Keeping Marketing’s Promises
by James H. Gilmore and B. Joseph Pine II

11/13/07
Ads that trumpet, “We’re unique!” are meaningless if the stores say, “No, we’re not.”

Reprinted by permission of Harvard Business School Press. Excerpted from Authenticity: What Consumers Really Want, by James H. Gilmore and B. Joseph Pine II. Copyright © 2007 James H. Gilmore and B. Joseph Pine II; All Rights Reserved. http://www.strategy-business.com

Why did the American Advertising Federation launch the campaign “Advertising. The way great brands get to be great brands.” in 2001? Because advertising no longer works as well as it once did. Companies in consumer and business markets now pay more and more to reach fewer and fewer households and executive decision makers.

Advertisements appear everywhere — we see ads online, on movie screens, on sports uniforms, on the sides of vehicles, on mobile phones, ads nauseam. London-based agency Cunning at one point even paid people, primarily college students, to wear its clients’ temporary-tattoo ads and logos on their foreheads. In an initiative dubbed “Fake Tourist,” Sony Ericsson employed actors, called “leaners,” to promote its picture-taking cell phones by frequenting tourist traps (e.g., the Empire State Building in New York, the Space Needle in Seattle) and asking tourists to take their pictures. The company also hired models to demonstrate video caller ID and interactive games at nightclubs. For its clients, DVC Experiential Marketing paid “commuters” to read new magazines aboard rush-hour trains; it also paid doormen to display “packages” from catalog merchants in their lobbies, as if tenants had not picked them up yet. Rob Walker, the Consumed columnist for the New York Times Magazine, noted that agencies “have concluded that the most powerful forum for consumer seduction is not TV ads or billboards but rather the conversations we have in our everyday lives.”

The authors of Buzz: Harness the Power of Influence and Create Demand distinguish between spontaneously generated buzz and buzz marketing, which “is the scripted use of action to generate buzz. It is deliberate. One of the factors that sets buzz marketing apart from other forms of marketing is the illusion, the invisibility of the marketer. Authenticity is the key driver!” A key driver, yes, but one that so often pushes consumers away; such activity creates the perception of phoniness because it is not what it says it is.

Consider clothing retailer Gap Inc. Its advertisements over the past decade, featuring line dancers and celebrities, have had several effects. First, they put off many current customers who saw images portraying Gap as different from how these individuals saw themselves. Gap no longer conformed to (and thereby confirmed) their own self-images. With each successive ad, the Wall Street Journal observed, such consumers grew “tired of [the] trendiness.” Second, in-store displays merely paid lip service to the advertisements — actual interactions with sales personnel fell far short of the energy and enthusiasm displayed in the ads. Third, Old Navy stores — also owned by Gap Inc. — carried essentially the same merchandise at a lower price, and without the overtrendiness. As a former Gap executive told the New York Times, “Being cool went to [Gap management’s] heads, and they lost their focus. They began putting Old Navys in malls right next to Gaps and undermining their own sales.” Finally, all Gap stores — thousands of them — look exactly alike. The process by which Gap grew revenues — adding more outlets while increasing advertising — became the process of killing the brand, as the perception of sameness permeated the marketplace. Gap’s advertising says “Unique,” but the in-store experience falls far short of what it says it is.

That is the fundamental problem with advertising: It’s a phoniness-generating machine. Think of the appeal of any hamburger in any advertisement versus the reality encountered in the actual establishment. Or think of any airline, hotel, or even hospital; if you could only check into the ads, you’d have a great experience. When you check into the actual place, however, it so often falls short of what the ads represented. When it comes to the Is What It Says It Is standard of authenticity, the easiest way to be perceived as phony is to advertise things you are not. This practice, endemic to the industry, may have worked when advertising could promote the availability of a new offering (even if not as new nor as improved as the ads said), when it could promulgate a cost advantage (even when it was short-lived or came with a catch), or when it could detail a distinction in quality (even though no one might be able to tell the difference). Today, however, wide availability, low costs, and high quality are merely “jacks to open” when what consumers want above all is authenticity.

What companies need, therefore, is a new approach to demand creation that actually enables — make that forces — a company to be what it says it is. To borrow the phrase architect Jon Jerde made famous, that discipline is placemaking. Places are what provide the primary means for companies to demonstrate exactly what they are for both current and potential customers. Companies that embrace placemaking understand a fundamental dictum for contending with authenticity: The experience is the marketing. In other words, the best way to generate demand for any offering — whether a commodity, good, service, other experience, or even a transformation — is for potential (and current) customers to experience that offering in a place so engaging that they can’t help but pay attention, and then pay up as a result by buying that offering. Stop saying what your offerings are through advertising, and start creating places — permanent or temporary, physical or virtual, fee-based or free — where people can experience what those offerings, as well as your enterprise, actually are.

Author Profiles:

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James H. Gilmore (jimgilmore@aol.com) and B. Joseph Pine II (bjp2@aol.com) are cofounders of Strategic Horizons LLP.

Poll finds nearly 80 percent of U.S. adults go online

NEW YORK (Reuters) http://www.reuters.com/news/technology/internet - Do you find yourself going online more and more? You're not alone.

Four out of five U.S. adults go online now, according to a new Harris Poll.

The survey, which polled 2,062 adults in July and October, found that 79 percent of adults -- about 178 million -- go online, spending an average 11 hours a week on the Internet.

"We're up to almost 80 of adults who now are online, or are somehow gaining access to the Internet. That's a pretty impressive figure," said Regina Corso, director of the Harris Poll.

The results reflect a steady rise since 2000, when 57 percent of adults polled said they went online. In 2006, the number was 77 percent.

When Harris Interactive, a market research firm, first began tracking online use among adults in 1995, the group found that only nine percent of the population -- or 17.5 million -- said they went online.

The poll also found that adults are spending more time online at home and at work, up two percent each at 72 percent and 37 percent respectively, from 2006. More dramatically, 31 percent of those surveyed said they went online elsewhere, up from 22 percent in 2006.

"They are finding however possible to get online...A third of the people who are online, that's how they're getting there - some alternate way," said Corso.

Demographically, the poll showed the online population aligning more with the general population.

For example, the poll showed that 25 percent of adults who went online were between 18 and 29 years old -- the same age group makes up 22 percent of the U.S. adult population.

Hispanics make up 13 percent of the adult population, and also made up 13 percent of the online population surveyed.

The poll also found that while online access is still dominated by younger adults, nine percent of those that go online are 65 years old and older, compared to the 16 percent of adults who are 65 and over.

"We're getting closer. Every year it's getting more and more like the general population picture," said Corso.

"Baby boomers are online. As they become more and more part of that population, we're going to see larger swings there."

As the online population gets closer to 100 percent, Corso said the next step was to see how people are getting online.

"It's not just a laptop or a desktop anymore. How many of these people are using some kind of hand held device for all of their online activity?"

(Reporting by Solarina Ho)

NBC to Offer a Free Video Download Service (TV meets the Internet!)

By BILL CARTER

NBC Universal, acknowledging that viewers are increasingly moving away from traditional television viewing, announced plans today for a service that will make popular NBC programs available to download free to personal computers and other devices.

The programs, including “Heroes” and “The Tonight Show With Jay Leno,” will be offered for a week immediately after their initial broadcasts. Commercials will be embedded in the programs and viewers will not be able to skip through them.

The move comes less than three weeks after NBC Universal announced it was severing ties with Apple Inc. after a dispute over how Apple was selling NBC programs on its popular iTunes service.

NBC first contracted with Amazon to offer its programs for sale to downloading devices like MP3 players. Now it is establishing its own downloading service, which NBC executives say they expect to become a viable competitor to iTunes.

“With the creation of this new service, we are acknowledging that now, more than ever, viewers want to be in control of how, when and where they consume their favorite entertainment,” said Vivi Zigler, the executive vice president of NBC Digital Entertainment. “Not only does this feature give them more control, but it also gives them a higher quality video experience.”

The NBC service, called NBC Direct, will begin a testing period in October with plans to be operational in November. The service will allow customers to download full episodes of NBC shows for seven days on Windows-based PCs. The file will expire after the seven days.

But NBC intends to transform the service into a model similar to iTunes by the middle of 2008 — that is, consumers will pay NBC directly to download episodes of the shows. “We did this to eliminate the middleman,” said Jeff Gaspin, the president of NBC’s digital division.

Copyright 2007 The New York Times Company

Internet Advertising Will Soon Top Newspapers, Study Finds

Overall, communications spending increased 6.8% in 2006 to a record $885.2 billion, outpacing GDP growth for the fourth time in five years, the report says.

By Thomas Claburn
InformationWeek
August 8, 2007 04:00 PM

Consumers are spending less time with media and businesses are spending more, according to a report released by private equity firm Veronis Suhler Stevenson (VSS). If current trends continue, Internet advertising will eclipse newspapers as the largest advertising medium by 2011.

Overall, communications spending increased 6.8% in 2006 to a record $885.2 billion, outpacing GDP growth for the fourth time in five years, the report says. VSS projects that the communications industry will grow 6.4% this year and will continue to do so at a compound annual growth rate of 6.7% through 2011. This would make communications the third fastest growing sector of the U.S. economy.

But when communications-related spending finally tops $1 trillion in 2008, it will be alternative media and institutional sectors driving growth. VSS divides the communications industry into four major end-user groups -- advertising, marketing, consumer, and institutional -- that spend money in 19 separate media segments.

"We are in the midst of a major shift in the media landscape that is being fueled by changes in technology, end-user behaviors, and the response by brand marketers and communications companies," said James Rutherfurd, EVP and Managing Director at VSS, in a statement. "We expect these shifts to continue over the next five years, as time and place shifting accelerate while consumers and businesses utilize more digital media alternatives, strengthening the new media pull model at the expense of the traditional media push model."

The good news, at least for those concerned about the health of the communications industry, is that spending is rising. The bad news is that less and less of that money is likely to go to traditional media providers as consumer attention shifts online.

Consumers are spending less time (-6.3% from 2001 through 2006) with ad-supported media and more time with consumer-supported platforms like cable TV and videogames (+19.8% from 2001 through 2006). And for the first time since 1997, consumers spent less time (-0.5%) with media overall in 2006 than the year before.

Media usage by institutional users, meanwhile, grew at a compound annual growth rate of 3.3% from 2001 through 2006, reflecting the increased use of online platforms to boost performance and workflow.

VSS attributes the drop in consumer media usage to the fact that online news and entertainment typically are engaging consumers for shorter periods of time than traditional media like broadcast or cable TV. "For example, consumers typically watch broadcast or cable television at least 30 minutes per session while they spend as little as five to seven minutes viewing consumer-generated video clips online," VSS explained.

The fastest-growing media segments in the next five years will be Internet and mobile services, branded entertainment, out-of-home media, outsourced custom publishing, and public relations, according to VSS.

Young Adults Are Giving Newspapers Scant Notice
By JUSTON JONES
New York TIMES
Published: July 16, 2007

With the United States military fighting a protracted war in Iraq and a wide-open presidential campaign already making headlines daily, Americans of all ages are interested in current affairs and are consuming news like never before, right?

Not so, especially not teenagers and young adults, according to a report released last week by the Joan Shorenstein Center on the Press, Politics and Public Policy at the John F. Kennedy School of Government at Harvard.

In fact, most teenagers and adults 30 and younger are not following the news closely at all, the report, titled “Young People and News,” concluded. It is based on a national sample of 1,800 Americans that included teenagers, young adults aged 18 to 30 and older adults.

Thomas Patterson, a professor of government and the press at Harvard who conducted the survey, said that young people today do not make an appointment with news every day the way older adults do.

“We found that most young adults don’t have an ingrained news habit,” he said. “Most children today, when watching television, are not watching the same TV set that their parents are watching. So even if their parents are watching the news every day, the children are likely to be in another room watching something else and aren’t acquiring the news habit.”

The survey went a step further to see what the respondents meant when they said that they did pay attention to the news. Those results, especially among the younger groups, were equally discouraging for the news industry, said Alex S. Jones, the director of the Shorenstein Center.

“What we found is that what people mean when they say they are engaged in the news has much more of a glancing, superficial basis than anything we would have hoped,” he said. “Young people seemed to think that just listening to the radio in the background was listening to the news.”

The results were especially grim for newspapers. Only 16 percent of the young adults surveyed aged 18 to 30 said that they read a newspaper every day and 9 percent of teenagers said that they did. That compared with 35 percent of adults over 30. Furthermore, despite the popular belief that young people are flocking to the Internet, the survey found that teenagers and young adults were twice as likely to get daily news from television than from the Web.
Despite this, some in the industry say the situation is not hopeless.

Jane Hirt, the editor of RedEye, a free daily newspaper that is published by The Chicago Tribune specifically for young, urban professionals, said that her publication had succeeded and had even expanded its audience by adopting some of the lessons learned from television and the Internet and by experimenting with ways to tell stories.

“We may have a short face-off with two sides of an issue,” she said. “We believe it is a way of delivering content in a form like younger people are used to getting on the Internet.”

She said that she reminds her editors that their younger readers are used to customizing their lives. “They pick and choose what they want on their iPods, what to TiVo and watch whenever they want, and so forth,” she said. “Therefore, because we are targeting that niche audience, we make story selections to really connect with them, and we can do that because we are thinking about them all day.”

Still, her publication and newspapers in general may be facing an uphill battle.

“My sense is that newspapers in their traditional form are not going to be able to recapture this audience,” said Professor Patterson. “What’s happened over time is that we have become more of a viewing nation than a reading nation, and the Internet is a little of both. My sense is that, like it or not, the future of news is going to be in the electronic media, but we don’t really know what that form is going to look like.”

Advertising outlook weakens in US
By Carlos Grande
Published: July 2 2007 12:13 Last updated: July 2 2007 12:13

Advertising forecasters have downgraded prospects for the US, challenging expectations of a boost to the marketing industry from the presidential election race and the 2008 Beijing summer Olympics.

Zenith Optimedia, the international media buyer, on Monday shaved its 2007 expectations of US advertising expenditure growth to 3.3 per cent at constant currencies.

Zenith, part of Publicis, the Paris-headquartered marketing services group, says weak expenditure on US network television and trade magazines to reduce further its previous estimate of 3.4 per cent, which had already come down from 4.1 per cent in December.

Zenith follows recently reduced US forecasts by Carat, part of Aegis, the UK-listed media and research group, and a gloomy analysis by Universal McCann, part of Interpublic, the US-listed marketing services group.

Universal McCann said US businesses were cutting back to focus on improving productivity and profits and building up cash resources. It puts US advertising growth at 3.1 per cent this year.
The US is the world’s biggest advertising market and the key profit territory for the world’s two largest marketing services groups - Omnicom of the US and UK-listed WPP.

Worldwide, the industry would normally expect a jump in expenditure during a period which includes the run up to the US presidential elections, the Euro 2008 football championships and the summer Olympics in China.

The current downgrades for the US contrast with upbeat assessments from Zenith and others of prospects for global advertising, especially internet marketing.

Interest in online video advertising and localised marketing on search engines has encouraged Zenith to publish upgraded figures for expenditure on internet advertising.

It now believes internet advertising will grow by 82 per cent between 2006 and 2009, while the rest of the advertising sector grows by 13 per cent during the same period.

Zenith estimates worldwide advertising expenditure will grow by 5.5 per cent this year and by 6.4 per cent in 2008. It calculates that the Beijing Olympics will generate about $3bn of extra advertising expenditure globally in 2008.

Sentiment towards western european markets has also improved: Zenith estimates that German advertising last year experienced its fastest growth rate since 2000.
Carat estimates that global advertising expenditure will increase by 5.8 per cent this year and 6.4 per cent in 2008.

Univeral McCann predicts worldwide advertising will grow by 4.2 per cent in 2007.
The Financial Times Limited 2007

I love this painting.

Dear Mast Research Report Readers,

Below is one of the better articles I’ve seen regarding the shift in MARKETING strategies which is resulting in the shift in advertising strategy and revenue, accordingly. Sometimes we (as media people) tend to forget that our valuable ad dollars are only a portion of an advertiser's marketing budget. As economic pressures continue to dictate stronger ROI and less "waste" in marketing, greater emphasis is being placed on pricing, incentives, customer retention and loyalty programs as well as shifts in media and advertising strategies to digital and newer forms of communication. That, coupled with the fact that traditional ad agencies can make more money as marketing services partners versus traditional advertising consultants and providers, we can anticipate that this is a trend that will only get stronger…

Where's the Money Moving? Out of Media
Ad Dollars Drop, but That Doesn't Mean Marketers Have Stopped Spending
By Bradley Johnson Published: June 11, 2007

CHICAGO (AdAge.com) -- U.S. ad spending -- at least the measured kind -- fell 0.3% in the January-to-March period, the first down quarter since the ad recovery began in 2002. But a drop in reported ad spending does not mean a drop in marketing spending. That's because what marketers need isn't just measured media; it's measurable results.

Omnicom President-CEO John Wren said his firm's emphasis on marketing services has given it an edge over rivals recently.

Budgets are gravitating from old-line measured media to an array of marketing-services -- digital, direct, customer relationship management -- that offers better tools to quantify results. Marketing services includes some media offerings, such as online ads. But much of marketing services doesn't fit in the box of an ad to be sold. For companies in the business of selling media space and time, a shift to non-media forms of marketing poses a fundamental challenge.

Marketing services win outMarketing-services disciplines often fly under the radar, unmeasured by ad trackers such as TNS Media Intelligence, which put out the first-quarter data. But the shift is clear: In 2005, U.S. agencies generated more revenue from marketing services than from traditional advertising and media, according to Ad Age's DataCenter.

The trend has continued. In the first quarter, the top three agency holding companies -- Omnicom Group, WPP Group and Interpublic Group of Cos. -- collectively generated 53% of worldwide revenue from marketing services. Omnicom last quarter generated even more revenue -- 57% -- from marketing services, and President-CEO John Wren said those disciplines have helped the firm outperform its rivals. "We are much larger in the marketing-services area relative to any of our leading competitors," he told analysts in April. "You know, I definitely think that's been a significant advantage for Omnicom over probably forever, but definitely for the last five or six years, and maybe even accelerated over the past couple of years."

To be sure, the economy is soft -- first-quarter GDP rose at an annual clip of 0.6%, worst since 2002 -- and ex-Fed chief Alan Greenspan sees a one-in-three chance of recession this year. Advertising can be a leading indicator: Measured spending began to fall three months before the official start of the 2001 recession, and it didn't begin a sustained rebound until six months after the downturn ended. But the agency business, boosted by digital work, is growing: U.S. agency employment in April hit its highest point since the 2001 recession. In contrast, traditional media companies have slashed 40,500 jobs -- 4.6% of workers -- since the measured-ad-spending recovery took hold in 2002.

Good for the web As traditional media disciplines struggle to adapt, internet media are gaining share. The internet's share of measured spending rose to 8.1% in the first quarter from 5.4% five years ago, according to TNS data. Even when they lose share, disciplines still can grow revenue. Consider the advent of TV: Every other consumer medium lost share from 1950 to 1960, yet every medium still managed to gain revenue during that booming decade. Even radio, most threatened by TV, managed a small gain. And by one measure, first-quarter measured media spending actually rose a little: Jon Swallen, senior VP-director of research at TNS, said the 0.3% drop becomes a 2.2% gain if you factor out Olympics advertising that boosted year-ago figures.

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New York Times May Ad Revenue Drops
New York Times May Advertising Revenue Down 8.5 Percent, Internet Ad Sales Up


NEW YORK (AP) Thursday June 14 10:19AM ET -- The New York Times Co. said Thursday that advertising revenue from continuing operations dropped 8.5 percent in May as national, retail and classified ads all declined.

The company said its total revenue from continuing operations fell 5.8 percent compared with May of last year.

The New York Times' media properties include its namesake newspaper, the International Herald Tribune, The Boston Globe and more than 30 Web sites including NYTimes.com and About.com.

Advertising revenue for the New York Times Media Group dropped 9.1 percent as national, retail and classified advertising all declined. Ad revenue for the New England Media Group fell 8.8 percent. The Regional Media Group saw the largest decline, with a 14 percent drop in sales.
Internet ad revenue for the New York Times, New England and Regional media groups surged 21.4 percent as display and classified advertising increased.

Circulation revenue for May rose 0.1 percent, as increased sales at The New York Times Media Group offset declines at the New England and Regional Media Groups.

Advertising revenue at the company's About.com Internet business jumped 32.6 percent with more display and cost-per-click advertising. The company said the data reflects the acquisitions of ConsumerSearch.com in early May and UCompareHealthCare.com in late March.

Unique U.S. visitors to the company's Internet properties gained 11 percent at 43.8 million, from 39.3 million unique visitors in the prior year.

The company said TimesSelect, a fee-based product on NYTimes.com offering columns and archived articles, has about 741,000 subscribers.

New York Times shares fell 40 cents to $26.04 in morning trading.

High Speed Internet Is Going High Speed!

China overtaking US for fast internet access as Africa gets left behind
One in five people in the world has high-speed lines but the gap is growing

Richard Wray, communications editorThursday June 14, 2007The Guardian

Almost 300 million people worldwide are now accessing the internet using fast broadband connections, fuelling the growth of social networking services such as MySpace and generating thousands of hours of video through websites such as YouTube.

There are more than 1.1 billion of the world's estimated 6.6 billion people online and almost a third of them are now accessing the internet on high-speed lines. According to the internet consultancy Point Topic, 298 million people had broadband at the end of March and that is already estimated to have shot over 300 million. The statistics, however, paint a picture of a divided digital world.

While there are high levels of broadband penetration in western Europe, North America and hi-tech economies such as South Korea, usage in developing countries, and especially in Africa, is pitiful. Many of these emerging economies lack telephone services, let alone the sort of broadband internet access that has become available to every household in Europe.

In terms of total broadband users, the US leads the pack with more than 60 million subscribers. But second-placed China is fast closing the gap. From 41 million users a year ago, China now has more than 56 million and looks set to overtake the US as the world's largest broadband market this year.

Katja Mueller, research director at Point Topic, said: "What amazed me when compiling these figures is that China has leapt ahead and actually had more people sign up to broadband in the first three months of this year than in any other earlier quarter."

China's rampant growth is a result of economic changes and government intervention. The country's economic boom has helped create an affluent urban middle class clamouring for the social aspects of internet access, while the government has been driving the roll-out of internet access in rural areas.

Next year's Beijing Olympics has provided a fillip to the market with the government demanding that every household in the capital has high-speed internet access in time for the games.

Japan ranked third, with 26.5 million broadband users at the end of March this year, while Germany is fourth at more than 16 million. France scored the highest growth (9%) in take-up among the top 10 broadband nations to leapfrog South Korea - at 14.1 million - to take the fifth spot with 15.3 million.

The UK came in sixth with just under 14 million broadband users at the end of March, up 6.4%. Demand in the UK has been driven by fierce competition from the satellite broadcaster Sky, which launched its broadband service last year, and the introduction of "free" broadband offers from firms such as TalkTalk.

But in terms of broadband usage as a percentage of households, the UK's position in the global rankings slips to number 17, with 55.5% of households connecting to the internet at high speed.
Based on broadband penetration, South Korea is by far the world's top broadband user with nearly 90% of households online. Several small, economically vibrant and densely populated states are also high on the list such as Hong Kong, Monaco and Macau. The US, with broadband penetration at just under 53%, is in 24th place. Penetration in China, meanwhile, is 14.35% while in India penetration stands at just 1.15% of the country's estimated 200 million households.

Penetration levels in eastern Europe, meanwhile, may be low but the region scored the highest overall level of growth in take-up, becoming the only area to show growth of more than 10%.
The region's economic rehabilitation, in part thanks to the inclusion of several states in an expanded EU, is driving take-up, according to Point Topic. Poland saw growth in new broadband connections of 9% in the first quarter, with Hungary at 10.38%, Bulgaria at 10.94%, Ukraine at nearly 15% and Croatia at a staggering 25%.

"Penetration of broadband in eastern Europe was really low, but it is starting to catch up with Europe and we expect eastern Europe to continue to grow," said Ms Mueller.

In fact, Indonesia scored the highest growth across the world in the first quarter - almost 28% - but from a very low base. Greece, meanwhile was second with growth of over 26% due to the rather late introduction of broadband by incumbent operator OTE.

The figures, however, show just how large the gap is between the digital haves and have nots. Many sub-Saharan African states do not register in the figures at all: only South Africa, Sudan, Senegal and Gabon make it on to the list, with household broadband penetration running from 1.79% in South Africa - with 215,000 users at the end of March - to just 0.05% in Sudan with a mere 3,000. North African states fare slightly better with Morocco scoring 6.78% penetration with 418,000 users, and Egypt at 1.55% or 240,000. Many African states are now looking to mobile phone companies to provide access to the internet as they struggle to find a place at the digital table.

AD SPENDING COULD BE WEAKEST SINCE 2001
By HOLLY M. SANDERS

$LOWING SALES: In January ad growth for this year was projected
to be 2.6 percent. Now expectations are lowered to 1.7 percent growth over 2006 spending.June 13, 2007 -- After a bad start to the year, Madison Avenue is bracing for even worse news: Advertising spending in 2007 is expected to be the weakest since the ad recession in 2001.

Ad tracker TNS Media Intelligence predicts U.S. ad expenditures will grow just 1.7 percent to $152.3 billion, down from a previous forecast of 2.6 percent.

"Take two aspirin and wait for 2008," said Jon Swallen, senior vice president and director of research at TNS.

Swallen and other forecasters figured that ad spending would be down compared with last year, which had the double boost of the Olympics and election spending.

Still, TNS was forced to revise its full-year forecast after ad spending in the first quarter fell short of expectations.

"Spending through the first three months contracted at an even faster rate than we expected," Swallen said. "I'm coming up short on even my most pessimistic forecasts."

Swallen said marketers are being cautious, especially local advertisers that are sensitive to economic conditions and tend to pull back on advertising when faced with uncertainty.

The drop in dollars also reflects marketers that continue to shift their ad budgets away from traditional media such as TV toward less expensive digital alternatives including the Internet.

Television is a mixed bag. While ad spending on cable networks is expected to rise 5.9 percent, network TV expenditures will increase by just 1.3 percent. Without the Olympics-election combo, spot TV spending is expected to fall 5.5 percent.

Article Link (NY POST): http://www.nypost.com

The case of the disappearing TV viewers...

Patterns, measurements define 2006-07 season

NEW YORK -- It has been a wild and in some cases wacky season for network TV, culminating in a hunt for millions of missing viewers that is so complicated that it's worthy of its own episode of "CSI."

On the surface, it is status quo CBS extended its winning streak in total viewers to five years, while "American Idol"-powered Fox bagged a third consecutive season victory among adults 18-49.

But underneath, a sea change has been brewing."I think we'll look back and see 2007 as the watershed when all the things we talked about viewing behavior and audience measurement of that behavior all came together to start the new era," NBC research chief Alan Wurtzel said.

"We've talked a lot about change and everything, but this is the first year we've seen it in a profound way."At the beginning of the season, Nielsen Media Research introduced "most current" ratings, cuming the audiences that watch a show live as well as those that record it on a DVR and watch it up to seven days later.

But even with those additional viewers counted this season, primetime television viewing dropped significantly compared with last season.The steepest decline was in live viewership, which fell 10% year-over-year among the four major broadcast networks. Adding in DVR viewership, which can boost shows' ratings by as much as 25% or more, the Big Four were still down 5%.

Things turned for the worse in the spring when many of TV's best and brightest fell to season or even series lows. That list includes "Desperate Housewives," "Lost," "Grey's Anatomy," "CSI: Miami" and "ER," among others. Even "Idol" wasn't immune though it hasn't seen a year-over-year decline.

The reasons seem myriad. Explanations include poor comparisons with the Winter Olympics, which boosted viewership levels last year, the lack of stunt counter-programming, a three weeks' earlier start to daylight-saving time, an abnormally high amount of repeats in February and March and a shift in viewing behavior brought on by the DVR, streaming video and the growing number of ways network TV is consumed these days."It's never one thing," said Fox scheduling czar Preston Beckman, who acknowledged that the early start to daylight-saving time and the increase in DVR penetration has changed the game.

He thinks that the networks also have learned the hard way that viewers are annoyed by their favorite shows going on hiatus or repeating. It's something Fox took into consideration three years ago when it scheduled "24" straight through. Nielsen said that only 66% of program minutes in March were original compared with 80% a year ago.

Daylight-saving time generally shaves 3% or 4% off viewing, something the networks saw three weeks earlier this year. It particularly hit the 8-9 p.m. hour and such shows as NBC's "My Name Is Earl" and "The Office." But even when things started evening out, the ratings remained down."Probably the two had a compound effect and moved people away from their normal March viewing patterns into a lower general pattern of television viewing," CBS research chief David Poltrack said. "We haven't really recovered from that."Mindshare research director Debbie Solomon thinks that the long hiatus periods and schedule shifts are coming back to haunt the networks and turn off viewers."They're not leaving the set, they're leaving the shows," Solomon said. "It's important to make that distinction.

The networks have been playing so many games with scheduling and a lot of programs have gone on long hiatus periods and a lot of changed nights. ... I think viewers have given up trying to find their shows."And unlike the past two years, when several shows debuted in the winter and spring -- "Office," "The Unit," "The New Adventures of Old Christine," "Deal or No Deal" and, of course, "Grey's Anatomy" -- this year fewer programs were introduced and only three, ABC's "October Road," Fox's "Are You Smarter Than a 5th Grader?" and CBS' "Rules of Engagement" stuck."And certainly you wouldn't put them in the same class as 'Grey's Anatomy' and 'Deal or No Deal' in terms of strength," Poltrack said. "This was a spring where the networks were not reinvigorated with new programming as in years past. Hence, more repeats.

This led to some lowering of overall viewing levels."Fox's Beckman doesn't think that the decline is as severe as it seems when just looking at live-plus-same day. It's a function of the fact that the average Nielsen home is three or four times more likely to be recording programming and playing it back later than it was a year ago."When you incorporate the live-plus-seven (ratings), you see that viewing isn't down as much as it appears to be," Beckman said. By that yardstick, such series as "24," "Lost" and "Idol" are flat or slightly up compared with a year ago.

NBC's Wurtzel doesn't think that there's a mass departure of network TV viewers. It's just that there are more choices and people are consuming media differently."It may well be that for a lot of people they don't feel the need to be there day-and-date for conventional television anymore," he said. "I do not believe that people aren't interested in television. That doesn't make any sense." But Beckman believes that with the networks putting so many shows on so many platforms, it is leading to a growing perception that viewers don't have to watch it on network TV. The trick, he said, is whether the loss in potential advertising revenue is offset by the gains in the other ways the shows are being sold.

NBC is asking Nielsen to look into its measurement to make sure that there's nothing hinky there, like a few years ago when young male viewership dropped precipitously. Nielsen said it's looking into NBC's concerns and plans to report to its clients before the Memorial Day holiday."What we've found is that people aren't watching less TV this season, they're watching slightly less live television," a Nielsen spokesman said.

Wurtzel is more concerned about the changes in the HUT (households using television) and PUT (persons using television) levels, upon which the viewership and ratings are based."I would be surprised if there was a proverbial smoking gun. I think it's going to be a lot of different things," he said. "But I think we really have to understand what the Nielsen situation is, either to say we've got to deal with it or to say it's been taken off the list."

http://www.hollywoodreporter.com by Paul J. Gough May 25, 2007

Thursday, May 17, 2007
Newspaper Industry Proclaimed "Vibrant, Growing"

According to recent provisional data from the World Association of Newspapers Paid-for newspaper circulation went up 1.9 percent year-on-year to more than 510 million paid-for copies in 2006, and the number of new paid-for titles grew to more than 11,000 for the first time in history.

Gavin O'Reilly, President of WAN and Chief Operating Officer of Independent News & Media Ltd., said "The prognosis for newspapers is actually quite different to conventional wisdom... Those of us in the newspaper business are very confident in the future... producing relevant and compelling products for our local markets, aggregating growing audiences and showcasing them to advertisers."

Based on preliminary figures from more than 200 countries and territories, to be published next month:

Paid-for circulations grew 1.9 percent over 12 months and 8.7 percent over five years. With free newspapers, global circulation grew 4.3 percent year-on-year.

Free daily newspaper circulation more than doubled over five years, to 40.8 million copies a day
More than 1.4 billion people now read a newspaper daily

Paid-for daily titles surpassed 11,000

Print is the biggest advertising medium in the world, says the report, with a 42 percent share.

Newspapers alone are the second largest, with 29.4 percent of global advertising spend.

Advertising revenues rose 4 percent in 12 months and 15.6 percent over the past five years

More than 6 billion US dollars have been invested in newspaper printing and production equipment in the last 18 months

O'Reilly noted that "Hidden in those figures is the fact that newspapers... actually represent more than the combined advertising value of radio, cinema, magazines and the internet."

Click here for the full presentation; http://www.wan-press.org/article14023.html .

Research from Media Post www.mediapost.com : Center for Media Research research@mediapost.com

Father & Son... Just relaxing.

This is a picture I took of my son Elliot, (and my feet) while we enjoyed a nice spring day on the porch. Very calm and cool.

I cherish my time with him! This picture reminds me of our fun times together.

I know this isn't research or media focused--however, my 9 year old son gives me creative ideas that only a child can imagine! I think outside the box more, thanks to him!

Old media turns combative against new media
Tue May 8, 2007 7:40PM EDT
By Kenneth Li

LAS VEGAS (Reuters) - Leading media executives took a combative tone against Internet companies on Tuesday, suggesting that Big Media increasingly considers new content distributors like Google Inc. to be more foe than friend.

At a panel discussion on the second day of the 56th annual National Cable & Telecommunications Association conference, top executives said talk of the demise of traditional media in the digital age was overblown.

While new distribution technologies like the Internet and mobile phones are siphoning television audiences, media companies argued that the Web also brings new revenue streams.

But the discussion quickly moved to criticism of the perception that traditional media businesses are dead, and to the rampant copyright offenses enabled by new digital technologies.

"The Googles of the world, they are the Custer of the modern world. We are the Sioux nation," Time Warner Inc. Chief Executive Richard Parsons said, referring to the Civil War American general George Custer who was defeated by Native Americans in a battle dubbed "Custer's Last Stand".

"They will lose this war if they go to war," Parsons added, "The notion that the new kids on the block have taken over is a false notion."

Time Warner defended its discussions on copyright protection with Internet search leader Google Inc., which another panel member, Viacom Inc., has sued.

Viacom, owner of the MTV and Comedy Central networks, is seeking more than $1 billion from Google and its online video site YouTube, accusing them in a lawsuit of "massive intentional copyright infringement."

Viacom CEO Philippe Dauman said on the panel his company had discussed working with Google and YouTube earlier than other major media companies, by virtue of the popularity of its programs on the Web and their resonance with young viewers.

Dauman said Viacom had little choice after failing to reach an agreement, as video clips of its shows were uploaded by YouTube users without its permission.

"So, it was only reluctantly after trying for a long period of time, to reach a deal that we found that we could not tolerate having our content taken, when we've got Brian and Dick and others compensating us for it," Dauman said, referring to Comcast Corp. Chief Executive Brian Roberts and Time Warner CEO Richard Parsons.
"We were forced into it," he added.

IfGoogle, whose advances in applying its Internet paid search technology to the television industry, radio and print has spooked traditional media companies, owns a 5 percent stake in Time Warner's AOL Internet unit.

"We're in a world where we're a partner with everybody and we're fighting everybody," News Corp. Chief Operating Officer Peter Chernin said on the panel.

Despite the attention from Wall Street, the media industry and the press, executives said the percentage of overall sales contributed by digital businesses remained small and they should be mindful of destroying existing lucrative businesses.

"The amount of money we get from those (Internet companies) are a fraction of those we get from the cable industry," Chernin said. "We have to be careful not to disaggregate."

News Corp. is likely in a position to know how enemies today could turn into friends tomorrow.
A source familiar with the matter said News Corp.'s Fox Interactive Media, which oversees its popular Internet social network MySpace, had reached a preliminary deal to buy photo sharing site Photobucket for an estimated $250 million.

MySpace last month blocked traffic coming from Photobucket after the photo service began running ads on photos displayed on MySpace sites. MySpace said it had violated its service terms.

"You'll see more acquisitions," Chernin said. "This is a world where the big get bigger. You'll see increased consolidation."

Data Says 2.5 Million Less Watching TV

May 8 06:01 PM US/EasternBy DAVID BAUDERAP Television Writer

NEW YORK (AP) - Maybe they're outside in the garden. They could be playing softball. Or perhaps they're just plain bored. In TV's worst spring in recent memory, a startling number of Americans drifted away from television the past two months: More than 2.5 million fewer people were watching ABC, CBS, NBC and Fox than at the same time last year, statistics show.
Everyone has a theory to explain the plummeting ratings: early Daylight Savings Time, more reruns, bad shows, more shows being recorded or downloaded or streamed.

Scariest of all for the networks, however, is the idea that many people are now making their own television schedules. The industry isn't fully equipped to keep track of them, and as a result the networks are scrambling to hold on to the nearly $8.8 billion they collected during last spring's ad-buying season.

"This may be the spring where we see a radical shift in the way the culture thinks of watching TV," said Sarah Bunting, co-founder of the Web site Television Without Pity.
The viewer plunge couldn't have come at a worse time for the networks—next week they will showcase their fall schedules to advertisers in the annual "up front" presentations.

The networks argue that viewership is changing, not necessarily declining. Some advertisers respond that they are no longer willing to pay full price up front to reach viewers that may not tune in later.

This fall, both sides will be watching what happens with families like Tony Cort's. During prime-time, Cort, his wife and four kids tend to scatter to computers or other activities in different parts of their New Jersey home. (Not during "American Idol" or "Lost," though.) They're definitely watching less TV, said Cort, who runs a Web site for martial arts aficionados.
"I remember when `24' was on, that was something there was a lot of interest and excitement about," he said.

News flash: "24" is still on. Its ratings are down, too, amid a critically savaged season.
More bad news abounds. NBC set a record last month for its least- watched week during the past 20 years, and maybe ever—then broke it a week later. This is the least popular season ever for CBS' "Survivor." ABC's "Lost" has lost nearly half its live audience—more than 10 million people—from the days it was a sensation. "The Sopranos" is ending on HBO, and the response is a collective yawn.

Events like "American Idol" on Fox (which is owned by News Corp.) and "Dancing With the Stars" on ABC (owned by The Walt Disney Co.) are doing the most to prop up the industry. But still, in the six weeks after Daylight Savings Time started in early March, prime-time viewership for the four biggest broadcast networks was down to 37.6 million people, from 40.3 million during the same period in 2006, according to Nielsen Media Research.

Millions of missing viewers could translate into millions of missing dollars for the networks heading into the up-front sales season.

Advertisers don't believe that the drop in viewership is as dramatic as the numbers suggest, but they're no longer willing to spend what they once did in the spring market, said Brad Adgate of Horizon Media, an ad buying firm. Johnson & Johnson and Coca-Cola sat out the spring market last year—betting they could get lower prices later—and it's likely other companies will do the same this year, he said.

The early start to Daylight Savings Time has hurt ratings. Prime-time viewership traditionally dips then as people do more things outside, and this year folks had a three-week head start to get into the habit of doing something else. More network reruns during March and April dampened interest, too.

"We let them get out of the habit of watching television a little bit, and it's going to take some time to get these people back in front of their television sets," said David Poltrack, chief researcher for CBS (owned by CBS Corp.).

Strategic decisions to send some popular serial dramas on long hiatuses appeared to backfire. NBC's "Heroes," CBS' "Jericho" and "Lost" lost significant momentum when they returned. Besides HBO's "The Sopranos," there are no lengthy countdowns toward the end of very popular series, unless you count "The King of Queens."

There also are technical reasons that this apparent diminished interest in television may be overstated.

This year, for the first time, Nielsen is measuring viewership in the estimated 17 percent of homes with digital video recorders—but it only counts them in the ratings of a specific show if they watch it within 24 hours of the original air time.

If you recorded "Desperate Housewives" this spring and watched it two days later, you're not counted in the show's ratings. And you're not counted by Nielsen under any circumstances if you downloaded a show on iTunes and watched it on your iPod or cell phone, or streamed an episode from a network Web site.

Since last year's Nielsen sample contained no DVR homes and this year's sample does, logic dictates that fewer Nielsen families are watching TV live this year, deflating ratings.
"People are not consuming less television, they're watching it in different ways, and the measurements haven't caught up," said Alan Wurtzel, chief research executive at NBC (owned by General Electric Co.).

The numbers can be significant. When "The Office" aired on NBC on April 5, Nielsen said there were 5.8 million people watching. Add in the people who recorded the episode and watched it within the next week, and viewership swelled to 7.6 million, a 32 percent increase, Nielsen said.
"The Sopranos" is another interesting case study. For its first four episodes this season, the show averaged 7.4 million viewers for its weekly Sunday night premiere, down from 8.9 million at the same point its last season.

But HBO shows each new episode eight times a week. Between the multiple plays and DVR viewing, each episode this spring gets 11.1 million viewers, down from 13 million last year. And these figures don't count people who watch on demand.

Numbers for "The Sopranos" may be down because people can watch whenever they want. They may not be as interested in the show as they used to be—or it could be a combination of both.

Television has made billions based on how many people watch a show at its regular time. That idea may already be obsolete. So should the industry use DVR viewing when setting ad rates? If so, how quickly must people watch the shows—within two days? A week? What about people who watch shows on their cell phones or on network Web sites, which Nielsen doesn't measure yet? Later this month Nielsen will begin measuring how many people watch commercials. Should those be used to compute advertising costs?
Right now, none of those questions have answers.

However, "if we continue to do business assuming people will watch television as they always have," said NBC's Wurtzel, "it's a dead-end game."
Copyright 2007 The Associated Press.

Newspaper Circulation Falls 2.1 Percent

Monday April 30, 10:26 am ET By Seth Sutel, AP Business Writer

Weekday Circulation at Daily Newspapers Falls 2.1 Percent in Latest Reporting Period

NEW YORK (AP) -- Weekday circulation at U.S. daily newspapers fell 2.1 percent in the latest six-month reporting period, according to figures released Monday, in the latest sign that people are turning to the Internet and other media for news.

Comparable figures for Sunday newspapers fell 3.1 percent, according to the Newspaper Association of America, an industry group. The calculations are based on reports that newspapers deliver to the Audit Bureau of Circulations.

Among large newspapers, the performance was mixed for the six months ending in March, with several showing gains, most notably The New York Post, which is locked in a fierce competition with the New York Daily News.

Those papers had the largest gains among the major dailies, with the Post's average weekday circulation rising 7.6 percent over the same period a year earlier, while the Daily News rose 1.4 percent.

The New York Post, which is owned by Rupert Murdoch's media conglomerate News Corp., recently announced that it would double its weekday price as of Monday to 50 cents from 25 cents. The Daily News, owned by the real estate developer Mortimer Zuckerman, charges 50 cents on weekdays.

Gannett Co.'s USA Today remained the largest daily in the country, with circulation of 2,278,022, up 0.2 percent from the same period a year earlier, ahead of The Wall Street Journal at 2,062,312, up 0.6 percent.

The Dallas Morning News, owned by Belo Corp., posted a 14.3 percent decline to 411,919, reporting for the first time since being censured in 2004 for misstating its circulation figures.

Newsday, based in New York's Long Island, had a 6.9 percent decline to 398,231. That paper, owned by Tribune Co., had also previously been censured for misstating circulation but returned to reporting circulation for the period ending in March 2006.

The Chicago Sun-Times remains the only major newspaper that had been censured by the Audit Bureau for misstatements in 2004 and has still not yet resumed reporting.

The Sun-Times' parent company had previously been known as Hollinger International Inc., run by the now-deposed press baron Conrad Black, and is now known as the Sun-Times Media Group Inc.

Newspaper circulation has been declining steadily for years amid changing reader habits and the emergence of other media for news, particularly 24-hour cable TV news and the Internet.

However the average weekday decline of 2.1 percent in the latest period was not as steep as the fall of 2.8 percent reported for the six-month period ending in October, or the six months ending in March 2006, when the decline was 2.5 percent.

Many newspapers are attracting readers and advertising dollars through their Web sites, but the growth in online revenues is generally outweighed by declines in print advertising, which still makes up the vast majority of newspapers' business.

Online readership of newspaper sites continues to grow. The NAA pointed to recently released data from Nielsen//NetRatings showing a 5.3 percent increase in the number of people who visited newspaper Web sites in the first quarter of 2007.

AP STORY: Circulation at the Top 20 Newspapers Monday

April 30, 10:59 am ET By The Associated Press

Average Weekday Circulation at the Top 20 U.S. Newspapers

Average paid weekday circulation of the nation's 20 largest newspapers for the six-month period ending in March, as reported Monday by the Audit Bureau of Circulations. The percentage changes are from the comparable year-ago period.

1. USA Today, 2,278,022, up 0.2 percent

2. The Wall Street Journal, 2,062,312, up 0.6 percent

3. The New York Times, 1,120,420, down 1.9 percent

4. Los Angeles Times, 815,723, down 4.2 percent

5. New York Post, 724,748, up 7.6 percent

6. New York Daily News, 718,174, up 1.4 percent

7. The Washington Post, 699,130, down 3.5 percent

8. Chicago Tribune, 566,827, down 2.1 percent

9. Houston Chronicle, 503,114, down 2 percent

10. The Arizona Republic, 433,731, down 1.1 percent

11. Dallas Morning News, 411,919, down 14.3 percent

12. Newsday, Long Island, 398,231, down 6.9 percent

13. San Francisco Chronicle, 386,564, down 2.9 percent

14. The Boston Globe, 382,503, down 3.7 percent

15. The Star-Ledger of Newark, N.J., 372,629, down 6.1 percent

16. The Atlanta Journal-Constitution, 357,399, down 2.1 percent

17. The Philadelphia Inquirer, 352,593, up 0.6 percent

18. Star Tribune of Minneapolis-St. Paul, 345,252, down 4.9 percent

19. The Plain Dealer, Cleveland, 344,704, up 0.5 percent

20. Detroit Free Press, 329,989, down 4.7 percent

The Dallas Morning News is reporting for the first time since being censured in 2004 for misstating circulation figures. The Chicago Sun-Times has not yet resumed reporting.
Source: Audit Bureau of Circulations.