Brand Adoption

The Groupon-ification of packaged goods is taking another step forward as beauty-review site TotalBeauty.com today launched the first of what CEO Emrah Kovacoglu expects will be many deep-discounted voucher offers for beauty products.

Total Beauty Deals launched at around 1 p.m. EST with an offer of $25 worth of E.L.F. cosmetics for $10 and redeemable through EyesLipsFace.com.

The beauty deal comes less than a week afterGeneral Mills became the first packaged-goods player to dip its toe in the daily-deal water by offering via Groupon a 12-item assortment of packaged food valued at $40 for $20 to be direct-shipped to consumers in San Francisco and Minneapolis.

And while traditional CPG couponing players Valassis Communications and News Corp.’s SmartSource so far haven’t done their own deep-discount daily deal propositions, that isn’t stopping CPG brands from giving it a try.

Part of the impetus for Total Beauty Deals is to go beyond the top 100 beauty brands that have been the biggest advertisers on the site to create a proposition more meaningful to the other 1,300 or so brands in the TotalBeauty.com review database that aren’t necessarily big ad spenders but would like to reach consumers with compelling offers, Mr. Kovacoglu said.

“Consumers get to discover new brands or new products from brands and choose those products themselves vs. getting sent a sample that may appeal to them or not,” he said. “It’s great for the brand, because when you look at the margins of beauty brands, this becomes positive ROI for them from day one, as opposed to sampling programs.”

Mr. Kovacoglu, a veteran digital marketer from Procter & Gamble Co.’s CoverGirl business, said at typical beauty margins, even products sold at deep discounts of 50% or more still represent positive gross margins for marketers, unlike sampling, which doesn’t guarantee a positive ROI.

“The cost of goods for many of these brands are 10% to 20% of the retail price,” he said, “so they’re still making money.”

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Agencies have a largely unsurpassed opportunity to drive breakthrough results for their clients while reinventing the art and science of brand building. But it doesn’t start from the now-tiresome debate of agency structure.

Having landed in my current post after having shepherded arguably the most ambitious experiment focused on rethinking agency structure — WPP’s Enfatico — I can attest to the dangers of too much focus on framework.

The future of our industry isn’t wrapped up in how agencies are built; at the center remains the consumer and the hard work of telling compelling and authentic stories about clients’ brands in a world of increasingly fickle and demanding thresholds of engagement.

The good news is that agencies now have access to powerful tools that put them at the center of the marketing renaissance with the opportunity to co-create and shape this exciting new world. Below are what I view as four areas that hold still largely untapped opportunities for agencies:

Audience Buying
Advances in media technology, data integration, and real-time bidding allow unparalleled targeting capability in the digital world. Marketers can now serve up the right creative to the right audience at the right time through the right channel to deliver exceptional campaign results. Holding-company trading desks, demand-side platforms and next-generation consumer data management companies are at the forefront of this movement, redefining marketing relevance. Importantly, this largely auction-based, real-time bidding functionality allows high levels of efficiency over the “long tail” of digital impressions — empowering niche content sources while delivering attractive incentives for new content creation.

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P&G has told retailers that, ultimately, liquid-filled tabs could take a 30% share of a U.S. laundry market that industry executives said totals $6.5 billion, making them a multibillion-dollar product proposition. In the U.K., currently the most-advanced market for unit-dose laundry tablets, all forms of tablets including powder now exceed 30% of the market, according to an executive familiar with the matter.

The packaging and three-chamber product certainly are different than anything U.S. consumers have seen before. Tide Pods have an orange and blue swirl pattern from two smaller chambers on top of a larger chamber of white fluid, all housed in a clear fishbowl-style container with a flip-top lid. Ms. Keith said the product has produced the highest consumer-satisfaction scores the company has ever seen for a new laundry product.

People familiar with the matter said P&G will put $150 million in marketing support behind the launch. Publicis Groupe’s Saatchi & Saatchi, Digitas and Starcom MediaVest Group handle advertising, digital and communications planning, and media buying, respectively, for Tide.

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ow big is biggest? WPP alone has revenue greater than agencies 8 through 50.

And yet big is getting ever so smaller. In 2010, the four largest holding companies made up 65.4% of the total revenue of the top 50. That’s actually been creeping downward from 69.4% in 2006. But still, big.

But if you want to get into a little more detail, Ad Age’s new 2011 Agency Report digs into the Big Four and the rest to give you an incredibly comprehensive look at how nearly 1,000 agencies stack up — including un-rolling the holding companies and networks.

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Dave Madden takes over as senior VP of EA’s global media sales, replacing Elizabeth Herz, who left the company after three years in the role. Mr. Madden’s sales and marketing experience in digital — particularly online, social, and mobile — was important to EA, as his job will be to help brands connect with consumers across all the marketer’s platforms, from traditional console to fast-growing social gaming.

Company CEO John Riccitello told Ad Age’s Digital Conference attendees last month that there will be 3 billion game-playing consumers by next year, about double the current number, during his keynote speech touting gaming as the next mass media.

EA’s latest financials, reported in February, showed digital revenue was up 39% year over year to top $195 million for its third fiscal quarter and was on track for a total $750 million in sales for its 2010 fiscal year.

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Odopod
“When we started Odopod we wanted to create a company with the ideas and resources to execute big and the metabolism and culture to behave small,” said Founder and Creative Director Tim Barber. “So when it came to naming the company we combined two pieces that got at this big/small idea. Odo — this was Godzilla’s island, the island where he had been a legend for generations and where he first came ashore. We loved the bigness and total domination of Godzilla. And Pod [because] at the same time we liked that we were a compact team that grew ideas, like a pod — the compact, protective enclosure of a seed. For the record, Steve Jobs stole our thunder a year later when the iPod launched.”

Zaaz
“We wanted a name that wasn’t an acronym or the founders’ names,” said Shane Atchison, founder and CEO of Zaaz. “So we came up with Zaaz, mainly because it was short, succinct, available. Also it’s a palindrome. We define it as something new, because that’s something we aspire to do every day. There’s no secret meaning behind it, just a made up word.”

+Castro
“We wanted a short, Latin, memorable and, most of all, uncomfortable name,” said Nicolas Pimentel of +Castro, the Buenos Aires shop he founded last year that is already working for Nike and Lay’s potato chips. “The most important thing you have to do if you want to innovate is to be willing to leave the comfort zone constantly. What one thing can constantly remind you of this? The name of your own agency. In a capitalist world, everyone tends to relate the word “Castro” to Fidel. Such a controversial person is a bit uncomfortable.”

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Before we answer that question, let’s define what we mean by digital agency. It’s not at all clear today what a digital agency is anymore. Can you even be an agency at all without being digital to one degree or another? What percentage of an agency’s work needs to be digital to earn the name? Is the name even relevant?

It’s like color TV. When all TVs are color, do you really need to say it? This new reality is the backdrop for the conversation. Traditional agencies have been building or buying digital arms for years now. When they present a campaign, it always has a digital element. They regard themselves, in many cases rightly so, as digital agencies. So what about all the agencies that think of themselves as digital first? The conversation in that camp has been about their ability to lead an account and their ability to execute all the other pieces of a campaign that may stretch beyond digital channels.

There has been a great deal of noise on this subject from both sides. One side says that traditional agencies are talking the talk, but not much more. They accuse traditional agencies of having businesses built on an outmoded media model, which they continue to squeeze in pursuit of the profits of days gone by. The other side calls digital agencies immature, unsophisticated in the ways of account leadership and the bigger picture. Both are right and wrong, of course. Both sides have their shortcomings and continue to paper over the cracks in their offerings with agency bravado. So that takes us back to the original question, do you really need a digital agency?

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Digital services accounted for an estimated $8.5 billion (28%) of the $30.4 billion in 2010 U.S. revenue generated by the 900-plus advertising and marketing-services agencies that Ad Age analyzed for Agency Report 2011.

Digital’s share of agency revenue rose from 25.8% in 2009. In dollar terms, agencies’ digital revenue jumped 16.9% in 2010.

To be sure, six in 10 digital dollars — or $5.1 billion — last year went to digital-specialty agencies such as Publicis Groupe’s Digitas and Sapient Corp.’s SapientNitro.

The second biggest portion — $2 billion — went to agencies whose core business is direct marketing or customer relationship management. Ad Age estimates direct-marketing/CRM agencies generated 42% of U.S. revenue from digital services in 2010. (Distinctions blur between digital agencies such as Digitas, which began in 1980 as direct shop Bronner Slosberg Humphrey, and direct/CRM powerhouses such as WPP’s Wunderman network, which has amassed deep bench strength in digital.)

The remaining portion of revenue — roughly $1.4 billion — was spread across agencies focused on disciplines including advertising, promotion, health care and public relations.

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We’ve got good news and we’ve got bad news.

First, the good: Salaries and bonuses in the industry have gone up, as has job satisfaction. Now the bad: Those salary increases are far less lucrative for some sectors of the ad business than others and nearly a quarter of marketing and advertising employees are considering changing jobs in the next 12 months.

Creative- and production-agency staffers saw the smallest gains over the past two years, while client-side marketers saw the largest. And surprisingly, digital employees saw less of a bump than ad-agency employees in general.

The findings come from a survey commissioned by Ad Age and recruiting agency 24 Seven. The survey was fielded by research firm Inavero from March 28 to April 11 and included more than 3,000 respondents nationwide in the marketing industry.

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