Forget General Motors – Nielsen’s online currency metric will bail out Facebook

May 22, 2012

With Facebook’s share price in an 11% freefall (when I last looked), thank goodness for OCR. That’s what I say. And maybe it’s the mantra nervous Facebook investors should be chanting, too.

OCR? No not Optical Character Recognition, silly – Online Campaign Ratings. It’s the new Nielsen media metric with which the research giant hopes to corner the elusive online ‘currency’ market. And it’s being backed by one of the ad industry’s biggest traders, WPP’s GroupM – which is a good start if OCR is to gain credibility.

Acquiring a universally accepted trading ‘currency’ – sometimes referred to as a “gold standard” – is an important breakthrough for a new medium. No matter how fast it has been growing, or how trendy it has become, its effectiveness will be (rightly) disputed by advertisers and media traders alike in the absence of any agreed benchmark. The result being a tethered and volatile ratecard.

It might seem a fine distinction, but there is a world of difference between what we have at the moment – which is a medium whose value is defined by analytics – and one which is regulated by currency. Analytics are proprietary: they do not command universal respect and are therefore open to debate. The finer points of currency may certainly be subject to academic criticism (look at the BARB ratings system governing UK commercial TV) but no advertiser or trader seriously questions its status. If they did, we might have a pocket version of the euro-crisis on our hands.

With a currency in place, a behavioural change takes place in trading. The key word is “guarantee”. In the network TV market, for example, all three elements to the media deal – media owner, advertiser and trader – have sufficient confidence in the system to make “upfront” or forward commitments into the future, usually a year ahead. The guarantee is the delivery of a specific kind of  audience in sufficient numbers; failing which, a financial penalty will be imposed on the media owner and, increasingly, on the trader.

In that sense, AOL’s recent decision to offer guarantees on online advertising delivery, covering certain agreed demographics such as age, gender and social type, was highly significant.

As is GroupM’s proposal to make joint TV-digital “upfront” buys, the plan being to compensate any shortfall on the TV-side with OCR-defined ratings acquired from digital platforms.

So what has all this got to do with the Facebook share price? With over 900 million registered users, among them half the population of America, Facebook forms the backbone of the online display advertising market. No advertiser can easily afford to leave it off the schedule. Dean Evans, chief marketing officer of Subaru of America, is typical in his attitude: “If half the US population is on Facebook, you have to work it to learn it.” Hence Nielsen’s decision to make Facebook data its OCR “tentpole”.

But what if one of the world’s biggest advertisers defies the orthodoxy, and pulls out of Facebook display – what then? There’s no doubt that General Motors’ announcement last week has had a profoundly destabilising effect on Facebook, all the more so as it came shortly before the much-hyped market flotation.

Actually, GM spends very little of its advertising budget on Facebook display: about $10m a year out of an estimated $3bn. Indeed, it spends more on its Facebook pages ($30m a year in content provision), to which it says it is still firmly committed. But that’s not the point. What if other advertisers, taking GM’s lead, start a Gadarene rush to the Facebook exit? GM’s announcement has, in a nutshell, reinforced a growing conviction within the investment community that the Facebook IPO is “Muppets’ bait” (to use Business Insider founder Henry Blodget’s singular phrase).

In point of fact, many fellow advertisers (particularly those in the auto industry) see GM’s surprise move as motivated less by an ideological stance on Facebook display ratings than by its global chief marketing officer’s desperate determination to wring $2bn out of marketing costs over 5 years. Joel Ewanick (for it is he) has a well-attuned eye for catchy headlines, and few could have been more catchy – as the lengthy piece in the Wall Street Journal clearly demonstrated – than his bombshell last week before the IPO.

But now that the second shoe has dropped, we have a better idea of what Ewanick is up to. He has just announced (to his favourite journalists at the WSJ again) – and presumably at his new media agency Carat’s behest – that the Super Bowl is way too expensive as well, and he won’t be participating in that either. Some doubt that he means exactly what he says. They believe he will only pass on the Super Bowl in the sense that Nike passes on the World Cup. But let’s put that aside for now. Taken at face value, what Ewanick is telling us is that neither Facebook nor the Super Bowl sell enough GM vehicles, because they are both massively overpriced.

That may well be trivially true. But display advertising has never been simply about shifting metal (or any other branded product for that matter). It’s also about maintaining and propagating your image. The question for Ewanick is not whether he can afford to skip Facebook and the Super Bowl, but for how long.

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VW’s Super Bowl ads – from “Little Darth” to just plain daft

February 2, 2012

Commercially, it’s the greatest show on Earth, with 30-second spots commanding over $3.5m apiece – an up to 30% increase on the previous season. ITV chief executive Adam Crozier can only gaze upon his 2016 Rio Olympics slots, wish he was at the helm of NBC, and despair.

Yes, it’s the Super Bowl, coming your way (if you have satellite or cable) this weekend – a US sports fest so intense that no advertiser of substance – in cars, beer, movies, softs drinks or snacks – can comfortably afford to exclude itself from the 111 million expected viewers and not-to-be-surpassed Nielsen awareness ratings.

So great advertising too? Frankly, despite the unique showcase, most ads aren’t as super as they might be. That’s for a variety of reasons. Some clients like to play it safe (and can you blame them, with that amount of money at stake?). Others overdo it. Drunk with earlier success, they get too tricksy and self-referential.

I wonder if Volkswagen and Deutsch LA haven’t fallen into that trap. Last year, they stole the show with “The Force” (aka “Little Darth”), which made Nielsen’s coveted annual “Most Liked” list and took a Cannes Gold Lion for dessert.

This year, they’ve stuck to Star Wars but gone for animals rather than children. See what you think:

I’m afraid I’m with the Dark Father on this one. The bloke with the funny prosthetic nose is just plain wrong.


New Nielsen ratings system knocks the spots off online ad targeting

August 8, 2011

So who said audience measurement had to be boring?

Nielsen, the world’s number one provider of the stuff, has just launched something called Online Campaign Ratings. Now I’d be the first to admit that doesn’t sound the most riveting event since Janet Jackson last maladjusted her wardrobe in public.

But stay with me. This is a well and truly iconoclastic product. No, really.

It knocks for six all those vapid, complacent notions we had about online display ads being somehow better targeted than the mass-market ones featured on television.

What NOCR, which launches to US media buyers on August 15, does is combine anonymously-sourced US Facebook data with traditional TV-style ratings reporting in a novel way.

The jaw-dropping conclusion to be drawn from the new metric, according to Nielsen president of media products and advertiser solutions Steve Hasker, is that just 30% of branded display advertising aimed at specific age- and gender-defined demographic targets is hitting its target. Compared with mass market campaigns that are 75% efficient.

Aside from bringing joy to the heart of Tess Alps and her friends at TV-advertising ginger group Thinkbox, the new metric also has implications for niche and specialist online publishers. Their ratecards will stiffen as the flim-flam stuff targeted at general audiences is exposed for what it is.

Early heads-up from media specialists, such as managing director EMEA at Essence Joseph Leon (quoted in New Media Age), is positive:

Facebook’s pervasive reach means that any campaign able to overlay Facebook profile data will benefit from a huge, natural sample group, overcoming two of the key issues with previous solutions: sample sizes and the potential bias of an incentive-based panel. I think it also highlights the inaccuracies and frankly debatable effectiveness of some of today’s campaign planning methodologies, which regularly depend on incentive-based panel solutions, to identify target audience media consumption.

Dominic Finney, co-founder of digital benchmark specialist FaR Partners, is also upbeat but a tad more cautious in his outlook:

The challenge would appear to be partnering with just Facebook, which potentially could limit Nielsen’s OCR’s findings as it will only have Facebook as a third party provider and Facebook currently only reaches around half of US users online.

Only a half of all US users online, eh Dominic? Not a bad start though, since Comscore, Kantar and the rest of the gang are going to have to play rapid catch-up. And, given that Nielsen has signed an exclusive deal with Facebook and has promised other third-party metric providers are on the way, that sounds to me like a clear market advantage.



Is Ipsos poised to buy Synovate from Aegis for €550m?

May 20, 2011

A rather interesting rumour is doing the rounds of the City. And it is this: Aegis, the media buying group, is about to divest its market research operation, Synovate, for a princely €550m (£481m). The lucky recipient? Paris-based global market research empire Ipsos.

While I have no idea whether any deal will go through, let’s say it’s not a surprise that the two parties should be talking. After all, we’ve been here before – or at least, somewhere very nearby.

Back in 2009, Aegis launched a formal strategic review to determine whether or not to sell Synovate. At the time, GfK was felt to be the most likely buyer. GfK – privately held but the world’s fourth largest MR group even so – was still smarting after it came off second best to WPP in the acrimonious £1.1bn bid battle for Taylor Nelson Sofres.

But it might just as well have been Ipsos, the fifth largest, that was doing the talking. Both MR groups are in the grip of the same strategic imperative: they need to grow bigger in the wake of the 2008 TNS deal, which catapulted WPP to near top position in the world market research league table, just behind Nielsen. The consolidation question is not a ‘whether’ but a ‘when’.

What’s more we know the Ipsos management team admires Synovate and believes it would be a good fit. Don’t just take my word for it. In late 2005 Ipsos’ chairman and chief executive Didier Truchot publicly described Synovate as “a very nice and dynamic organisation.”  Of course, he didn’t go so far as to say he would actually buy it. Then again, he didn’t say he wouldn’t. He merely pointed out that it was “a little too early” to entertain such a possibility.

Truchot was at it again in 2009, when announcing a robust set of results for the previous year: he danced around the idea of buying Synovate without actually saying it.

Perhaps five-and-a-half years has proved long enough to mature his plan.

All of which does little to shed light on Aegis’ motives for selling the business, if that is what it is doing.

Admittedly, the market research division is currently an underperformer. In the latest, Quarter 1, financial results, the Media division turned in an impressive 10.1% improvement in sales, well ahead of the 7% analysts had been expecting. Synovate, on the other hand, undershot, if only by a small amount.

Furthermore, divestment would provide more ammunition in the war-chest. Aegis chief executive Jerry Buhlmann has already embarked on a strategy of shoring up Aegis’ position as a pure-player global media buyer with the £200m acquisition of Mitchell Communications.

But there is a wild card in all of this. What of 27% Aegis stakeholder Vincent Bolloré? Despite his very public disavowals of any further interest in a takeover, Aegis would surely become more, not less, tempting as a target. After all, what Havas – of which he is president and the principal shareholder – most needs is a more effective media buying operation.

UPDATE 6/6/11: Evidently the rumour was true: Aegis has just confirmed it. What matters, now the veil of secrecy has been stripped from the talks, is whether Ipsos is allowed a clear run at the acquisition. Or will others, such as Publicis Groupe, barge in with better terms? Anyone interested in the financials (Ipsos is about twice the size of Synovate) might care to look at Bob Willott’s newsletter on the subject.


BSkyB – nearly the company with the UK’s biggest marketing budget

January 4, 2011

Will BSkyB soon become the UK’s biggest marketing company? It’s a sobering thought  – especially for those who, like culture secretary Jeremy Hunt, must now consider whether Rupert Murdoch and his son James are fit and proper guardians of the 61% of the broadcast media company they do not already own. What will they do with unfettered control of all that money – not so much when it is directed at ITV and the BBC (the case already), but at BSkyB’s non-broadcast rivals?

In fact, BSkyB is still some way from being the company with the biggest marketing budget. The latest Nielsen figures, which leaked out just before Christmas in The Telegraph, reveal that BSkyB has now moved into number two position behind Procter & Gamble in the advertisers’ league table: not quite the same thing, but the most reliable indicator we have in these matters. The main casualty – inevitably given what has happened to it – is the Central Office of Information. For some years the COI sat on, or very near, the top of the pile. Its fall from grace has been melodramatic: despatched from top to fifth place, with spending slashed 47% to settle – for now at – £112m. There’s no likelihood of it getting back.

BSkyB, on the other hand, increased its spend 20% to reach £161m. But even that wasn’t nearly enough for it to become top dog in the near future. P&G put on another third – giving it an unassailable lead at £189m. Unless of course BT, currently 7th with a spend of £104m, continues its phenomenal 44% multiplication of spend for the next three years (unlikely, I suggest).

These Nielsen figures are interesting indicators, but they need to be viewed with considerable caution. Although they purport to record expenditure to the end of the calendar year, there are a number of caveats; for example, there is no internet spend included for the last quarter (a significant omission). They are, moreover, merely a ratecard indicator: they do not tell us what was actually spent after discount. Finally, they do not record all forms of marketing activity. And some of these excluded sectors, like POP, are absolutely massive.

For all these imperfections, however, the Nielsen figures reveal a remarkable truth. BSkyB has become one of the UK’s most powerful companies, and it has done so in large measure through the intelligent application of marketing.


Interpublic’s solution to Lowe London? A Wall of money

April 19, 2010

Who will put Lowe London out of its misery? The loss of its principal accounts seems an everlasting litany. To Stella Artois, John Lewis and Nokia N-Series should also be added the Beck’s account. All that’s propping Lowe London up is international business from Unilever (barring Peperami, which went last year) and Johnson & Johnson. According to Nielsen, 2009’s already depleted billings of £91m shrank to a minuscule £53m.

How to attract top talent in such circumstances – the talent that will draw in vital new business? It’s a vicious circle, from which there are only two ways for a once famous agency to extract itself. Call it a day, as Lowe alma mater CDP did long after it should have. Or buy something that will enthuse new talent and new enthusiasm.

Not surprisingly, it is the latter course that Lowe Worldwide chief Michael Wall has embarked upon. Evidence of his enthusiasm and determination may be deduced from approaches to Creston plc (owner of Delaney Lund Knox Warren); Rapier; and Dye Holloway Murray. So far, it would seem, the overtures have been unrequited. But we should not underestimate the charm of a man with an open cheque book in these straitened times; nor the forcefulness of someone who has managed to persuade cash-strapped Interpublic to cough up.


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