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AdWeek published a story yesterday that addresses the very issue I pondered in my post last week regarding ABC’s interest in a TV show staring the Geico Cavemen.

Agencies have long been under the constraints of work-for-hire agreements and as such they don’t maintain rights to their ideas. In a digital era where the lines of content distribution blur across advertising and entertainment channels, those ideas are easily repurposed and the agency that created the idea is often cut out.

For example, McCann Erickson’s Staples ad campaign (the easy button) resulted in Staples ringing up $7.5 million in unanticipated sales from the novelty item. The roaming Gnome statues, spawned by the Travelocity campaign are being sold for $19.99 each. The agencies that created the ideas…get nothing.

From the AdWeek article:

Attorney Doug Wood, a partner at Reed Smith, New York, said, “If you look at the typical agency contract, it says: ‘Ad agencies transfer the ownership of all ideas and concepts to their clients.’ [Clients] can say, ‘The agency can’t use that idea anywhere else. It can’t control where I, the marketer, use it, how I use it, whether I use it at all.’ There are exceptions, but generally speaking, they hold fast to the idea that ‘you’re my agent and I don’t [pay to] retain you and then give you additional royalties and license fees. You’re like buying a pencil. Just because I use you for another purpose doesn’t mean I have to pay for you again.’”

“As advertising has become increasingly about content, agencies are no different from industries like publishing, motion pictures, video games, music, etcetera,” said Tom Finneran, evp, 4A’s agency management services.”

Joe Lawson, The Martin Agency copywriter behind Geico’s cavemen, who is writing the ABC pilot, needed client permission to do that.

Industry creatives are still second-class citizens when it comes to after-market use of their ideas.

Even their partners in producing work—musicians and photographers—retain ownership rights to their work.

Agency compensation issues aside, the question remains: What is the impact on industry creative people as a result of antiquated practices involving the ownership of intellectual property?

I never had a word for it before. Now I do. My teen daughter is into communitainment-ing. And she’s not alone. If you’re a parent of a teen or spend much time around them, you can probably relate.

The symptoms: they are always on…online…on MySpace…on IM…on a photo sharing service…on an online game with friends…on I-tunes…on their cell phone texting…on the spot in sharing some crazy video with their friends (sometimes all at the same time).

They don’t watch much TV. But nonetheless, when you start to worry that they are becoming desk-potatoes and anti-social and you force them to disconnect and go outside to get fresh air or exercise or go to the mall or a ball game, it’s not uncommon to find them in groups on their cell phones texting others and even one another. As more of them convince their parents to buy them smart phones, they are taking and sharing video, mobile myspacing and so much more.

A report released last month by Piper Jaffray’s analyst Safa Rashtchy entitled ‘The User Revolution’ describes how users are going from simply exchanging information, to sharing information, ideas, content and entertainment, all within a social context, as part of a process dubbed ‘Communitainment’.

In a story in Adweek, Rashtchy pondered whether the younger viewers were cutting back on something else? It turns out they are cutting back on some of the more traditional entertainment avenues. But the communication on IM and MySpace is entertainment for them. To them, communication is not what it is to us. If we’re talking, we want to exchange some information, then we’ll get back to our work, or we’ll go watch a movie or some TV for entertainment. For younger people those [communication and entertainment] activities are intertwined. They send music and video files to each other, and that activity, by itself, is fun for them. It is not the same as what we call communication. He believes that increasingly, people on the Web, especially younger people, are going to gravitate toward content consumption in a way that is not direct content consumption but, combined with something else that is tied within the idea of social community.

The report suggests that “Communitainment” will at least partially replace other forms of content–i.e., TV, magazines, and even big Internet sites in favor of niche content sites. And the importance of the trend is not just in shifting traffic patterns but, more importantly, in the way users view content as a free-flowing part of the communication spectrum.

So where do marketers fit? When consumers watch TV, there is an understanding that they get commercials in exchange for free programming. With “Communitainment,” that ‘understanding’ doesn’t exist. Content is created and shared by users. It’s a closed system and advertisers have to find a way to get into it. And that point is critical if Rashtchy is correct in his prediction that “communitainment” will rise from 30% last year to 50% over the next decade. But once you get in, you’re actually part of the family. The content family. Part of the family, that is, if advertisers can indeed gain consumers’ trust.

Tonight I stumbled on the Coke Zero website and ended up being sucked in for a while. It’s an interesting approach. Instead of the “diet” premise, they are playing on the idea that Coke Zero is a case of taste infringement of regular Coke. The website spins up the taste infringement concept in some entertaining ways. Some of the videos on the site are purported to be real lawyers being fooled. Hummmm??? And there’s a “Ruin this Man’s day” section as well as “Sue a Friend”.

I did a bit of searching and quickly found a New York Times story from Monday on the overall effort.

“The campaign is based on an oddball thought, that the executives at Coca-Cola who sell the flagship Coke Classic brand want to hire lawyers to sue their co-workers who sell Coke Zero. The grounds for the imaginary lawsuits would be “taste infringement” — that is, it annoys the Coke Classic executives that no-calorie Coke Zero tastes so much like their sugared soft drink.

In one commercial, a person identified as an actual lawyer who is not in on the joke, tells two actors portraying Coke Classic executives: “It’ll be dismissed. You’ll be humiliated.”

From the NYT article, it sounds the marketing angle they’ve taken with Coke Zero (designed to taste like a no-calorie version of Coke Classic) is paying off — “45 percent of Coke Zero sales are incremental” rather than borrowed from Diet Coke.

The campaign was created by Crispin Porter & Bogusky.

We all know what happened. It shocked many of us (it certainly did me). CareerBuilder put its account up for review February 23 saying the reason was that the Cramer-Krasselt Super Bowl ads failed to rank in the top 10 in USA Today’s viewer poll. And Peter Krivkovich said “no thanks…we won’t play” and resigned the account.

TZ’s Bobbin Wages scores an exclusive podcast interview with Peter Krivkovich, CEO of Cramer-Krasselt where he explains why they were so shocked by the client’s absurd move; what kind of example C-suite executives should set for their companies and what this says about client/agency relationships in general.

Terrific interview worth listening to. His points about setting an example at the C-suite level and standing for something certainly resonate.

This according to TMZ.com:

“ABC is looking to an unlikely place to find the next big television show: Geico TV commercials. The show would revolve around three pre-historic men who must battle prejudice as they live their day-to-day lives in modern Atlanta.”

I’m sure it was a simple decision for ABC. It’s a great campaign. People love it (read the comments on TMZ).

But:

1) What if it bombs? Would it taint the effectiveness of the Geico spots?
2) I’m assuming ABC would have to pay some type of licensing fee for the concept. But my guess is The Martin Agency (the actual creators of the concept) would not get any of it. (See update below.)

The agency industry is largely governed by an hours-based work-for-hire compensation system where the client owns the ideas not the agency. Agencies typically sell their ideas based on the number of man-hours it takes to create. It’s possible Martin has a unique deal with Geico, but normally agencies don’t get to retain the rights to their work. (If you don’t know much about the challenges in agency compensation, here’s a good background article.)

The Martin Agency is a well-respected shop with terrific work. I’m sure they’re excited and flattered that their work has impacted popular culture to the point where a network wants to make a show about it. And it will certainly increase their profile in the industry. BUT…you can’t take that to the bank.

Agencies have long rued compensation arrangements that size them up by the number of man-hours they commit rather than by the success of their solutions. So some agencies are starting to push for compensation packages that are more value based. Crispin Porter’s deal with Haggar, in which the agency took an equity stake as part of its compensation, and New York-based Anomaly who has priced itself based “on the subjective theory of value” where on its client Virgin America the company will get a percentage of the revenue from the sales of an in-flight entertainment system it helped to design are among a few that have inked new types of deals.

While the compensation issue is far from resolved, progress is being made. In fact, on the agenda at the ANA Advertising Financial Management Conference in May is a session entitled “Creating a Value Based Agency Relationship” where the premise is that benefit of this type of compensation aligns the interest of the agency and the client.

Well…here’s some good news for advertising. This according to today’s MarketingVOX:

“A new study from Knowledge Networks finds that almost 49 percent of TV network Web site viewers say that sponsorship of the streaming or download of an episode would increase their opinion of the brand.

The study, entitled “How People Use TV’s Web Connections,” also found that users of streaming or downloaded network video are much more likely than internet users overall (30 percent versus 22 percent) to buy from companies that advertise on their favorite programs.”

From MediaPost:

“In addition to the boost for marketers, the report found that TV networks also derive benefits from their sponsorships. Some 78% of viewers say that being able to watch episodes online increases their involvement with a program.

A full 25% of viewers of streaming or downloaded network TV videos say they are watching a regular TV program more often because of what they have watched on Internet video.”

The desire to be ‘big’ has been an all-consuming focus in the business world. The predominant thinking has been that big leads to better and that big equals more profit. Anyone who questions the validity of this concept is condemned as a heretic. It’s so entrenched as a business mantra that it seems that ‘big’ is the foremost business purpose. THE objective, rather than an outcome of a well-crafted plan and consistent delivery of ‘better’.

In the last week, there have been three specific stories that brought this issue to the forefront and made me think about the effects of the ‘drive to bigness’.

In a February 14 internal memo, Starbucks Chairman Howard Schultz criticized a number of decisions that have led to the watering down of the Starbucks experience.

“Over the past ten years, in order to achieve the growth, development, and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have lead to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand.”

He goes on to list what he sees as the underlying issues they need to solve and to take his share of responsibility for those decisions. Many initially questioned the authenticity of the memo, but according to a story in AdAge the company confirmed it as authentic.

Whole Foods is another example where the quest for big has caused a drift toward the middle, thereby losing some of what made it successful in the first place. In a story in today’s New York Times, it says some people believe the chain is “not living up to its core values — in particular, protecting the environment and supporting organic agriculture and local farmers. In interviews, some of the customers who describe themselves as committed to these values say they have become disillusioned and taken their business elsewhere. “They are at such a level you expect the best from them, and if you don’t live up to it, people notice,” said Todd Hale, a senior vice president of consumer and shopper insights for Nielsen, the market research company.”

Whole Foods has grown from a small business to a mega-chain with 193 stores, and just last week announced a deal to acquire the 110 stores of its largest rival, Wild Oats.

In the Advertising Agency business, an industry already under intense pressure and scrutiny relative to the efficacy of the full-service agency business model, Forrester Research further added to the pain with the release of a rather bleak report entitled “Help Wanted: 21st Century Agency”. The report says clients are dissatisfied, but for no clear reason that data can back up. (Just think of what happened with Cramer-Krasselt late last week.) Instead it’s a vague disenchantment and disappointment that value is not being delivered at a meaningful enough level.

Today’s struggle may be a result of sins of the past — the way in which the agency industry grew. In the quest for ‘bigger’, agency holding companies purchased lots of diversified companies and specialty services groups in the belief they could create an integrated offering by virtue of having these ‘units’ that their full service agencies could call on as needed. The logic was that because it was all under the same holding company banner (keeping the money in the family) it could integrate the offering while still allowing these specialized units to have their own clients/projects thereby avoiding the competitive conflict problem. Seems logical on the surface. The media agnostic pitch to clients worked well for a while because the story made sense. Agency holding companies got real big.

But, the approach didn’t deliver real integration or integrated thinking on a holistic level (in part because of P&L lines that worked against collaboration among agency sister companies and in part because of the infamous above the line/below the line mentality). At best, it delivered a multi-channel marketing capabilities set. Without the thinking, you can’t create an integrated solution or deliver a customer-centric or user-oriented approach that is in sync with today’s media/consumer scape. So now agencies are desperately trying to fold these capabilities and units into the main agency body and reworking their process and operations, as well as changing internal mindsets to get to a more integrated and accountable service deliver. (On top of scrambling to keep up with the quickly changing media landscape.) It’s a difficult predicament, but one that we need to find innovative solutions for in order to thrive and maintain value as a strategic partner. Because as one anonymous CMO was quoted as saying: “Client-side marketers are better at managing integrated campaigns and being media-agnostic.”

There are a lot of people doing some heavy-duty introspection and that bodes well. Personally, I find it refreshing that Schultz is doing some soul searching about Starbucks and like this post in TomPeters.com “I was beginning to wonder whether another great experience was going to surrender to the short-term gains of operational excellence, Howard Schultz gave me faith.”, I too have hope that if someone as revered as Howard Schultz gets it, maybe others will too. The upside of pushing the question to the forefront is that if we truly look at and understand the realities and effects of the all-out quest for ‘big’, perhaps we can create ‘better’. As Howard Schultz is famous for saying, “success is not an entitlement.” It has to be earned over and over and over.

JetBlue’s valentine was anything but sweet. As most everyone knows by now, an East-coast storm combined with some operational stumbles stranded thousands of JetBlue passengers on Valentine’s Day. Toilets overflowed when nine planeloads of JetBlue Airways passengers sat on the tarmac for six hours or more at JFK in New York. Tempers overheated as the carrier canceled a quarter of its flights over the President’s Day weekend. Resulting in some very pissed off and frustrated customers and lots of bad press.

But, I’ve been impressed with some of the steps they’ve taken to own up to the mistakes including the “customers’ bill of rights” unveiled Tuesday. I’ve been particularly impressed by the stand up nature of JetBlue CEO David Neeleman. He’s taken all the blame for the Valentine’s Day operational meltdown. No finger pointing or hiding. He has apologized in e-mails, in news reports, on JetBlue’s website, on a YouTube video and even on “Late Night With David Letterman.” And it feels like a genuine, heartfelt apology. Most airline executives (or any executive for that matter) are more inclined to hide beneath their desks and let their minions handle the angry mobs. But Neeleman has been standup enough to be not only the face of the problem, but is earning credibility as the face of the solution as well.

Its clear JetBlue takes its hard-won brand fame seriously, and from the video and triage response it seems like they are making real, fundamental changes on behalf of their customers. That’s encouraging and impressive. That kind of humility and transparency about the problem goes a long way to mitigate customer frustrations. Every company and everyone makes mistakes, but too many try to “spin” their way out of it by trying to offload blame on circumstances or finger pointing at others. Owning up to it and taking this kind of genuine approach will help JetBlue restore confidence and ensure their evangelists remain loyal.

Have the people at Career Builder lost their minds? What the hell kind of Kool Aid are they drinking over there? They can’t possiblity be that stupid can they? In what has to be the most absurd of all reasons ever uttered publically, CareerBuilder put its account up for review today saying that the Cramer-Krasselt Super Bowl ads failed to rank in the top 10 in USA Today’s viewer poll. Yes, that’s what they said to C-K. The USA Today poll for God’s sake. A stupid poll that no one gives a rat’s ass about. That doesn’t reflect results, sucess or anything of any meaning whatsoever. But, because they didn’t make the top 10, they are putting the account into review. Lunacy!

Cramer-Krasselt president, Peter Krivkovich immediately resigned the account. (Good for him!) And sent out at an internal memo, summarizing his take on the split. According to AgAge, his memo reads in part:

“To our amazement, to our total astonishment, all that astounding business success was less important than one poll,” reads part of Mr. Krivkovich’s memo. “C-Kers, we have to tell you — in our entire history, hell in the history of this crazy thing called advertising, I’m not sure there has ever been any thing as baseless or as unbelievable as that. It’s so ludicrous and they are so serious about that poll it’s almost funny.”

“They wanted us to make them famous; we did that in spades (brand awareness up by 64% — even Millward Brown, the venerable research firm, said their brand-building model couldn’t explain such incredible growth). But the TV ads did not make the top 10 in the USA Today poll — a poll that everyone knows doesn’t mirror results (see the continuing Bud sales decline for one!) — they just told us they will do a creative review.”

“‘Wait a minute,’ we said, ‘what about the incredible growth that is going on, the shares, the revenue, the awareness, the two best internet sites ever, the massive buzz, etc, etc.? What about all of that? That’s huge.’

“‘Yes,’ they responded, ‘but you [C-K] didn’t get the top 10 in the USA Today poll.’ ‘Hold on … we crushed every possible business metrics/barometer for success. Out of all the metrics and polls, it’s all about this one? You have to be F’ing kidding, right!?’”

“‘No, that’s it. It’s because of the poll.’ That was about the extent of the conversation.”

In the ideal world the agency industry would take notice of this lunacy and just say “NO” should the Career Builder folks come knocking at their door. Sadly, given the millions that CB spends, that won’t happen. But it would sure be nice if the industry had some balls or even self respect.

Despite general perceptions that the DVR and video on demand were the nails in the coffin for the traditional TV model and the :30 spot, a new report from Nielsen Media shows that almost a quarter of the ads recorded by DVRs actually get watched.

I’ll admit it surprised me. I’ve had TiVo for years, and in my house we skip right through the commercials. But a Nielsen Media Research study showed that:

“During the first 27 hours after being recorded, primetime broadcast commercials gain 16% in ratings among viewers age 18-49 in households with DVRs, with the total increase reaching 22% after seven days. This compares to a 35% increase in ratings for broadcast programs during the first 27 hours after the original telecast and a total increase of 47% after seven days.”

So it’s not all gloom and doom for the traditional television advertising model, which is good news considering that DVRs are gaining in popularity.

eMarketer estimates that over a third of US households will have the devices by 2010.