Good morning and welcome.
Thank you, Nancy, for your kind introduction. And before I begin my remarks, I want to take this opportunity to formally and officially welcome you to your new post as president and CEO of the AAAA. It’s a great organization and one that all of us in this room rely on for industry guidance and leadership. So on behalf of the industry, the Media Policy Committee, and my own company, I want to extend our best wishes for your success and to let you know that we are at your service whenever you think we might be able to help you achieve your goals.
I would also be remiss if I didn’t take the opportunity to thank Nancy’s predecessor for his many years of dedicated service to both the AAAA and the advertising agency industry. Burtch Drake led our trade association with integrity, distinction, and grace for more than a decade. In fact, this Media Conference was initiated under his direction 14 years ago and has grown to its current status under his leadership and guidance. As far as I’m concerned, we all owe Burtch a huge debt of gratitude.
I thought a lot about what I was going to say today that was on point to our theme “Digital Changes Everything.” Wow. That’s an understatement. Anyone who has been awake in our business over the past several years can certainly agree with that sentiment.
Digital is absolutely changing everything, and has been doing so for quite a while. And apart from the fact that we use digital as an overarching phrase that covers a multitude of things it really refers to the technical way pictures, sound and voice is transmitted over wires or wireless, or whatever form modern technology might devise. What really fascinates me is what it means from a practical standpoint and how it has allowed me to do things I couldn’t do before. So much is being written about the digital future and how the conversion of virtually everything will impact each of us, the way we work and the way we live our lives. We see now how the consumer has changed what they do and how they do it—control seems to be the operative word—and the role technology has played in enabling these actions. It’s not only changed the way we communicate amongst ourselves, but also introduced heretofore unthinkable ways to communicate with inanimate objects, like when your car tells you that your tire is low because the sensor detected the air pressure, or how Ford’s Synch can voice activate your music selection from your playlist while you’re driving. And it’s not just at home and in your car that digital has made inroads. It’s also allowed to us to talk to consumers while they’re at work. As much as companies don't particularly like it, the fact is that while sitting at their desks our staff watches YouTube, plans their evenings, and IM’s their friends. And there is very little we can do about it. Advertisers are starting to recognize this and are adapting their strategies to reach people at the office.
There’s a lot more down the road, but for the moment I’ll let the futurists and the pundits talk about that. For now let’s just accept digital changes everything as a given.
I’ll share something else with you that digital has changed—my sleeping habits, or rather the implications these changes are having on my professional and personal life, is keeping me up at night.
Let me give you a few examples of what I mean.
The recently settled WGA Strike managed to shut down production of scripted television programs and theatrical movies for more than three months. One of the central issues in this dispute between writers and producers was digital in nature—writers were seeking a larger share of revenues from downloading, VOD, and various digital viewing platforms on a going forward basis. The discussions were grounded in financial remuneration, but the context was clearly built around the digital impact on the changing nature of viewership. MP3 players, computers, and cell phones are the devices we use, but digital technology is the enabler. How does this impact us? I’ll answer that question with another question: How, as experts in the profession of reaching consumers, do we plan for this, develop engaging creative, negotiate availabilities, find added value opportunities, and ultimately measure and generate engagement? And, oh yes, let’s not forget selling our clients’ products.
Here’s another issue. The annual upfront market was recently characterized as the “forward buying” market, and perhaps it should be re-named accordingly. By the way, every company in the world does forward buying, from commodities to raw materials, to office supplies, so why not advertising availabilities? But I digress.
It’s pretty clear that the upfront will take on a different form as a result of the writers’ strike for many reasons, driven by both technology as well as economics. Let’s start with the January “digital” upfront meeting hosted by one network that bundled together all their assets and presented a broad range of communications opportunities to agencies and clients. Let’s add NBC’s announcement that it will introduce a 52-week programming schedule in lieu of the traditional fall season of premiers. Let’s move to the economically driven reduction or elimination of pilots with scripts going directly to series, or a noticeable increase in reality hours at the expense of scripted programming. Whether it was the writers’ strike or the economic realities of reduced ratings and fragmentation caused by technologically driven viewing alternatives, one can argue that the digital revolution was a spark that empowered this change. If so, it will have played a key role in revolutionizing an element of our business that has existed for decades and has been at the core of national broadcast buying. I’d say that’s fairly illustrative of the power of digital.
Now let’s talk about measurement for a moment. C-3 ratings are my touch point on this topic, largely because virtually all negotiations in last year’s upfront were completed on this basis. But that’s just the jumping off point. Digitization is allowing for a multitude of measurements down to individual commercials on a second-by-second basis. Samples are increasing as information is being derived from digital set-top boxes which allow almost census-type measurement. And advancements will allow us to more accurately project people viewership from this larger sample at each box, on each television, in every room of a household. Not only are we heading toward better knowledge of the performance of each commercial but we’re heading towards addressability as well. And I haven’t even touched the measurement possibilities provided by click-throughs on the web, and the ability to profile, project and serve ads based on what you have been doing and where you’ve been going.
The opportunities are almost limitless and the technology is mind boggling. Think about it. Everything old is new again thanks to hi-tech. Old TV will be new TV via the digital delivery of highly targeted and addressable messaging. New TV will provide data on both consumption but even more importantly on transaction patterns. What about the age-old medium of print? That’s new, too. New Print is foldable organic LED interactive tablets with call to action video. How about Direct? New DM is RSS and pay-per-action that comes in on your computer screens and your mobile phones. And let’s not forget radio--new radio is digital radio with the same addressable functions as TV. And how about outdoor? We’ve all heard about the billboards that talk to individuals as they walk by through the magic of mobile communications and Bluetooth. And let’s not forget about mobile. Digital is changing how we consume media on the move and has obliged us to examine how we deliver content to this market. It has spawned a new industry, producing 60-90 second mobisodes so that our consumers can snack on entertainment and news while they are on the move. The bottom line is that consumers will basically be reachable with targeted messages just about everywhere they go.
And that’s a point that leads nicely into my next item: privacy. It’s quite possible that 1984 is here, just 24 years later than Orwell predicted. Thanks to all the new technological capabilities I just outlined, the more we do and the more digital actions we take, the more trackable we become. Now, there are times I appreciate it when someone can save me time and effort by serving me something that I want. But there are times I’m not sure I want Big Brother watching me. I believe that as we become even more technologically advanced, and we will, privacy will become a bigger issue than it is today. And when that happens some of the arguments for and against the microscopic, electronic tracking of consumer behavior will reach the doorsteps of media agencies. Why? Because we are all investing money in new gadgets and programs and companies that perform those tasks. This is something I believe we are all going to have to think very long and hard about, so all I am saying is be prepared. Orwell’s prophesies may be realized sooner than we think, and when that day comes we very well may find ourselves at the very heart of the debate. The advertising and marketing industries have a so-so record of protecting consumer privacy because of junk mail, spam and pop-ups. Digital communications allow us to measure consumer behavior so that we can deliver targeted, relevant communication for products and services they really want. But if we don't manage consumer privacy responsibly and proactively, the government could take the decision away from us.
Digital is also having a significant impact on the local broadcast scene. As you all know, Congress has mandated a complete shift of all broadcast signals from analog to digital to be completed a little over eleven months from now.
February 17, 2009, marks another step in technologies’ march forward. It opens up a whole host of viewing possibilities for each local station. Take a medium-sized market like New Orleans, the site of next year’s Media Conference. They have a total of nine—yes, nine--over-the-air stations. There are six core affiliates, one Hispanic, and both ION and PBS.
Digitization allows each to expand their signal up to four times. You do the math – over time this market could have as many as 30 commercial signals and a bunch more PBS signals. Talk about fragmentation, talk about viewer confusion, maybe chaos, all offset by choice. And that’s not to mention incredibly increased competition for every other broadcast outlet, for print, for the internet, VOD, and every medium available to consumers.
Perhaps the greatest phenomenons in the past six to twelve months are social networks, and UGC (user-generated content). Facebook, MySpace and the other social networks have opened up yet another brave new world of communication between consumers and companies. They not only allow room for advertisers to get their ads across but also for the consumers themselves to control who sees what commercial messages through the use of friends’ lists and widgets. And consumer-generated media continues to fascinate both the public and advertisers alike if last year’s UGC-driven spots for Dove Cream Oil and Doritos are any indication. And, by the way, let’s keep in mind that each of these spots won Lions at the Cannes Advertising Film Festival.
So, that’s what’s keeping me up at night—how do I take advantage of all this, make use of it, test it, measure it, etc.? And I suspect that many of you here today and many of our colleagues elsewhere share in my nightmares. My list is not a be-all or end-all, and there are lots of things that I might have added had time permitted.
But I also must focus on what I’ll call the “NOW.” At last week’s Association of National Advertisers' Everything TV & Video Forum, Anheuser-Busch’s vice president of global media and sports marketing Tony Ponturo was the keynote speaker. Included in Tony’s talk was the statement that 90 percent of what Anheuser-Busch does today is considered traditional media. So regardless of your distribution, we must recognize that there’s a need to take care of not only all the things that are changing, but all the things that I can take advantage of and make use of NOW, that I can measure and test NOW, that I can touch and feel and see NOW. And the reason is because we have a job to do on behalf of our clients NOW. They’re looking for results NOW, and frankly so is Wall Street. So, I’ll let the pundits of the day forecast tomorrow, and talk about how I’ll be able to do things better, smarter, more efficiently and more effectively. I’ll let them spend 100 percent of their time considering the technological advancements of tomorrow. At the moment, I think I’m better suited to thinking about NOW.
It’s abundantly clear that digital changes everything and, as I hope I’ve illustrated, it’s already changed a heck of a lot and affects everything we do every day both on the job and off. And there’s little doubt that it’s going to continue in that vein for some time to come. And I might add at a pace that is often dizzying. It’s a little bit of what Mr. Dickens described as “the best of times and the worst of times” – wonderfully challenging, dynamic, stimulating, and exciting, and yet frustrating, uncertain, and at times confusing.
To my mind, and as a communications veteran, it’s the best of times. But to paraphrase Bette Davis in All About Eve, “Fasten your seatbelts. It’s going to be a bumpy ride!” Thank you.
And now before we proceed with our program, I’d like to thank some of our sponsors for helping us make this conference a success.
To begin with, I’d like to thank the Television Bureau of Advertising for sponsoring last night’s Opening Welcoming Reception and the Cable Television Advertising Bureau for the opening dinner and Cedric “The Entertainer.”
I’d also like to thank Mediaweek magazine for sponsoring the Golf Outing and registration bags, and The New York Times for sponsoring today’s Continental Breakfast.
Our thanks also go to Donovan Data Systems for sponsoring the conference registration desk and DOmedia for sponsoring the Breakfast for the AAAA Mid-Sized Agency Media Directors Committee.
The AAAA would also like to thank these additional sponsors, whose names are currently being shown on the screen behind me.