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Two Ad Giants Chasing Google in Merger Deal

July 28, 2013 by NewsMaker

The announcement on Sunday of the merger of two industry giants, Omnicom and Publicis, to create the largest advertising company in the world, signals that advertising is now firmly in the business of Big Data: collecting and selling the personal information of millions of consumers.

That business is a competitive one, with technology companies like Google and Facebook using their huge repositories of user data to place ads. Between them, Omnicom and Publicis accounted for $22.7 billion in revenue last year, more than the next highest ad firm, WPP. But no ad company comes close to the $50 billion in revenue that Google made last year, largely on the strength of its advertising business.

At the news conference in Paris to announce the merger, the chief executive of Publicis, Maurice Lévy, said the “billions of people” who are now online and providing data to companies offer an opportunity to use advertising technologies to crunch billions of pieces of data “in order to come with a message which is relevant to a very narrow audience.”

The business of advertising and marketing is being transformed by technology as advertising agencies collect data and target ads to individual consumers. Television remains the single biggest beneficiary of ad spending in the United States, with a total of $66.35 billion in 2013, according to estimates from eMarketer. But advertising online ($42 billion in 2013), including mobile devices at $7.7 billion, is growing at a much faster rate.

While advertising agencies often work hand in hand with Google, Facebook and Twitter, those same companies can also work directly with companies like General Motors and Coca-Cola, including sharing data. Traditional advertising agencies — the middlemen between the firms and the platforms like television networks, radio stations and online publishers — are under pressure to deliver more value for their customers, or be cut out of the equation.

“Industrywide, you’re seeing more and more brands taking in pieces of what they used to pay an agency to do in-house and then spend that with other companies,” said Brad Rencher, senior vice president and general manager of digital marketing at Adobe Systems.

David Kenny, a former Publicis executive who now runs the Weather Company, which includes The Weather Channel and weather.com, said that platforms like his are now working directly with companies to develop advertising campaigns, especially on mobile devices, essentially bypassing ad agencies.

At the same time, new competitors in the digital advertising space have emerged over the last few years, including Accenture, Sapient and Deloitte, consultancies that have built up their marketing and data divisions to include many of the services once provided exclusively by ad agencies.

“We see the lines have been blurred between the various functions and the various players,” said Mr. Levy in an interview after the announcement of the merger on Sunday. “In this world you have to partner and you have to compete with a lot of players.”

John Wren, the chief executive of Omnicom, who joined Mr. Levy for the interview added: “Our industry is not limited to a handful of people. There are new people coming over the line to what was traditional advertising every single day.”

Darren Herman, the chief digital media officer at the Media Kitchen, an agency owned by MDC Partners, a smaller advertising holding company in New York, said the merger was not a reaction to competition within the advertising industry but rather a move to fortify against the likes of I.B.M., Google, Salesforce, Adobe and Oracle. “Fighting that fight is potentially a losing battle,” Mr. Herman wrote in an e-mail.

For consumers, the merger is another signal that the business of marketing is becoming more personalized, often based on information that consumers may not even be aware they are sharing, including Web habits, social media activity and credit card histories. As advertisers collect and combine this data, consumers can expect to see advertising that is targeted more specifically at them.

Vindu Goel and Quentin Hardy contributed reporting.

This article has been revised to reflect the following correction:

Correction: July 28, 2013

An earlier version of this article misstated Google’s revenue in 2012. It was $50 billion, not $55 billion.

Article source: http://www.nytimes.com/2013/07/29/business/media/two-ad-giants-in-merger-deal-chasing-google.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: advertising company, narrow audience, radio stations

Google Casts a Big Shadow on Smaller Web Sites

November 4, 2012 by NewsMaker Leave a Comment

In a geeky fire drill, engineers and outside consultants at Nextag scrambled to see if the problem was its own fault. Maybe some inadvertent change had prompted Google’s algorithm to demote Nextag when a person typed in shopping-related search terms like “kitchen table” or “lawn mower.”

But no, the engineers determined. And traffic from Google’s search engine continued to decline, by half.

Nextag’s response? It doubled its spending on Google paid search advertising in the last five months.

The move was costly but necessary to retain shoppers, Mr. Katz says, because an estimated 60 percent of Nextag’s traffic comes from Google, both from free search and paid search ads, which are ads that are related to search results and appear next to them. “We had to do it,” says Mr. Katz, chief executive of Wize Commerce, owner of Nextag. “We’re living in Google’s world.”

Regulators in the United States and Europe are conducting sweeping inquiries of Google, the dominant Internet search and advertising company. Google rose by technological innovation and business acumen; in the United States, it has 67 percent of the search market and collects 75 percent of search ad dollars. Being big is no crime, but if a powerful company uses market muscle to stifle competition, that is an antitrust violation.

So the government is focusing on life in Google’s world for the sprawling economic ecosystem of Web sites that depend on their ranking in search results. What is it like to live this way, in a giant’s shadow? The experience of its inhabitants is nuanced and complex, a blend of admiration and fear.

The relationship between Google and Web sites, publishers and advertisers often seems lopsided, if not unfair. Yet Google has also provided and nurtured a landscape of opportunity. Its ecosystem generates $80 billion a year in revenue for 1.8 million businesses, Web sites and nonprofit organizations in the United States alone, it estimates.

The government’s scrutiny of Google is the most exhaustive investigation of a major corporation since the pursuit of Microsoft in the late 1990s.

The staff of the Federal Trade Commission has recommended preparing an antitrust suit against Google, according to people briefed on the inquiry, who spoke on the condition they not be identified. But the commissioners must vote to proceed. Even if they do, the government and Google could settle.

Google has drawn the attention of antitrust officials as it has moved aggressively beyond its dominant product — search and search advertising — into fields like online commerce and local reviews. The antitrust issue is whether Google uses its search engine to favor its offerings like Google Shopping and Google Plus Local over rivals.

For policy makers, Google is a tough call.

“What to do with an attractive monopolist, like Google, is a really challenging issue for antitrust,” says Tim Wu, a professor at Columbia Law School and a former senior adviser to the F.T.C. “The goal is to encourage them to stay in power by continuing to innovate instead of excluding competitors.”

SPEAKING at a Google Zeitgeist conference in Arizona last month, Larry Page, the company’s co-founder and chief executive, said he understood the government scrutiny of his company, given Google’s size and reach. “There’s very many decisions we make that really impact a lot of people,” he acknowledged.

The main reason is that Google is continually adjusting its search algorithm — the smart software that determines the relevance, ranking and presentation of search results, typically links to other Web sites.

Google says it makes the changes to improve its service, and has long maintained that its algorithm weeds out low-quality sites and shows the most useful results, whether or not they link to Google products.

“Our first and highest goal has to be to get the user the information they want as quickly and easily as possible,” says Matt Cutts, leader of the Web spam team at Google.

But Google’s algorithm is secret, and changes can leave Web sites scrambling.

Consider Vote-USA.org, a nonprofit group started in 2003. It provides online information for voters to avoid the frustration of arriving at a polling booth and barely recognizing half the names on the ballot. The site posts free sample ballots for federal, state and local elections with candidates’ pictures, biographies and views on issues.

In the 2004 and 2006 elections, users created tens of thousands of sample ballots. By 2008, traffic had fallen sharply, says Ron Kahlow, who runs Vote-USA.org, because “we dropped off the face of the map on Google.”

As founder of a search-engine optimization company and a recipient of grants that Google gives nonprofits to advertise free, Mr. Kahlow knows a thing or two about how to operate in Google’s world. He pored over Google’s guidelines for Web sites, made changes and e-mailed Google. Yet he received no response.

“I lost all donations to support the operation,” he said. “It was very, very painful.”

A breakthrough came through a personal connection. A friend of Mr. Kahlow knew Ed Black, chief executive of the Computer Communications Industry Association, whose members include Google. Mr. Black made an inquiry on Mr. Kahlow’s behalf, and a Google engineer investigated.

Article source: http://www.nytimes.com/2012/11/04/technology/google-casts-a-big-shadow-on-smaller-web-sites.html?partner=rss&emc=rss

Filed Under: Business News Tagged With: admiration, advertising company, search advertising

Corner Office | Katherine Hays: Katherine Hays of GenArts, on Employee-Owned Ideas

January 22, 2012 by NewsMaker Leave a Comment

Q. When was the first time you were somebody’s boss?

A. The first time I had a real leadership position was at Massive, a video-game advertising company that I co-founded. We started that from an idea, and built it into a company with international offices before selling it to Microsoft. You wear every hat at the beginning, and then you gradually hire a team and you begin handing off some of those specific hats.

Q. Was that a natural transition for you into a leadership position?

A. I would say some things were natural, and others were not. One of the core things that is important to leadership is passion for the vision. I’m not sure I could sell anything I didn’t believe in. And honesty and fairness are also key. Someone was doing a reference check on me at some point a few years back, and people said that I’m extremely honest and fair, and that was one of the greatest compliments somebody could give me, because those are really core to being a great leader.

Q. What else have you learned about leadership?

A. It’s important to keep things in context, whether it’s good news or bad news. Either can be very distracting to the team. I’m pretty good at keeping those in context and focusing on the task at hand. Some of the boards I’ve worked with are really good at that as well. They just don’t overreact, no matter what the news is.

Those things came naturally to me. That being said, I think being a great leader is like being a great athlete. You can start with some natural abilities, but what a shame if you’re not continuing to build on them very deliberately, and continuing to kind of push yourself out of your comfort zone, trying to understand what you’re missing, and what you can learn from other people.

Q. Any other lessons?

A. Being very good at hiring people is key. And I would say I made two mistakes in hiring. Both times they had all the right answers to the questions, amazing backgrounds, really strong résumés, but my gut just said, hmm, this doesn’t feel right. And I didn’t listen to myself, and I hired them, and it was a mistake. I couldn’t articulate what it was that didn’t feel right, which is why I think I convinced myself to hire them. But something felt less than genuine about them.

So the lesson there was, at the end of the day, even if everything seems to check out, you listen to your gut. And I’ve given that guidance to a lot of my team. If they come in and they say, “You know, something doesn’t feel right,” I say, “Don’t hire them.” Far better to pass on someone than to bring the wrong person into the team.

Q. What about lessons when you were younger?

A. I learned as an athlete — I rowed for four years in college — that you have to be present in the moment, and you can’t be distracted by something you just did that was really good, or by the fact that you’re a little bit behind in a race. You can’t focus on what’s just happened because you can’t change it. That’s not to say we shouldn’t pause and congratulate ourselves, but you have to balance that with maintaining focus on what the next steps are. You learn as an athlete to say: “Great, we won that race, but what are the things we could have done better? Because we have a race next week.”

Q. What about your parents? What kind of influence did they have?

A. Both my parents started their own businesses and built them from scratch. My father runs a pest control company, and my mom bought apartments, restored them and sold them. So a lot of our discussions around the dinner table were about solving business problems. It was just something that seemed very natural to me. It wasn’t just a job for them — they were building something that they were excited about.

Q. What are some specific business lessons you learned from your parents?

A. Probably the biggest thing I learned from my father was to focus on the customer. Talk to the customer, and if you ask them in the right way and you really listen, you will find out what you need to be successful in your business. They can give you a huge amount of guidance in pointing you to the right answer, and helping you realize something that you might have been missing. In his business, he realized that it wasn’t just about controlling the bugs. It was really about happy residents. You’re going into their apartment or home, and they wanted a technician who had a tucked-in monogrammed shirt, and a reminder the day before that they were going to be there. All of those elements were actually more important, or certainly as important, as the pest control itself. And that allowed him to build a business that has sent all of his kids to Ivy League colleges.

Q. Other mentors?

Article source: http://feeds.nytimes.com/click.phdo?i=906c0e076c0cfcc1de661ff7ce92b190

Filed Under: Business News Tagged With: advertising company, hats, hays

Chaos of Internet Will Meet French Sense of Order

May 21, 2011 by NewsMaker Leave a Comment

PARIS — The Tuileries Garden in Paris, a celebration of grand geometric vistas and tightly trimmed topiary, will be invaded next week by the denizens of a decidedly more chaotic space: the Internet.

The first-of-its-kind event is being convened by President Nicolas Sarkozy to put the Internet firmly on the agenda of the Group of 8 countries, who meet next week in France. But an alternate view is that the president wants to push his often-invoked vision of a “civilized Internet” — one that is safer for children, more favorable to copyright owners and more lucrative for the French treasury.

The get-together comes as the Internet takes a central role in powering economic growth and empowering societies, as revolutions in the Arab world have shown. At the same time, digital piracy in the West and censorship in China continue to vex policy makers, prompting calls for greater coordination of Internet strategies.

“The Internet is demolishing barriers, but we are still far from realizing the full benefit of what it can do for our world,” said Maurice Lévy, chief executive of the advertising company Publicis Groupe, who has served as Mr. Sarkozy’s point man in organizing the conference.

The event will also allow Mr. Sarkozy a chance to portray France, which sometimes seems ambivalent about the rise of the Internet, as a progressive, technologically savvy country.

And, less than a year before presidential elections, it will allow him to bask in the spotlight with the leaders of a dynamic industry, as the man who had loomed as his biggest rival, the former head of the International Monetary Fund, Dominique Strauss-Kahn, faces sexual assault charges in New York.

But the more conspiratorially minded French are concerned about Mr. Sarkozy’s intentions. The backdrop of the Tuileries, a physical reflection of the French penchant for imposing order on nature, provides a handy visual metaphor for these critics.

“In spite of a harmless sounding rhetoric, the E-G8 Forum is a smokescreen to cover control of governments over the Internet,” wrote Jérémie Zimmermann, a spokesman for La Quadrature du Net, a group that campaigns against restrictions on the Internet.

Mr. Lévy called this view nonsense, saying that the goal was to generate debate rather than to push the French agenda. While Mr. Sarkozy commissioned the event, the cost will be covered entirely by Publicis and other sponsors from the private sector, rather than the French government. Mr. Lévy said no one should hesitate to challenge Mr. Sarkozy, who is set to give the opening address.

“He will invite people to share their thoughts, to speak loud and clear,” Mr. Lévy said. “He will recognize that the Internet is a common good for the world. At the same time he will say there are still a few issues on which we need your thoughts — net neutrality, privacy, intellectual property protection, et cetera, et cetera.”

The 800 luminaries will gather under a giant tent in the Tuileries Gardens for panel discussions on these and other issues, networking opportunities and a gala dinner in the nearby Louvre. Confirmed attendees include Eric E. Schmidt of Google, Mark Zuckerberg of Facebook, Jeffrey P. Bezos of Amazon and Rupert Murdoch of News Corp.

Most of the events will be streamed live on the Web. But not all of them: About a dozen V.I.P.’s will be invited to the Élysée Palace for a private lunch with Mr. Sarkozy.

At the end of the two-day meeting, a small delegation of participants will travel to Deauville, France, to present conclusions to the heads of state assembled there.

“It will be up to them to decide what to do with it,” Mr. Lévy said. “They can decide it is useless, or they can decide it is interesting.”

If all this sounds a bit like a digital Davos, minus the snow, that may not be a coincidence; Publicis also organizes the annual meeting of the World Economic Forum in the Swiss Alps.

Does the world need another talking shop? Participants of the E-G8 say they welcome the chance to discuss digital policy issues at a global level. There is growing concern about a possible splintering of the Internet along national lines, with different countries adopting different policies on issues like censorship, privacy, copyright enforcement and network access.

Article source: http://feeds.nytimes.com/click.phdo?i=8ea4e9fe8cd3f7ee42cc7ac7a51d23ab

Filed Under: Business News Tagged With: advertising company, dynamic industry, tuileries garden

Chaos of Internet Will Meet French Sense of Order at Digital Summit

May 20, 2011 by NewsMaker Leave a Comment