Will ad agencies ever embrace content marketing?

The golden age of advertising. Remembrance of things past.

At Advertising Week in NYC last month, a panel of senior executives from some well-known agencies discussed the current state of affairs for the agency business. Their “big news” was the evolution of the traditional copywriter – art director team approach to ad development –  to a “tripod” approach that now includes a digital expert.

Similar statements from other traditional creative agency executives made it seem like they thought they were still in the “golden age” of advertising. This was back when a top agency would get paid a large sum of money to come up with a “killer” creative concept, executed by high production value ad campaigns in TV, print and then digital venues, supported by extensive media buys. 

The result?  Advertising campaigns created many memorable and iconic brands, and made clients and ad agencies rich in the process.

This "mad men" business model worked well when there were only three big TV networks, a few dozen prominent magazine and newspaper brands, with captive audiences willing to endure advertising in order to get to the entertainment and news content.

However, once disruptive technology in the form of  computers, the internet, social media, blogs and user-created content erupted, traditional audiences became their own programming directors and news editors, consuming exactly the content they wanted, where and when they wanted it, with the advent of Netflix, Hulu, DVRs and digital readers there was no need to tolerate intrusive advertising interruptions. 

Master of her own content realm.

Consequently, most of us today are looking for relevant content that offers a "fair value" exchange for our time and attention. In fact, we may go so far as engaging in conversation with content creators, and share “remarkable” content (as coined by Seth Godin) – that is, content worth remarking about, or at least sharing.

Savvy marketers now use content marketing to initiate a conversation, giving people a reason to come back for more relevant content. Simply blasting messages at a loud volume is no longer an effective nor motivational marketing tool, and the decreased value placed on ad creation reflects this. 

$ 90K per second just for production.

Brad Jakeman, President of The Global Beverages Group at Pepsico,  says his firm used to give agencies between four and six months to produce a single piece of marketing content (usually a :30 or :60 second TV ad) and would pay between $ 700,000 and $ 2million for each of them. “Now we need an agency that can produce content in days, with each piece costing $ 10-15,000."

Remember the 2002 Pepsi Superbowl extravaganza

 "For those who think young"  that featured Britney Spears (in her prime) and cost a whopping $ 8.1million to produce.

No wonder the agency business is suffering so badly, with shrinking margins and an inability to attract, retain or even afford the talent needed to effectively compete with the likes of Google and Facebook.

Yet, will content marketing be the saving formula for agencies?

Unfortunately it is unlikely because:

Most agencies still rely on creating the “big idea,” and have little interest in a conversation with consumers.

Agency execs respond to ROI question.

Creative agencies by and large are scared to death of accountability. Agencies like to sell “The Magic of Hollywood” and duck for cover when asked about marketing effectiveness, return on investment and use of big data mining. 

Content marketing is all about using engagement metrics (views / shares / comments / downloads / etc.) to help guide future content development, and optimize marketing spend.

Silos reign supreme: Many creative agencies disparage “direct marketing” and “digital” as a second-class tools, even sister agencies within the same holding companies like WPP and Omnicom rarely work across disciplines.

Agencies are also facing fierce competition from content marketing start-ups like Contently and NewsCred to traditional publishing companies like NY Times, Meredith and The Economist Group.

Was that a billable expense?

So it looks like the martini glass is still half full for most agency executives, though it is resting precariously on the edge of the table.

Pity, as advertising used to be such a fun, lucrative business. Then again, so was the trans-Atlantic cruise ship business before passenger airplanes came on the scene in the late 1950s.

If content marketing is king, who should attend the coronation?

Content marketing is trending as the fastest growing marketing discipline of recent years; likely a direct result of the fact that traditional marketing and advertising just don't work very well anymore. 

Successful content marketers are taking a similar process-driven approach today. From innovative product and brand marketers to traditional and emerging publishers, they are proving themselves members of "content marketing royalty" using the following formula:

• Start with a strategic road map: A clear sense of their brand in terms of a benefit-based “value proposition,” and well defined targets.
•  Employ the art of high quality and engaging story-telling.
•  Use the science of data analytics to help determine what content proves to be attractive and engaging, and what doesn’t work.
• Embrace a test, learn and apply approach that make their content marketing programs a “permanent beta” exercise.

Marketers:

The look before the epic leap.

A shining example is Red Bull energy drink. From the start, Red Bull sought out people who actively participated in extreme sports and adventures. They exemplified that "high energy" is what it takes to get to the top level of their pursuits. These extreme athletes and adventure seekers had amazing stories to tell, and their stories became the fabric of the Red Bull brand. 

The Red Bull brand was created “By giving wings to people and ideas,” according to Werner Brell,  Managing Director of Red Bull Media House. 

As an example, Brell cites the Red Bull Stratos space parachute jump, that has garnered 5.7 million You Tube views since it occurred in October of 2012 . “It was a scientific venture – delivering relevant content connected to an authentic brand” according to Brell.  

Austrian skydiver Felix Baumgartner reached a speed of Mach 1.25 during his 23.4 mile drop to earth, becoming the first human to break the sound barrier without any form of engine power.

GE leads the way in the corporate branding space. GE has mastered social story telling through visual channels. Its Twitter campaign #3DPrint My Gift helped the firm shed its reputation as a household appliance company, and reposition itself as an innovative and leaser in science and technology.

Beth Comstock

"We've done some research on our content marketing." said GE CMO Beth Comstock, last year at the ANA Masters of Marketing conference. "And we get 30 percent extra value for every dollar spent." She continued "I think social media has been a big part of it because it makes us relevant in a lot of new ways."

For brands trying to catch up in content marketing, Ms. Comstock offered these tips:  

"It starts by knowing who you are and what you stand for—without that, you are all over the place. And try a lot of things.You need to experiment. It doesn't cost a lot of money."  

Just look at GE’s content marketing site, GE Reports. It is all about innovation, science and technology and lives at the intersection of GE's purpose and what their audience is interested in. Over 28K people follow it on Twitter.

Kurt Vonnegut 

Yet perhaps what is old is new again. Ad Age recently reported  that famed author Kurt Vonnegut was hired to interview GE scientists back in 1947-50. He took their most exciting developments and pitched them to the media. Even more remarkable, what he saw at GE reportedly served as inspiration for his first novel “Player Piano” and helped inspire the central character in his 1963 classic novel  “Cat’s Cradle.”

Publishing Companies:

Perhaps the most logical members of the content marketing royal court are publishing companies. Many have been producing high quality content for years. Take for example The Economist, which just published a great special report called "Little Brother" on the changing business of advertising and technology, and their “Lean Back” blog. Lean Back is The Economist Group’s forum for top marketing thinkers and practitioners, to share ideas for engaging with consumers in new ways, and discussing the evolution of multi-platform marketing.

NY Times Branded Content Example.

A growing number of major newspapers and magazines now sell sponsored content or native advertising, a good example is Forbes Brand Voice.  The New York Times has created their own in-house content creation operation called T Brand Studio. Chicago based Tribune Publishing recently took a stake in content marketing firm Contend. 

This reflects a broader trend for publishing companies who are creating content for brands independently of their editorial operations. This approach adheres to the age-old church-state divide between journalism and advertising. Operations like these create new revenue sources, that are attempting to offset the precipitous drop in print advertising revenues caused by declining audiences. And branded content is the main money-maker for new media players like Vice and Buzzfeed. 

Audience growth metrics tell the success story.

Buzzfeed has become a growth phenomenon in the media businesses, successfully evolving from a widely derided content aggregator (packed with pet memes) to a profitable content marketer with rocketing audience numbers. Its growth is being driven by high quality editorial content that is worth sharing on social media. Their approach to content creation is informed by constant measurement, testing and web analytics.

As Buzzfeed founder Johan Peretti stated in an interview with Wired magazine:

Johan Peretti

“You can make a crap article that’s perfectly SEO’d and generates a lot of traffic, but you can’t call that a win if it gives people a bad experience. In the SEO era, getting readers was about smart tricks. We think differently. 

What need does a story play in someone’s life? When you’re having a rough day at work and see ’13 Simple Steps To Get You Through A Rough Day’, that’s servicing an emotional need: look at this hedgehog wearing a tiny hat — you feel better, you share it with your friends.”

No wonder publishing companies are aggressively moving into content marketing with the likes of Meredith’s MXM content agency and Time Inc. Content Solutions. But will this be too little, too late for these venerable firms?

Next in Part II: Ad agencies enter the content marketing arena.

Marketing in 2014: Mad Men or Math Men?

Economist SVP Nick Blunden.

The Economist Leadership Roundtable took the stage at the Hard Rock Café in NYC last week as part of Advertising Week events and galvanized the audience by asking some really hard questions. Then they sat back and listened.

The panel, led by Economist SVP Digital Nick Blunden, and featured a diverse group of entrepreneurs and big media company executives. 

Nick established the theme by referencing an excellent special report on advertising and technology from The Economist published in early September. It was entitled "Little Brother" and it focused on the ways technology is radically changing the advertising business and its profound consequences for both consumers and companies.

Nick asked one particularly provocative and hard question: In today’s disruptive technology driven world, is advertising more or less powerful than in bygone era of advertising? (As exemplified by AMC’s Mad Men series).

Tim Spengler, President of Content Marketing & Revenue Strategy at iHearMedia (formerly Clear Channel) answered first. He commented that advertising ”… is becoming more powerful…” as it evolves with the complexity that technology has created. He added “Data will be used more and more…with mobile infrastructure creating more of a one-to-one relationship with the audience.”

Greg Mason

Greg Mason, CEO of Purch Interactive (a digital content and services company) offered a qualified response “… that advertising could eventually become more powerful…as more down-funnel and performance-driven data becomes evident.” Greg observed that “intent-based data” is key, alluding to better attribution, or cause-and-effect measures of media exposure and eventual commercial transactions that might result.

The real Mack McKelvey.

Erin “Mack” McKelvey, CEO of 

Salient MG (a marketing consultancy specializing in digital / mobile and political sectors), offered “…advertising is becoming more powerful as marketers become more engaged with consumers via smartphones.” However, she offer evidence that sometimes data-driven marketers can do a poor job of profiling their intended targets. She cited the marketing profile she found for herself online that got her demographic, professional and behavioral data completely wrong.

Elizabeth Harz, President, Media of Adara (a travel data and analytics platform) said, “…advertising is becoming more powerful as it enhances consumers experiences.” She went on to say “...creativity is more important than ever. Teams need to be formed that are analytic and creative – leaning into data to help create content that consumers can relate to.”

Krishan Bhatia - NBC Universal

Finally Krishan Bhatia, EVP, Digital Strategy & Operations at NBC Universal observed “advertising is becoming more powerful as it becomes more interesting.” He went on to comment “content consumption is occurring
in a non-linear  way on an accelerated basis in digital venues.” and “a key media buying issue is seeking appropriate content delivery in the right context versus simply buying audience demos.”

Panel participants seemed to be more focused on asking the right questions about the highly disruptive and fast changing media / marketing / technology landscape rather than offering answers. The Economist did a good job of drawing the discussion out of traditional silos and providing insights on the combined power of compelling content and technology.

So it looks like marketing and advertising will continue to be part art and part science for the foreseeable future. As a result,

meeting the challenge of redefining and evolving business models for the ad agency, publishing, tech start-up and media sectors will most likely be in the journey, not the destination.

How will IBM leverage "cognitive computing" with IBM Watson?

I had the opportunity to attend the IBM “Watson in the Age of Discovery” event last week at the Museum of Art & Design in NYC.  IBM rolled out the red carpet for their top brass, including IBM CEO Ginni Rometty and IBM Watson head Michael Rhodin  to help tout their new cognitive computing platform IBM Watson.

Watson: Not your Father's IBM.

The promotionial video they’ve produced for IBM Watson was slick and well-edited. Even more compelling, however, were the stories behind the event's theme: Discovering by Design: How cognitive systems are accelerating discovery, innovation and insight. 

In plain English cognitive computing makes computers a “learning partner” in discovery. It is unlike a simple web search that yields results based on some mystical Google algorithm that focuses on simple popularity and relevance.

Rather, IBM Watson can be fed a nearly infinite amount of data and it can be “taught” to seek out distant connections between data points. It can read and understand natural language, meaning it can process unstructured data. Watson's mass data assessment process and analytic bandwidth goes well beyond the ability of even the most caffeine-driven researcher or dedicated professional.

The cases shown at the event ranged from clinical outcomes for pharmaceutical trials with French Pharmaceutical giant Sanofi to engineering challenges outlined by David Goldstein Lead Director from The Institute for Electrical and Electronics Engineers. IBM Watson partnerships featured went on to help researchers discover disease-fighting proteins at Baylor University to concocting new food recipes with "Chef Watson." IBM Watson answers questions based on the data it is fed, with statistical confidence in its stated results.

When IBM Watson Head / SVP Mike Rhodin promised “a new era of computing that will change the relationship between computers and people” I was frankly very skeptical. 

A tech-driven sea-change is at hand.

But the “use-cases” shown were compelling to say the least. Thomas Malone from the MIT Center for Collective Intelligence characterized cognitive computing as a “new age of discovery” with the potential to impact history akin to the advent of long-range sailing ships starting back in the 1400s. This time the frontiers are in the form of big data - and how to be use it to empower better decisions and improve the quality of life. Who am I to argue with a MIT faculty member?

The most compelling presentation came from 
Roberto Villansenor – who is the Tucson, AZ Chief of Police. It also frankly presented IBM with its biggest potential challenge in terms of a “use case” for its IBM cognitive computing platform.

Chief Villasenor cited the need for police departments to assimilate disparate databases to help solve crimes. He shared the thousands of pages of data that related to a case concerning the disappearance of a young girl last year in Tucson.

The most compelling use case.

He said police work is not like the crime shows on TV, as it can months of grinding work sifting through mounds of information for police to “connect the dots” and find relevant clues / evidence that helps solve crimes.

Most property related crimes go unsolved due simply to the lack of resources to process the available information. Police departments are focused on more life-threatening crimes / criminals. Imagine the IBM Watson Cognitive computing system being able to sift through all that data at lighting speed to get the police pointed in the right direction.

But here is the challenge for IBM: As a for-profit Fortune 100 corporation, do they need to mainly pay attention to large enterprise-level applications for IBM Watson with big price tags hanging off them? Will IBM Watson be “the next big thing” that will help them compete more effectively against H-P? Will Watson be used to tout their brilliant business acumen to equity analysts in 2015 - as a long-term growth driving initiative?

Or can IBM afford to “give it away” to some extent to resource constrained municipal agencies like the Tucson Police Department or to underfunded medical research hospitals. Will IBM use Watson to help improve the safety and quality of life of millions of people? Will they be willing and able to answer the higher social-welfare calling?

The obvious balance is somewhere in between. I hope that Ms. Rometty gives Mr. Rhodin some leeway during the 2015 IBM Watson business plan reviews, and that IBM will leverage the true power of IBM Watson cognitive computing to do more than drive bottom-line results for the company. 


That decision would truly usher in a new era of computing.

What makes for a compelling start-up pitch?

What makes for a compelling start-up pitch?

An enthusiastic crowd awaits the pitches.

I had the good fortune to be a judge recently at NYC Silicone Alley “Pitch Night” for both existing tech start-ups and would-be entrepreneurs taking their ideas for a test drive in front of an audience and judging panel.

This Meet-up event was held at a cool tech school located in the heart of NYC’s “Silicone Alley” called Turn to Tech – with a great view of the Flatiron Building and Madison Square Park. The event was sponsored by NYC-based Blue Water Labs, a big data and tech community builder consultant and aptly called Qwitcher bitchin’ and start pitchin’.

The rules were simple: A brief introduction, five minutes for “the pitch,” one question each from the three judges and one question from the audience – then out. The judging criteria was: 40% on the presentation, 40% on the technology and 20% on the “X Factor” –  allowing subjective room for the judges.

But what makes for a compelling start-up pitch? Business Insider offered their view “The Best Start-up Pitches We’ve Ever Seen” a couple of years ago, and they aligned well with helping judge this event.

Infomous provides a visualization of text content.

Infomous was the first firm up and Paolo Gaudiano their founder started in. The first rule of any decent pitch is grab the audience’s attention in the first minute, and a close second for a good pitch is explaining the business concept in a simple problem / solution way. 

 Paolo nailed it with his simple business description and by giving a live demo of their app. Infomous provides a visual exploration of text-based content. Perfect for publishers – their primary target.

Renuka Agarwal was up next pitching “Bond” which is a professional networking app that matches members based on similar profiles and interests. It is designed to make the traditionally time consuming and daunting online networking-process easier, more fun and more effective.

 

Renuka gets high marks for delivering her “two minute pitch” with the speed, and accuracy of a CC Sabathia fastball. She knew her material and delivered it with an effervescent high energy, delighting the audience in the process. These are also elements of a successful pitch. I'll bet she makes the cover of Fast Company at some point soon.

The final winning pitch of the night came from Michael Liguori – the CEO / CTO of What Minds Are For (WRM4) who provide Vognition™ - a technology that is designed to control devices using natural language processing (NLP) and natural language understanding (NLU). 

Michael explained a bunch of interesting potential uses for this custom voice interface. From a remote thermostat to a Blue-Ray player and an air conditioner. I wondered out loud after the event with Michael about industrial and recreational sports applications like ski lift operators, where seconds can count when they need to stop a lift in a hurry, and bulky gloves and manual switches can adversely come into play.

 His summary was compelling - another tenet of an effective pitch.

What will drive long-term value in the tech sector?

Will the tech sector continue to defy the gravitational rules of business with overheated valuations for unprofitable companies? Should we be collectively holding our breath that “the next big thing” will be the Internet of Things (IoT)? Or is it simply a case of too much angel, VC and acquisition money chasing too few really good new business model ideas?

Stratospheric Valuations.

Simple. Personal. Real Time Messaging. Gold.

The Wall Street Journal reported on the stratospheric valuations in the tech sector a few weeks back. They cited the $ 19 billion Facebook acquisition of WhatsApp back in February in a play to dominate messaging on phones and the web. Then there is the valuation of Uber at $ 18.2 billion in a recent round of funding. That makes Uber worth more than Whole Foods, United Airlines, and ALCOA. According to The Guardian's James Ball this valuation represents "...a nadir in tech insanity." 

Moving People. Stratospheric Valuation.

Doing the simple math, that's a whole lot of taxi-dispatched rides. Bell went on to say "So long as there are greater fools down the line - prepared to buying the hype and load up on tech stocks - the train will carry on...founders cashing in on the venture capitalist, who in turn get rich off the pension funds and 401ks who load up on these stock after buying into the west coast hype."  

Some scary thoughts around some really big numbers.

What's the next big thing?

A bad idea - that died quickly.

The WSJ Technology Columnist Christopher Mims went on to report on more start-ups a few weeks later in an article titled "Is Silicon Valley Pouring its Money Into the Wrong Stuff?

 They cited possibly the dumbest app ever "Yo" that allows users to send only one message is reported worth $ 10 million, and Washboard -  the start-up that launched a while back promised to  deliver a roll of quarters (worth $ 20) for only $ 27. Perfect for people who are lazy and hate standing on line at the bank. Thankfully, it just closed down.

The "Smart Things" value proposition. But is it good business?

Mims is not even convinced that "smart homes" powered by IoT are the next big thing. I tend to agree with this perspective. I don't wake up in the morning using my smart phone as the remote control device for the rest of my life. I actually get up, go running with my dog in Central Park and eat breakfast, all without any tech intervention.

Mims argues that the complexity added by automation outweighs the convenience. The WSJ visited "the smartest home in America" - inhabited by Smart Things CEO Alex Hawkinson. He says all these dumb objectives that are now connected promise to make life better...at least in theory. Watch the video and you can judge for yourself. The only thing that really made sense to me was the home security use case.

Is too much money chasing too few really good ideas?

Lots of start-up time and energy is being channeled into optimizing advertising platforms vs. creating life transforming businesses in energy, food production or medicine. Simple research shows that the entire market for US advertising is about $ 100 billion against the backdrop of the US GDP of $ 16 trillion. All these ad-optimizing sites are chasing 0.6% of the US economy. I didn't go to Harvard for business school, but I get the folly in this misdirected effort. Still this fixation on monetizing business models based their ability to generate ad revenue continues.

Where does the US need help?

The list of worthy sectors for investment and tech-driven improvements is not hared to find. Crumbling infrastructure, the "digital divide" of those with easy access to the Internet vs. not, affordable medical care, wellness education for a nation suffering an obesity epidemic and widespread substance-abuses. The list goes on and on. 

A smarter way forward.

I admire VC firms like Artiman with its one line description of "Partnering for the long haul" and its investments in companies that meet basic human challenges with "white-space investments."

They openly claim they love hard science and technology. They say that some of the most exciting disruptions come from technologies in the "ampersand" in R&D - proven research that hasn't been commercialized yet. 

Just look at their amazing portfolio of investments that cover a broad range from 
CellMax Life and OncoStem Diagnostics focusing on cancer diagnostics to that using leading edge technology to zSpace, a firm that enables natural interaction with virtual holographic 3D images for manufacturing, architecture and medical research. 

A venture investor taking this "doing well by doing good" approach to business is NGEN. They invest in companies that positively improve the environment and human wellness, that offer rapid growth and sustained profitability. What a novel idea.

These types of investment are not so glamorous, and I don't see may pitches for these kinds of firms at all the NYC tech meet-ups I attend. So I just might encourage my HS senior age son to take AP Chemistry and Physics this fall and major in a hard science in college. This education track may lead him to a career in medicine or being an engineer - and end up paying handsome dividends, not only for him but for many people in the long-run as well.