. Sorell himself said that an economic recovery is the only thing that will reverse the trend.

"I don't understand this degree of optimism. Basically, things are less worse than they were," he summed last week.

So which is it?

Brian Morrissey, writing for Adweek, presented an interesting perspective that finds the balance between marginal growth and no growth for advertising agencies. It might not be the economy. It might be a fundamental shift in the kind of agencies winning accounts.

"Yet the general expectation is that the number of these jobs will increase, particularly as digital initiatives become core not only as marketing channels, but as internal drivers of innovation," he wrote, citing Ameriprise, which was won over in a review that included Publicis & Hal Riney, as an example.

Whether or not you believe digital agencies can take the lead over traditional shops is less important than pinpointing what is happening in traditional shops today. By in large, many are missing a piece of the puzzle for 2010. It's not the economy. It's everything else.

The truth about "traditional" advertising agencies in 2010.

The moniker alone is one challenge. If advertising agencies get stuck with the label that they are traditional, they may be dead in the water within five years. Successful agencies, by their nature, have never been "traditional," a term that now applies to an overemphasis on big budget broadcast creative and ad buys. Unfortunately, that focus will not likely pay the rent next year.

Worse for "traditional" agencies attempting to wait out the economy will be the perfect storm. Despite being well-suited to move into social media, most have been lax in the uptake of the low cost counterpart. The result is three-fold beyond the moniker: agencies have adopted hiring freezes, demoralizing their creative teams; budgets are shifting toward digital, reducing mainstream budgets; and the lack of movement to understand the space at a slower pace than public relations has helped fuel their primary competition, which is generating increased revenue that will allow them to steal away "traditional" talent.

If you need more evidence, think back to the Forrester Research survey that found of 100 global interactive marketers, only 23 percent believed their "traditional brand agency" is capable of planning and managing interactive marketing activities; 46 percent did not believe they were capable. Where the Forrester Research study stops, however, is in adding the economic pressures of marketers over the last two years.

Unlike when advertising agencies were slow to pick up Websites as a viable marketing channel but then recovered by buying up Website design companies, many agencies are struggling too much this time around to repeat the process. So unless Sorrell and other holding company CEOs adjust their thinking beyond the economy, it seems likely digital agencies really will be in a better position to steal seasoned creatives, capture traditional accounts, and reshape the field.

Linking Emotions To Links: David Snyder

"Links are the product of what elicits an emotion from website owners, and the link builder that can tap these emotions is going to be able to manipulate the most important element in search rankings." — Dave Snyder, co-founder of Search & Social

When David Snyder, co-founder of Search & Social, a Web company focused on helping companies leverage the Internet, tied psychology to link giving, he seemed to understand the application of psychology as to why influential marketers would link to Invesp’s 100 Most Influential Internet Marketers.

The concept is simple enough. According to Snyder, Invesp is hoping to create content (a list in this case) that leverages the Internet marketer's pride, which in turn elicits the Internet marketer to link to the site on which they are being considered for inclusion. Ironically, these Internet marketers, when they do link to support themselves on Invesp's list, directly increase the perceived credibility and influence of the list.

Such tactics are not new. It was partly the basis for Technorati, the AdAge Power 150, and more recently Listorious. It also helped give a secondary push for several social networks, including Facebook, Twitter, and dozens of others that include ranking systems based on connections.

In some ways, it's tied to advice given out by too many social media experts — if you want links, link to other people; if you want comments, comment on other people's blogs; if you want to be "retweeted," retweet other people; if you want to be listed, list other people; if you want to be recognized as a leader in a particular field, pander to the perceived leaders.

The same can be said for the recent offerings in social media certifications. Several people who are attempting to cash in on the certificate program know that if enough of the right people buy into the program to give it a lift, then others will follow.

All of it points to an interesting component of social media and search. Quality, insight, or expertise are not always the defining factors in rank. Popularity tends to elevate popularity, companies pander to "influencers" and communication or marketing colleagues will comment where their comments will most likely be seen or, well, take your pick. (Don't misunderstand me. Many earn it.)

Where Snyder might be one degree off is in that "pride" is not the only emotion that lists and ranking systems elicit. Valeria Maltoni discovered that the psychology behind being included in a list covers a broad spectrum of emotions.

However, the results are the same. Lists tend to get noticed because it is in the self-interest of those listed to notice them and people cater to popular because it is in their self-interest to be as close to the source of popularity as possible. (Incidentally, this conversation topic has partly influenced an in-progress study and unrelated experiment for next year.)

Popularity topics aside, Snyder nails an important piece of the marketing equation.

Do you really want to know why Zhu Zhu Pets are popular this year? Why there are a range of emotions revolving around Tiger Woods? Or why CBS missed the mark on comedy?

Applying Snyder's model helps it make sense (minus the idea that "thoughts" are always part of the process). Simply put, marketers, advertisers and public relations professionals are in the business of creating messages or content that elicit a thought or emotional response in the hopes of converting those thoughts into action that results in a pre-defined objective.

Where many of them go wrong, however, is in either ignoring this part of the process, assuming influence over the media will apply the right context, or grossly miscalculating what thoughts and/or emotions will be tied to what they initiate.

Zhu Zhu Pets, for example, are hit toys not because of one "thought" but an entire array of emotions created by the wave of a hit product with limited supply as much as the humanizing customization (and originally low price point) associated with it. Different people arrive at the same action for different emotional reasons. In contrast, different people arrive at different conclusions about Tiger Woods based on different emotions as influenced by the context of how they view the situation. And, CBS missed the comedic mark once again because different people experienced the same emotion (disgust) when the network tried to find humor in linking pornography, children, and a well-defined icon of innocence.

Of course, these varied outcomes are also what makes communication situational and often unpredictable. Change any piece of the equation and the outcomes will be wildly different, online or offline.

Perverting Ads: Burger King And CBS

Not to be completely upstaged by the recent perversion of Frosty The Snowman by CBS in the U.S., Burger King is trying to sell breakfast food in the United Kingdom with a bikini-clad "babe" singing in the shower.

Except, she's not much of a babe. She can't really sing. And the bikini top — decorated with eggs, burgers, or other toppings as decided upon by site visitors — won't make you hungry.

If the singing wasn't bad enough, visitors can win a date with her. Burger King teases their intent by offering up that "you never know, it just might be the start of something beautiful (and she might even sing for you)!"

Dubbed as the first "guilt-free showercam," Cow PR seems to be following in the footsteps of Crispin Porter & Bogusky in trying anything to sell products that just don't stand on their own. The message is loud and out of tune: if the food sucks, punt with a publicity stunt.

Low Brow Comedy, Sex, And Publicity Is A Recipe For Disaster.

Although the Burger King stunt is still one rung up from the gutter that CBS created by re-dubbing a vintage clip of Frosty so he talks about his “porn collection” while surrounded by crowds of smiling minors, the direction is the same. Too many marketers and advertisers are still struggling in their attempts to exploit consumers and force viral campaigns at the expense of the brand.

Sorry. It's just not funny. What might be funny?

Les Moonves, CEO of CBS, could talk about his porn collection. Or, perhaps, John Chidsey, CEO of Burger King, could sing in the shower every morning.

That's what it's all about, right? Both ads would easily go viral and generate a whopper of publicity. They still might be tasteless, but at least we could see the faces behind the marketing funds that make these debacles possible.

Changing Journalism: Reynolds School of Journalism

If anyone is still wondering, and a few people still are, the changes taking place in journalism today are as permanent as any that preceded it. The changes are not only taking place with publishers at a snail's pace, but also in higher education at an increasingly hastened pace.

Funded by an $8 million grant from the Donald W. Reynolds Foundation, the Reynolds School of Journalism and Center for Advanced Media Studies at the University of Nevada, Reno, is specifically designed to help students "navigate the revolution in journalism." Most of the grant will be used to rewire and re-cable the journalism building, which includes a robust server system that will replace analog TV and radio facilities and create a new multimedia newsroom.

"This is a transformational gift," Milton D. Glick, president of the university, said. "It means our students will be even more prepared to communicate on every platform--print, broadcast, the Internet, social media and whatever comes next."

To help maintain the new infrastructure, the school is also launching a campaign to raise a restricted fund of $1.6 million. The changes are not restricted to infrastructure, but critical thinking and skill sets. Students who enrolled in the school this year were asked to purchase their own video camcorders.

The blended approach is well suited for the school, which offers the only accredited journalism program in the state. Even when I attended as a student several years ago, it helped shape the foundation for an integrated approach to communication.

While the core of the program is journalism, various electives provide students an opportunity to place an emphasis in other communication fields, including broadcast, public relations, and advertising. While the requirements remain the same, several new core requirements are being introduced, including multimedia reporting and production.

We see these additions to be critical for students entering journalism and communication today as they will likely serve them much longer in a field that continues to evolve, with significant crossover between public relations, news media, social media, and advertising. And even if some students do not see why every core class is important to their area of interest (as someone who had an advertising emphasis, I didn't appreciate reporting until years later), all of them will become vital requirements in the next decade.

It's equally vital for current advertising, public relations professionals, and even journalists to consider this emergent structure. As students from school, as well as several other progressive universities, many of these graduates won't have the same restrictive thinking that many practicing professionals seem to be hindered by today.

They won't ask questions like "which silo ought to be in charge of social media?" Or "Should I emphasize writing over video production?" Or "How do I distinguish professional journalist and a blogger?" In an integrated, interactive, portable multimedia-driven world, those questions will become as obsolete as "How do I pitch a non-news story."

Being Run In Circles: Zhu Zhu Pets

Within hours after the GoodGuide, an environmental and social consumer advocacy company, issued a release that some of the hottest toys this season contained levels of antimony and chromium that exceed federal standards, the Internet lit up with with searches for Zhu Zhu Pet recall information.

Except, consumers couldn't find much credible information beyond opinion and speculation. There was no recall.

The truth was that Cepia LLC, the manufacturer of Zhu Zhu Pets, had met federal standards and stricter regulations overseas. And in response, the company immediately issued a statement that Mr. Squiggles and Zhu Zhu Pets are “absolutely safe and has passed the most rigorous testing in the toy industry for consumer health and safety.”

The statement went on to provide a detailed accounting of testing procedures, which include independent tests several times during production and again before the items are shipped from the factory. It also included CEO Russ Hornsby's personal assurances that as a father and toy maker with 35 years of experience in the toy industry, that the company not only strives to meet U.S. and European standards, but strives to exceed them.

However, even with the statement, it took two days before Zhu Zhu Pets would be exonerated, with the GoodGuide retracting its release after the U.S. Consumer Product Safety Commission said the toy was in compliance. The discrepancy was in the testing methodology, with federal standards employing a soluble method and the GoodGuide using a surface-based method.

In one of the better accounts of the testing discrepancies, Jennifer Taggart, the founder of The Smart Mama, helped set the record straight. She points out that the U.S. standard is 60 ppm soluble antimony in paints and surface coatings used on children’s toys, not antimony as found with the Niton XRF analyzer used for testing surfaces. She goes on to conclude: "I call out greenwashing all the time. It goes both ways, you know?"

In an era of infinite information, inaccuracy spreads fast.

Even after the GoodGuide results were refuted, some news outlets still ran with the initial, erroneous release. Bloggers, unaware of the retraction, are still advising parents to think twice.

One suggested parents avoid the toy because antimony limits set today will likely be lowered tomorrow. Another suggested that because they are made in China, they are tied to impoverished and exploited people. And yet others doubted the U.S. Consumer Product Safety Commission investigation and clearance, given that GoodGuide was once featured on Oprah and, supposedly, is conducting a more rigorous test (even though they are not).

In a summation of all the content, most opinions were wrong and most coverage, even by news outlets, were nothing more than a reactionary game of "he said, he said." Specifically, news outlets covered the allegation, the response, outside opinions, and eventual retraction with most never investing any time in researching the truth.

Antimony is not a random chemical as many inferred. While dangerous in concentrated doses, it is a metal used to meet other safety standards as a flame retardant. It is frequently added to children's clothing, toys, crib mattresses, aircraft, and automobile seat covers. It is also used in electronics, paints, rubber, ceramics, enamels, and some drugs. So while GoodGuide still maintains it is cause for concern in any amount, its presence does not mean the toys are unsafe.

Federal testing methods (soluble) consider how much of the substance could be removed by dermal, ingestion, or inhalation at 60 ppm. The GoodGuide testing methods do not. While the GoodGuide regretted the error, it hasn't come close to offering an apology to the company or consumers nor did its retraction statement mention the toys by name.

GoodGuide makes everyone run in circles for little or nothing.

The general predisposition of the public is that companies, for love of profit, are bad; consumer advocacy groups, despite being profitable, are good; and news organizations vet the facts. Sometimes, this is true. Other times, with increasingly regularity and in this case specifically, it's not.

However, with the adoption of infinite information as a model, things have changed. Here, the advocacy group sensationalized erred testing methods, which mainstream and social media helped propagate at the expense of what appears to be an honest toy manufacturer with the biggest hit of the season. The lesson here is that the quantity of information doesn't always lead to more truth but rather popular opinion regardless of the truth.

The lesson that has yet to be learned is how future public relations professionals will be taught to manage this information. By our count, most are too busy rushing to social media in the hopes of becoming client cheerleaders and influencer relationship brokers.

While Cepia LLC did a better job defending its product as safe than the GoodGuide did in in admitting it was wrong, the erred information outpaced accurate information via social media. Most news outlets have reported follow ups, but few have amended their original stories.

Incidentally, the Bakugan 7-in-1 Maxus Dragonoid and the Fisher Price Laugh & Learn Learning Farm were also included as hazardous in the original GoodGuide release, but escaped the same scrutiny.

Going Social: Inc. 500 Companies

The Center for Marketing Research at the University of Massachusetts, Dartmouth, released a new study that tracks social media usage among Inc. 500 companies. It has tracked social media adoption among Inc. 500 companies since 2007, when it noted the fastest-growing companies tended to adopt social media at a faster rate than Fortune 500 companies.

Highlights From Center for Marketing Research 2009 Study

• Social networking leads in adoption. Seventy-five percent of Inc. 500 companies are very familiar with social networking, which is up from 57 percent in 2008.

• Twitter, far and away, is among the most adopted social networking tools being adopted by Inc. 500 companies, with 75 percent saying that they are very familiar with it.

• Social media is mainstream. Forty-three percent of Inc. 500 companies consider social media important to their business, with 91 percent of Inc. 500 companies employing at least one tool in 2009.

• With the exception of Twitter, 87 percent of companies employing social media report that the tool they use has been successful for them. (Twitter returned an 82 percent success measure.) However, most companies seem to overemphasize the importance of hits and comments as successful measures.

• Blogging follows social networking, but remains well ahead of other social media tools, with 67 percent of Inc. 500 companies saying they are very familiar with blogging and 45 percent hosting at least one blog. Blogs were also among the top cited tools to be adopted by companies not currently engaged in social media.

• Message/bulletin boards, online video, podcasting, and wikis have all tapered off in interest, with less than 50 percent of Inc. 500 companies very familiar with the tools.

While adoption is high, execution is haphazard.

Despite the high adoption rate, most companies seem to be adopting social media without a communication strategy. While 87 percent use social media, only 70 percent monitor their brands, only 46 percent consider social media very important, and only 36 percent have a written employee policy. Less than 40 percent employ social media for any other communication, such as with vendors, suppliers, and partners.

Based on the study, it seems most Inc. 500 companies are adopting social media tools that are among the most reported about, with little regard to benchmarking, or establishing measures beyond reach. For the most part, Inc. 500 companies become involved in networks that enjoy the most media coverage, regardless of their audience. In contrast, more than half use social media to screen potential employees.

It is important to note that only 148 of the Inc. 500 companies participated. However, the participation rate is approximately the same as previous years, which suggests trending might be the most important aspect of the study. The full report is available online.

Earlier this year, the Center for Marketing Research at the University of Massachusetts, Dartmouth, also released a benchmark review of Fortune 500 companies' blog adoption. It found 16 percent (81) of Fortune 500 companies hosted blogs, with 38 percent of those with blogs belonging to the Fortune 100.