Friday, June 30, 2006

Why Advertising Agencies Don't Get R&D

Friday, June 30, 2006
Why Advertising Agencies Don't Get R&D
By Max Kalehoff

A few weeks ago, at the 2006 Innovative Marketing Conference--produced by Corante and Columbia Business School--I attended a panel discussion on the "changing face of advertising," led by consultant Joseph Jaffe. Considering the conference theme was innovation, I had to ask a question of the illustrious panel reflecting my own experience working in the cutting edge of marketing and media: Why the heck are advertising and marketing agencies so often so late to invest in or experiment with new technologies and emerging media, while the marketers and clients demonstrate increasing interest and tendency to pursue them directly?

I'll admit, this is not a rule, and you can be sure most of Jaffe's panel passionately disagreed with me, and perhaps you do as well. However, my experience working at innovative startups for nearly a decade supports this notion: that advertising agencies, generally speaking, are increasingly behind the curve. And this is especially true when it comes to primary research and product development.

Fortunately, for my ego, one panelist agreed with me steadfastly and responded to my question in a most eloquent fashion. Dr. Len Ellis, one of my early career mentors and former executive vice president of strategy at WCJ, noted: "The advertising-agency industry is one which does not have R&D built in as a line item in the budget."

That point stuck with me, so I recently asked Len to elaborate on why product R&D so often is not part of the advertising-agency model. He noted:

1. The Deliverable. Advertising agencies produce content for a living; specifically, memorable stories in print ads and broadcast spots. Moreover, these stories are to be one-of-a-kind. Storytelling does not require R&D, nor does originality in storytelling.

2. The Value Proposition. Like all professional-services firms, agencies sell expertise, which by definition reflects what has worked in the past. R&D reflects an intention to try what hasn't been tried before.

3. The Culture. Like all vendors, ad agencies are risk-averse. Proposing the untried to results-oriented clients is a risk with long odds, an unknowable payoff and a steep downside.

And more recent contributing factors include:

4. The Ownership. The big agencies that have the requisite resources are all publicly owned these days, and Wall Street has little patience with company spending that cannot be tied to short-term results.

5. The Environment. There's been general erosion in R&D spending by U.S. businesses recently.

While Len makes some very good points, I also posed the question to my friend Mark Green, senior vice president, media services, ACNielsen Analytic Consulting, a sister company to mine. (Mark also has 18 years of media-agency experience.) He explained that in the context of primary R&D, if you were to break down the traditional ad-agency model into its three parts--media services, creative and account management--it begins to makes sense why R&D doesn't always fit.

First, creative and account management view advertising and marketing as more of an art form--not something subject to R&D. As for media services, it has been a victim of lowering margins and head count, while ad spending has increased dramatically. Media services has become more of a commodity business, and therefore can't support R&D, as the cost won't be directly passed on to the client. While some of the big players do make small plays in R&D, these efforts are mostly hype. Mark emphasized that this is not a steadfast rule; there are a few exceptions.

Finally, I posed the same question to my colleague Pete Blackshaw, who helped lead the first interactive marketing department at Procter & Gamble. He underscored that the R&D absence in the agency model is partly the fault of the marketers they work for. The client's model of risk aversion and fear of exploring the unknown often passes right down to the agency. The bottom line is that clients need to put skin in the game and invest, along with their agencies.

With commoditization and risk aversion seemingly so prevalent, what is advertising to do? In these disruptive times in our media and marketing landscape, isn't R&D the ad industry's salvation? Better yet, isn't R&D necessary to avoid carnage?

Max Kalehoff is vice president of marketing for Nielsen BuzzMetrics, a global measurement service for consumer-generated media.

 
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Marketers Embrace Podcasts As Marketing Tools

Marketers Embrace Podcasts As Marketing Tools
The Wall Street Journal
Major marketers are beginning to experiment with podcasts--free audio programs that can be downloaded onto portable music players or computers--as marketing tools. The list includes Johnson & Johnson, General Motors Corp., and Whirlpool Corp.--all of which have seized on the popularity of the broadcasts as part of their marketing strategies to tech-savvy consumers. It's difficult to draw a direct correlation between podcasts and product sales, but marketing experts said the broadcasts can be useful in building brand awareness. "If you have a small group that's listening every week, that's great," said Steve Rubel, a senior vice president with public-relations giant Edelman. "You are building a relationship with people who are influential and who will tell other people what to buy." For the company's Acuvue contact lenses, J&J sponsors a series of podcasts about teenage life called "Download with Heather & Jonelle," written and hosted by two teenage girls of the same names. The girls and their podcast have a special page on the Acuvue Web site, and the show is also listed in a podcast directory on Apple Computer Inc.'s iTunes. The program has boosted awareness of the Acuvue brand among teens, said Naomi Kelman, president of Vistakon Americas, the J&J unit responsible for Acuvue.

 
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IAB Co-Founder Expands Health Network

IAB Co-Founder Expands Health Network
by Shankar Gupta, Friday, Jun 30, 2006 6:00 AM ET
AFTER QUIETLY BUILDING OUT ITS properties for the last several months, ChoiceMedia Thursday officially unveiled a new network of health sites, dubbed Health Central Network. The company--which recently received venture financing from Sequoia Capital, Allen and Company, The Carlyle Group, and Polaris Venture Partners--also formally changed its name to Health Central Network.

The company now operates 25 health vertical Web sites, each focused on a specific condition or wellness issue, such as migraine headaches, diabetes, or skin cancer. Marketers include all the major pharmaceutical companies, including Pfizer, and Johnson & Johnson; the company also is in talks with health-related consumer packaged goods manufacturers, including Procter & Gamble and Yoplait, said Christopher Schroeder, Health Central president and CEO.

Schroeder added that company's focus is to provide in-depth information about specific conditions. "We're not looking to be another generic one stop shop health encyclopedia. The portals do that very, very well," said Schroeder, former CEO of Washingtonpost.Newsweek Interactive and a co-founder of the Interactive Advertising Bureau. "People are overwhelmed with the amount of information, and they're overwhelmed with the amount of information that's hard for them to understand."

Each of Health Central's individual sites is authored by several "patient experts"--bloggers, authors, or medical professionals--and aims to get not only the clinical information, which Schroeder said has become "commoditized," but also experiences and stories from writers who have lived with each condition. "They write content not just about the clinical ramifications of the illness, but also the personal ramifications," he said. "These types of content are unbelievably emotive, they drive a lot of reaction from the community."

The Web has seen a bloom of health-related services with all the major portals offering some sort of Health vertical--Google most recently entered the market, launching a health category for its Google Co-op product, joining MSN Health and Yahoo Health, both major players.

Other, more niche offerings have also cropped up. American Online founder Steve Case last year launched Revolution, a network focusing on lifestyle, health, and wellness.

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Physician Web community tops 400,000 with worldwide membership

Physician Web community tops 400,000 with worldwide membership
More than 400,000 physicians worldwide are now part of an online community of physicians that participate in pharmaceutical and other market research. The agency, Medefield, launched what it calls an aggressive recruitment program that resulted in a 25% increase in its membership during the past 12 months. According to Medefield, the panel is the largest online physician community in the industry. The panel members are from all over the world, including more than 140,000 based in Europe and 100,000 in the United States. Medefield says its goal is to increase the size of its physician community to 500,000 members within the next 18 months.
 
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New ad-supported VOD network ideal venue for pharma DTC

New ad-supported VOD network ideal venue for pharma DTC

A new ad-supported video on demand (VOD) health and wellness network is a prime spot for pharma advertisers, reports Advertising Age. HealthiNation has launched in 15 markets and will syndicate its video content online later this summer. According to the report, the customized, on-demand nature of VOD is the right fit for pharma advertisers who have been criticized for mass-reach DTC ads. The ads have a longer format than typical TV spots, and an ad that's a couple of minutes long could be a better venue to discuss complicated drug and condition information, the company's founder said. Pfizer has already signed on and HealthiNation expects more participation from other pharma and health companies. Video topics cover health conditions and other topics such as dealing with Medicare or insurance. Learn more on HealthiNation's Web site.

http://www.healthination.com/

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Tuesday, June 27, 2006

VNU Business Publishing launches Internet broadcasting service

VNU Business Publishing launches Internet broadcasting service

London—VNU Business Publications, the publishing arm of VNU Business Media Europe, Friday announced the launch of VNU On Air, a new portfolio of Web-delivered audio and video content. VNU On Air will offer a mix of up-to-date news, product and technology reviews, and industry discussion aimed at users of VNU’s 20 on- and offline brands in the U.K. These brands include Accounting Age, Computeractive, Computing, CRN, IT Week, The Inquirer and vnunet.com. VNU said the programming will appeal to the company’s three core audiences: b-to-b IT buyers, consumer technology users and financial management professionals.

 

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Monday, June 26, 2006

Research: Internet Users Plagued by 'Banner Blindness'

www.clickz.com/news/article.php/3616001

Research: Internet Users Plagued by 'Banner Blindness'
By Enid Burns
June 26, 2006

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Pharma should address patient, doc needs in oncology site design

Pharma should address patient, doc needs in oncology site design
A new study from research firm Best Practices reveals how pharmas can best use their oncology Web sites. The company studied 17 top-selling oncology drugs from nine companies and found that high performers design their Web sites to include and complement both product-specific and corporate branding. The study also revealed significant gaps between the information and services that pharmas provide online and what patients and key opinion leaders want. The company says pharmas should work to better align their offerings with consumer needs. The study also concluded that companies can use their oncology sites as a platform to provide clinical trials resources. Doing this will not only help inform constituents, but also help recruit potential participants and investigators.
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