Articles of Interest

Tuesday, July 19, 2005

WASHINGTON POST WEB SITE PUTS ADS IN RSS FEEDS

WASHINGTON POST WEB SITE PUTS ADS IN RSS FEEDS
WASHINGTON POST WEB SITE PUTS ADS IN RSS FEEDS
Becomes First Major News Site to Sell the Ad Format
July 15, 2005
QwikFIND ID: AAQ75H
By Abbey Klaassen
NEW YORK (AdAge.com) -- Washingtonpost.com yesterday quietly began integrating advertising into its RSS feeds, the first major news site, it says, to offer such a service. The MSNBC TV show The Situation with Tucker Carlson is the inaugural advertiser.

Growing numbers of online news organizations now offer free RSS feeds of their stories and features. Readers can sign up for specific feeds and automatically receive updates with links about the latest stories on that topic. Washingtonpost.com now offers subscribers more than 150 feeds to choose from and is beginning to sell ads into the syndication service. (The feed icons shown above are labeled 'XML' because the feed technology is based on the XML coding system, which is similar to but different from HTML.)
Simple syndication
RSS was originally created by Netscape as a "Rich Site Summary" technology but is now best known as a "Really Simple Syndication" system for online readers. It is an increasingly popular way to automatically gather information from the Internet and deliver it to a computer’s browser. In some ways, it’s like a search engine, enabling an individual to define the kind of information he or she wants to receive as it is published across the Internet each day.
RSS is most frequently a stream of text information -- headline links, short synopses and excerpts from blogs -- to which other kinds of files can also be attached. RSS feeds function something like a private wire service, bringing subscribers daily updates about a particular topic.
More than 150 feeds
Washingtonpost.com, part of Washingtonpost.Newsweek Interactive -- the online publishing subsidiary of The Washington Post Co. -- offers more than 150 feeds, with politics and opinion sections among the most popular.
RSS advertisements are typically bare-bones text ads, but increasingly HTML ads are used. The key, according to most online marketers, is placing the ads near relevant content -- one reason the Washingtonpost.com feed appealed to Publicis Groupe’s MediaVest USA, which negotiated the deal for MSNBC.
RSS ads
Ad-supported RSS feeds aren’t new -- Yahoo and Google have both been experimenting with ad-supported RSS feeds, and companies such as Pheedo have created RSS advertising networks and blue-chip marketers like American Express, Continental Airlines and Verizon have started to take advantage. But Washingtonpost.com’s foray into the field is significant in that it foreshadows a future in which mainstream news organizations will compete more directly with search engines and blogs for new media dollars.
And part of the reason MediaVest got in now was to help lay the foundation for that future, said Mohan Renganathan, associate director of digital strategy for the agency.
How deal evolved
This particular ad deal evolved as MediaVest was looking for new technological means to reach the politicos and news junkies its client, MSNBC, wanted to target. After several discussions with Washingtonpost.com, Mr. Renganathan convinced MSNBC to try it out as a new ad platform.
When a user clicks on an article in the presence of a text ad, it brings the user to an intermediary advertisement, called an interstitial. There is also an area within the ad that lets the user sign up for MSNBC’s own RSS feed.
Capped ad frequency
But this deal is starting out slowly: to keep from interrupting and annoying the end user, Washingtonpost.com and MediaVest capped the ad frequency at every 3 1/2 to four days, meaning that an RSS user will only see an MSNBC ad once or maybe twice a week. Washingtonpost.com also established a feedback button to allow RSS users a platform to air their opinions on the new advertising model and help direct the company in future RSS advertising expansion.

Hoping To Find Its Place In Cyberspace, News Corp. Acquires MySpace - 07/19/2005

MediaPost Publications - Hoping To Find Its Place In Cyberspace, News Corp. Acquires MySpace - 07/19/2005
Hoping To Find Its Place In Cyberspace, News Corp. Acquires MySpace
by Gavin O'Malley, Tuesday, Jul 19, 2005 8:00 AM EST
MORE THAN A DECADE AFTER it squandered its first foray online - the first of any major media conglomerate - News Corp. is once again betting big on online media, announcing a deal Monday to acquire Intermix Media Inc. for $580 million in cash. Intermix, which operates the wildly popular social networking Web site MySpace and about 30 other Web destinations, has made inroads in drawing both the precious youth market and advertisers. The timing of the deal is interesting for News Corp. in general and MySpace in particular. The deal comes 12 years after News Corp. bet big and failed with its first online strategy, and has been licking its digital wounds ever since. In 1993, it acquired Delphi Internet Services Corp., one of the world's first consumer Internet service providers. But News Corp. failed to formulate an integrated online strategy, squandering the opportunity as Delphi was passed by other emerging online services such as America Online, CompuServe, and Prodigy.
News Corp. isn't the only major media conglomerate to make an ill-timed bet online. Walt Disney Co. bet big when it acquired early popular search engine Infoseek, which ultimately was merged into Disney's online services. And, of course, Time Warner, merged with America Online, became dominated by an online strategy, before it regained its footing as a broad-based media and entertainment concern. Now Time Warner is once again looking to AOL to fuel its growth.

Mainly, big media companies like News Corp., Disney, Time Warner, and Viacom, have looked online as a way of extending their traditional media brand franchises and to help promote their usage. News Corp.'s acquisition of Intermix looks to be a genuine diversification play into the rapidly growing area of social networking.

Nielsen//NetRatings' AdRelevance unit reported last week that MySpace beat out heavyweights MSN Hotmail and Yahoo! Mail as the leading site for advertisers to promote their wares in June, with a 7.9 percent share of ad impressions. Advertisers include Procter & Gamble and Sony Pictures.

Additionally, MySpace.com currently dominates other social-networking sites on the Web, with 84.46 percent of the market for the week ending May 21, according to research firm Hitwise.

The deal represents one of many recent buyouts of Internet companies by traditional media players. For instance, earlier this year, Dow Jones & Co. purchased MarketWatch for $519 million, and New York Times Co. bought About.com from Primedia for $410 million.

Intermix, which said it had exercised its option to buy the 47 percent of MySpace.com it doesn't already own, will become part of News Corp.'s new Fox Interactive Media unit. The addition of Intermix's 27 million monthly users will more than double Fox Interactive's online audience.

Richard Rosenblatt, Intermix Media's chief executive officer, and Chris DeWolfe, chief executive officer of MySpace.com, will retain their jobs when the acquisition is completed. A company representative said MySpace had no plans to change under new management.

"MySpace will continue to create new ways to connect people online and to maintain a unique environment where our users can creatively express themselves," a spokeswoman said in a statement. "With this acquisition, MySpace will be able to accelerate its growth plans and expand into new markets."

In April, Intermix became the target of New York Attorney General Eliot Spitzer and his quest to curb spyware. Spitzer sued Intermix for spreading ad-serving programs without consumers' consent, along with the games and screensavers available on its sites. Intermix said it had stopped distributing programs mentioned in the lawsuit, but in June agreed to pay just over $7 million to settle the charges without admitting any wrongdoing.

WSJ.com - Turnover at Yahoo Slows Media Group's Los Angeles Move

WSJ.com - Turnover at Yahoo Slows Media Group's Los Angeles Move
Turnover at Yahoo Slows Media Group's Los Angeles Move

By KEVIN J. DELANEY
Staff Reporter of THE WALL STREET JOURNAL
July 19, 2005; Page B1

Plans to give a stiff shot of Hollywood glamour to Yahoo Inc.'s media and entertainment offerings have instead given the Internet company a case of the hiccups, as several division heads have decided either to leave Yahoo or opted against relocating to new Los Angeles-area offices.

Of eight media division general managers, three heading Yahoo's finance, sports, and movies and television units have decided to leave the Sunnyvale, Calif., company, Yahoo said. Three other division heads have declined to move to Southern California from Silicon Valley and so are leaving their current posts, taking other jobs at the company.

The management turnover partly reflects some internal discontent directed toward Lloyd Braun, the former chairman of the entertainment division at Walt Disney Co.'s ABC network, whom Yahoo Chairman and Chief Executive Terry Semel brought in late last year to oversee the invigoration of the media group. Since then, Yahoo and Mr. Braun have hired a new layer of senior executives overseeing content in entertainment, sports and other areas in the media group. Some employees in the group have bristled at Mr. Braun's management style, according to three people familiar with the matter.

Mr. Braun declined to comment, through a Yahoo spokeswoman. She said criticism of Mr. Braun "doesn't represent the general consensus among the group." She said the management changes played a role in the decision by Yahoo executives to delay the deadline for "a relatively small number" of employees to decide whether to move.

Yahoo in 2001 hired Mr. Semel, former co-head of the Warner Bros. studio, to turn the Internet company around amid falling revenue. Since then, Yahoo has powered back, mounting a credible Web search challenge to Google Inc., among other moves. Mr. Braun arrived in November to oversee Yahoo's content-related activities: News, entertainment and other multimedia content is a centerpiece of its effort to keep Yahoo before Internet users at a time when more of them are consuming media and entertainment via computers and cellphones.

Currently, Yahoo's media activities range from Web sites dedicated to finance, news and health to online videogames. Last year, it edged out rivals to host the official Web site of "The Apprentice," a reality-TV show starring Donald Trump. In May, Yahoo's music division released an online music-subscription service priced aggressively lower than rival offerings. Mr. Braun has spoken publicly about his interest in trying to help create mass-market content hits on the Web, but he and the company have been coy about any specific products or services he plans to unveil.

Yahoo Media Group is a relatively small contributor to the company's revenue and profits now, but a major strategic focus. Yahoo's aim is "to take a leadership role in defining what Internet content will be and how it will be presented to the consumer," Mr. Braun said in a February interview.

Yahoo executives announced this year that most of the Yahoo Media Group would be moving to a new facility in Santa Monica called the Yahoo Center. The facility is big enough eventually to accommodate as many as 800 to 1,000 employees.

The recent turmoil suggests Yahoo may be struggling to keep up with its own aggressive expectations. The Yahoo spokeswoman said the changes hadn't slowed Yahoo's plans. "This is all expected....The groups are doing extremely well despite the transition," she said. A number of employees already have moved from Sunnyvale and additional moves are planned for September, she said. "We view this as a positive and necessary change to strengthen the group's management," she said.

The game of musical chairs is being played out against a backdrop of intensifying challenges to Yahoo's news and entertainment efforts online. Time Warner Inc.'s America Online division is aggressively promoting video feeds on its revamped Web site and scored a hit with its recent online broadcasts of video from the Live 8 concerts. Viacom Inc.'s CBS News division last week announced a souped-up Web site featuring an increased number of free video clips.

Yahoo declines to specify revenue for the Media division. People familiar with the matter said it accounted for roughly $170 million of Yahoo's $3.6 billion in revenue last year. They said they don't expect the changes within the group to affect second-quarter financial results, which Yahoo is scheduled to report today.

Mr. Braun addressed the turnover during a quarterly staff meeting in Sunnyvale last week, according to the people familiar with the matter. During the meeting, he jokingly thanked Neil Budde, general manager for Yahoo News, for his decision to move to the Santa Monica office. He also acknowledged that other general managers had either quit or elected not to move, they say.

Douglas Hirsch, general manager for movies and television, said he had resigned from Yahoo, declining to discuss the reasons for his resignation. Nathan Richardson, former general manager for finance, left Yahoo last month to join Dow Jones & Co., publisher of this newspaper. A Dow Jones spokeswoman confirmed Mr. Richardson's hiring but declined to comment further.

People familiar with the matter say Brian Grey, general manager for sports, recently announced his resignation and has been hired by News Corp.'s Fox Sports unit to oversee its Web site. Mr. Grey said in a telephone interview, "I may be leaving in the near future, but I am still employed at Yahoo," and declined to elaborate further. Yahoo confirmed the three executives had left or were leaving Yahoo.


News Corp. To Buy Intermix For $580 Million

MediaPost Publications Home of MediaDailyNews, MEDIA and OMMA Magazines
News Corp. To Buy Intermix For $580 Million
by Gavin O'Malley, Tuesday, Jul 19, 2005 6:01 AM EST
IN ANOTHER EXAMPLE OF A traditional media company snapping up an Internet player, Rupert Murdoch's News Corp. on Monday agreed to buy Intermix Media Inc., which controls the wildly popular social networking Web site MySpace, for $580 million in cash.
MySpace, along with Intermix's other 30-odd Web destinations, has made inroads in drawing both the precious youth market and advertisers. Nielsen//NetRatings' AdRelevance unit reported last week that MySpace beat out heavyweights MSN Hotmail and Yahoo! Mail as the leading site for advertisers to promote their wares in June, with a 7.9 percent share of ad impressions. Advertisers include Procter & Gamble and Sony Pictures.
Additionally, MySpace.com currently dominates other social-networking sites on the Web, with 84.46 percent of the market for the week ending May 21, according to research firm Hitwise.

The deal represents one of many recent buyouts of Internet companies by traditional media players. For instance, earlier this year, Dow Jones & Co. purchased MarketWatch for $519 million, and New York Times Co. bought About.com from Primedia for $410 million.

Intermix, which said it had exercised its option to buy the 47 percent of MySpace.com it doesn't already own, will become part of News Corp.'s new Fox Interactive Media unit. The addition of Intermix's 27 million monthly users will more than double Fox Interactive's online audience.

Richard Rosenblatt, Intermix Media's chief executive officer, and Chris DeWolfe, chief executive officer of MySpace.com, will retain their jobs when the acquisition is completed. A company representative said MySpace had no plans to change under new management.

"MySpace will continue to create new ways to connect people online and to maintain a unique environment where our users can creatively express themselves," a spokeswoman said in a statement. "With this acquisition, MySpace will be able to accelerate its growth plans and expand into new markets."

In April, Intermix became the target of New York Attorney General Eliot Spitzer and his quest to curb spyware. Spitzer sued Intermix for spreading ad-serving programs without consumers' consent, along with the games and screensavers available on its sites. Intermix said it had stopped distributing programs mentioned in the lawsuit, but in June agreed to pay just over $7 million to settle the charges without admitting any wrongdoing.

Intermix may be News Corp.'s latest foray online, but it's not its first. In fact, News Corp. was the first major media company to make a big online investment. In 1993, it acquired Delphi Internet Services Corp., one of the world's first consumer Internet service providers. But News Corp. failed to formulate an integrated online strategy, squandering the opportunity as Delphi was passed by other emerging online services such as America Online, CompuServe, and Prodigy.

Wednesday, July 13, 2005

AdAge - Al Ries: LEARNING FROM HILTON'S MARKETING MISTAKE

LEARNING FROM HILTON'S MARKETING MISTAKE
LEARNING FROM HILTON'S MARKETING MISTAKE
Why a Brand Must Be Described in Three Words
July 11, 2005
QwikFIND ID: AAQ73J
By Al Ries
A Hilton executive was recently asked, “So what the hell is a Hilton?”
“People can’t necessarily articulate it,” said the marketing honcho. The brand is defined: “If we ... give people an experience that says, ‘Yes, I’m proud of what it says about me to stay here, it makes me feel good; I’m in charge of my stay.’”

What’s your brand? If you can’t answer that question about your own brand in two or three words, your brand’s in trouble.
That’s what differentiates a Hilton from a Hyatt, a Marriott, an Omni? Mind you, this is an organization that is spending $45 million a year on ads (and looking for a new agency).
Do you know your brand?
What’s your brand? If you can’t answer that question about your own brand in two or three words, your brand’s in trouble.
Powerful, long-lasting brands are built by owning a word in the mind.
What’s a Volvo? A safe car.
What’s a BMW? Fun to drive.
What’s a Barilla? Italy’s No. 1 pasta.
It’s astounding how many marketing executives can’t grasp this simple strategy: Own a word in the mind. A few years ago the CEO of Wal-Mart’s ad agency was asked, “What would you say is Wal-Mart’s USP?”
Value? No. Cheap? Yes
Without hesitation, he replied: “Value, loyalty and quality.” Rosser Reeves would have turned over in his grave. “Value, loyalty and quality” are hardly a uinique selling proposition. Outside of every Wal-Mart are the words, “We sell for less.” In every Wal-Mart ad are the words, “Always low prices. Always.” What word does Wal-Mart own? It’s “cheap.” Not a bad word. It has made Wal-Mart the world’s largest retailer.
Does “cheap” appeal to everybody? No. That’s why you know “cheap” is a good word to own. Any combination of words that appeals to everybody will never work in marketing.
In 1983, my agency was working for Holiday Inn, when our client decided to get into the all-suite hotel business. The brand name they chose: Embassy Suites.
At the time, there were only two significant players in the all-suite category. Granada Royale and Guest Quarters. We made two points.
First in mind
No. 1: The leading all-suite chain will be the first brand in the mind. To jump-start the Embassy Suites brand, buy the largest chain in the category, Granada Royale. Which they did.
No. 2: Embassy Suites would be reasonable, no more expensive than an ordinary hotel room. Furthermore, the primary benefit of a suite is to have one room for sleeping and one room for working. Hence our proposed positioning slogan: “Embassy Suites: Two rooms for the price of one.”
Which they didn’t do. Instead they hired the ad agency that proposed using Garfield, the cat. “You don’t have to be a fat cat to enjoy The Suite Life.”
Embassy Suites became a very successful brand. But it missed an opportunity to reposition traditional single-room hotels with a powerful strategy, “Two rooms for the price of one.” And today, of course, Garfield has checked out.
Learning a lesson
I learned a lesson: Maybe you can do both. Maybe you can take a simple positioning idea and “package” it, like putting bacon around a filet. When Federal Express decided to focus on its overnight business, it could have said, “The overnight delivery company.” Instead it wrapped bacon around the “overnight” idea with the slogan: “When it absolutely, positively has to be there overnight.”
What about Embassy Suites? After thinking about it for the last 22 years, how about “Embassy Suites: One room for you, one room for your cat?”

BOOM TIMES AT INTERPUBLIC'S R/GA

BOOM TIMES AT INTERPUBLIC'S R/GA
BOOM TIMES AT INTERPUBLIC'S R/GA
Inside an Interactive Ad Shop With Strange and Winning Ways
July 11, 2005
QwikFIND ID: AAQ73I
By Jonah Bloom
What if I said the hottest ad agency in the country isn’t in Miami? What if I said the shop with the brightest business prospects is owned by the floundering Interpublic? What if I said that the most exciting new agency model is being built by a 57-year-old who could reasonably be claimed by the old guard as one of their own?

Jonah Bloom, executive editor of Advertising Age.
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Before you write me off as dumb, crazy or preposterously provocative, I recommend a close look at R/GA, the IPG-owned, tech-centric shop tucked away on one of midtown Manhattan’s grittier side streets, and led by Bob Greenberg.
Been around since 1977
Please don’t misunderstand. This column isn’t claiming R/GA is either new or waiting to be discovered (readers, please also check out the films of this guy called Pedro Almodovar and take a trip to a little city I’ve found called Paris). It’s been around since 1977 and is as gong-laden as almost any agency you care to mention (there’s even an Academy Award in the trophy room). In fact, it was increasingly frequent, unprompted testimonials from admiring rivals, jealous siblings and a R/GA client that persuaded me to spend a morning in the shop’s offices.
It was worth it. Greenberg -- who looks Larry David, but sounds Noam Chomsky -- has hired more than 120 people this year, increasing his staff numbers by about 50% at a time when most agencies are still cutting. In the last year it has won business from Lowe’s, Target, Subaru, Lucent and Sharp, and, according to IPG agency insiders, played a big part in helping siblings Lowe and McCann win Nokia and Intel.
If you want to see R/GA’s work, look no further than NikeID.com, the sneaker giant’s incredible customization site. An idea spawned by agency and client collaboration, this is less an ad campaign or a Web site than a big business idea supported by impressive manufacturing and interactive sales technologies. (If you haven’t visited by now, you’re really not doing your homework.)
'Groupware'
R/GA’s structures and processes are radically different. There’s no account-man-creative-guy combos, no giant unwieldy media-based silos. In fact, the entire agency is structured into what Greenberg calls “Groupware” (he is master of nifty monikers), meaning teams of about eight people, each including technology developers, data analysts and interaction or experience designers as well as copywriters, media planners and project managers.
While some agencies outsource their software and

One of R/GA's most visible works was the 23-story-high interactive promotion on the Reuters Building sign in Times Square that allowed passersby to design their own shoes.
technology development, they are the creative backbone of R/GA’s offering, and the shop is built to produce invitational, interactive and database driven “experiences,” many with e-commerce elements -- ideal for this new media era. R/GA is also creating work that allows clients to make better use of their digital assets to feed the need for constantly changing messaging, reducing their dangerously expensive dependence on the periodic creation of new film-based content.
A study in change management
Of course R/GA’s tech-centricity won’t appeal to everyone (even if it should), but the shop is worth studying regardless, if only as a lesson in change management: It started out in 1977 as a production house, focusing on computer-assisted filmmaking; in 1986 it evolved into an integrated digital studio; by 1995 R/GA was becoming an interactive ad agency; now it intends to become an ad shop centered in interactivity.
So what forces drove Greenberg from the production business? Primarily technological change that had allowed the clients (agencies, filmmakers) to become backseat drivers in the editing suite, or to farm out whatever part of the process they wanted to whomever they wanted, what Greenberg calls the “modularization” of the business. Second, it was the fact that those same clients were bringing in cost-control agents and driving down prices. Sound familiar?
In this regard we should all be pulling for R/GA, because its success is proof that a business that accepts and adapts to change can win and win big.

Venture to Put Live Shows on Internet and Radio - New York Times

Venture to Put Live Shows on Internet and Radio - New York Times
Venture to Put Live Shows on Internet and Radio

By JEFF LEEDS
In a bid to widen significantly the audience for concerts and live events, America Online and XM Satellite Radio are backing a venture that will deliver live performances to Internet, satellite and wireless customers and through other media.

The venture is expected to start offering its performances this fall. Many of them will originate from arenas and theaters owned by the AEG division of the Anschutz Company, a concert promoter that also holds a stake in the venture. Kevin Wall, executive producer of broadcasts of the multicity Live 8 concert this month calling for aid to Africa, will run the new venture, Network Live.

Mr. Wall, former vice chairman of the Internet services company iXL Enterprises, said AEG was aiming to offer up to 40 concerts from major acts this year and develop its own brand-name series, which could then be distributed or downloaded to an array of devices.

The company plans to generate revenue by licensing its events to various distributors, including AOL and XM, and by selling advertising and corporate sponsorships tied to its concerts, Mr. Wall said.

In addition, sales or fees "directly related" to a specific performance will probably be shared with the artist, said Timothy J. Leiweke, president and chief executive of AEG.

The accord creating Network Live comes as distributors of digital entertainment are trying to add programming to attract customers. AOL, for instance, has been developing new content for its revamped service in a race against Yahoo and other rivals. XM has been trying to one-up its smaller rival, Sirius Satellite Radio, by adding new radio talent.

It also arrives as the concert industry, reeling after a slide in attendance last year, is trying to determine how to use the Internet to make more money. Clear Channel, the nation's biggest concert promoter, last week said it planned to shift up to 25 percent of its advertising budget online and that it had struck a deal with Yahoo to alert music fans to coming concerts in their area.

In the past, the notion of attracting mass audiences for concerts online was considered a dubious one. House of Blues Entertainment, another owner of concert arenas, developed plans in the late 1990's to sell pay-per-view Webcasts of its performances, but they drew few viewers, and the company shelved a planned stock offering in 2000 amid the collapse of the dot-com bubble.

This month, however, the Live 8 concerts broke online audience records, AOL said, drawing a peak of 175,000 simultaneous users.

Mr. Leiweke said House of Blues, in retrospect, might have been "a little bit ahead of their time."

Tuesday, July 05, 2005

PARIS HILTON'S HOT BURGER AD GENERATES TEPID SALES

PARIS HILTON'S HOT BURGER AD GENERATES TEPID SALES
PARIS HILTON'S HOT BURGER AD GENERATES TEPID SALES
Carl's Jr. Parent Company Defends Marketing Strategy
June 28, 2005
QwikFIND ID: AAQ70L
By Kate MacArthur
CHICAGO (AdAge.com) -- Despite the whirlwind of publicity generated by its Paris Hilton ad, the controversial spot does not appear to have significantly increased Carl's Jr. restaurant sales.
Despite the tepid sales, CKE President-CEO Andrew Puzder called the Paris Hilton ad impact 'nothing short of phenomenal.'
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The chain posted a 1.7% gain in same-store sales for the four weeks ended June 20, while sibling chain Hardee’s posted a 0.7% gain. Both chains are operated by CKE Restaurants of Santa Barbara, Calif.

Carl's Jr. was running the ad for the full four weeks, while Hardee's began running its own version of the ad during the last week of the period.

Expecting higher returns
Analysts and industry watchers were expecting much higher returns in the wake of the worldwide attention paid to Carl's Jr. and its Spicy Barbecue burger courtesy of Ms. Hilton's erotic car-washing escapade in the ad.

During a conference call with analysts after the market closed yesterday, Anton Brenner of Roth Capital Partners said: “Particularly looking at Carl’s same-store sales, it doesn’t appear that there is a noticeable boost from the Paris Hilton ads,” he said. “They might have gotten a lot of attention, it’s hard to squint and see how it has impacted your actual sales performance.”

CKE President-CEO Andrew Puzder called the Paris Hilton burger ad impact “nothing short of phenomenal.” He said: “As I am sure you’ve heard others say you can’t buy this kind of publicity."

Mr. Puzder said Carl's Jr.'s average unit volumes were higher than for any comparable period in a decade. He appeared to put a positive spin on the Paris advertising period by merging it into sales performances over a two-year cumulative period for an increase of 9.9%. He also noted the company's 28 consecutive periods of positive sales.

Lacked 'newness' factor
When grilled further by analysts about the surprisingly tepid sales, Mr. Puzder said the spicy burger that Mr. Hilton promotes in the spot had already been out for two to three months, so it didn’t have the "newness" factor.

“Where would we’ve been without this Paris Hilton ad in this period?” Mr. Puzder said. “We certainly would have sold a whole lot less. I mean we have a lot of people going into restaurants ordering ‘The Paris Hilton burger,’ which was our Spicy Barbecue burger, and you’ve certainly wouldn’t have had those sales but for running the Paris ads. So I think we are –- we were very pleased with the results.”

At least one analyst has downgraded CKE shares after the company reported lower-than-expected earnings yesterday despite higher sales. Larry Miller, restaurant analyst at Prudential Equity Group, singled out financial issues at Hardee’s when he lowered his outlook for the stock.

"We remain concerned that the Hardee's turnaround ... may be in jeopardy," he wrote in a note to investors.

Mr. Puzder explained that the 1,420-calorie Monster Burger with 107 grams of fat launched by Hardees earlier in the quarter “exceeded all of our expectations with respect to both media attention and sales, helping solidify Hardee’s position as the place for big, juicy delicious burgers for young, hungry guys.”

Friday, July 01, 2005

Hearing the Boom Through Headphones

Hearing the Boom Through Headphones
Published: June 29, 2005
(After July 07, 2005, this article will only be available to eStat Database subscribers.)

Digital music player revenue nearly tripled in 2004, reaching $4.5 billion, according to In-Stat.

In-Stat predicts that the number of hard disk and flash-based digital music players will almost quadruple between 2004 and 2009, rising from 27.8 million to 104 million units.

One-quarter of US consumers own digital audios players, up from 16% in 2001, In-Stat says. Although a number of competing devices, including Rio, iRiver and Creative, have emerged to challenge the popular iPod, Apple commands 30.2% of the worldwide digital audio player market.



Yankee Group also expects digital audio players to grow sharply in the coming years, but at a slower pace than projected by In-Stat. Yankee Group says the installed base of digital audio players in the US stood at 35.1 million in 2004, and will reach 41.6 million in 2005. By 2009, it projects that there will be 67.7 million digital music players in the US, almost twice as many as in 2004.



A recently released report from the NPD Group indicates that digital music players are leading some consumers to online music services. NPD found that 22% of US online consumers who had begun using music downloading services did so because they recently had purchased a digital audio player.

The percentage of US households using such services has expanded considerably since the beginning of 2004. Only 0.5% of US households used them in December 2003, while fully 4% of households used the services by March 2005. However, P2P file-sharing has proved consistently more popular than legal services, with around 8% to 10% of households using them throughout 2004 and 2005. By March 2005, 9.6% of households used P2P services.

Will legal music downloading ever be as popular as P2P services? eMarketer Senior Analyst Ben Macklin finds that changes in the market have made such a shift more probable: "With the recent launch of Yahoo!'s Music Unlimited service combined with the well established iTunes, Napster 2.0 and Real Network's music service, Internet users now have a genuinely compelling array of paid online music services that can compete with P2P networks."

eMarketer's report on online music will be released in July. Sign up to receive an e-mail notification when it is available.