The popularity of a food truck that tools around LA selling gourmet Korean BBQ tacos and the success of the Jonas Brothers would seem to have little to do with each other — let alone contain any possible lessons for ad-agency execs. But in a keynote at the Ad Age Digital Conference, Union Square Ventures partner Fred Wilson managed to tie it all together. Wilson cited the Kogi Korean BBQ taco truck as example of the successful use of earned media — they created a community through Twitter and their blog — and now have customers lining up for an hour outside nightclubs. Meanwhile, the Jonas Brothers’ managers fought
Warner Bros. Columbia Records when the band wanted to spurn radio over posting videos to MySpace. In the end, the band defected to Disney (NYSE: DIS) and Warner Bros. lost out.
Wilson’s point: earned media (the conversations that take place on blogs and community sites) can trump paid media (advertising); therefore, ad agencies need to refocus and understand that when everybody is a publisher, you can’t just rely on traditional media to get the word out. I spoke with Wilson after his session.
So as paid media declines due to economic and other pressures, will earned media naturally rise and fill the void? [His presentation included a slide that compared creative and media spending and the S&P 500.]
Was that a mischaracterization? No, that is a scenario that everybody needs to stare at. I’m not saying it’s definitely going to happen. My goal was to be a little provocative and controversial and say, ‘Is there a way that the total media business continues to grow with the S&P or GDP or whatever benchmark you want to use, but yet, the media buy component declines.’ If that’s the case, what’s going to pick up the slack? My argument is: technology and content.” More after the jump.
In terms of investing, you said that you’re feeling a little more cautious about backing ad firms right now. For the ad companies you are considering investing in, are there any areas where you’re a little less concerned?
I like analytics a lot. And I like any kind of earned media platform. I like ad networks, although I think it’s very important to invest in ones that are differentiated and have a niche, as opposed to offering generic display placement. On the ad agency side, that’s an area that we have been particularly cautious about, though we have made a few investments there.
Do you see ad agencies being able to make the shift towards earned media? And will that necessarily involve more acquisitions activity
I think ad agencies will move into earned media by building up groups within their existing organizations. I expect to see a lot of internal start-ups at ad firms. But yes, I also think they’ll have to do acquisitions as well, in order to make the shift quickly.
Are there any examples of ad agencies moving on earned media now?
You saw the agencies by up a lot of SEM shops over the past few years. For example, Reprise Media was acquired [by Interpublic Group in April 2007] and that set off a wave. And social media agency acquisitions will be the next thing.
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