Omnicom Group

Omnicom Group is among the world’s largest Advertising sector businesses in the world. Omnicom Group’s employees generate $881.3M in profits on $11.655B of revenue. Global output in the Advertising business will likely rise substantially over the next 10 years. Long-term economic growth may lift all boats, but Omnicom Group is determined to remain a market leader. Sectoral leadership in the Advertising segment takes dedication and consistency, but management seeks out-sized growth.

Omnicom Group’s ticker symbol OMC has recently been trading near $52.77 a share. The Omnicom Group corporate headquarters in New York NY predicts Advertising profits will satisfy shareholders in search of risk-appropriate returns.

The significance of market volume is sometimes ignored, but with a total market capitalization of $17.456B ensures sufficient liquidity. With a beta of 0.87, the company is less volatile than the market as a whole. When the average equity moves lower, Omnicom Group moves less aggressively.

Interpublic Group

Interpublic Group is among the world’s largest Advertising sector businesses in the world.  Interpublic Group’s employees generate $12.6M in profits on $6.223B of revenue.  Global output in the Advertising business will likely rise substantially over the next 10 years.  Long-term economic growth may lift all boats, but Interpublic Group is determined to remain a market leader.  Sectoral leadership in the Advertising segment takes dedication and consistency, but management seeks out-sized growth.

Interpublic Group’s ticker symbol IPG has recently been trading near $11.35 a share.  The Interpublic Group corporate headquarters in New York NY predicts Advertising profits will satisfy shareholders in search of risk-appropriate returns.

The significance of market volume is sometimes ignored, but with a total market capitalization of $5.322B ensures sufficient liquidity.  With a beta of 1.15, the company is more volatile than the market as a whole.  When the average equity moves higher, Interpublic Group moves more aggressively.

Aflac Incorporated

Aflac is in the business of selling insurance designed to meet needs that most insurance companies ignore. Most Americans are used to seeing a deduction from their paycheck each month that is used to provide health and life insurance coverage. But the rest of the insurance industry has largely neglected the hidden costs of sickness. When people can't work, they almost never still get paid. And many types of work such as sales that operate on a commission basis lose their luster quickly if not enough time can be devoted to keeping up.

Aflac's main differentiation with the rest of the industry is its focus on supplemental insurance policies that pay cash that can be used to cover incidental costs. Given the inherent difficulty of differentiation in the insurance industry, where all policies are essentially the same except for their price, it is astonishing that Aflac has been able to set itself apart.

The secret to Aflac's successful branding efforts has been a major advertising campaign starring an angry duck. The iconic commercials and related line of plush toys have earned a clear space in the nation's cultural consciousness. Unfortunately, Aflac's success will prove difficult to replicate overseas. Aflac's Japanese duck is friendly, reassuring and far less successful. If Aflac's success is the result of a unique cultural connection with its customers, the company is quite secure in the United States but vulnerable everywhere else.

Charles Schwab Corp.

Charles Schwab has profited primarily by riding the wave of financial innovation in the aftermath of the demise of traditional pensions. In a world where most workers need to save and invest independently in order to prepare for their retirement, Charles Schwab offers small investors the tools that just a few years ago were only available to the insiders.

The modern investing framework emphasizes independent financial advisers that provide objective advice that is then executed through an outside party in order to ensure that objectivity. While the emergence of the hedge fund industry has offered sophisticated investors an opportunity to trade aggressively, Charles Schwab provides all the tools that the average investor will ever need. Charles Schwab is the logical outside party to execute the average investor's trades and the company has seen impressive growth.

The discount broker business is at its heart a commodity business that aims to charge a low price for timely trades, yet many investors are willing to upgrade their services as they grow progressively more wealthy. Because of Charles Schwab's advertising presence, the company is particularly well placed to upgrade the accounts of its more than 7 million clients.

Yahoo

Yahoo's core business has been essentially flat ever since Google rose up to dominate its niche. Given the performance of most of Yahoo's competitors from the 1990s, Yahoo is an unabashed success story, but compared with Google, Yahoo is just another also ran.

Yahoo's board of directors seems to have finally figured out that something big needs to happen and it has undertaken a reorganization at the very top of the business. But the company's scatter-shot approach to the release of this information to the media and the absence of anything more than idle speculation lends credence to a reserved take on the situation.

Yahoo's new advertising platform has generated a great deal of attention on Wall Street, but Internet marketers know that Google has a stranglehold on this market. Without the ability to leverage search dominance in the same way that Google does, many analysts have suggested that Yahoo just outsource search to Google and concentrate its resources on a more profitable niche. Even a combination with MySpace is unlikely to give Yahoo the ability to beat back the behemoth.

Harley-Davidson

Harley-Davidson is one of America's most iconic brands. It is also a financial powerhouse. This is not a coincidence. By tapping into a deeply patriotic consumer base and aggressively marketing to new market segments such as women and professionals, Harley-Davidson has adroitly avoided the pitfalls that have beset so much of American industry.

Harley-Davidson has taken a product that for much of the last quarter century had superior foreign competition and crafted a marketing strategy that effectively allowed the company to survive. Harley-Davidson has managed its business so that today the quality of the competition doesn't significantly effect its bottom line. The transformation from cult status to mass-market monster is most impressive because of the almost total absence of brand dilution.

It doesn't make sense that aging Boomers and young punks alike would all look to the same product to validate their existence, yet this is precisely what Harley-Davidson has managed. Sturgis has gone from a rough and tumble biker hangout to an enormous commercial pilgrimage, and none of the core customers seem to mind.

In an era of rising fuel prices and stagnant disposable income with an ever expanding array of competing ways to spend entertainment dollars, Harley-Davidson has convinced Americans of all stripes to throw thousands of dollars at a status symbol that increasingly signifies no particular status. Or maybe that classless sameness is really what Americans have been looking for all along.

Overall Ad Spending Flat; Online Ads Continue Their Tear

CNNMoney.com reports that total ad spending fell 0.7 percent while online ad spending rose 16.7 percent in the first quarter. Television and radio both dropped over 2 percent but newspapers lost 5 percent of their ad spending.

The continuing transition from traditional media to the new digital communication medium is having larger impacts on society than sending Google shares soaring. The legal and ethical framework that control the way information is vetted and then conveyed via television, print, and radio simply don't work effectively online.

The ongoing implosion of the nation's newspapers is wrecking havoc on the traditional punditry. Fifty years ago, the vast majority of people read the Sunday paper and watched the evening news to get their information. Consequently, the information available to people was both much more homogeneous and significantly more limited. Now that a profusion of Internet news organizations and blogs offer more in-depth, more opinionated, and more questionable "news".

The information consumer of today is at once more informed and more misinformed than at any time in history. The ultimate effect of online communication is unambiguously positive, but the growing pains of the medium are potentially dangerous.

Companies like Yahoo stand to profit enormously from this long-term trend, but Google looks like the biggest near-term winner. With its unassailable lead in Internet search, Google controls the pathways most users travel to find information online. If no one defeats Google in its core business, Google will reach outward like a giant octopus to grasp for ad revenues across everything on the Internet. And while Google promises to do no evil, the temptation is only going to grow.

Adsense Arbitrage and Internet Advertising

The Computer Business Review Online is reporting that Google is shuttering the accounts of people who use Google's Adwords program to "buy" viewers and then direct them to websites full of high paying ads. Since on average only 1 or 2 viewers in a hundred clicks on an ad, these arbitrage opportunities only work when the price differential is fairly large. Apparently, savvy web developers have found lots of these situations. The best example of this situation is where the website purchases traffic related to "digital watches" very cheaply and then has many ads for Rolex watches which are worth a great deal.

Moral arguments about arbitrage in general aside, Google is foregoing significant revenue here in order to increase the quality of users' searches. Google makes money every time someone uses either Adwords or Adsense, effectively running both sides of this arbitrage for the website developer. Google is clearly gambling that the overall quality of the searches they provide to users is more valuable to their business than this revenue.

The real implication here, however, is that those engaging in arbitrage don't have a good alternative to use now that Google has shut them down. In particular, Yahoo! and Windows Live don't control enough of a fraction of the total web search market to replace Google. When Microsoft re-branded their search engine, they actually lost ground and Yahoo! has been unable to catch Google.

Advertising is turning into the second viable industry on the Internet, after the vices like adult entertainment and gambling. Hopefully, the Internet will be able to keep it clean.

Murdoch Bids for Dow Jones and the Wall Street Journal

Businessweek reports that Rupert Murdoch's News Corp. has offered a hostile bid for control of Dow Jones and Co., the financial information powerhouse, with a massive 66% premium. Most analysts covering Dow Jones business empire, which includes the Wall Street Journal, were previously under the impression that the company was fully valued at its old price of just $36 per share. That Murdoch was willing to offer $60 a share for a company firmly entrenched in the dwindling print media is astonishing.

Murdoch's high offer for the company will likely prevent most private equity companies from offering competing bids because even with the use of extensive leverage, it seems unlikely that the company could be flipped within a decade at a substantial profit. The beauty of Murdoch's bid is that the prospect of integrating the Wall Street Journal with his existing media assets at Fox and his upcoming Fox Business channel makes the company worth substantially more to him that to any other conceivable rival. The only competitor with the deep pockets necessary to fight back in a bidding war is GE/NBC which could engage in purely defensive bidding to try to protect its valuable CNBC franchise. Not very many people watch business news on CNBC, but the wealthy audience is an advertiser's dream and the resultant profits make it one of NBC's more valuable properties.

The only thing standing in the way of Rupert Murdoch is the family with a controlling share of ownership in Dow Jones and Co. The Bancroft family has made use of their two-tier ownership structure to resist many previous bids for control of the company. The company is structured in such a way that while the family does not own the majority of the company, their shares have extra voting power which makes their acceptance of any deal crucial. Nonetheless, not all of the Bancroft family is opposed to the bid and the prospect of an increased bid seems likely to convince enough younger family members to sell. The sale has provoked intense interest across the media because of its implications for the value of many other media properties. With print circulation in free-fall, if Murdoch can find a web-based strategy to leverage the "old media" into the future, he could save the fourth estate.

Of course, whether or not Murdoch succeeds in purchasing the Wall Street Journal is beside the point. The print media is dying as society simultaneously loses interest and moves online. The old subscription model of payment which enriched the newspaper business for so long must give way to a solely advertisement based system. In an era where information is free, eyeballs are still worth a fortune to advertisers.