Can three mostly unrelated stories make for a trend? They do in my head, anyway. Let's review.
First, I read in Fortune that former Philadelphia PR executive Brian Tierney will resort to layoffs at the Inquirer and Daily News, local papers that he and a team of investors purchased in May for more than $550 million. Tierney blames the troubles on a sharp reduction in advertising, including a massive 10% drop in September alone.
Second, The Wall Street Journal reports that Electronic Arts (Nasdaq: ERTS ) could see $4 million to $5 million in additional revenue during the holiday quarter from advertising in the video game Need for Speed: Carbon, which began selling earlier this month. And that's only 30% of the so-called ad "inventory" in the game, the Journal reports.
Third, and finally, the blog AdRants says that work is under way to re-create New York's Times Square in the virtual-reality game Second Life. Developers hope to be finished before the ball drops on New Year's Eve.
After reading all of this news, my wacky brain went on overdrive. I wondered whether Tierney's problem, EA's bonus, and Second Life's soon-to-be new resident were somehow the machinations of a Madison Avenue driven mad by the TiVo (Nasdaq: TIVO ) effect. Could it be?
Well, why not? Times Square does, after all, sport the world's most famous billboards. And on a worldwide basis, advertising generates hundreds of billions in total revenue annually. The push to digitize this business segment has created several success stories, including, of course, Google (Nasdaq: GOOG ) .
But my brain didn't immediately conjure the smiling faces of Larry and Sergey. Instead, I wondered about the specialist agencies that help to transform ad dollars into worthwhile digital pitches. Take aQuantive (Nasdaq: AQNT ) . Capital IQ reports that the agency-cum-technologist grew revenue by 40% and earnings by 47% in the past year alone. That's money that could have gone to Tierney by way of classic ad powerhouses such as Interpublic (NYSE: IPG ) , Omnicom (NYSE: OMC ) , and Publicis (NYSE: PUB ) .
And the shift may accelerate. With EA officially measuring ad inventory and Second Life sporting an economy large enough to attract the Internal Revenue Service, the virtual has never been more real for digital marketers.
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