Is the ad network dead?

By Jarvis Coffin

A change is imminent in the ad network space, and for planners and buyers, the change will mean the end of sameness.

I get a lot of telephone calls and inquiries from people who want to know what I think about the trend toward consolidation in the ad network space. Since I work for a network, I guess they want to know if the prospect of fewer, bigger players in the network space is a good thing or a bad thing.

The answer I give is that the ad network space is not consolidating, it is expanding. Indeed, I can't recall a time since 1995 when new networks have emerged as rapidly as they are today. They are not just plentiful and new, they are different, springing up around audience groups and content channels as off-shoots of branded media online, which is suddenly keen to tap the veritable long tail in a qualified manner.

The trend, I argue, is going to continue over the course of the next year, and most of what has qualified in recent memory as an ad network will vanish and be replaced by a more modern version with upscale features and requirements.

For all the planners and buyers who struggled to understand the difference between ad networks over the past couple of years, the change will mean the end of sameness. For all the web publishers who strung networks together in order to extract a living, it will mean the end of anonymity. We are having something of a renaissance online and the harbinger of change is the network.

The old ad network was the run-of-network, affordable reach version. It was the people's version, because while the rich few dined out on expensive positions and fancy creative, the ad network ladled out bowls of ad banners to a steady line of pedestrian traffic. Ad networks fed the workers.

The growing affluence online, however, is creating a stronger middle class among web publishers with middle-class tastes and upper-class aspirations. Standing in line for ad banners won't do. Recognizing this, savvy business owners with an appetite for growth of their own are beginning to cater to the discriminating needs of the emerging middle class and create spaces for them with well-appointed features and benefits.

These will be the new, specialized ad networks of the future. They will be wealthier and quite brand conscious. Some of them will wear labels from AOL, Disney or MTV, while others will appear in trendy California designer networks, and others in hand-crafted quality that is available only in small, expensive batches from New England.

The new ad network will care a great deal about its community. It will want the right sort of neighbors. It will shun suburban sprawl and large developments that remind it more of where it came from than where it wants to go.

All of this is ordained by a market that needs to grow. We expect delivery on another $30 billion of advertising over the next few years, and we must make sense of it in a way that consumers will recognize. More advertising clutter and banner blight will drive the population away. Online users must see value for themselves in the outcome of $30 billion.

The online caregiver, who must reconcile the internet user to advertiser, is the web publisher. As the market continues to grow, the desire and ability among publishers to improve their condition, and that of their users, will grow with it and they will align themselves with partners that yield improving results and, ultimately, value.

The proliferation of vertical networks shows how that value is already being calculated: relevancy. Only relevancy equates to the desires of both publishers and users at the same time.

Marketers will easily recognize the advantages for them with this new network landscape. Until now, they have relied on large, inward-looking places with generic appeal for all their needs. Going forward, there will be the chance to expand, to get out of town and mix it up with the boutiques on Main Street. Think Wal-Mart versus Starbucks and you can conjure the significance of new vertical networks -- and new media.

Since the beginning, the ad network has always been a highly adaptive model online. Pop-up networks, CPA networks, behavior networks, video networks -- the ad network has supported them all. Now, would you believe, the AOL Network?

As Wenda Harris Millard, president, media, for Martha Stewart Living Omnicom, said announcing the company's entry into the network space via Martha's Corner: "As internet users become more passionately engaged with lifestyle sites, we want to enable marketers to reach consumers in a targeted, niche environment."

Ah, yes. The ad network is dead. Long live the ad network.

Web widgets: connect the missing link

By Peter Kim

A successful widget should not only be entertaining and inline with content available on a given site, it should also fulfill ad serving requirements set forth by portals and publishers.

Advertisers aggressively are seeking new ways to reach elusive demographic segments online, fueling the explosion of widget marketing.

Widgets can be published on desktops, on personal web pages and shared virally. They can also be tracked and monitored. The opportunities for marketers are virtually limitless. Web widgets stand to become the Toyota Prius of the online advertising industry, with their ability to integrate new technologies and deliver excellent mileage, all in a very resourceful and drivable machine.

However, until recently, finding ways to effectively disseminate widgets have left many scratching their heads in search of a distribution model that makes sense from a business standpoint.

It appears it might not be enough to simply take a "build it and they will come" approach.

The challenge of portal and publisher requirements
Monetizing and effectively distributing widgets has proven challenging to date, but it becomes even more challenging given the specific requirements many of today's leading web portals and publishers employ.

While these entities have demonstrated they are eager to embrace the widget phenomenon, there are certain requirements they are not willing to compromise -- and with good reason.

At the top of the list is security. Portals and publishers alike have concerns over widgets that require users to input user name and password data, since that data is sensitive and thus subject to possible hacks or liability issues. The potential of security breaches and lawsuits, regardless of the level of security in place, simply has not made the risk of accepting these types of password-protected widgets worthwhile. This, in turn, has made distributing widgets all the more challenging for providers. Unfortunately, many of today's current widget providers don't offer the level of security needed to ensure safe dissemination.

The second requirement relates to many leading portals and publishers maintaining policies that do not allow fourth-party hosting of a widget, or any other type of online content for that matter. An example of fourth-party hosting would be a standalone widget provider who is not authorized to distribute content through the portals and publishers.

A key concern is that the party hosting the widget or content is not only a reliable host but will be able to manage, host and track the widget based on portal and publisher peak traffic levels and certification test requirements. Most do not want to go through certification of new fourth parties and prefer to have everything hosted, tracked and reported by the third party serving the ad.

The third requirement relates to specifications and policies. Portals and publishers need to ensure that specifications, site requirements and policies for their property are met during each campaign, regardless of the type of content going on their site. Multiple parties involved in the process -- creating the widget, hosting, tracking and distributing the widget -- will make it challenging to ensure the widget is within site requirements.

This presents a tall order to fill for widget providers that lack the experience or history of serving content to mainstream sites and portals, be it banner ads or beyond.

Enter rich media ad serving: the missing link
The widget future appears bright for third-party organizations that are already approved to provide sites and portals with banner ads and other forms of online content.

Rich media widgets provided by established third-party providers can serve as the effective missing link. Rich media widgets are web-based widgets that, at the same time, serve as rich media ad formats that can be ad served through a certified ad platform. Because of their ad compatibility, these widgets are served, hosted, tracked and reported through a single solution.

Similar to a banner ad purchase, marketers can distribute a widget across all sites and portals on their media plan, without having to worry about site kick-backs or launch delays. The learning curve is virtually nonexistent, and, as an added bonus, the trust with publishers and portals has already been established.

The bottom line is a successful widget should not only be functional, entertaining and inline with content available on a given site, it should also fulfill the complex ad serving requirements set forth by portals and publishers.

Compliant rich media ad-serving widgets placed on a variety of leading sites and portals enable advertisers to achieve the next level of widget success -- ensuring the widget is highly visible, easy to find and simple to "grab."

Peter Kim is founder and president of Interpolls. Read full bio

U.S. Ad Market Woes Mount

November 28, 2007
By Georg Szalai

NEW YORK Media and entertainment investors are growing increasingly worried about the outlook for the industry heading into next year, with the U.S. advertising market a key concern amid talk of a recession and several downgrades of ad spending forecasts.

Add in fears that underlying U.S. ad growth in 2008 will be anemic, and shares of advertising and media conglomerates are near 52-week lows as the year grinds to a close.

Goldman Sachs analyst Anthony Noto, who downgraded the entertainment sector to a "cautious" rating in September, followed with a report Tuesday that said there have been numerous company and macro-economic data points since then that "increase our conviction in our view."

Noto believes "that there will be a larger-than-expected slowdown in 2008 than what is reflected in current financial estimates" for many media and entertainment companies.

Analysts also cite other investor concerns besides ad sluggishness: a slowing home video market, tumultuous credit and equity markets that reduce the chances of big buyouts, and continued worries that technology giants like Google are eating media companies' lunch in the digital age.

"The biggest problem is slowly eroding expectations," said Lawrence Haverty, portfolio manager at Gamco Investors.

Shares of Time Warner on Tuesday closed up 2 percent at $16.62 after going as low as $16.17 intraday, below a recently set 52-week low of $16.27. Shares of Disney finished up at $31.72 after setting a new low of $30.68 intraday. News Corp. voting shares and CBS Corp. Class B shares also edged up, closing only slightly more than $1 above their recent 52-week lows. WPP Group, the world's largest ad and marketing agency conglomerate, saw its stock close at $60.11. Its 52-week low stands at $59.01. Fellow ad giants Omnicom Group and Interpublic Group saw their shares finish at $46.67 and $9.16, respectively, near their year lows of $45.82 and $8.69. (Click here for related story: "What Ad Stocks Say About the Economy.")

It is with this bearish background that major media and entertainment industry executives will appear in New York next week at the annual UBS Global Media & Communications Conference, where investors will look for guidance on the outlook for the ad market.

As always, attendees will closely follow the traditional ad spending projections by Bob Coen, director of forecasting at media agency Universal McCann, and ZenithOptimedia CEO Steve King. They will provide the latest estimates for 2007 and an early stab at 2008 after already having reduced their projections for the current year a few times.

Most have predicted a nice uptick in U.S. ad spending in 2008, thanks to the Beijing Olympics and the U.S. presidential elections. But some warn that a possible recession and oil prices of $100 or more could lead marketers to cut back on some underlying ad spending after the sluggish housing market already has hurt real estate advertising.

"The Olympics and election in 2008 will put a bit of a floor under advertising spending, but there will likely be a notable reduction anyway, especially from banks and mortgage providers on local TV," said Hal Vogel, longtime industry analyst and president of Vogel Capital Management. "Ad spending overall will be up only slightly and will be close to flat in real terms."

According to Vogel, the only truly bright spot is that the dollar is "so weak that ads for foreign products could be up quite a bit."

Citing the slump in the U.S. housing market and the recent credit crunch, ZenithOptimedia has downgraded its 2007 forecast for U.S. ad expenditure gains from 3.3 percent to 2.5 percent. At last year's UBS conference, King originally predicted a 4.1 percent increase for 2007, and his latest forecast may sink further next week.

Even more bearish, Coen said this summer that U.S. ad spending likely would only rise 3.1 percent this year, down from his original forecast of 4.8 percent.

Next year's U.S. ad growth should be more solid, Coen said this summer in his first forecast for 2008. U.S. ad spending would reach $305 billion, up 5 percent from his 2007 forecast, he said. Market watchers are waiting for his latest 2008 estimate next week.

All major prognosticators agree that growth in overseas ad spending will continue to exceed the U.S. rate of expansion, as it has done since 2003.

Total U.S. advertising expenditures for first-half 2007 slipped 0.3 percent year-over-year to $72.6 billion, TNS Media Intelligence, a provider of strategic advertising and marketing information, said. "For the first time since 2001, media advertising expenditures have declined for two consecutive quarters," said TNS president and CEO Steven Fredericks. He predicted more trouble in the back half of the year.

The Internet, which continues its strong growth trajectory, and in-cinema advertising are two of the few bright spots.

According to the Interactive Advertising Bureau, online ad spending for first-half 2007 reached nearly $10 billion, a record and a 27 percent increase compared with first-half 2006.

Radio, meanwhile, has come under increased pressure in recent months. The Radio Advertising Bureau reported revenue for first-half 2007 was unchanged at about $10.4 billion, thanks to healthy growth in such areas as concerts/ theaters/movies ads (plus 11 percent).

However, radio advertising declined 1 percent year-over-year each in July and August before slumping 7 percent in September.

Wachovia analyst Marcy Ryvicker recently predicted a 1.7 percent radio ad decline for 2007 as "media advertisers are moving dollars from 'old media' to the Internet."

Ad networks: moving beyond reach and targeting

By Rebecca Weeks


Real Girls Media's business development director reports on the latest ways interactive media executives are taking advantage of ad network benefits.

As the long tail gets longer and online behavior becomes more complex, media buyers are relying more heavily on ad networks to provide reach and optimization.

"Online networks allow you to scoop up thousands of pennies out there, like assembling your consumer. They have already assembled the inefficiency into efficiency," said Sean X Cummings, Ask.com's director of marketing.

But few executives fully understand the opportunities ad networks provide beyond simply aggregating the inventory of small publishers. Earlier this month at an event produced by San Francisco's Bay Area Interactive Group, 250 interactive media executives gathered to learn new ways to better leverage ad networks.

Pam Horan, president of the Online Publishers Association, moderated a panel that aimed to uncover various ways marketers are taking advantage of networks.

First up for discussion was the underlying purpose of ad networks, which have long been viewed by the buying community as pure direct response vehicles.

"In the past, we used them mainly for high volume, but now we're starting to use them for branding purposes. This requires experimentation to find success," said Scott Symonds, executive media director at AKQA.

Some of the networks have been trying to re-position themselves as having a strong offering for brand advertisers, but there isn't much proof of their effectiveness -- not yet at least.

"Is a network's transparency important to you?" asked Horan.

Panelists agreed that run-of-network transparency isn't a huge concern, and Cummings explained why the networks aren't voluntarily offering it: "A lot of networks are hesitant to divulge the list of their sites because they only have a few with recognizable names. I believe the sites with small reach are at an advantage because they are less content rich and therefore the user's eyes gravitate to the advertising. Or at least we hope they do."

As for optimization, Symonds said, "qualitatively driven campaigns take a longer time to build. Learning how to optimize is difficult. What's important is developing a custom universe of well performing sites."

"My biggest challenge with networks is pacing against our budget. They often over-deliver too early for fear that we won't roll over our budget," said Cummings.

Ad networks that don't place their client's needs first are certain to fail.

Differentiation is a must
With new and flexible systems like Adify, it seems every large media company these days is starting an ad network. So how can ad networks truly be differentiated?

hi5 Networks' Brett Finkelstein believes they can position themselves according to function and value: "We segment networks into four types of focus: media, widget, specialties (like geography) and premium -- for example, Hispanics are a really important target for us. And as a publisher, hi5 is getting a premium for non-user-generated content inventory at a 25 to 50 percent higher rate."

Vertical networks are seen as a great solution for clients because they aggregate special demographic or interest groups but most often can provide a narrow reach. Active Athlete Network, for example, allows brands to access athletes and sports enthusiasts, and Federated Media services bloggers. As another example, ad networks like Real Girls Media's allows marketers to reach a vertical within a vertical; advertisers targeting women can choose from nine different lifestyle channels that identify interest groups on DivineCaroline.com as well as on partner publisher sites.

"Exclusivity is another differentiator," added Cummings, "because non-exclusive relationships with publishers put a network at a disadvantage." But these days publishers are reluctant to sign exclusive contracts because they want flexibility to shop for the highest ad rates and try out various partner networks.

Networks offering behavioral targeting -- which operates under the assumption that which web pages users click on and where they go from those pages indicate at least a presumptive interest in buying products related to those topics -- are providing advertisers with higher value from lesser targeted inventory. For instance, brands with longer consideration products, like cars, tend to benefit from behavioral targeting. However, there is still much to be learned about its impact and potential: "I think we need to learn what strategic usage there is for a behavioral targeting campaign and to experiment more with it," said Symonds.

Many advertisers are finding that a combination of behavioral, contextual and demographic targeting can offer the best insights about their target audience. In addition, social networks are also working hard to support innovative concepts for advertisers. For example, AKQA developed a dorm room-related campaign for Target on Facebook, and ConAgra Foods approved an integrated campaign with cooking tips, a celebrity chef endorsement and a sweepstakes -- for its Pam cooking spray on DivineCaroline.

But not all brands should be eager to participate. One of the challenges social networks face is integrating into their communities all the types of brands that want exposure.

"The brands on hi5 must seem fun because by nature our platform is fun and entertaining for users," Finkelstein said.

Be informed before selecting an ad network
What are the key criteria to help buyers determine which ad networks to use?

"Two things: sales support and technology. The sales team must represent their publishers well and provide service that maximizes a client's impact," said Symonds. "They should act like a partner publisher and give general stewardship of the campaign."

This type of high quality service comes as a result of a team's understanding of a client's needs and business model, which can often be discovered through an initial proposal.

Cummings doesn't think technology is robust enough to make a difference when selecting an ad network. "I think the best networks will be those that obtain exclusive contracts with content providers. Not many networks have a lock on the content."

What is the next generation of ad networks?
Two new possibilities related to user re-targeting are sequential and 'avoidal targeting.'

"Sequential often takes too much work, but is worth it. You never really know whether the consumer consumed, but you have to do it quickly. Ads served days apart will never register. In fact, ads served mere hours apart is about the most distance you can afford for "Burma Shave" style messaging," said Cummings. "Avoidal targeting uses cookies to identify those consumers who actually will never be your customers so that you can stop serving them wasted advertising. Pass backs have always been promised, but the reality is that they have never happened."

Social networks may be primed to offer another promising strategy: calculating influence. Finkelstein added, "Purchase intent is being wrapped into influencers with viral impact. We want to know a user's connections and interactions because the level of their activity is a good predictor of how influential they are on community opinion."

Beyond these strategies, I personally suggest you consider ad networks that can offer integrated campaigns, customization and scale, new formats beyond the banner (sponsorships, contests, etc.), roadblocking, consultative selling and enhanced creative testing.

Seth Godin Interview - What's a Meatball Sundae? [SearchEngineWatch]

Seth Godin Interview - What's a Meatball Sundae? [SearchEngineWatch]

Microsoft Brings Social Networking Style Feature To The XBox 360

Microsoft Brings Social Networking Style Feature To The XBox 360

What brands really think about ad networks

Depending on your brand, ad networks can be a boon for your business or kind of a wash. Brands that need to reach a mass audience relatively cheaply say they are happy with the traffic they net on a network's hundreds or thousands of sites. But brands that are especially vulnerable to bad or confusing placement on sites, or want to cultivate a particular user, have to wade into the ad network depths with caution.

Quality placements, of course, are defined differently by different brands. But controlling your image and collecting clickthroughs can be done, say our online marketers. Nevertheless, they warn, overlap and the mass profusion of networks without clearly defined niches can make it hard to differentiate which one is the best buy.

Below, a panel of intrepid marketing professionals discusses how ad networks have worked for them, and what they are still waiting to see in online marketing's evolution.

1. Do you use ad networks? If so, why?

Kyle Sherwin, media director at Sony:
Ad networks are a ripe opportunity for our business in its current state, not only for economic reasons -- low entry costs and aggressive rates -- but also because they can address the special interests of our artists' fan base. Some networks have a host of specialized media properties that are very important for gaining credibility with a core fan base. For certain artists and products that appeal to a narrower fan base, we need to penetrate properties that are relatively undiscovered and can serve as initial points of influence for us.

Keith Pieper, director of performance media at Universal McCann, on online campaigns for client Microsoft:
Yes, Microsoft uses ad networks. We use ad networks primarily for volume and efficiency. We typically test how ad networks perform and then optimize based on performance against campaign objectives.

Valerie Constable, director of media at Kaiser Permanente:
We use ad networks for our individual plans, primarily. Health care has different types of insurance: corporate, small business and individual/family accounts. Our individual plan group at Kaiser Permanente is all direct response-oriented, so we use ad networks.

Katelyn Himes, manager of online marketing for La Quinta Inns & Suites:
We do use a number of ad networks for direct response campaigns. We find that they provide very efficient, targeted campaigns with low-cost, high-volume impression levels, and a lower cost per conversion. They also allow us to be present on a number of sites that we would not normally buy. Smaller sites can be aggregated together to drive scale, and larger sites are sold at a lower cost. Most networks also offer a CPA campaign, which can also be very efficient.

Correy Honza, director of internet marketing for Quiznos:
We've used them in our test markets for new products and we're planning to use them a lot more. We've done a lot of portal advertising but now, looking at the benefits of it, portals require a minimum spend. Ad networks are inexpensive and you get on thousands of sites. So we are checking out ad networks and see what they have to offer. It's also interesting how ad networks are getting into behavioral marketing. It's a slick way of communicating a message.

Dave Chase, CMO for AltusAlliance:
We're more focused on niche ad networks like Glam and Active Athlete Media than "buying ads by the ton" with traditional ad networks.

Katie McCormick, web manager at Revlon:
Yes, we do. In 2007, for our Mitchum Man deodorant, we chose the larger ad networks that had a lot of site traffic. We're planning now for 2008. Who knows where we will land?

Bill Daley, senior manager, interactive marketing for Universal Orlando Resort:
We use them because they are guaranteed targeted traffic to our website and we do the ad buy on a CPC basis. Also, we view the additional impressions to help branding and still track view conversions.

Sean X Cummings, director of marketing for Ask.com:
When you can't advertise on Yahoo!, AOL or MSN, as we can't, you have to find ways to get mass reach. We use a lot of different ad networks. Those brands that are smart are taking advantage of them. Most advertisers do not comprehend the power of online ad networks but are still buying media with old-school traditional thinking. For example, in offline, there is often an associative halo affect with brand name shows and properties. You buy on "Heroes" because your brand's association with the brand "Heroes" makes your brand, for a lack of a better word, cooler. You are one of very few advertisers during an immersive, commercial interruptive experience. This does not exist online.

So why are you paying the price premium for being on a portal or branded site? You used to buy on portals, and sites with scale, because you wanted more bang for your buck. Buying on smaller branded sites and assembling your consumer piece-by-piece required too much effort, too much trafficking and complex media plans. Those days are over. Online networks allow you to scoop up thousands of micro-consumers. It's not death by cannon fire but by a thousand cuts. The ad network has already assembled the inefficiency, into efficiency. Most brands do not understand this. They get convinced that they want to produce very rich creative. Most of that is wasted. Sure you need it, but as a supplement. The argument you often get is "Well, I want to be on that site with the $20 CPM. It's a much better property." Yes, it is, but it also has much better content. Why could that be an issue? First, their brand, the branded site, often overshadows yours instead of providing that halo. Second, what are people there for? Content not advertising. If you are on JoeBlow's blog, his content is not as rich. Where does your eye wander online when the content is not king? Advertising. Sure there are brands with very specific demographics that they need to reach, but often, even with colossal wastage, the online ad network is much more efficient. You get much better price-per-performance on networks. Why? Well, even if your creative performs better on the branded site, it will do so by about 20-30 percent for the same creative; but you get between 3 to 30 times better pricing on the network… you do the math. Unfortunately, or fortunately for us, most brands don't.

Author notes: Mira Schwirtz is a San Francisco-based freelance writer covering the culture and business of technology. Read full bio.

2. If you, either through an internal department or an agency, work with ad networks, are you happy with the placements your ads get through ad networks? Why or why not?

Keith Pieper, director of performance media at Universal McCann, on online campaigns for client Microsoft:
We are generally happy with ad networks. We have used almost every major network in the U.S., including Advertising.com, ValueClick, Tribal Fusion, Specific Media, 24/7 Media and Collective Media. Ad networks provide reach and are effective for retargeting, but we have found that consistency of service and cost effectiveness varies greatly between networks.

Katelyn Himes, manager of online marketing for La Quinta Inns & Suites:
Most of the networks we are working with are blind, so we do not have a strong understanding of where our ads are placed. We try to focus more on the targeting aspects rather than the sites. We generally ask for a sample site list, which usually lists the top tier sites within a given network. We do happen to see a lot of our ads throughout the web due to retargeting, and the placements typically seem to be desirable. We also monitor incoming traffic to our site, and it leads us to believe we are getting some good traction on several sites that we deem to be network traffic. We do plan on testing more open networks in the future so we can pick and choose the sites we are on. In terms of actual ad sizes available, there typically seems to be a wide variety.

Sean X Cummings, director of marketing for Ask.com:
This is a red herring question. We have a unique relationship in that we know many of the sites that our networks use. However, most networks protect their site lists from the advertiser. The important issue is to look at the performance of your various creative sizes. It's about the "mass" placements, not individuals as with a branded site. Don't pay attention if you run into a site that has a poor placement; the data of the "mass" will tell the full story. It really all depends on what type of business you are and what your goals are. Are you an acquisition-and-then-prevent-attrition model? Well, then, the conversion funnel is the most important for you. Getting users in that funnel, retargeting, converting and then loan-to-valuing on the back end. Are you instead a top-of-mind awareness model? Your measurement goals must be very different. You have to change the consumer mindset away from the ad. That is much more difficult and requires different measures. Basically the burden is on the client to develop the strategic measure that drives their business. If you deliver that strategic measure to your agency, they will find a way to get the ad networks that can optimize on it.

Valerie Constable, director of media at Kaiser Permanente:
We only use ad networks where we can use site selection because there are certain sites that would be inappropriate for health care. We're happy with the reach, which can be pretty extensive. And it's a way to get on some of the smaller sites that would be editorially appropriate but wouldn't make it on our radar.

Kyle Sherwin, media director at Sony:
We are generally happy because we work with open, visible, transparent networks. We will suppress any sites or categories that we don't want to be involved with.

Correy Honza, director of internet marketing for Quiznos:
It's an intelligent and economical way of reaching consumers, and we don't have to know about each site and its traffic.

Katie McCormick, web manager at Revlon:
We're happy with the placement for Mitchum Man.

Bill Daley, senior manager, interactive marketing for Universal Orlando Resort:
We work with an agency and we are very happy with the placements. They know where we want to be and where we don't.

3. If you're comfortable disclosing this information, which network do you use? Why did you choose it?

Sean X Cummings, director of marketing for Ask.com:
We've used every major network and constantly test new networks every quarter for performance. Not all ad networks are equal, and not all are equal for each business. A network that performs great for one client may tank for another; that is what surprises most brands. They hear a brand espousing the virtues of a certain network, try it out and their program tanks… and then think either they are doing something wrong, or the other brand does not know what they're doing. There is the illusion that because many networks can provide mass reach, that it means mass consumer. The type of ad placements within a group of sites will be quite diverse. Sure, you may be buying skyscrapers and leaderboards, but where they are on the page has as much influence as what site it is on. Those various combinations of the assemblage of sites within an ad network create a psychographic persona of sorts for that network. It is not about demographics, but psychographics, and the mindset of those consumers when they are on those grouped sites.

Bill Daley, senior manager, interactive marketing for Universal Orlando Resort:
The ones we use the most are Undertone, Specific Media, Advertising.com and Vendare. We also use the MSN Direct, which is like a network buy within the MSN sites. They work the best for us in regards to site conversions, and duplication of websites within these networks is minimal.

Valerie Constable, director of media at Kaiser Permanente:
We've used many including Tribal Fusion, Specific Media and Advertising.com. We apply some internal controls and calculate marketing costs per (potential) member. We've used more general networks, rather than health-oriented ones. Sometimes health content is applicable if we agree with it. We do contextually target, for example, expectant mothers, but we're just as likely to behaviorally target. We re-target too. We have a re-contact strategy that we've only been using for a few months, but we've already seen a significant lift.

Keith Pieper, director of performance media at Universal McCann, on online campaigns for client Microsoft:
Aside from niche networks and nuance features, ad networks in general offer a commodity product -- i.e. massive reach at a relatively low cost -- and they can scale fast. Aside from price, what really makes one network different from another is an understanding of our needs and business, which comes down to service. In our experience, service is a differentiator between ad networks.

Kyle Sherwin, media director at Sony:
We've used Specific Media, Collective Media, Undertone Networks and ValueClick. Other companies like Gorilla Nation that are not technically networks also serve similar functions for us. We have used Advertising.com but since they're not transparent, we've shied away more recently. For a more broad-based artist, we'll use networks with the most popular sites (i.e., Comscore 100 or 200). Sometimes we'll work with networks with thousands of sites because they have properties that attract the right influencers and specialized music genres.

Katelyn Himes, manager of online marketing for La Quinta Inns & Suites:
Without giving away too many secrets, we work with some of the top networks out there and continuously test new opportunities.

Katie McCormick, web manager at Revlon:
We use ValueClick and Advertising.com because they are the best known and came to us with the best proposals.

4. What is your biggest fear about relying on ad networks for the placement of your ads? How have you tackled this?

Keith Pieper, director of performance media at Universal McCann, on online campaigns for client Microsoft:
One of our primary concerns is consistency in performance. Like any good performance-based buy, we'll buy a little from every network to spread our risk then reallocate funds to the ones that perform best.

Valerie Constable, director of media at Kaiser Permanente:
Inappropriate content. We site-select and we have guidelines we provide, but the reality is with the way networks are set-up, we don't have as much control as we'd like.

Katelyn Himes, manager of online marketing for La Quinta Inns & Suites:
Our biggest fear is conversion duplication across networks. If you are using multiple networks, you need to make sure you have a mechanism for de-duping conversions whether it is through an ad server or another method. Also, creative wear-out. With so many impressions served, you have to be careful not to become the advertiser that is considered annoying. Carefully plan your creative variations and frequency caps.

Sean X Cummings, director of marketing for Ask.com:
As with UGC, there is a much higher degree of uncertainty of the content you will be placed next to. Ignore it. Many clients do knee-jerk reactions to a single ad placement; they fear some overly conservative person will get offended by the content it is next to. You are not endorsing that content, and it will always be in the vast minority of placements. Online is not offline where there is an implied endorsement because it is almost always a branded property. When only one in 10,000 people clicks on an ad, and only a moderately better proportion see it and come to your site, it is too transient to get worked up about. If you do, you'll spend your entire time justifying the people barking at the moon and not doing your real job. If you are too fearful then just stay in your little bubble on branded sites, and watch me outperform you.

Kyle Sherwin, media director at Sony:
Invisible networks may be a suitable fit for credit card companies that want to attract huge audiences. We are a micro marketer and need to know where every penny goes. So we're looking at networks with specified points of interest for us.

Correy Honza, director of internet marketing for Quiznos:
Are they able to deliver the impressions they promise? For us, it's about dollars and cents and reach.

Dave Chase, CMO for AltusAlliance:
We only work with transparent ad networks and ones that refuse to use pop-up ads.

Katie McCormick, web manager at Revlon:
Our biggest issue is the use of celebrity sites because we don't want our celebrity models (for example, Halle Berry) to appear next to a competitor's talent in an editorial mention and confuse consumers.

Bill Daley, senior manager, interactive marketing for Universal Orlando Resort:
Our biggest fear would be complaints by consumers if they saw one of our ads on a site that is controversial or inappropriate. Over the years I can only remember this happening once.

5. If you don't use ad networks, why not?

Dave Chase, CMO for AltusAlliance:
Our use has been limited as we are interested in creating brand associations with our ads rather than just buying ads by the ton.

6. What would ad networks have to change about the way they work in order to attract a client like you?

Keith Pieper, director of performance media at Universal McCann, on online campaigns for client Microsoft:
Price and scale are the primary factors for including ad networks on media buys. However, it would be nice to see additional differentiation in product offerings. For instance, we have yet to see a major B2B ad network out there. Or how about a custom ad network for each advertiser based on a vertical niche?

Valerie Constable, director of media at Kaiser Permanente:
Because we're a regional player, we geo-target, so ad networks have to have geo-targeting and site selection. Being able to have more to say on where we are placed on sites would add value. Oh, and of course customer service is very important. We love when reps educate us about their new opportunities so we can take advantage of them and be included.

Katelyn Himes, manager of online marketing for La Quinta Inns & Suites:
As a brand, I speak to about one new ad network per day, and with so many choices out there, it can get very overwhelming. Ad networks need to find a niche. All ad networks claim to have the same value proposition: "Quality traffic, enhanced targeting, account management teams, best inventory, etc." The truth is that the overlap across most major networks is between 60-80 percent or more. With that in mind, ad networks need to take the time to stop the battle and demystify the landscape. What are the true differences outside of what everyone else is saying? In speaking for all other brands out there, if we had a list of all ad networks in one place with the true unique core competencies of each one, it would really help brands holistically understand the uniqueness and pros and cons of each network. I encourage the networks out there to take up this challenge.

Kyle Sherwin, media director at Sony:
We can't know with full confidence that we're getting equal distribution on all the sites within a network, so we need better auditing on a property-by-property basis. But it's a trade-off because we're working with remnant inventory that has its financial advantages. Beyond that, I think networks will have to start organizing segments of unique real estate outside of traditional media placements or offer custom programs that will give us the creative or specialized presence we're looking for.

Correy Honza, director of internet marketing for Quiznos:
It's hard to muddle through all the different ad networks because it seems like there's a new one created everyday. They need to promise a certain number of impressions.

Dave Chase, CMO for AltusAlliance:
By providing the best of both worlds: reasonable ad prices and reach with quality sites.

Katie McCormick, web manager at Revlon:
The problem is there are so many ad networks that it's hard to differentiate between them.

Getting More Mileage from E-Mail Metrics

NOVEMBER 26, 2007

Short-term focus, long-term results.

Nearly all e-mail marketers measure their campaigns, but many do not use the results to support their budgeting goals, according to EmailStatCenter.com's "State of Email Metrics" survey, sponsored by Campaigner.

More than one-half of respondents said they measured results 24 to 48 hours after deployment. However, fewer than one-fifth said they measured their annual results. “Marketers must continually evaluate and benchmark their campaigns, in addition to looking at them immediately after the send,” said Luc Vezina, vice president of marketing at Campaigner, in a statement.

Although e-mail campaigns were usually measured for success, only one-half of e-mail marketers said they used the metrics for budgeting or forecasting.

Respondents had a range of e-mail marketing budget amounts, but the greatest number of marketers (31.7%) budgeted less than $50,000 annually. More than one-fifth did not know their budgets.

In 2007, more online marketers planned to increase their budgets for in-house e-mail lists than for any other online ad tactic except for search marketing, according to MarketingSherpa.

The numbers suggest that customer retention took priority over acquisition, as only 10% of respondents said they planned to spend more for e-mail to third-party lists.

CPG Starts Thinking Outside the Box

NOVEMBER 26, 2007

Virtual shelves, real customers.

After decades of relying on television and print advertising, US consumer packaged goods (CPG) marketers are finally moving a larger proportion of their marketing budgets online.

This year, eMarketer projects that CPG companies will spend $920 million on all forms of Internet advertising, up 33% over 2006.

By 2011, CPG advertising online will hit $1.8 billion, for a compound annual growth rate of 20.9%.

"Although the increases are impressive, they have been years in the making," says Lisa Phillips, eMarketer Senior Analyst and author of the new report CPG Online: Health & Beauty Go Interactive. “Of course, consumer behavior is the driving force behind the spending changes.”

Consumers are going online to search for and research CPG products and then discussing them on blogs and social networks.

“But consumers are not just browsing for promotional offers and coupons,” Ms. Phillips adds. “They are buying CPG products online.”

To take the health and beauty category as an example, Forrester Research expects online sales of health and beauty products to reach 14% of total revenues in 2010, versus 5.6% in 2006.

“The CPG industry as a whole is suddenly bullish on the Internet,” Ms. Phillips says.

In the first half of 2007, eMarketer estimates Internet advertising by CPG companies grew 39.5% to $430 million, compared with just $310 million in the same period in 2006.

That follows a year in which CPG Internet advertising shot up 117%, to $700 million—far higher than the $470 million eMarketer had predicted.

“Media-channel spending shifts in CPG mirror the changes taking place in many other industries,” Mr. Phillips says. “Automotive, financial services and pharmaceutical advertisers are all cutting ad budgets for traditional channels in favor of digital communications with consumers.”

Video Fix: Super Suit Gets Serious | Danger Room from Wired.com

Video Fix: Super Suit Gets Serious | Danger Room from Wired.com
Raytheon, the giant defense contractor, recently bought up Utah technology firm Sarcos' robotics business. And it wasn't because of Sarcos' work on the Bellagio's fountains, I suspect. For years, Sarcos has been working for the military on real-life exoskeletons, to radically boost soldiers' strength.
Here's a video of a Sarcos exoskeleton in action.

Canadian Online Ad Spending Heats Up

NOVEMBER 21, 2007

Canadians really “get” the Internet, but ...

“Canada’s online development has been a paradox,” says Karin von Abrams, eMarketer senior analyst and author of the new report Canada Online Advertising. “The country has one of the best broadband infrastructures in the world and higher household Internet penetration than the United States.”

“The online population is engaged, tech-savvy and independent-minded. Canada is home to a cutting-edge computer games industry, assisted by substantial tax breaks. The size of the country and its pioneer heritage encourage efficiency and progressive thinking,” says Ms. von Abrams.

“Yet Canadian companies have generally been slow to advertise online.”

According to a number of sources, Internet advertising and marketing accounted for little more than 5% of total advertising spending in Canada in 2006.

“This in a nation where three in five online homes used a broadband connection, at a time when Internet users spent more than 13 hours online each week,” says Ms. von Abrams.

Admittedly, Canada’s entrepreneurs tend to be cautious. Given the country’s small population, audience size and ROI are crucial. Advertising dollars need to work hard, and many firms have held back from online experiments to focus on media they know. But the situation is finally changing.

In 2006, spending on Internet advertising in Canada rose by 80% and passed the C$1 billion (US$894 million) mark for the first time.

eMarketer projects that online advertising spending will pass C$3.0 billion (US$2.44 billion) by 2011—roughly tripling its value in 2006.

“The shift is underway,” says Ms. von Abrams. “Canada’s agencies and in-house marketers are honing their skills in digital channels. Leading Canadian content owners are increasingly forming partnerships to make the most of their assets online. And it is easier than ever for the country’s advertisers to use the Internet effectively.”

For more on what’s going down up north, read the new eMarketer report, Canada Online Advertising, today.

Will the Credit Crunch Inflate the Internet Bubble?

Will the Credit Crunch Inflate the Internet Bubble?

Professional social network PartnerUp has surveyed 862 real estate, mortgage, and financial workers about their intent to start their own businesses following this summer’s subprime mortgage financial crisis.

The results are thought-provoking

Keys to differentiating ad networks

What can an ad network do to make itself stand out in a sea of undifferentiated companies? Underscore Marketing's president has some ideas.

Almost every time I have gathered together with my buy-side industry buddies in the past few years, I've heard the same complaint. There are new ad networks launching seemingly every day, but none of them seems like its own animal. Many of them have "proprietary" targeting, ad management, rich media and reporting technologies that everybody else seems to possess, too. Their names are even beginning to run together.

Lack of differentiation among networks is a common gripe. It's so common that I've been hearing reps from networks acknowledge openly in meetings that they need to position themselves differently with respect to their competitors, and they wonder aloud how they might do it.

I have some suggestions.

• Guarantee placement: Running an advertiser out of network or in places the advertiser's brand specifically forbids is a common (and underhanded) tactic. Even if your network never does this, plenty of other networks do. They get caught often. The result is usually a blacklisting. Over the years, so many war stories have been traded back and forth about nightmarish placements that almost every network has been tarred with the same brush in this regard. So why not guarantee placement? If an advertiser runs outside a pre-approved list of sites or placements, they get the month's flight free.
• Show what a media buyer can't get when he leaves your network off a buy: Highlighting inventory or unique reach that's accessible only through a buy with your network makes sense. If you have exclusive relationships with sites, buyers need to know that. If you have unique reach against a specific demographic, interest or behavior that media buyers are trying to target, they need to know that. It counts for a lot when buyers are sitting in front of their comScore interface trying to find ways to extend unique reach. I haven't seen too many networks successfully advertise this, although ValueClick recently demonstrated its unique reach versus other networks in an article and the details managed to lodge themselves in my brain.
• Show off your optimization chops: Countless networks claim to be experts at optimization, or to have proprietary auto-optimization black boxes. Well, show me -- don't tell me! Pick a metric, then run some control impressions that are representative of the buy sans optimization. Then do your stuff and show me the difference between what I get when you optimize buys versus what I might get if I let the buy run without optimizing.
• Lift the curtain on behavioral targeting: Simply saying you're able to target by behavior isn't enough. Buyers are smart enough to know that the more data you have and the more data points you're able to take into consideration, the better targeted the ads are going to be. Give me a one-sheeter that shows me all of the data points and variables I can use to target ads. Not only will it show how you compare to other networks, but it might give me an idea for a campaign.

I see a lot of presentations and sit in on a lot of meetings with ad networks. By and large, they seem to be telling me things as opposed to showing them to me. I think that if networks put their money where their mouths are, they would be able to get a lot more traction behind the notion of separating themselves from their competitors.

Web Site Spending Draws Ad Dollars

NOVEMBER 15, 2007

Central meeting grounds for companies and consumers.

While Internet advertising may get more attention these days, online marketers also recognize the importance of their own Web sites, according to a SDL Tridion-sponsored study conducted by PK Data.

Nearly six in 10 marketers said that the Web was critical to their global brand and marketing strategies.

"Companies spend immeasurable billions on their Web sites," said David Hallerman, senior analyst at eMarketer. "In most cases, without those central meeting grounds for companies and consumers, all the measured billions spent on online advertising such as paid search—which looks to drive traffic to company sites—would be for naught."

According to 79% of the marketing executives surveyed in 2007 by McKinsey, a company’s consumer site was the primary online channel used to sell products or services.

Even when not used directly for e-commerce sales, company sites were used to entice consumers by providing product and service information, to engage their sensibilities with the brand and to obtain their e-mail addresses for further marketing interactions.

Consumers also generally trust ads they find on company Web sites, according to a Nielsen study. Six in 10 consumers said they trusted ads on brand Web sites. Only word-of-mouth, newspapers and consumer opinions posted online scored higher.

Marketers' focus on sites is not just maintenance. Mr. Hallerman said that Web-based customer contact is one of the reasons spending is shifting away from advertising media, along with product integration (also known as product placement).

"Ad spending growth will be soft in 2007 as a result of these shifts, at only 2.1%," Mr. Hallerman said.

Bringing ISPs Into The Behavioral Mix

by Phil Leggiere, Wednesday, Nov 14, 2007 1:45 PM ET

Once the vital center of the Internet eco-system, Internet Service Providers are now more frequently looked at commodities, marginal if not entirely irrelevant to the emerging future of Web advertising. Yet, as Bob Dykes, CEO of NebuAds explains below, ISPs are a crucial, still largely untapped, component of a behaviorally based advertising infrastructure. Behavioral Insider: How does NebuAds work with ISPs in behavioral targeting? Bob Dykes: We started out with a very unique orientation. The challenge we set ourselves was to add value to ISPs and publishers of currently untargeted inventory, which includes about three-quarters of all current ad impressions. ISPs have been a neglected aspect of online's evolution over the past several years. But the fact is the depth of aggregated data they have to offer, anonymous data, is an untapped source of incredible power. In an era when cookie deletion is becoming more and more common, it's also more reliably continuous data. BI: How does the personalization and behavioral methodology you've evolved differ from what most of us are familiar with? Dykes: The conventional approach to behavioral targeting has been to place cookies on specific Web sites or pages. We've gone about it in a very different way. We place an appliance in the ISP itself. Therefore we're able to get a 360-degree, multidimensional view over a long period of time of all the pages users visit. So what we're really talking about for the first time is a truly user-focused, though still anonymous, targeting, taking the totality of anonymous behaviors rather than just a subset of sites on a network. BI: It seems at first glance this could open up a Pandora 's box of privacy problems. How do you avoid that? Dykes: We've had the advantage of coming onto the scene relatively recently when concern about privacy was growing. So we've architected our targeting platform from the ground up to addressing privacy concerns. For one thing, in addition to being committed to only using anonymous data, we have developed a privacy guidelines list which includes providing consumers with robust notice and choice such as instruments for opting-out of ads. BI: So tracking is not by individual identifiers? Dykes: We don't track individual consumers. We set up a taxonomy of commercial interest categories, for instance, ‘Porshe SUVs,' and simply keep track of content interests. We exclude data from sensitive areas, say sex sites or HIV Drugs. By anonymous we mean we collect no personally identifiable email addresses, last names, home addresses, social security or phone numbers, financial or health information. The kind of data we do aggregate includes Web search terms, page views, page and ad clicks, time spent on specific sites, zip code, browser info and connection speed. BI: How does the granularity arise? Dykes: Within this vast universe of information we create a map of interest categories, beginning with the widest definitions, auto, finance, education, what have you. But within those we can provide far greater granularity. So if you're talking about auto, we can drill down into particular interest segments, say SUVs, luxury cars, minivans, and then even to particular brands or models. Within the interest category of travel, we can identify consumers interested in learning about Martinique, the south of France or Las Vegas. Most interest categories age fast, of course, so one very critical component of analysis is identifying optimal cycles for reaching customers in each area. For flowers, say, there's a cycle that's at most hours in which to reach an interested consumer. With auto, obviously, the cycle is far more complex and includes several phases stretching out over days or weeks. By having a far more comprehensive view, from an ISP rather than site by site vantage point, we can identify from the highest level to the minutest level where consumers are in the funnel. BI: What's the key advantage for advertisers? Dykes: The advantage of having a more granular picture of user interests for an advertiser is that they have the capability to adjust and vary creative to suit customer interests. That's an incredible opportunity that often takes brands and agencies some time to really wrap their heads around. When we work with media buyers we educate them that targeting isn't only about serving your message to the most appropriate consumer prospects, but about serving those prospects the most interesting and relevant creative to get those messages across. It can be as simple as an iced-tea advertiser knowing whether and when to serve a creative using snowboarding or windsurfing. A more complex example would be, say you're an advertiser of high-end clothing and you're serving an ad to a woman who's very interested in high-end clothing and accessories and is on MySpace. Instead of just serving the same ad for Fendi handbags several times, you can serve a series of ads with different varieties of handbags. The notion of retargeting as conventionally deployed is very limited. You need to mix up different types of creative or it gets boring. Another advantage of having a more comprehensive set of data points is that advertisers can learn to better mix their ads in an optimal sequence to match consumer interests according to where they are in the buying cycle. They can learn to know when to serve a first impression which is very soft-sell, when to provide more detail and invite more engagement, and, finally, when to really try to drive a transaction. This not only provides more variety but integrates creative, marketing strategy, consumer interest and the product sales cycle in much stronger alignment.

Shops Stand to Lose in Digital Revolution

November 14, 2007
By Brian Morrissey

Agencies have the most to lose in the new digital order, even more than broadcasters, per industry leaders surveyed by Accenture.

NEW YORK Changing consumer habits, driven by the shift from analog to digital media, are revolutionizing the ad industry. But that could spell bad news for agencies, according to a new study by Accenture.

According to 70 industry leaders surveyed by Accenture, agencies have the most to lose in the new order, even more than broadcasters. When asked who would fare worst in the transition to digital advertising, 43 percent said agencies, compared to 33 percent who answered broadcasters. Cable operators were third with 10 percent. No respondents chose search companies or digital ad specialists.

The challenge agencies face stems from the rise of performance-based advertising and the technology tools needed to execute highly targeted campaigns, rather than mass-media pushes fueled by a singular "big idea," according to Charlie Symmons, senior manager in Accenture's media and entertainment practice.

"It used to be content was king; now it's very much context is king," he said.

For that reason, Accenture sees a threat to agencies from technology companies, which can provide the tools that allow clients to better know their customers. This could displace agencies' value to their clients, the report warns.

Accenture interviewed 70 advertising "decision makers" around the world from February through April this year. Respondents included executives from agencies, media companies and technology providers.

The consulting firm found 50 percent of respondents believe digital media would be the primary form of content and advertising delivery in the next five years. Over 80 percent think it will happen within a decade.

With that shift to digital, the survey found that advertising is undergoing a fundamental shift to become more accountable, Nearly four-fifths of respondents expect advertising will become more performance based, while 87 percent believe analytics will play a critical role.

Yet traditional advertisers are pessimistic they have a good grasp of the tools needed to operate in this landscape. Over 70 percent said the industry is not "technologically prepared for the resulting changes in performance measurement."

"People felt the complexity had grown over the last few years," Symmons said. "It's harder to target and track and develop campaigns."

While ad agencies were not expected to gain from these shifts, 46 percent thought search companies and 19 percent said digital ad specialists had the most to gain.

'Social-Shopping Study' Defines New Breed of Shopper: The 'Social Researcher'

Shopgirl can search, too

A new breed of online shopper, the "Social Researcher," who places increased significant emphasis on peer feedback in product reviews when making purchasing decisions, is the focus of a recently completed study by the e-tailing group, writes MarketingCharts.

The Social Shopping Study 2007, commissioned by PowerReviews, surveyed 1,200 consumers who shop online at least four times per year, spending $500 or more annually.

The study sought (1) to understand how online shoppers use reviews to make informed buying decisions, and (2) to explore consumers' preferences and interests in "Social Navigation" - or the ability to narrow product selections based on reviews from like-minded people with similar interests.

Some 70 percent of all online shoppers said customer reviews and ratings on a retailer's website were extremely or very important when they are selecting and purchasing products, followed by 62 percent citing a top-rated products list (as rated by customers):

Among the respondents, 65 percent were identified as Social Researchers - consumers who actively (always or most of the time) seek out and read customer reviews prior to making a purchase decision:

Social Researchers were found to engage in the use of reviews across all behavioral areas at a rate 20 percent higher than average online shoppers:

• 86 percent of Social Researchers find customer reviews extremely or very important, vs. 70 percent of all online shoppers.
• 76 percent of Social Researchers find "top rated product" lists to be extremely or very important, vs. 62 percent of all online shoppers.
• 64 percent of Social Researchers research products online more than half the time, no matter where they buy the product (store, web, catalog, etc.)

How online shoppers, particularly Social Researchers, perceive Social Navigation was also examined:

• Some 82 percent of Social Researchers (vs. 75 percent of all online shoppers) found reading reviews better than researching a product in-store with a knowledgeable sales associate.
• 76 percent of Social Researchers (vs. 69 percent of all online shoppers) are more likely to shop on a retailer's website - vs. its competitor site - if it offers social navigation.
• 75 percent of Social Researches (vs. 64 percent of all online shoppers) found it extremely or very helpful to narrow product selection based on feedback from people like them (with similar interests).

Online Ads Nip at Traditional Media

NOVEMBER 13, 2007

The Trad Four are treading water.

Internet advertising contributes more to total media spending every year.

According to eMarketer projections, that share will reach 7.4% in 2007, more than one in 10 dollars in 2009 and at least 13.3% by the end of 2011.

"Shifts among marketers away from traditional media would make US advertising growth flat-line without the Internet," said David Hallerman, senior analyst at eMarketer.

The Internet's share of ad spending has gained over radio's share in particular, according to TNS Media Intelligence. The research company's data for the first six months of 2007 showed radio with 7.1% of US ad spending, compared with 7.6% for the Internet.

TNS does not count paid search, which accounts for 40% of the online ad market. If paid search were included, the gain over radio ad spending would be even larger.

The increased spending on online ads is coming from a mix of additional allocations and budget shifts from other media, and TV may be in for the largest losses.

Among the largest companies, 42.4% of marketing executives told BusinessWeek that TV would take the biggest hit in ad budgets in the next few years.

Considering that total TV advertising in 2007 will range between $67.8 billion (Universal McCann) and $75 billion (Morgan Stanley), a 10% spending shortfall would represent about $7 billion.

"However, all that money is not going onto the Internet," Mr. Hallerman said.

Online Ads Nip at Traditional Media

NOVEMBER 13, 2007

The Trad Four are treading water.
Internet advertising contributes more to total media spending every year.

According to eMarketer projections, that share will reach 7.4% in 2007, more than one in 10 dollars in 2009 and at least 13.3% by the end of 2011.

"Shifts among marketers away from traditional media would make US advertising growth flat-line without the Internet," said David Hallerman, senior analyst at eMarketer.

The Internet's share of ad spending has gained over radio's share in particular, according to TNS Media Intelligence. The research company's data for the first six months of 2007 showed radio with 7.1% of US ad spending, compared with 7.6% for the Internet.

TNS does not count paid search, which accounts for 40% of the online ad market. If paid search were included, the gain over radio ad spending would be even larger.

The increased spending on online ads is coming from a mix of additional allocations and budget shifts from other media, and TV may be in for the largest losses.

Among the largest companies, 42.4% of marketing executives told BusinessWeek that TV would take the biggest hit in ad budgets in the next few years.

Considering that total TV advertising in 2007 will range between $67.8 billion (Universal McCann) and $75 billion (Morgan Stanley), a 10% spending shortfall would represent about $7 billion.

"However, all that money is not going onto the Internet," Mr. Hallerman said.

Web spending hits new record in third quarter

Story last modified Mon Nov 12 15:48:02 PST 2007

U.S. Internet advertising revenue rose 25 percent in the third quarter to about $5.2 billion, a new record, according to data released on Monday.

The report by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers showed that online advertising revenue has hit new highs in each of the first three quarters of 2007.

Revenue for the first nine months of 2007 totaled $15.2 billion, up nearly 26 percent from the $12.1 billion recorded during the first nine months of 2006, the report said.

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"The continued robust growth of the industry indicates that marketers increasingly understand and appreciate the benefits of interactive advertising," IAB Chief Executive Randall Rothenberg said in a statement. "Marketers large and small have come to accept digital media as the fulcrum of any marketing strategy."

The boom in online advertising has driven media and technology companies to build up their online advertising businesses, partly through acquisitions.

Among recent deals, Google agreed to pay $3.1 billion for ad-serving and tracking company DoubleClick, while Microsoft bought online marketer Aquantive for $6 billion.

The Four Pillars of a Distributed Web Strategy

My interest in distributed web businesses – web businesses that don’t reside on a single domain, but instead span across various web sites – stems from necessity.

While the long tail of the Web is getting longer, so is the percentage of overall pageviews absorbed by the head of that tail. If your site isn’t one of those elite sites at the head of the curve, you’re most likely losing ground every day.

In this environment, you either find ways to put your content / functionality / service in front of people where they are, or you wither away into irrelevance.

At a macro level, there are four broad strategies that can be undertaken to get distributed.

Widgets

Widgets have been covered in excruciating detail on this blog. The short version: have a stable of Flash widgets available to your users that your makes your site’s best content and functionality available “to go,” at the whim of anybody who hits your site, and at the whim of anybody who comes across one of your widgets in the wild.

Here’s my list of best widget resources.

Toolbars / Extensions / Downloads

Not to sound idiotic (which this does), but another place that Internet users spend a lot of time is in their browser or on their desktop.

If you can convince your users to add a plug-in / toolbar / extension to their browser, your service is going to be front and center in these folks’ browsing experience. From a distributed perspective, it doesn’t get much better than this.

The challenge, of course, is that a download is a big obstacle to adoption. Not that this is an impossible task – StumbleUpon is a great example of a company that rode a browser extension to mass adoption, and eventually, an acquisition.

I’d also include downloadable clients in this bucket. Stuff like Last.FM’s audioscrobbler and Meetro’s IM client are both good examples of download powered distribution.

APIs

APIs, or Application Programming Interfaces, allow outside developers build on top of your application, and typically involve creating modular blocks of your site’s functionality or content that can be called into use by other sites.

APIs are not as accessible as widgets, as only developers can make use of them. However, APIs can enable broad, site wide adoption of a web service. For example, when my employer decided to use the Yahoo! Maps API to add maps to our local business reviews channel, in one fell swoop we added about 1M Yahoo! maps to our site.

Facebook Apps

With more than 30M active profiles, and a unique opportunity to distribute your web application via the social fabric of existing networks of friends, Facebook has become a distribution channel all its own.

I was initially skeptical about some aspects of the Facebook platform – but no longer. I see a Facebook distribution strategy as an absolute must have for just about any consumer facing web app.

The best post that I’ve seen on Facebook App tips can be found on Inside Facebook.

Conclusion

While coverage of each of these four distribution buckets may not be appropriate for every consumer facing company, it’s interesting to take a look at some of the leaders in distributed business strategy and see what they’re doing in each area.

So is anybody knocking the ball out of the park on all of these distribution elements?

StumbleUpon has millions of downloads of their toolbar, but “only” 7,000 FB app users.

Adaptive Blue (review) has an impressive toolbar and stable of widgets, but no Facebook app or API that I could find.

Yelp has a newly released API, a stable of widgets, and a Facebook app (3,000 users).

The companies that seem to really have distributed business strategy down are some of the original MySpace era widget kings. Slide has massive traction on Facebook, massive widget traction on MySpace and elsewhere, and a toolbar.

Likewise, RockYou has massive Facebook traction, huge widget distribution, and a Facebook API.

Photobucket has incredible widget traction, a custom browser, and Facebook App (16K users).

Those looking to better understand best practices in terms of distributed business strategy would be well served to keep an eye on the things that these photo widget players are up to – though I wouldn’t necessarily copy these sorts of crass cloaking and spam tactics.

While I don’t believe that it’s nearly time to abandon home base entirely, I do think the importance of building and executing a distributed web strategy is growing. It will be fun to see which companies solve this, and if any of the monster destination properties show an interest in distribution (vs. aggregation).

Reposted from its original on Sexy Widget.

Facebook Ads: Old, New Or Irrelevant

Facebook Ads: Old, New Or Irrelevant!
The Economist
Everything old is new again: Facebook's advertising system is a new take on an old concept. Paul Lazarsfeld and Elihu Katz, authors of the influential 1955 media classic "Personal Influence" argued that marketers actually target certain individuals in their media messages, called "opinion leaders" rather than mass audiences. These individuals are today referred to as "influentials" because it is they who virally disseminate information.
Social networks now make it possible for these targets to reach larger groups of peers more quickly and easily. However, by putting this kind of control in the hands of persons who are unaffiliated with them, marketers run the risk of their brand being criticized.
Opponents of Facebook's invitation to let consumers spread marketers' messages say the tactic is "creepy." Others claim it will dilute the quality of the social-networking experience for Facebook's users. Paul Martino, an entrepreneur who launched the social network Tribe, says that interpersonal relationships on social networks are of an increasingly poor quality, anyway. "Social graphs degenerate to noise in all cases," he says, which means marketing campaigns could "descend into visual clutter ... rather than being the next big thing in advertising." - Read the whole story...

Spanish-Language Ad Spending Up

NOVEMBER 12, 2007

TV gets the most Spanish-language media dollars.

Total ad spending in Spanish-language media for the first half of 2007 reached $2.87 billion, up 2.3% over the same period last year, according to Nielsen Monitor-Plus.

Spending increased in all Spanish-language media types tracked by Nielsen, except local newspapers.

"The past couple of years have seen increased growth in ad spend for Spanish-Language media, with automotive ranking as the top product category, and Univision Communications as the top advertiser, for this time period," said Brian Lane, senior vice president at Nielsen, in a statement.

The Nielsen numbers indicate a rise over the $3.8 billion in Hispanic ad spending for all of 2006 reported by Hispantelligence, TNS Media Intelligence and Advertising Age. That study covered Internet spending as well, which it showed at $132 million for the full year.

However, eMarketer senior analyst Debra Aho Williamson said that neither of the studies told the whole story of ads targeting Hispanic-Americans.

"With the growing number of companies using English-language advertising to reach Hispanic consumers, measuring such spending should be a priority," Ms. Williamson said. "But for now, most measurement firms only provide estimates of Spanish-language ad spending."

MANAGEMENT : Transparency as Strategy

By Patricia Wheeler

Is transparency just a well-meaning, rather soft idea, or does it have strategic value?

The dictionary defines transparency as “able to be seen through with clarity.” In the organizational world it means “free of deceit,” which translates into being “readable.” You don’t finish a conversation with a transparent leader wondering what they really meant, and what the implications are for you. You are clear about the underlying intent as well as the content of the message.

How does transparency differ from authenticity? Authentic leaders have a good match between intention and behavior…“say” and “do” are in sync. But you can be authentic without being transparent. Transparency refers to the deliberate behavior that is directed toward being readable.

Why is it so important? Because done well, transparency builds trust. And it eliminates the time-wasting behavior of trying to figure out what someone really thinks and wants.

I once coached a wonderful, authentic vice president who received feedback on her 360 that she intimidated her direct reports. She was shocked by this, because she thought she was communicating encouragement (she was clearly thinking encouraging thoughts), but her thoughts and intention were not transparent to her people. Part of her coaching agenda was to tell them that she wanted to get better at acknowledging them…and making sure that she checked back in with them to ensure that she was doing so. Team morale, and performance, improved.

Let’s be clear…transparency is no excuse for rude, hurtful or unprofessional behavior. And there sometimes can be too much of a good thing. People don’t need to know the details of your divorce or childhood traumas. The key is to make sure that you use god common sense and transmit information that adds value to the workplace.

Why is transparent leadership especially important now?

Our world is growing more complex by the day. We are barraged with information and we must intersect with an increasing number of stakeholders in different locations and cultures. More often than not, leaders operate through influence rather than direct control. Driving collaboration, internal accountability, and self-direction requires a different skill set than in traditional command and control settings.

A culture of transparency breeds a more agile and engaging organization. Companies who don’t promote and model this sort of culture are missing a huge strategic advantage. And what is this advantage? In two words, employee engagement.

Of the 25 top levers of engagement that the Corporate Research Council identified, several directly relate to leader transparency. These include managers demonstrating honesty, clearly articulating organizational goals, accepting responsibility for failures as well as successes, and clearly caring about employee well-being. And why should we care about engagement? Simply put, highly engaged employees have been shown to be 20% more productive. And people want to work for managers they can read and trust.

So, If people trust you, they will listen better to you.

More trust leads to less organizational “static.”

As static and resistance decrease, speed and precision are enhanced.

Well-executed transparency can set the stage for innovation and cross-silo collaboration.

If transparency is so effective, why don’t more people practice it?

Many leaders believe that showing any vulnerability will make them look weak and ineffective, resulting in a loss of respect. In our coaching engagements, we use the “FeedForward” process, which is a great example of modeling transparency. We ask leaders tell their stakeholders what they’re trying to get better at and enlist their help in this effort. In my experience coaching many leaders, I have never seen an instance where revealing how you’re trying to get better led to less respect. In fact, the usual result is increased trust.

Transparent communication is particularly important during times of great stress and change. We’re always looking for anchors of trust and we want to make sense of the world, especially during times of disruptive change. If you are not readable, people will “make it up”…which usually results in their imagining that things are worse than they are. So an important part of modeling transparency is to tell people what it is you don’t know, as well as what you do know. This may require some courage.

From a coach’s perspective, here are some suggestions to enhance transparency:

- Know yourself. Get feedback on whether you tend to share too much or too little information? Find out how readable you are to others.

- Clarify your values. You are working with other humans, and we are all driven by our core values and emotions. So let people know what is really important to you.

- Take regular reflection breaks…make sure you are consciously and continuously making good choices about how and what you do and don’t share…and why.

- Be aware of cultural differences in what constitutes a good level and pace of transparency. Cultural differences vary by geography and within organizations.

- Build your muscle: practice transparent communication with your coach or confidantes to develop and hone your skills.

Practicing transparent leadership can help you get even more honest with yourself (and others) about what engages you and what turns you off, what you stand for and why it’s important to you. Being clear about your values and drivers can put you “in the driver’s seat” for having an even more successful (and by the way, happier) career…and life.

Copyright 2007, Leading News
Patricia Wheeler is an executive coach and consultant who helps smart people become better leaders. As Managing Partner in the Levin Group LLC, she has spent 15 years consulting to organizations and coaching senior leaders and their teams. You may contact Patricia by E-mail at Patricia@TheLevinGroup.com or by telephone at 404 377-9408.