the Web Chef's e-Bytes

WPP in the Know and on the Grow, MSFT not too Slow

Today's news brings interesting information on the WPP Group's growing interest in the Internet.  Two items of interest demonstrating their strategy were reviewed in the mainstream media today.  The first and larger of the two is that WPP has agreed to purchase Internet Ad distributor 24/7 Real Media (TFSM) for $637 million in cash according to the Financial Times and interesting $649 million according to the New York Times.  I wonder where that extra $12 million came from and why the discrepancy in reporting from these two media powerhouses?  (Note: It was explained by the WPP website press release announcement on the acquisition explaining the purchase price as being $649 million based on $637 million to shareholders and "Unvested stock and options are valued at US$49 million and net cash is expected be approximately US$37 million to value TFSM at US$649 million.")

24/7 Real Media will continue to be run as an independent entity within WPP to allow for it to service a broad range of competing ad agencies and clients according to the reports.  The New York-based company had sales of around $200 million and provides services in 12 countries according to the press release.

In other WPP news today, The Wall Street Journal reports on the WPP Group's agency Kansas City-based VML and their brand monitoring software SEER that is "Monitoring thousands of web sites for key phrases, SEER tracks how criticism or praise of a company spreads from one blog site to another."  The brand monitoring technology is reportedly similar to that of Nielsen's Buzz Metrics* and NameProtect a Madison-based company acquired earlier this Spring by Corporation Services Company that I discussed in my article on Brand Protection in the Age of Digital Engagement that was published a couple of months ago on Wisconsin Technology Network.

Meanwhile in an even bigger deal showing the projected growth and belief in the advertising market, Microsoft (MSFT) announced the $6 billion purchase of aQuantive (AQNT) a leading Internet Advertising player.  It was interesting to see that while the deal was announced on the Microsoft website, I didn't see it on the aQuantive home page. The only indication of the action was in the significant increase in the share price on their investor relations page.

These purchases follow Google's acquisition of DoubleClick earlier this spring.

*(Aside - Interesting to see Nielsen Buzz Metrics branding strategy of an endorsed brand, while VML is kept in WPP's portfolio as part of a house of brands.)

New IBM Study on Evolving Digital Content Business Models

IBM has released a new study "Navigating the Media Divide: Innovating and Enabling New Business Models" according to a recent AdWeek article.  The 35 page report developed by IBM's Institute for Business Value is available as a PDF on IBM's web site.

The report focuses on what they call the media divide between content owners and content distributors, certainly an interesting topic given the recent public conflict we've seen between YouTube and a number of traditional content developers like Viacom. 

The results of the study led to predictions of four diverging business models through 2010.  The models are:

1. Traditional Media - "walled conditional access with dedicated devices"
2. Walled communities - "distribution of niche and user generated content with conditional access through dedicated devices"
3. Content hyper-syndication- "professionally produced content available through open and portable channels"
4. New platform aggregation - "User generated content and an open distibution platform"

Page 11 of the report has a nice visual representation using our favorite 4 box strategic overview for each of these models with content source on the y axis ranging from user/community contribution to produced by professionals and on the y axis distribution and device platforms from proprietary to open.

Among the drivers for this content innovation according to the study are the growth of high speed access (both mobile and fixed), new device adoption, evolving regulations and new consumer behavior.

The analysis led to the following recommendations for media companies

1. Put consumers at the center of your business
2. Convert consumer data into competitive advantage
3. Give controal to get share
4. Deliver experiences, not content
5. Leverage virtual worlds
6. Innovate business models
7. Invest in interatctive, measurable advertising serrvices and platforms
8. Redefine partnerships, while mitigating fallout
9. Shift investments from traditional business to new models
10. Create a flexible design

Each of these are further expanded on in the study.

Newspaper Blogs Growing

Slowly but surely the "mainstream media" is starting to get it. 

They are recognizing that their product can be enhanced with web 2.0 tools like podcasts, video, blogs or enhanced discussion forums.  I've seen this with the publications that I like to view online including the Wall Street Journal, Milwaukee Journal Sentinel and Madison.com.

According to Nielsen Net Ratings research, blog readership of the top 10 online newspapers grew by 210% in 2006.  In an article in the Center for Media Research, Nielsen Net Ratings Senior Director of Media Analytics Carolyn Creekmore is quoted as saying "that it makes perfect sense for online newspapers, where responding to a blog posting is like writing an instant letter to the editor."  I like this analogy and have found myself responding not only on newspaper blogs, but also in open comments on a story/editorial when I feel passionately about an issue.

Learned on Women, a blog focusing on marketing to women also covered this story, reporting that the research found that newpspaper blog readership is reported to be more prevalent among males with 66% of readers being male and 34% female. 

Media Trends - Web Surpasses Newspaper

Editor and Publisher reports on a new government study published in the Census Bureau's Statistical Abstract of the U.S. that discusses media utilization.  The report shows that the use of the Internet is projected to surpass newspaper readership next year.  The total number of hours spent each day with media is projected to be 9 1/2 hours with yearly usage of each media reviewed projected at the following:

1. Television - 1,555 hours
2. Radio - 974 hours
3. Internet - 195 hours
4. Newspaper - 175 hours
5. Magazines - 122 hours
6. Books - 106 hours
7. Video games - 86 hours

The media utilization numbers were reportedly taken from the "Communications Industry Forecast & Report" compiled Veronis Suhler Stevenson according to the article.

Mainstream Media - Frozen or Fluidly Dynamic?

Sculpture celebrating newspaper reading
Originally uploaded by readerwalker.

Newspapers, magazines, trade publications - the traditional print media, are all concerned by the impact that the internet is having on circulation and advertising revenues. Consumers continue to change their preferences for accessing news and other information. Recently there have been various reports indicating that mainstream media publishers are increasingly grasping how to port their knowledge resources to the internet with increased interactive features like video, polls, discussion boards, blogs, etc. They have begun to capitalize on the dynamics of the medium to reach their target audiences.

Click Z reported that newspapers were gaining an online audience citing research from the Newspaper Association of America showing that online newspapers like the Seattle Times had gained readership of 25.1% in the 25 – 34 demographic. Other online newspapers like the Deseret Morning News, Star Ledger showed even larger increases.

Conde Nast is reporting success with their strategy of creating new branded destination content sites that aggregate resources and capitalize on interactivity beyond their traditional print magazines or their accompanying sites. The New York Times reported on the launch of their new brides.com site and referenced the success of epicurious.com and style.com and concierge.com that cover food, fashion and travel respectively. While I can’t comment on style or concierge.com, I can attest to epicurious.com, a great site if you are looking for recipes and other food related content.

If you’re interested in this topic, I’d suggest visiting the Online Publishers Association to gain additional insights on what is happening with new media.