Walletpop (our sister site) blogger, Geoff Williams recently examined a new marketing strategy undertaken by Staples Inc. (NASDAQ: SPLS). The company wants to make you and your office "fashionable". Unfortunately, it appears that it has hired the wrong marketing firm to handle the task.
I cite as example this one whimsical little marketing blurb from Geoff's blog post. In attempting to get you to purchase fashionable binder clips, Staples has this to say about some retro look clips they have to offer: "It's the look of a bygone era with a decidedly modern flair."
Are they kidding? Does Staples think it's marketing argyle knee socks?
There's a whiff of desperation when a company completely departs from common sense in advertising. Personally, I have no use for toner cartridges which compliment my eyes. If the day ever comes when Staples begins to offer office mail carts with ground effects and spinner rims, I'd say we're just one baby doll lab coat away from seeing Staples close it's doors.
Gary Sattler is a freelance blogger. He does not knowingly have investment interest in the companies mentioned in this blog post
Who can forget the advertising campaign a number of years back that threw social watch dogs into fits over Abercrombie & Fitch (NYSE: ANF). That particular advertising foray employed the lithe bodies of teen and preteen boys and girls in a way which, while certainly drawing attention, underscored today's excessive use of underage sexuality in advertising. Parent groups and child protective agencies were enraged, as well they might be. However, a recent ad campaign launched by Beyonce and her House of Dereon, clothes for girls, makes Abercrombie's misadventures look about as harmless as a day at the zoo.
A blog post presented by our sister blog Styledash, reveals the shocking truth about the clothing ad campaign, which is the brainchild of Beyonce and her mother, Tina Knowles. Blogger Kristen Seymour espouses the danger in this type of advertising by describing the presentation in the terms of "Go on, baby, and earn your lunch money the old-fashioned way."
The gallery provided by Styledash is self-explanatory and might serve to turn the stomachs of little girl's parents everywhere. Certainly, Beyonce and her advertising agency have accomplished what they wanted to. We can also believe that Abercrombie & Fitch shall benefit slightly with a parallel focus to its own questionable advertising strategy. However, we need only to remember the enigmatic fate of JonBenet Ramsey to realize down which road this type of advertising strategy may lead.
(Thanks to Styledash for the tip, Additional thanks to Gawker)
Shares of radio broadcaster Clear Channel Communications Inc. (NYSE: CCU) were slightly up in early trading after the company posted higher first-quarter profit boosted in part by gains in its outdoor advertising unit. Though, the company was not able to beat analysts' predictions as the weak economy put pressure on the overall advertising market.
Clear Channel Communications announced that its quarterly profit surged to $799.7 million, or $1.61 per share. The income figures were definitely something to cheer about. During its first quarter last year, the company had net income of $102.2 million or 21 cents per share. Excluding one-time items, earnings for the quarter would have been $0.19 per share. Analysts' forecast (which typically exclude one-time items) was for $0.21 per share, according to Thomson Reuters.
The media and advertising display company also said that quarterly revenue rose 3.9% to $1.56 billion, compared with $1.51 billion reported in the same period a year ago, helped by favorable foreign exchange rates; excluding the effect of the week dollar, revenue rose only 1%. Analysts had been expecting to see slower sales of $1.53 billion.
General Electric Co. (NYSE: GE)'s NBC Universal unit will charge $3 million per 30-second advertising spot in the 2009 Super Bowl, according to the Wall Street Journal (subscription required). Is it me, or does that strike anyone as particularly insane? The deal is this: I would be that many disinterested fans watch the Super Bowl just for the ads alone. The reason? These are the best of the best, attention-grabbing and inventive commercials.
So, why don't ad agencies and PR flacks do this the rest of the year? The only Super Bowl ad that stuck in my mind this year was Tide's 'talking stain" ad, which probably cost a few dollars to produce and was enormously effective. The cost of the campaign was the cost of the ad, of course. All those other advertisers that spend millions on Super Bowl ads this year? Can't remember one of them.
The price for a 2008 Super Bowl 30-second ad spot was $2.7 million, so NBC is upping the game here a bit. Is that ad inventory worth it? With media changing all the time, television is still a lucrative game, and smart advertisers are combining the web and television into complementary market platforms. Like the Tide commercial referenced above, the entire ad was designed to drive traffic to MyTalkingStain.com, not to your local supermarket to buy the product. That's smart marketing. If you spent $3 million for an ad, would you want the impact of the web to somehow be involved? I thought so -- but not all ads do, apparently.
Shares of Gannet Inc. (NYSE: GCI) are trading somewhat higher after the largest newspaper publisher reported better-than-expected earnings. To the dwindling number of investors who still care about the beleaguered sector, this is good news. But shares are barely budging because the overall numbers were dismal.
Net income was $191.8 million, or 84 cents a share, down 9% compared with a profit of $210.6 million, or 90 cents a share, a year earlier. Excluding one-time items, profit would have been 77 cents, a penny better than Wall Street estimates. Newspaper publishing revenue fell 8.6% to $1.51 billion as retail and classified revenue slumped. USA Today revenue rose 2.1% as national advertising held steady. Revenue from its much smaller broadcasting business fell 7% to $170.2 million.
The deal for Yahoo! (NASDAQ: YHOO) to allow Google (NASDAQ: GOOG) to sell text ads on the portal's search pages may happen more quickly than most analysts believed. According toThe Wall Street Journal, "Yahoo Inc. moved closer to outsourcing its search advertising to Google Inc. after an initial test of the system yielded what the two firms deemed positive results."
The partnership could add several hundred million dollars of revenue to Yahoo!'s annual numbers. Most observers believe that regulators would be troubled by the two largest search companies joining forces.
The news still begs that question of whether any deal can be better than Microsoft's (NASDAQ: MSFT) offer to buy Yahoo! for over $29 a share. The first offer was at $31, but Microsoft's shares, part of the payment, have declined since then.
Yahoo!'s actions to run away from Microsoft seem to go along the lines of trying to stay independent for the sake of being independent. In other words, the company has no answer to the question of why investors are better off if Yahoo! stands alone.
Since no one other than Microsoft wants to buy the portal, the answer is that Yahoo! has lost all options to defend its present strategy. A deal with Google does not, in any way Yahoo! can explain, make the company worth $30 a share.
Douglas A. McIntyre is an editor at 247wallst.com.
Schering-Plough fell $5, nearly 26%, to $14.47 in early afternoon trading while Merck plunged $6.67, or 15%, to $37.84. As the New York Times and other media outlets noted, the news from the American College of Cardiology couldn't have been much worse for investors.
A scientific panel said the drugs failed to slow the growth of plaques in arteries associated with heart attacks and strokes. It also urged physicians and patients to "rely more heavily on older cholesterol-lowering drugs called statins, which have proven benefits and can be cheaper," according to the Times.
For Schering-Plough, the results are potentially devastating because both drugs account for about 70% of the company's profit, according to analysts' cited by the paper. You have to wonder how much longer Schering-Plough can remain independent.
About the only winners from this mess are the media companies. Those annoying commercials for the drugs helped fatten their bottom lines during a period of uncertain consumer spending. If the companies have any hope of salvaging these products, they are going to need to open up their checkbooks and buy lots and lots of advertising. Freelance journalist Jonathan Berr writes and edits the blog Ketchup and Eggs.
Yahoo! (NASDAQ:YHOO) is about to launch a site for women between 25 and 52 years old. It must think this group does not have enough to do on the internet. The assumption is a victory of hope over reason.
According toThe Wall Street Journal the new site called Shine is "aimed largely at giving the Internet company additional opportunities to sell advertising targeted to the key decision-maker in many household." The same group is the target of the websites of virtually every women's magazine and web-only operation like NBC's iVillage.
Yahoo! is very late to the game. There is no reason that the big websites for brands from Vogue to Women's Day to Allure are going to lose any visitors to the new destination. The older brands have been in business for years and women only have to much time to spend on the internet.
The launch is an example of why Yahoo! has been relatively unsuccessful in recent years. It has become a follower and not a leader in categories from maps to news.
The new operation gives Microsoft (NASDAQ:MSFT) on more part of Yahoo! to shut down if and when it buys the company.
Douglas A. McIntyre is an editor at 247wallst.com.
Google's (GOOG) shares continue to be stuck below $500 where they have been since late February. Part of the reason for the fall is that comScore data showed that the number of people who clicked on ads at the big search engine was weak in January.
It looks like the stock will drop again as "click rates" for Google ads rose only 3% in February when compared with the figures for the same month last year. According toMarketWatch: "Google reported 25% growth in paid clicks in its fiscal fourth quarter ended in December. But comScore data released last month showed flat growth in Google's paid clicks in January." Now, investors can ponder another piece of bad news.
The easy answer to the Google data is that a recession is slowing down advertising activity everywhere. Google carries millions of ads in its AdSense program, so it would make sense that it should suffer some fallout.
But, the answer may be more troubling than that. Readers of Google's search pages may be discovering that the text ads next to the listings are from marketers trying to take advantage of people looking for information by clogging pages with related messages. As more people understand the system of targeting based on search results, fewer are willing to be sucked in by companies trying to reach them due to their behavior.
If the Google system of matching ads to search results is putting its customers off, that would be worse news than the effects of a recession.
Douglas A. McIntyre is an editor at 247wallst.com.
Henry Blodget at Silicon Alley Insider offers some good in "Google Sucks Life Out of Old Media." While we all know that, yes, Google (NASDAQ: GOOG) is a one-race pony and that its growth rates are slowing, there is no denying that Google continues to not only dominate the online ad party, but advertising in general as its growth rates mock anything else comparable out there.
Blodget looks at a couple of things here. First, he looks at the growth of advertising in general and its split between online and offline. Next, he looks at the split between online players and their growth prospects. His findings won't surprise Google bulls (this author included), but to see the actual numbers -- it's pretty staggering.
Specifically, some numbers from Blodget:
Total U.S. ad revenue (in 17 companies Blodget, et al., looked at) grew 9% from 2006 to 2007, from $53 billion to $58 billion.
Online ad revenue grew 28%, from $14 billion to $18 billion.
Wow. While 9% overall industry growth is interesting, though not jump-up-and-down-and-call-your-preacher numbers, online ad growth is seeing tremendous gains.
One of the world's largest ad agency holding companies, WPP, sees its 2008 results being stronger that last year. In the scheme of things, that would seem to make no sense. WPP is a global firm, so perhaps a great deal of this improvement will come from outside the US and Europe.
According toReuters, "The group, whose agencies include JWT and Young & Rubicam, said it had not felt any impact from global financial crises but warned again that the `real world' could be affected in 2009." What happened to the 2008 global economic slowdown?
In many ways the comments echo those from News Corp (NYSE: NWS) and CBS (NYSE: CBS). Both have indicated that they are not seeing any meaningful impact of the economy on their advertising revenue. That could be a sign that any recession is coming in pockets of the economy, but is not hitting it across the board.
WPP may be right. While the airline, auto, retail, and financial sectors are cutting back, there is evidence that consumer goods, energy, and tech companies are still recording strong sales. That may mean that marketing dollars from these areas of the wider economy are fine.
WPP has to be getting the revenue growth from somewhere. Perhaps its results are a sign that concerns about a recession are a bit overblown.
With a large portion of the blame for the housing slump being placed squarely on the shoulders of aggressive mortgage salesmen, you might think the industry would crawl under a rock and wait for the bad headlines to pass.
But their continued aggressive marketing indicates otherwise, with the mortgage industry as a whole making no reduction in its advertising budget since the heady days of the bubble. Bank of America (NYSE: BAC) is still pitching ads urging homeowners to refinance to "get the cash you need, when you need it," according to the New York Times.
That banks are still looking to provide cash for buying homes and refinancing is a bullish indicator. The zeal with which they're marketing these products may mean that consumers are being unduly timid about entering the housing market in the face of considerable headline shock.
Alternatively, it could just mean that the lenders still haven't learned their lessons.
In a move that's both sad and expected, The New York Times Company (NYSE: NYT) is planning to eliminate as many as 100 newsroom positions from its flagship paper.
The move follows cutbacks at the other major papers including the company's Boston Globe as well as The Los Angeles Times and Washington Post. Even though newspaper executives will babble on and on about the Internet, the industry is still a print business and that's the problem. Advertisers continue to find it more cost effective to shift their spending from traditional media onto the Internet. That trend will become even more prevalent as marketing budgets get squeezed in an economic downturn.
It's amazing that the New York-based publisher avoided these cuts until now. If the Sulzberger family didn't have a iron grip over the company through a dual-class ownership structure that minority shareholders have complained for years is unfair, the layoffs would have been much worse. Shareholders may pressure for even deeper cuts if there isn't an improvement in the company's stock which is down 27% over the past year.
We here at BloggingStocks are quite diligent about reviewing the comments from our readers. Whether added to a blog post or submitted directly to our editorial staff via the home page widget, your viewpoints are critical to making this a well rounded presentation. In response to a comment by a reader whom I'll identify only as Laura B., I'd like to address a very important issue which she offered for our consideration.
Laura expressed a concern which is brought to her mind by a television commercial which was produced for Toyota Motor Corporation (NYSE: TM). You've probably seen the commercial yourself. In the advertisement a father labors valiantly to build a tree house for his children to play in, only to have the kids absently spurn his efforts in lieu of playing in a Toyota Sienna outfitted with all the latest electronic gizmos. Laura's issue is with the action of the father closing the door on the vehicle and then leaving view. The kids (I assume) remain in the vehicle unattended.
Every year an unacceptable number of children and pets succumb to the heat which is quickly generated by sunshine beating down upon tightly closed motor vehicles. I'm reminded of an incident which happened near to where I previously lived. A woman returned to her minivan after shopping and placed her infant in it's car seat. She then closed the van door, accidentally locking her keys inside. The good news is that this particular story had a happy ending, another shopper quickly produced a tire iron and they entered the van by breaking a window. However, the time span from door locking to window breaking was estimated at three minutes, and even in that short time span the child became over heated to the point that they needed to immediately employ extra measures to cool the child's body temperature back to a safe level.
I'm still enjoying the sweet taste left in my mouth from this morning's Coca-Cola Classic (I treat myself to three of four of the syrupy concoctions each week). I'm also still enjoying -- at least once a day -- Coca-Cola's (NYSE: KO) "It's Mine" Super Bowl ad, my favorite among the bunch. The dueling parade balloons concept (available to watch here) was clever and well-executed, nicely scored (with a 60-second excerpt from the Rossini Overture), and complete with a big payoff at the end. Also note the thoughtful inclusion of a young brunette girl, football in hand, around the 50-second spot. (Anyone else reminded of Lucy Van Pelt?)
Most importantly, the ad had solid brand placement, frequently reminding viewers what was being advertised. This was not the case with Coke's chief competitor, PepsiCo (NYSE: PEP), which employed dancing lizards and supermodel Naomi Campbell to publicize its SoBe Life Water. Problem was, "Life Water" was barely mentioned.
But the fun of Super Bowl Sunday is behind us, and the business of earnings is ahead. Coca-Cola is set to announce its fourth-quarter results tomorrow. The mean estimate among analysts is calling for per-share results of 55 cents, a 5.8% improvement from year-ago results of 52 cents per share. The high estimate at this point is 57 cents, with a low of 50 cents; the revenue estimate weighs in at 5.77%.