The sale of gluten-free foods is big business.  In fact, Americans spent more than $4 billion on gluten-free foods alone last year.  Whether an individual is diagnosed with celiac disease (an autoimmune digestive condition that can be effectively managed by eating a gluten-free diet), is gluten-sensitive, or has chosen to eliminate gluten as a trendy diet option, the gluten-free movement is a booming industry.

Until recently, there has been no regulatory definition of “gluten-free” in the United States and manufacturers have been able to use their discretion with regard to how much gluten they include in their food and dietary supplement products.

In early August, the Food and Drug Administration (FDA) at last defined what a “gluten-free” label on a food or dietary supplement package means, after more than six years of consideration.  According to the FDA, products labeled “gluten-free” will either have to be free of wheat, rye and barley or contain less than twenty parts per million of gluten.  The FDA considers the statements “no gluten,” “free of gluten,” or “without gluten” to be equivalent to a “gluten-free” claim.  According to the FDA, a food or dietary supplement that bears any of the foregoing claims in its labeling and fails to meet the requirements for a “gluten-free” claim will be deemed misbranded under the Federal Food, Drug and Cosmetic Act. The FDA also discourages the use of statements in labeling about the gluten content in foods or dietary supplements other than “gluten-free,” such as “low-gluten” or “very-low gluten,” because, according to the FDA, there is no scientific basis for these claims.

Requirements related to “gluten-free” labeling on drugs and cosmetics are outside the scope of the FDA’s rule, but the FDA is evaluating whether to address ingredients in human drug and cosmetic products that currently are derived from wheat, rye, or barley.

Manufacturers have until August 5, 2014 to review their food and dietary supplement products to ensure that they comply with the FDA’s rule, or to remove “gluten-free” or similar claims from their labels.

 The Way I See It

The Digital Advertising Alliance (DAA) recently issued guidance explaining how its Self-Regulatory Principles for Online Behavioral Advertising and Multi-Site Data apply to certain types of data in the mobile space.  The DAA’s Self-Regulatory Principles are a direct response to the Federal Trade Commission’s (FTC) call for advertising industry self-regulation in the digital space.

The DAA clarified that its Self-Regulatory Principles are applicable to three newly-defined classes of mobile data: (1) data collected from a particular device regarding app usage over time on non-affiliated apps (Cross-App Data), (2) data about the physical location of the individual or device (Precise Location Data), and (3) calendar, address book, phone/text log or photo/video data created by a consumer and stored on a device (Personal Directory Data).  In addition, the DAA reaffirmed the applicability of the Self-Regulatory Principles to the collection of data over multiple sites (Multi-Site Data).   Significantly, the DAA acknowledged that it may not be feasible to comply with the Self-Regulatory Principles on mobile devices in the same manner as on desktops.  For example, devices with small screens might make it difficult to provide notice of Multi-Site Data collection on the same webpage where this data was collected.  In such instances, the DAA stated that notice would be acceptable as long as it is “clear, meaningful, and prominent.”

Data collection for operations and systems management, market research, product development and reporting for ad delivery purposes are all exempt from the Self-Regulatory Principles’ notice requirements.  In addition, de-identified data that does not associate or connect an individual with a particular device is carved out from certain compliance obligations.  Note, however, that none of these categories of data may be used to determine eligibility for employment, credit, healthcare treatment or insurance.

Notably, the DAA made clear that the new guidance is in an “implementation phase” and that, during this phase, the guidance will not be in effect or enforced by the DAA.  However, once the DAA announces that this new guidance is effective, it will begin to enforce any non-compliance through its accountability mechanisms.

The Way I See It

2013 has certainly been a landmark year, and we have seen both social and financial gains dance across the headlines of various news publications. We watched as the S&P 500 hit an all-time closing high of 1,682.50 in July, and we watched history be made with the United States Supreme Court’s ruling on DOMA.

While I still do not have access to a crystal ball, the fiscal outlook for 2013 will certainly determine a large portion of the way the growth within the Advertising Industry, among other industries, will play out.

The Way I See It

  • I see the industry continuing to evolve to adapt to changing consumer trends, marketer needs and media evolution.
  • I see the advertising industry continuing to be an important engine of business growth and job creation.
  • I see the advertising industry as the storytellers that allow marketers to better inform the public and help businesses promote their brands and sell their products and services.
  • I see the advertising business working hard to do with less, while attracting and retaining the best and most creative talent.
  • I see the advertising industry needing to be fairly and reasonably compensated to do all that I just said.

The Way The Industry Sees It

I sat down with Neal Grossman, Chief Compensation Officer of TBWA Worldwide and Chief Operating Officer of TBWA\Chiat\Day’s Los Angeles office, to discuss the economic outlook and agency forecast for the industry in the year ahead.

There has been a great deal of press lately surrounding advertisers extending their payment terms.  What are your thoughts on this?

I don’t see this as anything new or as the sign of a new trend.  Larger advertisers in particular have for years been looking for ways to extend payment terms.  Aside from media spend, agency fees and production represent a significant portion of their remaining marketing spend.  Agencies, however, are not able to, nor should they have to, act as banks for their clients.  In terms of agency fees, we don’t have much flexibility in the payment of our own costs.  80% of our costs (such as staff costs, rent, taxes, etc.) are paid within 30 days or less and less than 7% are paid after 60 days.  To accept extended payment terms effectively is accepting a reduction in the agency’s profit margin and for smaller agencies it can create significant cash flow issues.  With smaller agencies, it could even put them out of business.  With regard to production companies, they are similarly situated where a significant portion of their costs are talent related and costs that need to be paid up front.

A lot has been said about value compensation in recent years and most advertisers seem to equate that with implementing some form of pay-for-performance.  Does this address value compensation as agencies see it?

While the adoption of pay-for-performance has become more common place, it’s not been meaningful because there is often not a significant and achievable upside.  The criteria is often subjective and we’ve seen examples where it’s been used as an excuse not to pay the agency, where junior clients are given equal weighting as senior clients in their evaluations of the agency and where procurement criteria related to cost savings and process are weighted more heavily than marketing criteria.  Further, a common way pay-for-performance criteria are scaled uses a minimum threshold of “meets expectations” before any portion of the bonus is earned.  And yet, most people’s expectations are that work be “above average.”  So, the scales are biased to begin with because “meets expectations” (above average) as a beginning threshold for earning a bonus might not yield any bonus for above average work, and 100% of the bonus is often not achieved even when the marketing results are exceptional.  As a result, pay-for-performance is generally not material and won’t be accepted by agencies as a substitute for base compensation they feel is inadequate.

Continue Reading A Candid Conversation on the Economic Outlook & Agency Midyear Forecast with TBWA\Chiat\Day’s Neal Grossman

Spamming has taken a new form in this era of mobile phones and text messaging.  In addition to fighting the clutter in our e-mail inboxes, we are also faced with clutter on our cell phones.  In the words of the FTC, text message spam is a “triple threat.”  First, mobile spam often uses the promise of free gifts or product offers to get you to reveal personal information such as bank account, credit card, or Social Security information.  Alternatively, clicking on a link in a text message can lead to the installation of malware that collects information on your phone and sends it to a third party.  Second, the spam can lead to unwanted charges on your cell phone bill. Third, these unsolicited messages can slow your cell phone’s performance.

With few exceptions, it is illegal to send unsolicited commercial e-mail messages to wireless devices, unless the sender gets your permission first.  The FTC has taken an active interest in preventing this spamming from continuing.  In March 2013, the FTC filed eight different complaints in courts around the United States charging twenty-nine defendants with collectively sending more than 180 million unwanted text messages to consumers, many of whom had to pay for receiving the texts.  The messages promised consumers free gifts or prizes, including gift cards worth $1,000 to major retailers such as Best Buy, Walmart, and Target, in exchange for providing sensitive personal information, applying for credit, or paying to subscribe to services.  The text message spamming network involved the individuals sending the spam, who got paid by website operators based on how many consumers entered information on each website, and website operators, who were paid by businesses that gained customers through the process.

In July 2013, the FTC continued its campaign against these spammers by filing another complaint in the U.S. District Court for the Northern District of Illinois naming another set of defendants in this network.  Cell phone companies as well as major big box retailers, fearing that this practice tarnishes their brands, have also warned their customers and provided avenues through which to lodge complaints.

 The Way I See It

  • I see that, while text message spamming was inevitable, it, unlike e-mail spamming, may have an end in sight since there are direct costs to the consumer from simply viewing the message, there are direct effects on cell phone service, and there are many ways for consumers to prevent this spamming from occurring (i.e., putting one’s number on the National Do Not Call Registry or submitting a complaint to a cell phone company, retailer, or the FTC).

    • Continue Reading “Canning the Spam” – The FTC on Mobile Spamming

Foxwoods, Mohegan Sun, Harrah’s: these are a few key players in the gaming industry. And many who frequent the craps tables or drive past their billboards know that these casinos (and many others throughout the country) are owned by Native American tribes. Although regulated by the Indian Gaming Regulatory Act, Native American gaming has recently been on the rise, largely due to the government’s limited ability to prohibit gambling on Indian reservations and other lands of tribal sovereignty. In fact, according to a recent analysis by Bank of America Merrill Lynch, Native American gaming represents 43 percent of U.S. gaming industry revenue – with Las Vegas representing only 10 percent and regional commercial gaming the remaining 47 percent. Two hundred thirty-six Native American tribes operate four hundred twenty-two facilities across around twenty states. How does the Native American gaming industry continue to grow in the midst of the down economy while some Las Vegas resorts and casinos have shuttered their doors?

The Way I See It

  •  I see casinos working with agencies to direct creative, which needs to differentiate the casino from any other gambling institution and drive visitors to take their gambling dollars there. To many people, all casinos are the same, so the real challenge is brand development and recognition.
  •  Many Native American gaming institutions are in key localities and thus focus largely on target marketing and securing local attention – and driving tourism. Say you’re driving down the highway through Chicago toward Northwest Indiana, you’ll see billboards advertising casinos to encourage you to get off at certain exits, or if you’re somewhere regionally close, you may see commercials during local programming advertising casinos. For casinos, understanding the local target market is key.
  • The Native American gaming industry has grown into a $27 billion business from almost nothing twenty years ago, alongside the rise of online gaming and Internet gambling, which have only increased the competition. I see casinos using new marketing and advertising tools to reach new target audiences in order to build brand reputation and attract future visitors.
  • I see many Native American casinos taking advantage of social media to grow brand identity and draw new visitors with tactics such as sweepstakes on Twitter and photos of recent parties at various casino locations on Facebook.

The Way The Industry Sees It

I sat down with Jim Diamond, an expert in Indian Law, to discuss the recent rise of Native American gaming and casinos.

Being an expert in Indian Law, could you explain the history of Native American sponsored gaming and its regulation?

Many people aren’t aware that games of chance are a part of Native American – Indian – culture and are not a recent invention.  Even before the arrival of the Europeans, American Indians played individual games like dice, or team sports, for example, and wagering was a common element of the activities.  Large scale commercial gaming sponsored by American Indian tribes proliferated in the 1980’s when Reagan-era budget cuts forced tribes to find alternative sources of operating funds. States then ventured into expanded reliance on lotteries.  The result was that a number of tribes like those in Florida and California expanded gaming, first by expanding bingo games.  This met with opposition by the states, who said the expanded gaming ran afoul of state anti-gambling laws.  The tribes sued in federal court and a federal regulatory scheme, Indian Gaming Regulatory Act (IGRA), with permissive Indian tribal gaming was the result.  IGRA forced states to enter into agreements – compacts – with Indian tribes, but under a framework established under federal law.

By remaining on the outskirts of the federal government’s regular gambling jurisdiction, how do you think Native American casinos have impacted gamblers across the nation?

First, states that permit Indian gaming have come to heavily rely on the whopping $1.4 billion tribal gaming contributes to state tax revenues.  Most significantly, Ron, I think the American experience with Indian gaming has led to a change in popular opinion that the social harms feared to result from expanded gambling have been largely unrealized. So, with the reduced fear of gambling addiction or organized crime and the dependence on the tax revenue, gaming is now everywhere.  The popularity of Indian gaming has led states to vastly expand non-Indian casino and other gaming. Around twenty states now have commercial casinos.  The popularity of Indian gaming has also led states to be more open to expand other forms of permissive non-Indian gambling like the popular riverboat gambling, racetracks, and off-track betting.  Charities and religious groups have also benefitted from the permissive atmosphere with expanded “Las Vegas nights” and bingo.  So the overall resulting expansion of legal gambling has meant consumers don’t have to travel as far to gamble.

Continue Reading Exploring the Rise of Native American Gaming

In the futuristic world of Minority Report, Tom Cruise’s character walks into a Gap clothing store; his eyes are scanned and a 3D hologram of a saleswoman welcomes him by name and inquires about his satisfaction with his previous Gap purchases.  The movie is set in 2054, but this scene may not be too different from the world we live in today.

Retailers such as Nordstrom, Family Dollar, Benetton and Warby Parker are testing new technologies that track customers’ movements throughout their stores by following the wi-fi signals from customers’ smartphones.  As part of a movement to gather data about in-store shopping behavior, retailers are also using video surveillance technology to detect moods based on facial cues, catalogue how many minutes are spent in a particular aisle and how long a customer looks at merchandise before making a purchase.  Retailers who employ these technologies can use the information gathered to determine the ideal store layout or to provide targeted offers based on a customer profile.  So far, some consumer reactions have been less than positive.  However, this data gathering is no different from the digital equivalent: e-commerce sites that use cookies and other online tools to determine who consumers are and how they shop.  Nonetheless, it appears that, for many, transporting these technologies to brick-and-mortar stores is striking some shoppers as just too creepy.  In fact, Nordstrom ceased experimenting with this technology partly in response to customer complaints.

Those objecting may not realize that location-based targeting has been around for some time.  For example, GPS-based apps can determine whether you are in a particular store and immediately offer products and deals available at that retailer through your mobile device.  While this practice may have turned some consumers off initially, it is increasingly an accepted practice.  One notable difference, however, between app-based targeting and brick-and-mortar tracking is that those who download these theoretically apps expect location-based tracking, whereas those who walk into a store likely do not expect to be monitored and targeted.

The Way I See It

We’ve all dreamed of traveling to exotic locales, living like locals halfway around the world, or taking that long-discussed epic road trip across the good ol’ U.S.A.  When it comes down to it, travel is a luxury, and in the recent economic downturn, budget-friendly trips have been the ones most frequented.  As the economy picks up and a new generation of eager travelers matures, we’re noticing a revived investment in local business growth initiatives and tourism advertising and marketing budgets for cities across the country and around the world.

The Way I See It

  • Stateside, cities are reinvigorating their taglines, investing in digital and social media advertising as opposed to the traditional, often-cheesy commercials, and encouraging visitors to try hidden spots, embrace local traditions, and support local businesses.
  • I see states and cities trying to draw business and economic development in order to grow tourism and business travel.  Everyone wants to get in on the start-up boom, and initiatives like New York’s “We are Made in NY” campaign, which now covers the sides of buses across the city, is aiming to revive Silicon Alley and draw more startups to the city with incentives like subsidized office space and grants, and increased resources and support from the community.
  • I see states and cities around the country opting for local creativity rather than relying entirely on national agencies.  Colorado is the latest with its announced of a “Making Colorado” initiative which will bring together advertising and marketing professionals from the state and also rely heavily on an online forum for feedback from residents on new ideas.

The Way The Industry Sees It

I sat down with Edward Hogikyan, Senior Vice President, Marketing, of NYC & Company, New York City’s official marketing, tourism, and partnership organization, to discuss advertising and marketing strategies used by cities to attract tourists and boost local economies.

Let’s talk a bit about the recent revival of local business growth and tourism initiatives in cities like New York.  How has the general approach in NYC to drawing tourism changed in recent years?

New York City itself is constantly changing.  If you were here six months ago, there are now new things to see and experience, places to dine, exhibitions, shopping, or even new places to stay.  Reminding people of that is important in keeping NYC top of mind as a destination and core to our messaging.  There are also new segments to focus messaging on, such as families – they have been a priority for us.  Over 15 million families came in 2012, a nearly 3% increase over 2011.  NYC is the top U.S. destination for gay travelers and the passage of the same-sex marriage bill, combined with the recent U.S. Supreme Court rulings on gay marriage, has afforded us a new way to message to the LGBT community.  The youth travel market continues to grow, and they are often more intrepid about exploring parts of the city that are outside the typical tourist destinations.  International markets have also been shifting dramatically.  The exponential growth in visitation from China and Brazil, for example, has resulted in a significant influx of cash into the city’s economy as both markets are comprised of serious shoppers.

Considering a city as a brand, how do cities typically measure Return on Investment (ROI) and success, especially with the tie-in to local businesses and growth?

There are several different metrics for success that we use.  One, of course, is total visitation.  In 2012, NYC reached a record 52 million visitors, up from 43.8 million in 2006 when our current organization was created.  We are also the top U.S. destination, with a 33% share of international visitation (the second highest in the country is at 11%).  Next we look at jobs and the economic impact of visitation.  In 2012, we had a record $55.3 billion in economic impact.  There are 356,000 jobs currently supported by the leisure and hospitality industry.  By 2015, we are projecting $70 billion in economic impact and 390,000 new jobs.  Other key indicators include hotel room occupancy and the Average Daily Rate paid for those rooms, and attendance at Broadway and other cultural attractions.

Continue Reading Calling All Travelers: Advertising Cities as Brands

Gatsby.  His name has been forever immortalized through the words of       F. Scott Fitzgerald.  For most of us, it conjures up memories from high school English classes, but now it’s being broadcast all over in ads and trailers for surrounding the film adaptation.  The Great Gatsby’s big movie turn got us thinking about how marketing strategies around blockbuster film adaptations impact book sales and play into the publishing industry.  Some of the biggest flicks to hit silver screens in the past few years have been adaptations from books – Harry Potter, Twilight, The Hunger Games, Silver Linings Playbook. And of course, this practice is nothing new. Even Gone with the Wind is an adaptation of a book. So how do movie adaptations tie into marketing strategies to sell books?

The Way I See It

  • I see big-screen box office hits reinvigorating marketing of their book counterparts with the production of new editions of the book with covers to match the movie posters and new promo displays linked to the main characters from the movie to feature alongside book displays at retail stores – all timed around the release of the movie adaptation.
  • I see an opportunity for publishers to capitalize on the buzz around highly-anticipated new movie adaptations to implement a marketing and advertising strategy to drive sales of the associated books by reminding consumers that the movie was a book first.
  • With the popularity of certain themes at the movies – such as vampires, crime dramas, or futuristic fantasies – publishers can tie books with similar themes into the pop culture theme-of-the-moment by target marketing to key demographics or consumers composing the fan base.

The Way The Industry Sees It

I sat down with Rachel Coun, Executive Director of Marketing, Trade Books at Scholastic Inc., to discuss marketing strategies for books that become blockbusters.

How do marketing strategies for books change, if at all, with a new film adaptation hitting theatres? What factors play into whether and how a movie adaptation of a book will impact marketing of a book?

When a film adaptation comes out, we have the great opportunity to reach new people who are eager to see the film and have not read the book yet.  Plus, when the movie is based on the first book of a series, you are able to promote that next book in the series to the existing fans as well. Prior to its theatrical release, we advertised The Hunger Games on Facebook and popular movie and entertainment websites with “It started with a Book” messaging.  Once the film released, we added “And the Story Continues” to the copy line and linked the ad to all three books in the series.  In addition, we sent out an eBlast, with that same messaging, directly to people who purchased The Hunger Games movie tickets online.  We promoted The Hunger Games Movie Tie-In Book to both that new movie audience as well to existing Hunger Games fans.  This entailed retail displays featuring a movie image; placement on our Hunger Games Facebook page and Scholastic website; social media outreach via Facebook and Twitter; and advertising on Hunger Games fan sites that cater to both the book and film audience.  We also have worked with movie studios on cross-promotions that included movie tie-in book giveaways via on-air radio promotions and media events.

Are there any timing factors that impact how a movie version will play into sales of the book?

We release movie tie-in books a good six weeks prior to a film release to give a new audience time to read the book before the movie comes out as well as create energy among existing fans who are waiting to see the film.  The books still are promoted at retail for several weeks after the movie releases to bring new fans to the brand.

Continue Reading Box-Office Hits to Best-Sellers: Scholastic Inc. Shares Marketing Strategies Around Film Adaptations

The way we get our news is changing.  Every morning and throughout the day people around the world log on to Twitter to find out what is making headlines, new key developments on topics of interest, and what is “trending” – literally and figuratively.  And Twitter is not the only social media network being utilized to gather news and check for updates.  Facebook’s “Timeline” offers users the ability to share news articles within their network. Many social media users will check various social media sites more often than they may like to admit, looking for news or articles posted by “friends.”

The New York Times may have caused a stir when it introduced a paywall to access unlimited news content, but for many people, established news organizations are no longer that critical.  After all, they don’t have to look beyond their social networks to find the news they want.  Critically, with this shift in media consumption, advertising dollars are shifting too – the industry is going social.  Based on exponential increases in ad spend on social and digital networks, a recent BIA/Kelsey study predicts that social media ad spending will grow significantly over the next few years, from $4.7 billion last year, to $11 billion in 2017.

 THE WAY I SEE IT

I see the shift to social continuing and more advertisers spending less on traditional media including digital news outlets, TV, and print, and spending more on social networks.

  • I see the shift to social continuing and more advertisers spending less on traditional media including digital news outlets, TV, and print, and spending more on social networks.

    • Continue Reading Ad Dollars Go Social

A phenomenon that has been present as a form of advertising for many years is now blossoming in digital media and the subject of much discussion in the industry:  native advertising.  Native advertising is content that promotes a brand or product in the native format of the website, publication, or platform in which it is presented.  Native advertising looks different for each medium – for instance, a Sponsored Story on Facebook, Featured Partner content on BuzzFeed, a branded or promoted playlist on Spotify, or a traditional advertorial page in a magazine are all types of native advertising.

As more advertising dollars flow away from traditional display advertising into native advertising, the seamless integration of brand messaging into entertainment, news, and other content that native advertising provides has generated concern and debate over the need for adequate disclosure and guidelines to ensure that consumers are aware that the content is advertising as well as the need to keep the content consistent with advertisers and publishers’ core brand values so that consumers will remain engaged.

Last week, the head of Google’s webspam team published a YouTube video reminding advertisers and agencies that they must clearly disclose that native advertising content is advertising, including links that they pay content creators to include in content or paid search links purchased through Google, which consumers may otherwise believe are freely-endorsed or top-ranked pages.  This is not a new issue for the publisher or advertisers who participate in paid search placement, and was highlighted by the FTC in a 2002 letter responding to Commercial Alert’s complaint against search engine companies alleging that consumers were misled to believe that search results are based on relevancy or actual page clicks, when they were really based on paid placement.  The FTC declined to take action against the companies then, but issued warning letters recommending that search engine companies ensure that paid search results are clearly and conspicuously disclosed to consumers.

The Way I See It

  • I see publishers, content creators, blogs, advertisers, and agencies beginning to pay more attention to the business and legal issues surrounding native advertising, with an emphasis on more clear disclosure that native ads are paid content while striving to retain the organic, seamless qualities that make native advertising effective.
  • Many publishers will, like The Atlantic recently did after a negative reaction from its readers to a native blog post sponsored by the Church of Scientology, revise their editorial guidelines focused on how native advertising will be formatted, styled, and disclosed.

    • Continue Reading Native Advertising Isn’t New, but Considerations for Advertisers Are Just Heating Up