Even though over here, the recession is really starting to bite - Just don't tell the President - And people are freaking out that gas (petrol) is now up to $3.60 (under two quid) a gallon, and filling up your Humvee costs as much as the GNP of a small, but only slightly corrupt, African nation, the online ad biz is booming.
News in the past week indicates that Google, Yahoo, and Microsoft have seen their first-quarter earnings grow more than 30%. Obviously, the fact that the Internet is less expensive, more targeted and easier to track than most traditional media -- and at a time when marketers are pinching pennies, they obviously want to be accountable for every one.
According to analysts here in the US, 38% of marketers expect to increase their online ad spending during the economic downturn, a number only slightly higher than the 36% who expect to decrease their traditional media outlay. Either way, I'm sure you guys are seeing the same thing over there. Anyone want to buy a slightly used "Hummer?"
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More indications here in the US that the company which invented the great coffee rip-off is in deep doo-doo with the announcement on Thursday that Starbuck's has taken a major step back from their music and book business by handing over day-to-day management of its year-old music label to Concord Music Group, as they strive to contain costs and rejuvenate its coffee shop business.
Yet this restructuring of Starbuck's Entertainment, seems a tad strange, when you consider that even though the unit is small, it's been quite profitable and the news comes just over a year after the company unveiled its Hear Music label with great fanfare.
In recent months, however, the chain's overall fortunes have soured due to a sharp downturn in U.S. consumer spending and the fact that people are waking up to the fact that you can actually buy quite good coffee for a tenth of the price. CEO Howard Schultz has gone on record to say... "We are committed to examining all aspects of our business that are not directly related to our core," I guess he means coffee. But you know it doesn't mean cheap coffee!
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With all the current hype about the promise of "mobile"... You know, the constant barrage of how from now on everyone will be watching Star Wars on their cell phone, with ad breaks every ten minutes, or until the battery runs out just as Darth Vador is about to kick Luke Skywalker's arse...
I am beginning to think back to the halcyon days of the late nineties, just before the dot com bubble burst. Remember when we were told to forget about actually selling stuff and making a profit, 'cos it was all about building the audience? The phone biz is smelling just like that right now. Because it seems to me that no one is answering any of the basic questions, like what role mobile media plays in a larger campaign or as an essential element in the overall media strategy for a brand.
In other words, what is it that mobile is supposed to do that can't be achieved with other media choices? What essential role does it play? Forget that it's "hot" or even "cool." Just tell me why I should use it and what benefits I will derive from doing so. That's not too much to ask, is it?
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News out this week makes it official, Google has retained its spot as the world's most valuable brand in a league table that reveals the ever-growing power of IT companies and new media business models.
It would seem that the Google brand is worth more than $86.1 billion, up 30% on last year, according to the Brandz list from Millward Brown Optimor published Tuesday, which calculates the proportion of sales driven by brand. Two years ago, when Microsoft topped the list, (it's now at number three) Google ranked seventh.
Interestingly, Apple, which ranked seventh, reached the survey's top 10 for the first time. It also was the first time that RIMM's BlackBerry phone, ranked 51st, made the list at all. Things are changing rapidly.
As bone fide, fully paid up member of the digerati, and because I know you are desperately interested, here is a very small collection of the domain names Google currently owns...
It's more than likely that many of these domain names have been registered by Google either to protect their brand, and in some cases to prevent typosquatting and similar practices. Google lawyers have surely been keeping busy reclaiming lots of Google-related domain names over the years. If you can come up with something they might want to buy off you... Good luck, and I hope you get rich!
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I am convinced the stock market is a giant casino, where no one, particularly people in the so-called financial industry, has a clue about what the hell is going on... Apple on Wednesday reported a fiscal second-quarter profit of $1.05 billion, or $1.16 a share, on $7.51 billion in revenue. During the same period a year ago, Apple earned $770 million, or 87 cents a share, on sales of $5.26 billion.
The results topped Apple's forecast of a profit of 94 cents a share and $6.8 billion in revenue. Analysts estimated Apple would earn $1.05 a share on sales of $7 billion. The company said that during the quarter ended March 31 it sold 2.29 million Macintosh computers, 1.7 million iPhone's and 10.6 million iPod's. For its third quarter, Apple estimates it will earn $1 a share on $7.2 billion in sales.
So... AAPL comes in with awesome earnings and goes down after hours, all the major banks lose dumpster loads of money and the stock goes up. Even worse, companies report XXX earnings, then two days later it's announced it was largely because of some random currency credit or whatever. how does anyone accurately read earnings? The answer is... You can't!
Today's Wall Street Journal has a story about how Mattel is struggling to breathe life back into its flagship brand, Barbie--more than a year after problems surfaced. A great illustration of the tough job the toy industry faces in attracting the fickle attention of young girls.
They've tried all kinds of gimmicks to modernize the doll with more electronic features. But with all the iPods, games, phones and other electronic stuff out there, all they've done is confused their young customers. The recent "Magic of the Rainbow," a fantasy doll marketed under the Barbie brand--doubled as a remote control, came with a CD-ROM game and featured wings that fluttered at the push of a button, resulted in girls asking the question, is this a doll?"
Apart from some dolls almost being lethal, this is a good example of line extension gone nuts. Stick to basics, and when the franchise starts to get fatigued, move on to something new. The world has changed from when kids used to prefer the box to the toy... Unless it's a Gucci designed $500 box!
I'm in advertising, right? So, I don't pretend to be an economist, but I am always mystified when I read about the big conglomerates (WPP, Omnicom, IPG, Publicis) buying up hundreds of new media companies for millions of dollars, after which the founders of these companies take their new found riches and go off and start something else.
Meantime the conglomerates eviscerate the companies they have just bought by making them conform to their rigid, top heavy management style, so stifling exactly the innovation and entrepreneurship that attracted them to them in the first place.
The conglomerates then proceed to lay off most of the staff of the new company before folding them into one of their BDA's, where they soon disappear. The conglomerate then goes off and repeats the same exercise. As I said, I'm no economist, but it sounds incredibly stupid to me.
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It wasn't that long ago online tracking company comScore sent a shiver through the stock market when it released figures showing signs of the economic slowdown weighing on Google, as evidenced by a continuing deceleration of ad click-through rates. Even though comScore came out a few days later with a more favorable interpretation of the numbers. The report fed into the stock market's fears and hammered Google shares further along a slide that had started at the beginning of the year.
Well, at the end of last week it turned out all that worrying was for naught. After market close Thursday, Google delivered a quarterly report showing all parts of its money-making machinery to be cranking right along, with net income up 31 percent to $1.31 billion and revenue up 42 percent to $5.19 billion over the same period last year.
As CEO Eric Schmidt put it, "The business model continues to work very well and we've had good, disciplined management of our operating expenses, so thank you very much for the management team. It's also interesting to note that paid clicks growth is much higher than has been speculated by third parties." The 800 pound gorilla is on track to become a 1600 pound gorilla!
More dodgy news for Facebook... In the "This will be interesting to see how it plays out" category, a Texas woman has sued Blockbuster over its activities relating to Facebook's Beacon tool.
The movie rental service has been reporting user activity to Facebook since Beacon launched last November, which the plaintiff says is a violation of the Video Privacy Protection Act.
I wonder how Mark Zuckerberg and his army of lawyers will respond to this? Even though the action is against Blockbuster, it will obviously impact Facebook's business model... Whatever that is! Anyway... I'm getting very fed up with Facebook and the hundreds of people I don't know, but want to be my friend!
Element 79 in Chicago, which was set up primarily to handle Pepsi business is losing a big slug of that account with the news yesterday that PepsiCo's Quaker is shifting creative duties on its Gatorade and Tropicana brands to TBWA\Chiat\Day and Arnell Group, respectively.
TBWA\C\D will handle Gatorade, and Arnell, will handle Tropicana. Pepsi issued this statement: "We're always looking for breakthrough creative, and as such, are continuously assessing performance from incumbents, as well as, other agencies. As we look at the businesses today, we believe Gatorade and Tropicana could benefit from a partnership change. In essence, both world-class brands demand new, creative thinking to fuel their growth. We appreciate Element 79 Partners stewardship and creative work over the last six years, which have contributed to the success of our brands. We wish the agency continued success in the future."
Which basically means that Element 79 is screwed... My prediction, they won't last out the year!
I was more than amused to read today that while Yahoo's board has instructed management to keep meeting with Microsoft and with Time Warner, to work out a possible deal, Frank Quattrone reportedly has been enlisted as an advisor to Google CEO Eric Schmidt. Google has hired Quattrone's law firm, the Qatalyst Group, to provide counsel and help strategize its positioning in the Microsoft-Yahoo merger talks.
When you consider Google's famous corporate motto is "Don't be evil." You might ask your self why they need advice from a guy who spent several years dealing with accusations of obstruction of justice while at Credit Suisse. But to be fair, the subsequent clearing of the charge after four years removes any obstacles for him to work in the financial industry.
Still, you'd think with something this big, a touch of "Caesars Wife" might be well advised.
I guess you have to hand it to the British when it comes to new product introductions. I must say I had a chuckle when I read about London's Peter Jones department store offering discerning customers the chance to stump £50 a pop to taste Caffé Raro - an exotic blend of Jamaican Blue Mountain and Kupi Luwak beans, the latter having passed through the digestive tract of jungle cats. Yes... That means exactly what it sounds like!
Apparently, Kupi Luwak beans are eaten by Indonesian civet cats and subsequently "harvested" from their faeces. A spokesman for Italian coffee outfit De Longhi, which markets the blend, explained: "It is in high demand from coffee aficionados. They will relish the chance to buy such a rare coffee. After all, only 200kg of Kupi Luwak coffee is produced each year!
If you fancy buying it when you are here in the US, go here... And indulge yourself for just $739 a pound! What a load of old crap!
As loyal readers of MadScam will know by now, I am flying to London next Tuesday to speak at the amazing "Under The Influence" Ad conference on Thursday, April 18th. Which in inimitable British style, will last all day, take place in five grand British Pubs, and by the time I get to the fifth, I will undoubtedly be so inebriated I will be speaking absolute shit... So, what else is new?
I have emailed everyone I can think of to join me there, or join me for drinks over the next couple of days. I am staying here... I have no idea what it's like, but knowing London, there's probably a pub within falling down distance. Wednesday is out, as I am having a hopefully very boozy lunch with Gordon Macmillan, the Uber-Editor of all that is great about BrandRepublic (That should earn me a few drinking points on Wednesday!)
But, if you get desperate for a free pint, my mobile number is 1-208-340-0465... How many primo-ad blogger's do you know stark raving mad enough to hand out that kind of information to all and sundry? Anyway, if I have left anyone out on my various invitations for free drinks and getting legless... Humble apologies... And the first pint's on me! Even though the dollar is now fucking worthless! Anyone reading this in the UK, please get in touch with me. You never know what could happen!!!
Over here in the US, the battle for Yahoo is really starting to heat up now with the news that "The Wizened of Oz" - Rupert Murdoch’s News Corporation, is in talks with Microsoft about joining in its contested bid for Yahoo, a move that could result in the union of Yahoo, Microsoft’s MSN and News Corporation’s dreadful social network, MySpace.
The New York Times calls the three-headed beast "a behemoth that would upend the Internet landscape."
That's quite possibly the understatement of the year. It's sad that although Yahoo claims to have the most users on the Internet, it has never been to turn that huge traffic into a real money engine. Which is why potential buyers have been increasingly sniffing around, culminating in the Microsoft bid.
Steve Balmer, CEO of Microsoft would give his right arm to be able to challenge Google for a bigger piece of the ever increasing search-based advertising revenue.
No doubt, based on his track record, "The Dirty Digger" will demand both of Balmer's arms in the course of striking a deal
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George Parker
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