Dave’s Take

If someone had told me last year that radio would be the first advertising medium to break out of the recession-laden media market, I would have bet the house against such a ridiculous prediction. And just like my office football pool bets, I would have lost my proverbial shirt because as hard as it is to believe, RADIO IS BACK, BABY!

According to the Radio Advertising Bureau, radio revenue grew over 6% in the second quarter to an astounding sum total of $4.5 billion. This dramatic increase far exceeded industry expectations, which predicted a more reasonable sales growth of only 3.4%. So, the big question everyone is asking is WTF? How did a business as flat and predictable as radio break through with such impressive banner sales? Apparently, there are a number of factors that fortuitously combined to bring radio back from the abyss.

One big factor in radio’s rebirth is a dramatic uptick in national advertiser spending. National radio ad spending is up 17% already this year, which adds up to an impressive $1.2 billion in gross sales for the first six months of 2010. Leading the country wide sale-a-thon are the automotive and financial sectors, which have increased their national radio presence by 26% and 22% respectively. Other new radio players are the communications industry, (spending up 14%/$336 million) and retailers including Safeway and the American Beverage Association. Add to this list all the political spending an election year brings and it’s easier to understand why radio is booming.

Perhaps an even more important aspect in radio’s resurgence is found in the industry’s latest technological advancements. Not only has Nielsen finally delivered on its promise for a revamped “People Meter”, capable of more accurately reflecting actual listening numbers, but mega conglomerate Clear Channel has invested heavily in a new cutting-edge technology for contextual ad placement. How this new proprietary service works is fairly simple – Clear Channel can now insert a particular commercial immediately after specific programming or content is broadcast in any of its 200+ markets across the country. For instance, Clear Channel client Wal-Mart recently bought immediate adjacencies to any heavy metal song to promote its sale on AC/DC records and discs. Insurance giant Geico has also invested big ad bucks in this revolutionary offering and radio has delivered results that have exceeded all of Geico’s expectations.

Not only has the radio industry found reason for optimism, but the outdoor market is showing signs of growth for the first time in three years. The Outdoor Advertising Association just reported second quarter sales were up 3.6% over last year, for a total of $1.9 billion. While these numbers are encouraging, the rest of advertising industry, especially the agency biz still needs a push to get back on its feet. Hopefully 2010 is just the start of a great decade for advertising.

Even though the economy is still in the dumps; unemployment continues to climb; and foreclosures remain at all time highs, at least we can all take comfort in knowing the designer diaper business is booming. If, like me you had no idea the designer diaper business even existed, you’ll be happy to know that all is swell in Huggie land and that there’s enough baby droppings to keep it running.

How do people justify buying something as unnecessary as a designer diaper? Who knows, but there’s no shortage of suckers, er customers willing to pay a premium price for something most people choose not to think about. According to the Kimberly-Clark Corporation, makers of the Little Movers designer diaper line, sales are up a full two share points over last year’s record sales. Their biggest competitor, Proctor & Gamble, is in the race for designer dollars by launching their own Pampers by Cynthia Rowley Collection, featuring an astounding 11 different designs of disposable poop holders.

What makes these sales stats even more amazing is the fact that at any given time, there are on average only 12 million babies in nappies, nationally. The fact that over 2 million of them are now sold under a designer name is nothing short of amazing (or frightening). Part of the attraction is the apparent fascination new mothers have with denim, hence the uptick in denim designer diapers. “The simple insight is that moms simply love seeing their babies in jeans”, says Huggies brand manager Keegan Coulter. “Our (denim) Little Movers franchise is up 15%.” Mr. Keegan went on to add, “Nearly 60% of moms purchase denim for their babies before they even reach six months of age.”

Despite my dismay over the perceived irrelevance of these products, I must admit to admiring the agencies marketing them. JWT’s New York office gets full credit for the campaign tag line, “The coolest you’ll look pooping your pants.” Their online ad has received over a million views, proving once and for all what every bad nightclub comic has known for years, bodily functions are easy targets for promotion. Now, if only our elected officials can be forced into giving a s*%$ about the rest of the economy.

I have been fortunate to have worked with some great creative talent throughout my career and as a result, I have received my fare share of awards. I say fare share because I seldom submit entries for award consideration. My philosophy towards industry awards is “trophies don’t sell soap.” While it’s great to receive recognition from one’s peers, I believed that good creative should be driven by the desire to help your client rather than creating a campaign that will look good in competition. I say ‘believed’ because recent research has forced me to rethink my position.

According to a new study by the British consulting firm, Institute of Practitioners in Advertising (IPA), a definite link between creativity and effectiveness has finally been discovered. Their research examined 213 case studies of ad campaigns over the past eight years, involving such prominent clients as Cadbury, Budweiser, Audi, Honda and Volkswagen. Their findings? Creatively awarded campaigns are eleven times more effective than campaigns that were not awarded industry accolades. Eleven times – that’s a lot. How could I have ever doubted the value of Addies, Tellies et al.? Maybe because I still don’t buy the multiplier of eleven in terms of award winners over never-rans.

“Creatively awarded campaigns are a more reliable investment – they achieve greater effectiveness levels,” said Harnish Pringle, director general of the IPA. His report considered a wide range of qualifiers, including sales, profits, ROI, likeability, emotional appeal and market-share growth. “Creativity and effectiveness are inseparable. This is a good step, but there’s still a lot of work to do to show the exponential value of great creative ideas,” warns Bert Moore, chief strategy officer of Lowe Worldwide. Clearly the study is a dire warning to those CEOs that believe cutting costs brings the best return on investment.

While I’m still not completely convinced that a campaign’s effectiveness is vastly related to the number of Addies, Tellies or Cleos it garners, I have to admit the British study has opened my eyes to the realization of a connection between the two. I still need proof from an American research team that the same causality exists in our campaigns. After all, even though we share a language and common heritage, the Brits are in a world of their own.

As someone who has embraced the latest in technology for years, I find myself in a quandary over electronic books. I have played with Kindles and iPads and have found them to be perfectly fine for certain kinds of reading, i.e. on planes, trains and in coffee shops. But when it comes down to really reading, you know – when you can’t stop turning the pages as you lie in bed or sit on the patio in the early morning light, nothing can compare to the feel, smell and familiarity of a good old fashioned paperback book. While I do find myself using my iPhone’s Stanza app to read classics while I wait for my oil to be changed or some other boring necessity, I still can’t make the jump to e-books completely.

Perhaps the plastic and metallic feel of the electronic display unit betrays my underlying love of the feel of pulp. Maybe it’s because I can’t show off the title of the latest tome I’m enjoying with strangers as I pass by their tables at Starbucks. But for whatever the reason, I just can’t abandon my love of holding a book as I read. Like mowing a lawn, I find it totally satisfying to longingly look at the progress my bookmark has made in a reading. With e-books, all I get is a progress bar like my laptop battery display, which gives little reason for a feeling of accomplishment. I also enjoy the anticipation of the ending while savoring the last few pages a great read. With an e-book, all I get is a random number floating on glass.

I have one other complaint, however minor, about e-books – they seem slower to read. It isn’t something I can quantify, but the limited exposure I’ve had with them has lead me to feel they are not as easy to read as printed versions. While my speed complaint has led to several snarky comments from my e-book lovin’ friends, I now get the last laugh with the recent release of the first study of both the Kindle and iPads versus printed books. In the newly published usability survey from product development consultancy Nielsen Norman Group, both the Kindle and the iPad were found to read slower than printed books. The study revealed that reading speeds declined by 6.2% on the iPad and by 10.7% on the Kindle as compared to print. Ha! I knew I wasn’t crazy (at least when it comes to e-books).

Will this surprising discovery hurt e-book sales? Not very likely as evidenced just this week by James Patterson finally passing the one million mark in e-book sales. It seems that when it comes to books, much like with everything else, technology rules. Regardless of what sells to whom, the only way you’re getting my paperback is to pry it from my cold, dead, clammy fingers.

The phenomenal success of the iPhone and iPad has been both a boom and a bust for their proprietary wireless provider, AT&T. On one hand, having the exclusive rights to the millions of smart phones and fancy pads is like owning a money tree; but on the other, it is more like the sword of Damocles, waiting to behead the corporate giant of its profits and reputation for what many customers have described as horrible customer service and shoddy reception. After years of simply ignoring the complaints, AT&T recently decided to change direction and has begun to actually encourage customer input. Is this latest move an act of desperation or inspiration? I firmly believe it’s the latter and industry insiders are beginning to agree with me.

Just how serious is AT&T about rehabilitating its image? Plenty, as evidenced by their proactive hiring of “social media strategist” for customer care, Shawn McPike. After coming on board last August, McPike has moved to increase his department’s staff from one to 19 full-time customer care agents. Among those, are five who do nothing but deal with AT&T social media mentions, which number over 10,000 per day. How successful has their customer outreach been? To date, over 47% of customers reached via social channels like Twitter, Facebook and YouTube have responded to AT&T’s correspondence, resulting in over 37,000 service responses per month. In explaining their (AT&T) new approach to complaints, McPike stated, “It’s hard to sit there and let someone blast you, but that’s the only way we are going to improve. As much as it’s not pleasant, I have to fully acknowledge and encourage people who come to me and listen.”

To mollify customer criticism, the customer care team responds directly to those who engage them via Twitter (@ATTCustomerCare) or through their wall on Facebook. And while they can’t immediately provide any help concerning bandwidth complaints (the number one grievance), they can boast about AT&T’s response in spending over $19 billion this year alone to improve both its wired and wireless infrastructures. The question remains, is this enough of a response to garner increased customer satisfaction? “I’m glad AT&T is pushing forward. They’ve really let the media run the story for the longest time,” says Chris Brogan, president of corporate PR watch dog, New Marketing Labs. Brogan agrees with the philosophy that doing something is better than doing nothing in regards to negative publicity spread via social media sites.

As a long time customer of AT&T mobile services, I welcome any attempt at direct communications between the multi-national giant and its customers. To me, there is nothing more frustrating than failing to at least get someone to listen to your service-related complaints. Whether that channel of communication actually solves any problems is secondary to the mere appearance of concern from a provider. While it may at worst end up being just lip service, at least it satisfies the eternal need for all of us to at least be heard.

I am constantly amazed at the number of small business owners I meet who still don’t believe a website is worth the investment. Or even worse, they buy a cheap template for their site and then fail to update or promote it. Next to a bad location, nothing stymies retail business more than not having a presence on the Web. These clueless owners don’t seem to understand how successful branding starts and ends with the Internet. To put it simply – a business without a website is a business waiting to fail. In the 21st century, a business must have a topical Web presence to survive.

A recent Yahoo WOM (word of mouth) survey reveals just how important the Internet is for peer-to-peer WOM recommendations. Yahoo researchers discovered that while only 7% of all brand WOM conversations occur online, almost 40% of all WOM conversations are influenced by the Internet. Think how many times you or someone you know has started a conversation with, “I read on the Web today about…” This is WOM branding 101 and it’s gaining in influence on a monthly basis. Clearly, if you ignore the importance of online WOM branding you are ignoring a huge stream of potential customers.

Some more surprising facts included in the Yahoo report:
• The Internet is growing in terms of WOM importance. All other media sources including TV and newspaper are flat in regards to creating WOM.
• Two-thirds of WOM is positive, with only 8% considered negative WOM.
• Certain businesses, such as financial and automotive appear to do better than most in online WOM conversations.
• Very little WOM is attributed to social media sites, as most conversations take place face to face. The level of Internet influence in WOM discussions has risen almost 5% over 2009 conversations.
• Almost 15% of ALL conversations include something from people who found the information online.

These stats act to cement the belief that without a website, your business will have a heavy uphill battle to be successful. The study also reveals how important website content is to prosperity. Visitors expect to be educated about your product or service in a professional and timely manner. Failing to update or include all necessary information will not only fail to increase sales, but can actually work against a business. Just remember, creating good Web copy is easy…just put yourself in your customer’s seat and see if you get what you need from your portal. If not, it’s time to change the message before it’s too late.

What do Papa Johns, Pepsi and American Express have in common? Besides all being successful major American businesses, they have also all decided to truly test the power of the Internet by going out on a limb and placing all their current ad dollars into one basket – social media. No broadcast, no outdoor, no DM and no print – just their brands riding on the wings of Twitter, Facebook and Foursquare. Daring yes, but smart strategy? Only time will tell.

These big players are the just the tip of the iceberg should their daring roll of the dice prove profitable. I’m sure more than just a few TV stations are watching this play with bated breath. If it works, the floodgates will open and the current rate cards for newspapers, radio and TV will drop faster than the stock of British Petroleum. Even though social media has been growing tremendously over the past three years, it still remains an unproven channel for direct sales and marketing. Clearly, there are still a lot of unknowns in the social media world, but apparently not enough to scare off these big players.

“Social media is the hottest thing out there,” says Janet Fouts, a social media coach (whatever that title means). “The ones who succeed are the ones who will land the tech-savvies, the Gen Y’s and the Gen X’s,” she went on to explain. While few doubt the casual impact of social websites, no real studies have shown any quantitative traction for social media channels to actually move viewers into action. In fact, most studies have shown just the opposite – social sites are great for branding and promotion, but not for driving sales.

Not only are sites like Facebook and MySpace ill equipped for actual sales promotions, trying to force-feed social media subscribers promotional gimmicks may actually backfire for the advertisers. According to Jay Baer, a social media “guru” (again with the self-made titles) the growing number of social media promos could in fact create “participatory clutter” within the social media world. This clutter will only produce fatigue and frustration among the participants of social media sites. In short, using social media for advertising and marketing defeats the social aspects of the sites, thereby destroying any credibility a sponsor may have earned through previous sponsorships and support.

Will the inclusion of social media members in product design and promotion outweigh the “big brother” aspects of advertising in a previous ad-free environment? Who knows—but what I do know is that a lot of ad people will be watching these summer campaigns with a nervous eye.

As someone who has worked in the ad biz for more than 20 years, I can honestly say that I’ve never seen the industry in as bad a shape as it is right now. Every advertising and marketing person I know is singing the blues, wondering if the outlook on our profession is as dismal as our imagination has led us to believe. Now we have factual proof that our fears are indeed based upon truth. In the recently released, “Advertising Age’s Agency Report – 2010″, the dismal state of affairs in which our industry currently wallows is spelled out in detail. While it documents how bad things truly are, it also gives us hope in reporting the corner has been turned and perhaps recovery is on its way.

The severity of the national decline in ad revenue is astounding. According to the report, 2009 witnessed the greatest decline in industry revenue in the 66 years Advertising Age has tracked it. Statistics reveal that total revenue for the American businesses of advertising, marketing, public relations and media services dropped 7.5% to a total of $28.4 billion spent last year. Not surprising, this rate just happens to exactly match the 7.8% drop in advertising/marketing/PR jobs in 2009. Even the ever-growing health care advertising market witnessed a decline of 1.6%. And despite the lowest cable and network broadcast rates in years, media placement agencies reported their net income fell over 10%. Event marketing took its medicine as well, with promotion-based agencies suffering through a 13% decline in revenue for 2009.

The final shot of bad news documented within the report is found in the number of registered agencies in the United States. Between 2008 and 2009, the total number of ad agencies dropped from 912 to 883. In regards to specific positions, U.S. agencies laid off a collective 58,400 jobs during that same time. A depressing 107,700 ad jobs have been lost since the recession began in 2007, with January of this year topping out with the lowest level of advertising employment since 1994.

But before we all jump off the nearest bridge we need to contemplate the good news the AA report has contained within its pages. It seems (hopefully) the worst has passed and the future is beginning to look brighter. Optimists point to all the major accounts in play as a sign the ad biz is gearing up for its rise from the ashes. There are even signs some of the major agencies are either preparing to or are actually hiring new employees. I sure hope that’s true, as even the most optimistic advertising professional has had their world turned upside down for the past three years. I think we all deserve a change of fortune and here’s to wishing 2010 is the year it happens.

According to the latest Arbitron/Edison Research report, a full 48% of all Americans aged 12 and older are currently members of at least one social network. This rate of social membership is a dramatic jump from their 2008 study, which revealed a social network acceptance of just 24%. The doubling of social connectivity proves once and for all that social networking has gone mainstream and will only continue to grow in the future.

Even more surprising, it’s not just the young who are socializing online. While a full 78% of all teenagers and nearly 77% of people aged 18 to 24 have at least one personal profile page, almost two thirds of those Americans aged 25 to 34 do so as well. However, the real surprising numbers are found in the 35 to 44 age group, where over half now have personal profile pages online. “The use of social networking sites has expanded beyond the younger consumers, with substantial numbers of Americans over the age of 35 now using social media,” summarizes Bill Rose, SVP of marketing at Arbitron.

Along with the increased use of social networking is the growing perception of Internet importance among all age groups. For the first time since Arbitron began polling, more US citizens believe the Internet was the “most essential” among information channels, including television, radio and newspapers. The order of importance to individual users has the Internet at 42%, followed by TV at 37%, radio with 14% and not surprisingly bringing up the rear, newspapers with just 5%. Underlining these newly arranged priorities, the study revealed that now six out of ten households currently have Wi-Fi capabilities.

In addition to the dramatic increase in social networking, the study also disclosed the growing importance mobile texting plays. A full 45% of all mobile phone owners text message on a daily basis. Broken down by age groups, they discovered that 75% of all teens text, followed by 76% of 18 to 24 year olds, 63% of 25 to 34 year olds, 42% of those aged 35 to 44 and a growing 37% of 45 to 54 year olds text daily.

If nothing else, this report disproves the old adage of not being able to teach old dogs new tricks. Regardless of age, Americans are always ready for the next adventure and with social networking, they’ve adapted quickly. I wonder if the same will hold true when the 3-D revolution hits next year.

Like landlines, rotary-dial phones and 8-tracks, the neighborhood video store is going the way of the buggy whip. Once a cutting edge service, the video rental process has now evolved past mere brick and mortar to join other on demand services in cyberspace. Like nature, those who have adapted, like Netflix are booming; while those who cling to ancient business models, like Blockbuster are folding up their tents and turning out the lights.

Since their widespread proliferation in the 80’s, the video rental store has enjoyed a great run, but a run that is now drawing to a predictable conclusion. With Hollywood Video already in bankruptcy and Blockbuster preparing to file, the days of driving to the store for a movie are coming to an end. Services like Redbox and On-Demand are forcing the closure of thousands of video rental storefronts, nationwide. Hollywood Video has already closed over 800 of its stores and now Blockbuster has announced it will close 500 of its 3,500 stores this quarter. As for the rest of their locations, industry experts know it’s simply a matter of when and not if they are all going to close.

In retrospect, do the honchos of Blockbuster and Hollywood wonder where it all went wrong? Do they ponder the possibilities of “what if” in regards to their failure to adapt to the technological evolution sweeping the industry? Who knows, but what is obvious is that their hubris has resulted in a one-way trip to death row. After all, who wants to drive a mile to a store to rent a single movie for a week? Not many, as evidenced by recent industry stats that show store front video shops add up nationally to a mere 45% of the video rental market. Subscription services like Netflix control 36%, with kiosk-based systems like Redbox holding on to the final 19% of rentals.

Desperately trying to delay the inevitable, Blockbuster has announced its intention to remain in the game by installing as many as 10,000 Blockbuster Express kiosks this year alone. They are also trying to update their business model by starting a streaming on-demand service like Netflix. In addition, they are cutting deals with the studios to get DVD titles like “Sherlock Holmes” and “The Blind Side” 28 days before Redbox or Netflix gets them. While a step in the right direction, I find it doubtful they will succeed. The movie rental boat has sailed and Blockbuster is still sitting on the dock. They seem to have forgotten the most basic of business principles – adapt or die.