50 Marketing Trends found for Agencies / Creative

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P&G Applies Green Thumbscrews to Ad Shops, Media Agencies

"There's no prude like the reformed whore," as the old proverb has it. Likewise, there's none greener than yesterday's environmental Godzillas. [Interpolates MarketingTomorrow's legal-eagle hastily: "Procter & Gamble (a doughty defender of planet earth's diminishing assets for the past five hundred years) has never, not once, ever, at any time, fallen into the category of 'despoiler'."]
  Meantime, on Wednesday May 12 the planet's biggest advertiser unveiled its Supplier Environmental Sustainability Scorecard for key suppliers, with the first reports due July 1. And among those 'key suppliers' are advertising  and media agencies ... 

[Estimated timeframe:2011 onward]

As a P&G spokeswoman pointed out, the 'Sustainability Scorecard' was in part crafted by Sir Martin Sorrell's Green Grenadiers. However, fearing this news might trigger a spate of nervous tics on Madison Avenue, the Champs d'Elysee and Charlotte Street, the spokeslady reassured that "agencies and others won't be held accountable for answering questions that don't pertain to their industries".

However, P&G remains schtüm as to the names and numbers of suppliers it requires to file the first round of questionnaires. The Cincinnatti colossus was likewise silent as to whether any media companies are yet participating.

But the eventual goal is for all P&G suppliers to file the scorecards, following evaluations of the first phase of reporting. The latter was developed by a committee comprising twenty major suppliers.

The scorecard "represents the next step in P&G's commitment to environmental sustainability," says P&G chairman/ceo Bob McDonald. "Keeping sustainability at the core of our business fuels innovation and strengthens our results."

P&G suppliers will have one year to prepare their data before their performance ratings can adversely affect their supplier status. Eventually, though, P&G will use the scorecard to determine sustainability ratings as part of P&G's annual performance reviews.



All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: AdAge.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=5180

UK Advertisers' Environmental Claims to Undergo Greater Scrutiny

Following a twelve-month period of industry-wide consultation, Britain's Advertising Standards Authority has unveiled details of new rules governing what advertisers may - or may not - claim for their products. Especially prominent in the ASA's crosswires is the hazy issue of of environmental credentials - which will face far tougher future scrutiny.

[Estimated timeframe:September 2010 onward]

The ASA's Committee of Advertising Practice, along with BCAP, the body governing broadcast ads, has simplified the current code from four sets of rules into a single document which contains a new provision for “social responsibility” - an amorphous term intended to prevent advertisers' exploitation of loopholes in the Code.

The most crucial changes attempt to stifle “greenwash”, where advertisers or agencies exaggerate a brand's environmental benefits.

According to the CAP, the claimed benefits “must be supported by a high level of substantiation”.  Failure to do so means that advertisers could be penalised for omitting “significant information”.

Any “green” claims must cover the full “life cycle” of a product, CAP says, and also acknowledge areas where scientists’ opinions are divided.

The Advertising Standards Authority has the notional power to ban advertisements it judges to be 'misleading', usually after complaints from the public.

The new guidelines will come into effect in September2010, although they do not have the force of law and depend on the voluntary cooperation of the UK advertising and media industries.


All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: FT.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=5093

New Insurance Policies Help Agencies Control Production Costs

A few years ago Dianne Richter, an ad agency veteran who's clocked time in the broadcast departments of shops such as JWT, Y&R and Saatchi & Saatchi, found herself on a nightmare of a commercial shoot. While driving to location, police had blocked the production team's route for several hours after a suicide jumper perched himself on a bridge.
With daylight fading and under a tight production schedule, the team scrambled to rent boats to ferry their rigs and crew across the river to the set. Quick thinking saved the commercial, but those last-minute changes came at a steep cost to the client.

The good news for advertisers is that broader protections are being offered under recent changes in the U.S. insurance market. New, broader insurance programs are becoming available to fill gaps and cover things such as travel delays, dangerous weather conditions and other unforeseen issues that can crop up unexpectedly and quickly skyrocket production costs.

Traditionally, U.S. insurance policies for TV commercial shoots have covered claims only for physical damage. If a house being used in a commercial shoot burns down, for example, or if camera equipment is stolen. Arranging insurance is a small -- not to mention pretty unsexy -- step in the lifespan of a TV spot, but in a tough economy that has squeezed marketers' budgets, it can help prevent extra costs from being tacked on when least expected.

The new protections are the most significant change in TV production insurance in the American ad market in years, said A. LeConte Moore, managing director at Dewitt Stern, a century-old risk insurance brokerage that specializes in insurance for media, entertainment and ad industries.

According to ad industry executives, the average cost of a TV spot these days runs about $250,000. But depending upon the complexity of the job -- the location of the shoot, music rights, celebrity actors -- the costs can reach a high-end of between $1 million and $2 million.

Insurance premiums tend to cost about 2% of a shoot, and the broader coverages being made available by the likes of Entertainment Brokers International, part of OneBeacon Insurance, today aren't all that higher. So if a production budget is $200,000, and carries a $3,400 insurance premium, for another $200 a production can manage a variety of surprise contingencies.

"It feels like insurance on steroids," said Ms. Richter, who now works at New York-based independent Droga 5, handling production estimates and contracts for the agency.

Back in the day, production companies would arrange insurance for commercial shoots and bill it back to clients. Now, ad agencies take on the insurance responsibilities, buying coverage in bulk to cover the production company and the agency, as well as clients.

"We are the stewards of production dollars," said Ms. Richter. "Production companies are being asked to produce things with limited funding, agencies are being asked to produce better commercials with limited funding, and our clients are watching their bottom lines. [The new policies] eliminate worry that these very unusual but devastating losses could result in cost changes and overages for our clients."

It's not just individual shops that are taking notice. Industry insiders say that over the past few months, a number of large ad agency holding companies have begun re-examining their insurance arrangements. Paris-based Publicis Groupe recently re-upped its insurance contracts to gain broader coverage on behalf of all the agencies under its umbrella, such as Leo Burnett, Fallon and Digitas.

"Reducing the risks associated with their investment in commercial production has always been important, and in the current economy it has become critical," said Richard Meehan, Publicis' North American treasurer. "This new broadened coverage supports this effort and could likely lead to more commercials being made, as it will let brands 'sleep easy' about risks on productions that they otherwise may not have done."

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: AdAge.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4889

Controversy reigns over ad agency's 'crowd-sourcing' campaign

US ad agency Crispin Porter + Bogusky recently ignited an online debate and protest campaign on Twitter when it crowdsourced the design of a product logo for Brammo, an electric motorcycle start-up. Criticism mostly focused on the high-end agency taking such a low-cost route, as well as its putting creative into the hands of outsiders when experts were not just available, but the very ones passing it off.

For Brammo, crowdsourcing was more than just a way to stretch its budget. "We wanted to blur the line between [who works for Brammo] and [our] products," says Brian Wismann, the company's director of product development. "And it created its own buzz."

Crowdsourcing creative -- which includes user-generated contests, and receiving input on briefs and designs -- is an increasingly popular option for marketers that want to add a consumer-engagement punch to their campaigns. It's also controversial. Detractors call it gimmicky, say it encourages low-quality creative, and eschews strategic thinking and relationship management. But love it or hate it, this much seems clear: Not only is crowdsourcing here to stay, it's picking up steam.

HP, for one, recently doled out $300,000 in prizes for its You on You Project, which asked participants to create Web videos in the style of its campaign, "The computer is personal again." And Microsoft, pushing the idea that its users contributed to the development of its Windows 7 operating system, is asking for 7-second video demos for a Web series highlighting its features. Gayle Troberman, gm for advertising and consumer engagement at Microsoft, says, "The masses are the best way to deliver a message."

But ad professionals who view crowdsourcing as a gimmick say these exercises are nothing but sweepstakes for the digital era. And because they're driven by a desire for consumer interaction, they note, they're more about the process than the final product.

"I'm interested in the high end of marketing creativity and production, and don't think you can get anything high end" with crowdsourcing, says Benjamin Palmer, co-founder of The Barbarian Group. "By definition you're asking people [to contribute] who are not at the top of their field."

Some, however, believe creative does not have to suffer. Last month, Unilever, after working with Lowe London for the past 15 years on Peperami, decided to turn the brief for its next campaign over to members of ideabounty.com. "We felt we could get ... even better content by opening up the brief to more people than we would typically get from an agency or agency team," says Matt Burgess, managing director at Unilever U.K. So far, he adds, they've received 1,200 submissions.

Others point to Frito-Lay's Doritos consumer-generated ads for the Super Bowl -- the last one of which topped the USA Today poll that many marketers use as a metric of game-day success -- as an example of crowdsourcing that delivers if not quality creative, qualitative success.

Economic motivators may certainly help drive the growth of crowdsourcing. For a brand like Brammo -- which gave $1,000 each to five winners of its contest -- crowdsourcing meant the agency could provide a service the client might not otherwise have been able to afford.

Burgess says Unilever sees huge cost savings with crowdsourcing. Ideabounty, he explains, told them to "put up $10,000 ... as the appropriate reward, which is well below what you would pay an agency for their idea." Unilever will produce the winning idea with a production partner.

"We would not have done this just for commercial reasons alone," Burgess adds. "It's to get our advertising from good to great."

Not everyone claims savings: Doritos' director of marketing, Rudy Wilson, says, "At the end of the day, we're spending money to get awareness of this program out. The money we're saving is being repurposed."

Steve Simpson, partner and creative director at Goodby, Silverstein & Partners, an agency whose clients include Doritos, HP and Netflix (which also has done consumer-generated content), says crowdsourcing is slowly maturing. "As crowdsourcing [grows] from being a gimmick, a big sloppy hug of Web 2.0 openness, the products and the process will become more professional," he says. "The crudity of the pioneers will be scorned and the work will begin to show more finesse."

A few ex-Crispin staffers are so confident in the wisdom of crowds that they've just launched Victors & Spoils, a shop based on the principles of crowdsourcing. On his blog, co-founder John Winsor describes the creative department as being staffed with traditional art directors and copywriters as well as "a global digital community."

Of course, the more crowdsourcing grows in popularity, the more the "crowds" may demand more than a stack of cash for their contributions.

"Who knows how many of the ideas that don't win prizes nonetheless influence a company's thinking down the line -- without payment to the contributors," says Simpson. "Crowdsourcing is here to stay, but expect both parties to it to begin to cast a colder, more businesslike eye at the other."

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: Adweek.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4858

Unilever Brand Eschews Advertising for 'Crowdsourcing'

Last week an article hit the advertising press that sent shivers down the collective spines of Madison Avenue. One of the world's largest advertisers, Unilever, fired its agency, Lowe, London, on the Peperami brand. Peperami is a popular snack in the U.K. roughly equivalent to a Slim Jim.

What made the decision doubly painful for Lowe was that it was fired not for doing a bad job, but for doing a good one. Matt Burgess, managing director at Unilever, said, "Lowe has done great work on the account over the years. They've created a strong creative vehicle that's extremely well defined and portable. But their work has created a problem for them, because it makes Peperami the obvious candidate for crowdsourcing."

Agencies get fired every day. What makes this case unique, however, is that the agency was not replaced by another agency; it was replaced by what Unilever claims to be a "crowdsourcing" solution.

Now this all sounds very leading edge in a digital, social-media sort of way. But let's dig a little deeper and ask ourselves if Unilever's approach is actually crowdsourcing or something very different.

First of all, what exactly is crowdsourcing? Perhaps the place to start is to ask what we mean by a "crowd," and more specifically, a digital crowd. The best place to look for that definition is in James Surowiecki's seminal 2004 book "The Wisdom of Crowds." It is safe to say that the term "crowdsourcing," which was coined in Wired magazine in 2006, owes its origins to Surowiecki.

Surowiecki tells us that a digital "wise crowd" must be diverse, so that lots of different opinions are represented. It must be decentralized so no single person can influence the outcome. It must be independent, so that "good" information can balance out "bad" information. Finally, it must be collaborative, so that it can result in "collective intelligence." Wikipedia, for example, is all of these things.

The last pointabout collective intelligence is critical. Crowdsourcing at its core is about mass collaboration. Unilever's move, on the other hand, is nothing of the sort. Unilever is looking for no collaboration here. What it is looking for is to get lots of high-quality creative ideas at a significantly lower price. End of story.

What it has created is nothing like crowdsourcing, but rather an ongoing contest to create new advertising executions at a vastly reduced price. Unilever is offering a bounty of $10,000 for the person who can develop the winning TV and print ideas. Unlike other famous brands that have sourced creative from consumers, for example Doritos for its Super Bowl ads, Unilever is specifically looking for professional ad people to put forward ideas. Advertising Age's story about the Peperami move, from a few weeks back, noted that professionals in creative businesses were specifically "who the pitch was marketed to."

The best entry will win. There will be no mass collaboration of the type Procter & Gamble uses when it taps InnoCentive.com to connect to a crowd of over 140,000 scientists and engineers worldwide to solve research and development dilemmas. Mr. Burgess admitted in the article that cost was a key factor, as well as the ability to get more ideas from more professional creatives.

Now don't get me wrong, I have no problem with Unilever's move. It may be a look into the future where professional ideas are more numerous and much cheaper, thanks to online outreach, fitting in nicely with the pronouncements of Ad Age's own Bob Garfield.

But please, Unilever, don't insult our intelligence by packaging it as a leading-edge mass-collaborative exercise, an exercise that truly represents a step forward toward creative collective intelligence.

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: AdAge.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4801

A Pop-Up Agency for London's Mom-and-Pop Shops

 LONDON: Last week, London's RKCR/Y&R went hyper-local, applying creative expertise honed on clients such as Virgin, BBC, Land Rover and Marks & Spencer to Polish Chap Who Sells Dumplings, local band Dead on TV, the Camden Arms pub and about 25 other neighborhood entrepreneurs.

For the week starting Aug 24, RKCR/Y&R set up a pop-up agency, RKCR/Y&R Local, a few blocks from its HQ in Camden Town and offered its creative and strategic services to local small businesses and sellers in the Camden markets.

The pop-up concept is part of an ongoing program created by RKCR/Y&R and facilitated by Camden Town Unlimited, an organization of local business owners with a mandate to boost the area's commercial fortunes.

RKCR/Y&R had been working with local government body the Camden Council and CTU for the past year, and had initiated the creation of a Creative Council, bringing in talent from some of the other creatively driven companies in the area, such as MTV, Hugo Boss, Proud Galleries and the Roundhouse. The pop-up-shop idea came out of one of the Creative Council sessions. The program, launched in June, offers a way for local landlords to make use of empty retail space and attract new tenants.

"We've been realizing that in the downturn everyone needs a bit of help," says RKCR/Y&R Executive Creative Director Damon Collins. "They've been talking to us about the fact they've had a lot of people foreclose on leases, etc. We started saying, 'Let's do something with the shops. We've been helping the council, the town; why don't we help the businesses?'"

While perhaps best known as the urban setting for the film "Withnail & I," the London borough of Camden is also famous for its stall markets. The neighborhood is known as a music and art hub, but can get a little gritty. "It's a real town," Mr. Collins said. "You'd never say it was pretentious. It's got an edge to it."

Since opening RKCR/Y&R Local, the agency has worked with about 30 local entrepreneurs. Among them: the LCB Surfstore, the aforementioned seller of pierogi dumplings; a local purveyor of frozen banana treats; the Camden Locks hair salon and tattoo parlor; an off-license (liquor store); and others.

The Local shop was anchored by two agency creative teams and a strategist, and a series of other volunteering creative teams rotated in throughout the week. The shop is helping out with everything from posters and other advertising to logo design, business cards, packaging and websites. RKCR/Y&R is doing deals to score affordable media for its new clients and also asking those clients for quid pro quo media deals, where one retailer, for example, will offer to post ads for another local business in exchange for RKCR/Y&R Local's services. On Friday, the agency hosted a showcase of some of the creative product produced for its Local clients.

While the pop-up idea is an admirable example of a company giving back during harsh economic times, in an era when ad agencies are exploring more entrepreneurial avenues, the effort also allows the shop to stretch its business and creative perspective. Mr. Collins called it a "great five-day research project" and a "reality check."

"Every single client is looking for real insight into the consumer," he said. "Here, you're actually out on the street. You're not in an office paying people to ask people questions. You're listening to people and talking about what real people are thinking and doing."

RKCR/Y&R Local is the third business to occupy the pop-up store at 22 Chalk Farm Road. "We're very keen to find more premises in the area so we can continue the program," said CTU Chief Executive Simon Pitkeathley. "We've proved that this initiative makes properties easier to let and lets them more quickly." The reaction to the pop-up ad agency among local retailers has been "overwhelming," Mr. Pitkeathley said.

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: AdAge.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4697

Toyota Alarms Agencies With Plan to Launch Marketing Companies

Toyota Motor Co. is in damage-control mode after an announcement suggesting the carmaker will bring its more than $1 billion global advertising account in-house prompted panic and confusion at its U.S. ad agencies. Toyota, which unseated General Motors in 2008 as the biggest carmaker in the world by sales, issued an announcement July 28 out of its Tokyo headquarters detailing the launch of two new marketing companies: one to "handle marketing within Japan" and another company to "carry out and assist global marketing."

[Estimated timeframe:Q3 2009-onward]

The announcement went on to detail plans for the two ventures, saying Toyota intends to staff each with between 100 to 150 employees and capitalize each company with an initial infusion of more than $1 million. Toyota's newly installed president, Akio Toyoda, was tapped to oversee the domestic-marketing company, while former Toyota marketer Hiroshi Takada has been named to lead the company overseeing marketing outside Japan, the announcement said. The carmaker, which is deliberating on names for each of the entities, said its new marketing firms are set to begin operations Jan. 1.

Toyota spokeswoman Ririko Takeuchi told Advertising Age sibling Automotive News the moves were being driven by the Japanese automaker´s desire to make its marketing and advertising operations a free-standing entity empowered to make quicker decisions. She said the new companies will "handle advertising, sales promotion and global marketing strategy" and "focus on marketing issues globally and help create a unified message."

It´s no surprise, then, that many at Toyota´s ad agencies were left scratching their heads about the status of their relationships with the carmaker.

Agency reaction
Several executives at roster agencies told Ad Age they had no information about the motivations behind Toyota's moves, and knew no more about the situation than what was being reported in the press. Adding a layer of concern was that the Toyota announcement followed recent moves by rival Hyundai to bring its advertising in-house. Hyundai shuttled lead U.S. shop Goodby, Silverstein & Partners off its account and is transitioning creative duties to Innocean, the agency owned and controlled by Hyundai's founding family.

Kurt Ritter, CEO of El Segundo, Calif.-based Team One, which handles Toyota´s Lexus brand, said in an internal memo to staffers, "It has been brought to my attention that some of our team members here at Team One are expressing concern relating to a recent online posting stating that Toyota will assume ´in-house´ responsibility for advertising currently created by [Toyota agency Saatchi & Saatchi, Los Angeles]." He went on to say that the announcement from parent Toyota Motor Corp. was being misconstrued. "Please note that neither [Toyota Motor Sales USA] nor its agencies of record are referenced in this press release. I am sharing this information with all of you to alleviate any concerns."

Saatchi and Team One serve as agencies of record for the Toyota and Lexus divisions, respectively, of Toyota Motor Sales USA. They handle creative, digital and media duties for Toyota and Lexus, with the exception of broadcast-buying duties, which are handled by ZenithOptimedia. Toyota is also one of Dentsu America´s biggest clients; the agency handles work for Toyota Motor Corp. North America and the Scion brand. Saatchi, Team One and ZenithOptimedia are part of Publicis Groupe.

A Dentsu America spokesman would say only that the moves had no affect on the agency´s U.S. business, while representatives for Saatchi & Saatchi and ZenithOptimedia referred calls to the marketer.

´Great deal of confusion´
Mike Michels, a spokesman at Toyota Motor Sales USA, conceded that the press release from parent Toyota Motor Corp. is causing a "great deal of confusion."

Mr. Michels said North America has, and will continue to have, more autonomy in terms of making marketing decisions than many of the other 150 markets in which Toyota does business. "Many are smaller and need marketing resources the central group in Japan can offer."

"Reports that all agencies will be fired and the all the work brought in-house are totally off base," said Mr. Michels, who described Toyota´s creation of two marketing companies as "an internal reorganization of the existing global marketing organization."

Whatever that means remains to be seen, as Toyota indicated the two new structures will be up and running in a matter of months. The moves come as the Japanese car giant faces a nearly 35% sales drop in sales amid one of the worst years in the history of the auto industry. Toyota posted its first operating loss in seven decades in December and a loss of $38.7 million in its most recent earnings period.

In the U.S., Toyota Motor Corp. ranks as the No. 2 ad spender behind General Motors Corp., but brand Toyota was the No. 1 spender in 2008, ahead of GM´s Chevrolet. Brand Toyota alone spent nearly $825 million in measured media in 2008, according to Ad Age data.

This should be no surprise to followers of Japanese business practice. The Toyota Production System which sprang full blown from the Kaizen movement introduced by Dr. Deming in 1945 is the backbone of Lean Manufacturing. One of the tenets of Lean Manufacturing is the diminished role of "outsourcing"to allow more finite control of a given practice or process.

On Jan.2, 2008 http://madisonavenew.com/mad172.html published a "what if" article on how Toyota could migrate Lean Manufacturing principles to develop a Lean Advertising process by taking the business in-house. The stated purpose in the article was to devise a means of applying the Toyota culture of "continuous improvement" to the practice of advertising. Apparently someone at Toyota took note. But not someone at Team One.

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: AdAge.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4625

Coke Pushes Value-Based Agency Compensation Model

Coca-Cola Co. is trying to start an industry-wide movement toward a "value-based" compensation model like one it's adopted that promises agencies nothing more than recouped costs if they don't perform -- but profit margins as high as 30% if their work hits top targets.

[Estimated timeframe:2009-2012]

Usually tight-lipped Coke disclosed its plans at the Association of National Advertisers Financial Management Conference in Phoenix on April 20, saying it wanted to nudge the industry into adopting value-based models as a standard practice. If it succeeds, agencies accustomed to being able to book profits long before they deliver work won't have that sort of certainty anymore.

"We want our agencies to earn their profitability, but it's not guaranteed," said Sarah Armstrong, Coke's director of worldwide media and communication operations, the driver behind the move for Coke, which spends some $3 billion a year on global advertising. "We need them to be profitable and healthy, but they have to earn it through performance."

Coke's shift from paying a flat fee based on hours worked began in five markets last year. The model is rolling out in at least 35 more this year and will encompass all of the company's ad- and media-agency relationships by 2011. The concept of value-based models has been a hot topic in the industry for at least a decade, but few marketers have attempted to apply it. (Procter & Gamble is perhaps the furthest along but uses it on only 12 of its brands.)

Ms. Armstrong took pains to note that the process involved considerable give and take with agencies that were briefed on Coke's plans and were given opportunities to voice concerns. "There were some pointed questions," she said. "But our agencies read the trades, and they know what P&G did. They knew at some point someone would take this path; they just didn't know it would be us."

Put into action
Coke's agencies include some of the most creative in the media and agency worlds, including Wieden & Kennedy, Crispin Porter & Bogusky, Starcom MediaVest Group and Mother, among dozens of others. Some agency executives, speaking privately, said they couldn't argue with the theory behind the shift, but had concerns about how it might work in practice.

"Look, if you're talking about getting paid more because you're adding value to a project, I think that's terrific," said a senior executive at one Coke agency that has yet to switch to the new model. "The tricky part is how you define value."

Traditionally, defining the value of an assignment has been the job of the agency, which tells its client how many people and how much time it'll need to accomplish a given project. Under its new model, Coke will determine the value of assignments based on a range of factors including the work's strategic importance, the talent involved and whether other agencies could duplicate the work -- if they could, it's worth less.

After those factors are used to set the value of a project, the agency's performance and the business results that follow determine what, if anything, the agency deserves to be paid beyond its upfront costs (which, in practice, are sometimes inflated). If all targets are hit, the agency could make as much as 30% on a project; if all targets are missed, the agency won't make any profit at all.

Supporters of the approach acknowledge that it's not a perfect approach to measure the value agencies add, but they call it a massive improvement over a status quo that equates hours spent with value delivered. "I'd rather be approximately right than precisely wrong," said Tim Williams, founder of the agency-compensation consultancy Ignition.

Effort vs. value
Other major marketers present perked up at Ms. Armstrong's presentation. "It got my juices flowing," said Keith Levy, VP-marketing at Anheuser-Busch, which slashed agency fees earlier this year. "We agree with Coke that [agency] effort doesn't necessarily equal value ... but it also shows you how much time and effort it takes to get there."

Though the shift comes amid a brutal economic downturn that has prompted many marketers to slash agency fees to save money, Ms. Armstrong said cost savings had little to do with Coke's move to a new compensation model. It's "ironic," she said, but the shift began in 2006. She declined to comment on whether Coke saw any savings in the five test markets -- Australia, China, Germany, the U.K. and the Philippines -- in which it deployed the new model last year.

However, cost reductions have been a priority at the company of late. Last summer, CEO Muhtar Kent said Coke would look to save between $400 million and $500 million a year by the end of 2011. Marketing was said to be a primary focus. The company also has been looking to optimize its use of agencies, slashing its global roster by more than half in the past 18 months. Despite that, Coke spent $3 billion on advertising globally last year, a $200 million increase from the previous year.

The new model, in theory, ought to better align the quality of Coke's advertising with the size of its budget, but the approach is not without its risks. Will Coke's agencies be willing to take the same creative risks if striking out means they'll see no profit for their trouble? "That has not been a concern," Ms. Armstrong said. "I have a fundamental belief that our agencies are competitive enough that they are going to bring their A-games no matter what."

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: AdAge.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=3932

Marketers Face Challenges in Integrating Traditional and Digital Media

Latest research from America's Association of National Advertisers cites lack of metrics and internal lack of understanding as members' biggest challenges; Agencies cite client's lack of awareness about customer's use of digital media as top challenge.

[Estimated timeframe:2009 onward]

Previous industry research indicated that marketers and agencies struggled to integrate marketing, particularly across the broad array of new and emerging media. To build on those findings, a new study was conducted to specifically address the integration of traditional and digital media.

This research involved 294 marketers conducted by the ANA (Association of National Advertisers) and the 4A's (American Association of Advertising Agencies), in partnership with Bellwether Leadership Research & Development. It indicates that marketers and agencies are facing challenges both within their own organizations, and with their partners, during the integration process.

The majority of client-side marketers (59 percent) are satisfied with their company's progress with the integration of digital media (Internet, mobile, widgets, social media) and traditional media (TV, radio, print). However, the greatest challenge for marketers is the lack of metrics to properly allocate the mix of traditional and digital media. On the agency side, the key finding and frustration is that clients do not understand how customers use digital media.

These findings are consistent with the Marketing & Media Ecosystem 2010 survey conducted jointly by the ANA, IAB (Interactive Advertising Bureau), 4 A's and Booz Allen Hamilton in 2007. At that time, over ninety percent of respondents indicated they planned to increase marketing spend in digital. Yet many identified significant barriers including: insufficient metrics (62 percent), lack of organization support (51 percent) or lack of experience (59 percent) in the new media.

This more recent survey exposes additional challenges marketers are facing as digital media becomes more pervasive.

The Client Perspective

In addition to the lack of metrics, client-side marketers identified existing internal issues, which, listed in descending order from greatest to smallest challenge, are:

  • Key people at company (including senior management) lack understanding of digital media
  • Reluctance to move funds from "tried-and-true" practices of the past
  • Internal organizational silos impede a focused enterprise-wide approach

The Agency Perspective

The top two agency challenges for integrating digital media into larger scale marketing programs were client-related and are:

  • A lack of client awareness about the benefits of developing a more integrated approach
  • A lack of client cooperation across their operating/divisional channels.

Meanwhile, agencies feel that their internal issues, including a lack of digital expertise, the company's operating structure and agency politics, are less of a challenge for integrating digital media.

The Suggested Solutions
Both advertisers and agencies had similar advice for integrating traditional and digital media:

  • Become as educated as possible on new/digital media
  • Set clear goals and understand business objectives up front
  • Understand your consumer
  • Be willing to test and learn
  • Integrate digital and traditional media
  • Commit to metrics and analytics

"To effectively utilize digital media, and promote its integration with traditional media, marketers and advertisers must overcome the two obstacles that continuously arise: education and measurement," said Bob Liodice, President and CEO of the ANA. "Only once the industry takes steps to become savvy, will integrated marketers be able to fully embrace all that advertising today can offer a brand."

"Marketers must use the full range of effective media choices to their best competitive advantage," added Nancy Hill, President and CEO of the 4A's. "Effective media strategy isn't one-size-fits-all. The very best media strategies take into account the opportunities inherent in all channels, and agencies and clients alike need to work together to educate internal and external constituents to demonstrate the value of well-thought-out multi-channel approaches."

This survey was conducted in the first quarter 2009, in partnership with Bellwether Leadership Research & Development. Google sponsored Bellwether's involvement. Both ANA and 4A's members were surveyed.

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: ANA.net
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=3936

Boom in Issues Advertising Could Net Agencies $1 Billion
Boom in Issues Advertising Could Net Agencies $1 Billion By Michael Bush Published: June 01, 2009 NEW YORK (AdAge.com) -- There are battles brewing in Washington, and agencies might want to join the fight to stake a claim on what could be worth $1 billion in media spending. Long thought to be the playground for PR and public-affairs shops, Washington could soon see an influx of......

Boom in Issues Advertising Could Net Agencies $1 Billion

By Michael Bush Published: June 01, 2009

NEW YORK (AdAge.com) -- There are battles brewing in Washington, and agencies might want to join the fight to stake a claim on what could be worth $1 billion in media spending.

Long thought to be the playground for PR and public-affairs shops, Washington could soon see an influx of creative agencies hungry for a piece of a large and growing advertising market.

According to TNS Media Intelligence/Campaign Media Analysis Group, $420 million has been spent on issue-advocacy ad efforts since the beginning of the year. And with a major push on health-care reform on the horizon, a recently named Supreme Court nominee and the ever-present environmental and tax issues lurking, it would come as no surprise if third-party advertising efforts supporting or battling any of these issues drove that media spend closer to $1 billion. That's not chump change for ad agencies that have watched their margins get squeezed or have had to deal with clients cutting back on spending.

Evan Tracey, president of WPP´s TNS Media Intelligence/CMAG, said it has been a very aggressive 100 days in terms of issue-advocacy advertising, and it will continue to grow because of all the activity taking place around big-ticket policy initiatives. He said he expects the biggest areas of activity on the federal level to be energy, health-care and business issues such as taxes, trade and labor-related policy changes. Fights over service cutbacks and budget cuts will attract millions in ad spending at the state level.

"State and federal issue-ad spending could go as high as $800 million or even higher," Mr. Tracey said. "When it comes to advertising around these issues, the thinking is no longer ´Maybe we should do it´; it´s become a must in order to promote and frame the issues and engage the public and policy makers."

Supporting legislation
Mr. Tracey says there is another element of change this year. He isn´t necessarily surprised by the amount of activity he has seen, but the usual pattern of issue-based advertising is different. "What you usually have is the masses of money spent to defeat a piece of legislation, but in this case it´s reversed," Mr. Tracey said. "There´s a lot of advertising support in favor of the president´s policies and he´s getting a lot of support from his friends and that´s fueling this somewhat. In essence it´s a carry forward from the campaign."

That´s not to say the ad world is awash in hope and harmony. A quick look at the numbers indicates competing opinions in the environmental sector.

According to TNS/CMAG´s numbers, some of the biggest spenders this year include the American Petroleum Institute ($26.3 million), the Alliance for Climate Protection ($18.8 million) and the American Coalition for Clean Coal Electricity ($7.9 million).

And, Mr. Tracey added, "if the Obama administration decides to go all out with health-care reform, that could add a lot more fuel to this fire."

Leaping in
Independent firm R&R Partners, best known for "What happens in Vegas stays in Vegas," claims it recognized how big a trend issue-advocacy advertising was going to be two years ago and set up a Washington office at that time. Pete Ernaut, president of R&R government affairs and persuasion, said revenue has grown 300% to 350% for the D.C. office in the two-year period, and he expects it to be the most profitable division of the agency within the next year. "We believe it´s the future of our company," Mr. Ernaut said.

The agency jumped into the space while lobbying reforms and new disclosure requirements were being introduced. "On the eve of those going into effect, we felt it was going to dynamically change the strategy of lobbying forever," Mr. Ernaut said. "And we felt this outside-in method was going to be the wave of the future and standard for years to come and tried to be out ahead of it."

The agency is working for groups including the National Mining Association, American Coalition for Clean Coal Electricity, Southern Nevada Water Authority, El Paso Energy and Colorado Interstate Gas Company. The work it does for those groups encompasses everything from creative development to media buying to PR, in Washington as well as the rest of the country.

Mr. Ernaut said judging by the number of projects the agency is seeing from an "RFP and pitch standpoint," his is just the "beginning of the explosion in this area."

But ad shops thinking D.C. is a promised land of easy cash need to think again. Not only is it tough to gain entry, even agencies who get a foot through the door may find they´re not cut out for the work.

Negative prospects
"With the ad business the way it is right now and a big pile of money sitting out in the world of politics, there´s no doubt traditional agencies will try to jump in," said Vinny Minchillo, chief creative officer, of Scott Howell & Co., a Republican political-media consultantcy whose clients include Sen. John Thune, Sen. Jim DeMint, Sen. Kay Bailey Hutchison and many others at the federal and state levels.

"They will fail," he said. "For starters, 95% of that $1 billion will go to negative advertising -- very negative advertising. That will cause a lot of agency people to put themselves on the sidelines."

Mr. Minchillo also said many shops might not be set up for the quick-and-dirty nature of politics. "It´s not uncommon for political clients to have television production budgets of under $15,000 per spot and a need to be on the air in 48 hours."

That said, he added that some shops might stand a chance. "The hard-core retail shops probably have the best chance of being able to adapt quickly. Also the shops with employees who don´t care much about sleeping."

Even by R&R´s admission, it started "to hit its stride" only in the past year.

Making the transition
Mr. Tracey said there are steps other interested agencies can take to make that transition.

"Practitioners in the issues-advocacy side [tend] to come out of the [political] campaign world," he said. "Some of the more traditional shops that want to enter will have to bring in new people or partner with some of the shops doing the lion´s share of this work, because you can´t just draw up traditional brand-rollout strategies in this space. These efforts are much more fluid and reactionary."

Mike Hughes, president and creative director of Interpublic Group of Cos.´ Martin Agency, said he doesn´t think issue-advocacy work will make that much of a difference for many of the agencies dealing with budget cuts.

But money isn´t the only reason agencies should get involved with such work, he added. "Maybe some agencies are a little less busy these days; they can get behind these causes in a bigger way," said Mr. Hughes, whose agency has worked with Al Gore and the Alliance for Climate Protection since 2007. "The causes will contribute something at a time when agencies need additional activity and revenue but won´t make up for the general malaise."

Despite the learning curve, Mr. Minchillo said he expects to see things heat up as people vie for a piece of the $1 billion.

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4147

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