Internet Usage and Importance Expand

JULY 2, 2007

The Internet leads a rise in most media usage.

The Internet is the most essential medium for consumers and newspapers are the least, according to an Edison Media Research study conducted by Arbitron in January and February 2007. Respondents were all from the US and ages 12 and older.

Over a third of consumers deemed newspapers "least essential," while nearly a quarter felt that way about the Internet. Both radio and television had the fewest "least essential" mentions, at 18%.

Larry Rosin of Edison Media Research said, "It is not a stretch to say that the Internet has become just as important as television as an important source of information and entertainment in the lives of Americans."

Over a third of respondents said they were using the Internet and television more than in 2002. Radio was the only medium to take a major hit, with an equal percentage of respondents saying they used it more and less.

Equity firm Veronis Suhler Stevenson measures time spent with media by using ratings data, survey research and consumer purchase data. Between 2000 and 2006, US consumers increased their total media time by 5%, from 3,333 hours per year in 2000 to 3,499 in 2006. Veronis Suhler estimated that media usage will rise to 3,518 hours in 2007.

Put another way, that is an average of 9.6 hours a day of media exposure in 2006, up from 9.1 hours in 2000.

Consumers don't always use one type of media at a time. Read the eMarketer Multitasking Consumers: Distracted or Connected? report to learn more.

Papers Still Dominate Local Online Ad Spending -- But Are Losing Share

By Jennifer Saba

Published: June 06, 2007 11:30 AM ET
NEW YORK Newspaper Web sites might reap the most from local advertisers spending online but a new study reveals online newspapers are losing share. According to Borrell Associates, newspapers controlled more than 35% of all locally spent online advertising in 2006 but that dominance is declining: Online newspaper share decreased 8.2 points over a two year-period.

"It's likely to slip more this year," the report warned, "as the industry grapples with the Web's transformation from a banner-advertising and pay-for-listings medium -- familiar formats for newspapers and their existing advertisers -- to one that is dominated by video advertising and paid search."

The study found there is no slowdown of advertising dollars flowing to the Internet either, rather more competition is honing in on newspapers' turf. This year, analysts with Borrell forecast that local online advertising is projected to increase 31.6% to $7.5 billion and Internet giants like Yahoo, Google, and others are scrambling for those dollars. Borrell found that pure-play sites represent 33.2% of local online ad spend.

"The local marketplace is shifting," analysts observed in the study. "The come-from-behind sites operated by radio and TV stations are gaining small bits of share ... The Internet 'pure-play' sties -- those not affiliated with traditional media -- are gaining local market share."

Newspaper companies teaming up with Google, Yahoo, Monster and others, stand to gain suggested analysts. For example, Yahoo's domestic advertising growth slowed from 36% in 2005 to 19% in 2006 and in the Q1 this year, Yahoo's growth is almost flat, up 0.4%.

The alliance with Internet companies will allow newspapers to tap into national ad revenue or as Borrell calls it "found money." Analysts wrote that those newspapers that participated in the survey and are involved in national advertising networks still received on average 93% of their revenue from local advertisers in 2006.

The study said that those newspaper sites that are succeeding do so because of a combination of factors including staffing online-only sales people that target non-traditional advertisers and by instituting higher online ad rates.

Furthermore the study revealed that the average newspaper Web site's revenue equated to about 15% of all locally spent online advertising in 2006. However, there were papers that reported much larger percentages, in a few cases, 50%. Not only did these sites maintain a separate online sales staff, the sites depended less on classifieds. The top performers received 62% of its online revenue from classifieds as opposed to 71% for the average newspaper Web site, according to the report.

Can Google bring business intelligence to offline advertising?

Posted by Larry Dignan @ 6:30 am Categories: General, Web Technology, Google, Search
Google announced its long-awaited TV ad trial with Echostar and Astound in what has become a long line of offline advertising forays. What's Google up to? Creating a dashboard for advertising services.

In other words, Google is trying to do what business intelligence companies do today for enterprise customers–create a dashboard so executives can monitor returns, an ad campaign's progress and potential trouble spots in real time. In enterprise applications, business intelligence is often the most valuable player to a company. Business intelligence software is widely taken for granted today.

But the business intelligence (BI) state of affairs in most forms of advertising is a different story entirely. BI is non-existent. That's what makes Google so scary to old media. Here's what the advertising world is thinking: "If media buyers start asking for quantifiable returns we're screwed. No more dinner parties. No more golf course. No more schmoozing. We've got nada. Geesh, I don't know what this prime time advertising really produces!"

Of course, the old media types will tell you that advertising is based on "relationships." Fair enough–to a point. But that argument sounds vaguely familiar to what stock brokers used to say before online trading. Travel agents had a similar spiel.

Cutting through the din of Google concerns–synthesized in BusinessWeek–BI is the most detrimental thing to the advertising world. Think about it: If you couldn't produce real-time ROI metrics would you really want another company trying to monitor your faux statistics.

Now it's far too early to proclaim Google a big winner. The company is offering increased automation in TV advertising (see Techmeme discussion ), but it's only a first step. And it's going to be a slog to bring a modicum of BI into the advertising world. So far, Google's success offline has been spotty at best.

The biggest wild-card is going to be Google ability to partner with other media players. "We believe Google may need to partner with additional cable TV and satellite companies to offer advertisers significant offline reach," writes Bank of America analyst Brian Pitz in a research note.

The end game is clear: BI is porting to all forms of advertising. "We note that Google is clearly moving towards becoming a one-stop shop (an advertiser's 'dashboard') for purchasing advertising on multiple platforms including TV, radio, newspapers, online, and mobile and is working to build robust technologies to provide end to end support to advertisers," says Pitz.

The only uncertainty is how long it will take Google–or another more palatable company like Yahoo–to bring BI to offline advertising. My hunch it'll take a long time given television advertising is more than twice the size of online advertising. It takes a while to get those big media dogs moving.

Internet Ad Spend to Surpass Radio in '08

ZenithOptimedia has revised its global ad spending outlook and now predicts that the internet will overtake radio as the fourth-largest advertising medium a year earlier than it previously expected.

In a major revision, the media-buying agency now predicts that online will grow six times faster than traditional media through 2009 and overtake radio in 2008, writes MediaPost (via MediaBuyerPlanner). Zenith forecasts that online advertising spend will increase its share of the global marketplace from 5.8 percent in 2006 to 8.7 percent in 2009.

Global spending on internet advertising increased from $18.7 billion in 2005 to $24.9 billion in 2006, according to ZenithOptimedia, writes the Times Online (U.K.).The internet already accounts for more than 10 percent of the ad market in Norway, Sweden and the U.K., the report points out.

The momentum of online ad spend reflects trends in the British market, in part as a result of the uptake of high-speed internet access. More than £2 billion was spent on internet advertising in 2006 in the U.K., where online advertising accounts for 11.4 percent of total advertising revenue - nearly double the global average of 5.8 per cent and above the U.S.'s 7.8 percent share of ad spend.

Zenith also predicts that TV's share of global ad spend will be down 0.2 percent in 2009 from 2005 levels. Newspapers are predicted to have no growth.

After online, cinema and outdoor media are the fastest-growing media, according to the report.

Online Drives UK Total Ad Spend

APRIL 3, 2007

Online swans in to save the day.

Online ad spending in the UK accounted for 11.4% of all ad spending in 2006, according to new data from the Internet Advertising Bureau UK (IABUK), PricewaterhouseCoopers (PwC), the Advertising Association, the Radio Advertising Bureau and the World Advertising Research Center.

Online ad spending in 2006 was up nearly 42% over 2005.

The IABUK said that almost all traditional media spending was down, and that online ad spending growth was largely responsible for total ad spend growth of just over 1%.

The UK now leads the world for share of advertising spend online. The global average is 5.8%, according to ZenithOptimedia.

In 2006, online display advertising rose 35% over 2005. Paid search increased 52%, and now represents 57.8% of all online advertising.

Online classifieds were up 45% over 2005. Traditional print classifieds were down nearly 8%.

eMarketer recently looked at online ad spending per Internet user, using data from PwC and Wilkofsky Gruen Associates as benchmarks. Spending is estimated to reach $216.69 per user in the UK by 2010, up from $122.01 per user in 2006.

On Madison Avenue, A Digital Wake-Up Call

Firms Take Notice As Nike Demands More Web Savvy

By SUZANNE VRANICA
March 26, 2007; Page B4

In recent years Oregon independent Wieden + Kennedy has been the firm to beat in the ad world, its creative smarts and agility helping it capture clients as powerful as Procter & Gamble and Coke. So this month's decision by Nike, Wieden's longtime star client, to look for a new agency to handle part of its business sent ripples across the industry.

The reaction wasn't so much because Wieden has been Nike's lead agency since 1982, a connection cemented by a close relationship between Nike Chairman Philip H. Knight and Wieden principal Dan Wieden. What really unnerved Madison Avenue was that one of the main reasons for Nike's move was dissatisfaction with the agency's digital expertise, according to people close to the account. Despite its top-notch ability in every other department, Wieden has been slow to adapt to the Internet -- an important arena for a marketer as focused on the youth audience as Nike.

Up for review is Nike's running-shoe account, say people familiar with the situation. "We are looking for expertise in different mediums, different creative directions for various areas of U.S. business," a Nike spokesman said when the review was disclosed earlier this month. Wieden will continue to handle the bulk of Nike's ad account, including its basketball, men's training and women's fitness businesses.

Industry executives say the move was a wake-up call to Madison Avenue. The message is clear: No matter how talented an agency's creative team or how well the client's management likes the firm's executives, the agency is of limited value unless it embraces digital media.

"We have to be thinking about ideas in all the channels and not just the [traditional] advertising channels," says David Murphy, former president of the Los Angeles office of Publicis Groupe's Saatchi & Saatchi who recently left to open his own shop.

Many traditional ad agencies, with roots in television and print, have been slow to grasp the impact of the Internet. In the past couple of years, as consumers and advertisers have begun shifting to the Internet, some agencies have responded by beefing up digital talent through both hiring and acquisition. But many firms don't have enough digital talent to meet client demand, and those that do often have kept the digital department separate from the rest of the firm.

Wieden had hired some digital thinkers, but they were scattered through its offices around the globe. It wasn't until earlier this year, when it hired Renny Gleeson, a digital expert who had a top job at Aegis Group's Carat Fusion, that the shop began to take digital more seriously and teach digital know-how to the rest of its troops.

Even so, Wieden could be doing more, people at the firm admit. Digital has long been "an afterthought here," says a person at the agency. "We do it but haven't done it to the level we need to."

A spokeswoman for Wieden referred calls to Nike, which declined to comment beyond the statement it issued earlier this month. Mr. Wieden, through the spokeswoman, declined to comment.

About two years ago, Mr. Wieden passed on what may have been a golden opportunity to digitally remake his firm. Prominent digital ad firm AKQA proposed to Mr. Wieden that the two agencies create an informal alliance to pitch business and work collaboratively on shared accounts, according to several people familiar with the matter.

On paper, the two made a good fit. Both are at the top of their respective areas, and they share major clients such as Coca-Cola and Nike. But after several meetings to discuss the idea, Mr. Wieden couldn't be persuaded. People familiar with his thinking say the executive has long been fearful of tying up with other firms for fear of spoiling Wieden's culture. Instead, he believes in broadening the agency's skill set by hiring people with different types of expertise -- as he did with Mr. Gleeson.

Mr. Wieden may now wish he had made a bigger move. AKQA has gone from strength to strength; last month a private-equity firm bought a majority stake in the firm, giving it the resources to expand further.

Meanwhile Nike, which has long used several digital specialist firms such as AKQA and Interpublic Group's R/GA in addition to Wieden, has been sending signals that it wanted a different approach. "Gone are the days of one shoe, one advertising campaign. Now you've got to engage consumers on every level," Trevor Edwards, Nike's vice president of global brand and category management, told The Wall Street Journal last summer.

Nike's marketing campaigns have reflected a shift in emphasis towards the Web. Last year it worked with Google to create joga.com, a successful online community for soccer fans tied to the World Cup. The attraction of the site for Nike is that people who check out joga.com -- because of its subject matter -- are guaranteed to be exactly the kind of consumer Nike wants to speak to, which isn't the case when the company buys TV or print ads. "We get right to the center of the consumer," Mr. Edwards said last summer.

Nike now believes digital thinking should be at the heart of ad strategy, according to people familiar with the marketer's thinking. To make digital more central, it needs its main ad agency to be better skilled at digital techniques because the agency is developing ad strategy at the very early stages of a marketing campaign.

Ad executives say more mainstream ad firms could lose business unless they figure out how to better integrate digital media. "If people aren't embracing digital they will get left behind; clients are already there and they are gravitating to agencies who get it," adds Mr. Murphy.

Some agencies have tried to foster better collaboration between traditional and digital advertising. WPP Group's Ogilvy & Mather in 2005 named Jan Leth, executive creative director of the North American operations of its digital arm, OgilvyInteractive, to the additional post of co-chief creative officer for Ogilvy's New York office.

Publicis Groupe, similarly, is considering merging Modem Media, a digital firm that it acquired as part of its recent $1.6 billion purchase of Digitas, into its Publicis ad agency, according to people familiar with the matter.

Still, even with the best intentions, collaboration can be difficult to pull off, ad executives say.

"The thing is all these things look good on paper but so did communism," says Matt Freeman, chief executive officer of Tribal DDB, the digital arm of Omnicom Group's DDB Worldwide. "At the end of the day it's all about who is in charge. ... Traditional ad people are in favor of integration as long as they are in control. It still comes down to who reports to who and egos."

Local Broadcasters Deliver Digital Ads, Drawing From New Revenue Pools

After taking knocks from upstart digital media, local broadcasters are starting to receive sizeable benefits from next wave of new media development, said speakers at the Kagan Radio/TV Values & Finance Summit in New York City on Thursday.

Kagan Research forecasts that radio and TV stations will generate $1.7 bil. in 2007 revenue from online media sources—which will deliver double-digit growth in the years ahead. That covers station-owned websites, multicast channels in digital broadcasting, podcasting and station content monetized on third party platforms, including budding wireless broadband media.

"It's a pretty positive outlook for radio from my perspective," said John Blackledge, senior analyst covering radio, TV and outdoor at JPMorgan. Summit speakers noted that selling digital platform ads and drilling deeper for local advertisers that never bought broadcasting before brings completely new ad money, as the accompanying table indicates.

"The pie expands," said Tom Castro, president and CEO of radio group Border Media Partners. "It's not a zero sum game" anymore.

Tapping new-to-broadcasting advertising money is crucial because ad revenue from traditional advertising is trending flat to slow-growth. Excluding online/digital, TV stations' $44.9 bil. in 2006 total ad billings and—to a lesser extent—radio stations' $20 bil. in ad billings ride a see-saw of ups-and-downs based on election and Olympic years.

Last year, Kagan estimates new media revenue contributed 2.7% of all ad revenue at radio and TV stations. Local advertisers can create their own ads using the self-serve tools available via websites, which relieves stations of time consuming account service and ad creation work for the smallest advertising accounts.

"Broadcast stations—both TV and radio—are ideally positioned to be leaders in their local online markets due to their strong ties to the community, leading local content, and seasoned sales teams with strong ties to area advertisers," said Kagan Senior Analyst Robin Flynn. "According to Kagan Summit speakers, TV station owners are at most in the very 'first innings' of developing the local online opportunity—if not still in Spring training."

Digital media is not a cake walk to riches because operating websites and enlarging local content creation raises broadcast station expenses. But speakers said broadcasters seemed to have turned a corner by holding their own amid the bombastic arrival of fast-growing new digital media rivals, such as subscription satellite radio and the Internet.

There are worries ahead. New digital media revenue streams can't be automatically counted on to lift profits, given spotty weaknesses in conventional radio advertising, particularly in the automotive category. However, political ads seem to have morphed into a non-stop business, not just an election year windfall in even numbered years, broadcast executives said.

TV points to Web

SAN FRANCISCO Traditional advertising plays a key role in prompting consumers to search for merchandise online, according to a study by the Retail Advertising and Marketing Association (RAMA) and BIGresearch.

Roughly half of the consumers told researchers they take cues from TV, magazine and newspaper ads to determine when and where to shop online. In order of preference, 47 percent said they turned to magazine ads, followed by TV commercials and newspaper ads at 43 percent each. (Respondents could choose more than one medium.)

In-store promotions motivated 27 percent to search for products online. When it came to coupons, far more women than men used them for online guidance, at 42 percent of women versus 29 percent of men.

The survey findings seem to reinforce the evidence that many marketing agencies are collecting, which indicates online and offline marketing programs work better than online-only or offline-only campaigns. "When it comes to advertising, retailers always need to be careful not to put all of their eggs in one basket," said Mike Gatti, executive director of RAMA.

"While search engine marketing continues to be a popular strategy, retailers should not lose sight of traditional advertising channels to promote products and services," Gatti said.

Shoppers use the Internet as a resource before determining which items to buy and where. According to the survey, 92.5 percent of adults said they regularly or occasionally research products online before buying them in a store. Products that are most often researched online are electronics, apparel and appliances. Men were twice as likely as women to shop for automobiles online, 20 percent to 10 percent, respectively.

"Retailers must realize that online communities are now producers and are able to extend the distribution of traditional media with a trust and truth not even approximated by mass media," said Joe Pilotta, vp at BIGresearch.

The study surveyed more than 15,000 consumers in November and December 2006. RAMA released its analysis of the survey last week.

Internet Display’s 6.5% Of Advertising

Averaged From Wide Spending Range

Display advertising on the Internet carved out a 6.5% slice of total U.S. advertising in 2006, although spending proportions differed widely by advertiser classes to yield that average, according to TNS Media Intelligence.

Last year, Internet display stood at 5.7% of total U.S. ad spend. As a digital new media, Internet display takes a growing a slice of the pie that used that used to be devoured only by traditional analog media such as newspapers, magazines, broadcasting and outdoor.

"It's been growing at eight or nine tenths of a percentage point a year over the past three years," says Jon Swallen, senior VP of research at TNS MI. "That's striking because that's just for display advertising, which is a slower growing segment within Internet advertising."

The data survey doesn't include ad spend for fast-growing "paid search" such as on Google, which is analogous to non-display direct response and classified ads in analog media. Internet display covers banner ads, and encompasses some innovations such as rich media ads with moving graphics or audio.

As the accompanying table indicates, the advertiser allocation to Internet display is distilled from a wide range of percentages from various advertiser categories. At the high end, the Health and Fitness advertiser category channeled a well-above average 26.1% to Internet display. At the other end of the scale, Restaurants at 0.9% and Apparel at 1.4% were well below average.

Swallen notes advertisers with information-intensive messages—such as selling mortgages and credit cards—are big proportional spenders on Internet display. The Financial Services category averaged a 17% spend on Internet display.

Below average users are image-oriented marketers such as Apparel and Non Alcoholic Beverages. There's not a lot of intricate new information to convey about a soft drink, for example.

Display Internet's 6.5% slice came out of a $149.6 bil. total U.S. advertising pie last year, which TNS MI estimates grew 4.1%. The Internet display category itself soared 17.3% in 2006 to reach $9.7 bil. That growth rate eclipsed all other categories except a 25.5% spike in free standing inserts (loose inserts in print publications), a smaller category on a total dollar basis.

As for traditional media sector ad spend in 2006, outdoor climbed 8.6%, TV rose 5.3% (benefiting from an election year), magazines 3.8% and radio 0.3%, while newspapers fell 2.4%. Internet display's slice of pie gains came at the expense of a shrinking newspaper slice. Advertisers are embracing new media, despite its uncertainties (see Jan. 19 Kagan INSIGHTS free at kagan.com).

Agencies Warned: In Digital Media, Change Or Die

http://publications.mediapost.com/index.cfm?fuseaction=Articles.san&s=57452&Nid=28566&p=424232

by Tobi Elkin, Thursday, Mar 22, 2007 6:00 AM ET

DEVELOPMENTS IN DIGITAL MARKETING AND media are happening at such breakneck speed that marketers must prepare to navigate them--or be left behind. The same goes for the agencies that advise them. But the consensus among a panel of experts appearing at OMMA Hollywood earlier this week is that they're not ready, not by a long shot.

"Agencies aren't prepared for where things are going," said Tim Hanlon, senior vice president-Ventures Group, at Publicis Groupe's Denuo. Hanlon was, by far, the most strident of the group. Agency silos, he said, remain the order of the day, referring specifically to the relationship between brand and direct response media.

"Consumers, especially younger ones, if they see something in any form of media, they're going to want to go further with it," Hanlon said. "Agencies should be de-siloing to make that TV expression both a branded and DR vehicle," whether it's a TiVo vehicle or a telescope unit, "a little TV with a DR component," adding: "Is that the direct marketing agency's responsibility or the brand agency's? I think it's both, so why do have two separate groups?"

Good question. The role of the agency will need to change, given the rise of online-based ad auctions, hyper-local media planning and buying services, like SpotRunner and Spotzer, and other emerging media planning platforms.

"Google showed us that search and targeted ad messaging is not only a viable business, but a gargantuan business," Hanlon said. "The holding company model missed it. Now they're scrambling to be experts or to acquire this skill." Hanlon noted Publicis' acquisition of Digitas late last year.

With mobile and search engine optimization, "the reality is that you still have to have integrated agencies and teams. It's a big challenge. People have to be aligned differently. The way we hire and [provide incentive] needs to change, and it can't happen quickly enough," Hanlon noted.

Holding companies are licking their chops at digital investments. However, "making the investments is definitely the easiest thing we do--the hardest thing is to take an investment of any size and integrate it into the agencies and to deliver a powerful offering," suggested Bant Breen, president, Interpublic Futures Marketing Group. "That requires more holding company involvement--or a new [kind of] holding company involvement."

Nick Grouf, co-founder, chairman and CEO of SpotRunner, maintained that agencies, media companies and providers are morphing all the time: "Agencies change but they don't go away."

Breen suggested that the idea that creative and technological solutions stand at polar opposites no longer applies. "It's a messy landscape today ... Digital media staff is working two and a half times longer and harder than the traditional media staff," he noted, citing thousands of media channels and different data feeds. "We need systems to coordinate that process. Truly personalized creative could be very, very exciting."

"The media agency needs to reinvent its business model so that it's much more of a polyglot," Hanlon said. "Agency holding companies risk marginalizing themselves to just focusing on the big stuff. And then it becomes nothing more than a share-shift game. That's not a growth business; the growth is at places like Google."

"The big part of what agencies do is to empower consumers to make a purchase decision, foster relationships, enable transactions and deliver information," added Sean Gold, senior vice president marketing, MySpace. "Traditionally, they've been great at delivering information, but the fostering relationships/enabling transactions needs to improve."

Online Advertisers Bet on Video but Count on Display

MARCH 22, 2007

Web publishers' hearts are rectangular-shaped.

Nearly all Web sites with streaming content are monetizing it with video advertising, according to a survey of sites in the Advertising.com network.

While the network does not represent all Web publishers, its reach makes it a good indicator of overall trends. Not only did all video streaming sites surveyed say that they run video ads, 80% more sites plan to suppport video in 2007 than did in 2006.

Asked which online ad formats would lead revenue growth, respondents overwhelmingly chose large rectangles. Video was far down the list.

"Video carries great emotional impact like TV, yet it can be measured and can't be skipped," noted David Jacobs of Advertising.com. "That value means publishers can command higher CPMs — hence the rise of streaming content."

That explains why video will account for so much online ad spending going forward.

As we move into the next decade, eMarketer estimates that marketers will put more of their online budgets into video and other rich media advertising than they do into display ads, banners and other static placements.

Web publishers' preparation for video — while still believing in the tried-and-true large rectangle — makes sense given how video adoption is likely to play out.

As eMarketer senior analyst and video specialist David Hallerman puts it, "Spending increases on rich media advertising (most notably video) will lead the way in online ad spending, coming from a small base but with great desire among major brand advertisers for the format."

Nielsen: Last Year, 4.6% Increase in Ad Spending

March 20, 2007

By Katy Bachman, Mediaweek

NEW YORK -- Nielsen Monitor-Plus reported Monday a 4.6% increase in advertising spending to $139.07 billion, compared with 2005. Most of the 17 media experienced growth, led by the Internet with a 35% gain to $6.7 billion, followed by a 9.1% gain in Spot TV in the top 100 markets to $25.6 billion. Also showing strong gains were Spanish-language national TV, up 8.1% to $2.9 billion, and outdoor, up 8.1% to $3.7 billion.

Other media showing growth were: national Sunday supplements (5.6% to $983 million), local Sunday supplements (4.6% to $60 million), network TV (4.2% to $23.8 billion), national magazines (3.9% to $18.6 billion), local magazines (3.3% to $543.9 million), national newspapers (2.9% to $1.8 billion), national cable TV (1.8% to $23.7 billion) and spot radio (0.7% to $6.1 billion).

Media that ended the year with negative growth were: business-to-business magazines (-0.2% to $4.2 billion), coupons (-0.6% to $409.3 million), spot TV in markets 101 to 210 (-0.9% to $1.2 billion), network radio (-2.4% to $1.1 billion) and local newspapers (-3.6% to $13.9 billion).

Although ad spending among the major media grew in 2006, budgets among the top 10 advertisers were up only 1% to $17.9 billion. Six of the top 10 spent more in 2006, including top advertiser Procter & Gamble (up 1.1%), and both telecommunications companies, AT&T (up 44.4%) and Verizon Communications (up 16.2%).

Automotive advertisers were mixed. General Motors chopped its budget by 16%, as did DaimlerChrysler, which spent 6.1% less. Both Ford Motor Co. and Toyota Motor Co. increased spending by 10.2% and 14.2%, respectively.

Despite an uptick in spending among certain auto advertisers, in general both categories of automotive (automotive/auto dealers and automotive local dealers) were down 1.4% and 3.5%, respectively. In total, the automotive advertisers cut more than $374 million out of budgets.

The biggest growth categories for 2006 included pharmaceutical (up 14.9%), wireless telephone services (up 10.5%), and direct response products (up 10%).

Product placements in primetime network programming also leveled off in 2006 with a decrease in the overall number of placements to 79,701 from 102,793 in 2005. The shift "can be largely attributed to shifts in programming such as the airing of more dramas, which tend to carry less product placements than other program genres," said Annie Touliatos, director of marketing and strategy for Nielsen Product Placement Service.

Coca-Cola soft drinks was the top brand using product placement, followed by Chef Revival Apparel, Nike Apparel, 24 Hour Fitness Centers clubs and the Chicago Bears (NFL team). The top programs containing product placements were Fox's American Idol, followed by CBS' Amazing Race, ABC's Extreme Makeover Home Edition, NBC's The Biggest Loser and UPN/CW's America's Next Top Model .

More than 2.6 billion political spots aired on local TV, representing more than 93% of all political ad expenditures, up 24% from the previous midterm elections in 2002. A sizable percentage of the ads, 41%, were classified as negative.

New Research:The User Revolution

Piper Jaffray just published a fat report called "The User Revolution: The New Advertising Ecosystem and The Rise of the Internet as a Mass Medium". Here are some of its key findings:

• We expect global online advertising revenue to reach $81.1 billion by 2011, representing a 21% CAGR (2006-2011).

• The User Revolution. The advertising world is going through a revolution, one that we call the "User Revolution" as it is happening primarily with the consumers, who are taking control of content consumption and branding. We believe this trend will cause a significant rise in prominence of the Internet as a major content consumption and marketing medium.

• "Communitainment." The Internet has increasingly become a principal medium for community, communication, and entertainment--three areas that have collided together and are impacting each other's growth--generating a new type of activity that we call communitainment.

• The Internet Is Mainstream. The Internet has become a mainstream media outlet that now rivals traditional media for reach and advertising dollars.

• Media Fragmentation. The proliferation of online and offline media outlets has resulted in shrinking television audiences and an increasingly fragmented media landscape.

• The Golden Search. We believe search continues to gain ground, driven by the rise of search as the New Portal, the increasing use of search in branding campaigns, and the local search opportunity.

• We believe Google's wide variety of non-search-related products creates a virtuous cycle of brand affinity that drives incremental search volume.

• Video Ads Could Drive The Next Wave. We believe Internet video ads could become a game changer for large brand advertisers, who are used to the 15- or 30-second TV commercial

• Internet Usage Patterns Are Changing. Portals maintain the highest reach, but the fastest growing category of destinations is communitainment sites such as MySpace and Facebook.

• Ad networks are experiencing increased demand due to increasing Internet fragmentation, desire for more targeted inventory, increasing usage of networks for branding, and increased site visibility.

• Agencies are rapidly evolving into more sophisticated, technology-savvy entities that combine best of breed offerings.

• Companies to watch: Google (and YouTube), Yahoo!, Disney, News Corp, Time Warner, Microsoft, InterActive, Facebook, Craigslist, Brightcove, Yelp, SINA Corp., Baidu, aQuantive, ValueClick, 24/7 Media, Netflix, Wikipedia, MobiTV, Digg, and Hakia to be the most important players to watch.

Like my good friend Kaiser Kuo, Group Director for Digital Strategy, for Ogilvy China, mentions in this new (and great) blog " Ich bin ein Beijinger" : none of this should come as a surprise, but the report is full of eye-opening finding regarding the decline of TV viewing, changing viewing and decline of broadcast TV ad as percentage of total ad spend.

Kaiser who has a unique insight to China (and was very much responsible for Maxthon getting discovered and funded..) is confident that advertisers will flock to video ads and all the opportunities that are opening up for digital media advertising in China .However, he wonders how ready people really are for pre-roll commercials stuffed in to things they want to watch.

I tend to agree with Kaiser, although there is a fantastic opportunity for advertisers, the Internet savvy users might very well prefer to block ads if possible. This is something we have learned at Maxthon and seems to be especially true for Chinese Internet users. Al the sophisticated ad-blockers and filters that come pre-installed in Maxthon has definitely been one of the key driving factors for Maxthon success in China.

Anyway, next week I am flying down to Beijing again to talk on Piper Jaffrays Annual China Growth Conference on behalf of Maxthon. I will then have a chance not only to meet up with Safa and rest of the Piper Jaffray gang, but also to meet with Kaiser again and plot how we can deliver some interesting advertising opportunities together in China.

Newspapers Outsell TV Broadcasters With Local Online Video Ads

According to a new report from Borrell Associates, local online video advertising, worth about $161 million in 2006, is expected to grow to $371 million this year, or 5% of all local online advertising, and to exceed $5 billion in next five years.

In 2006 the market for locally targeted online video ads became a legitimate market in Chicago , New York and Los Angeles (the three largest markets) worth more than $5 million each. The next 37 largest markets each saw more than $1 million in revenue from online video, according to Borrell. The study claims that "infomercials" are said to drive the increase in the advertising market, not traditional 15-second commercials

In 2006 newspapers sold approximately $81 million in local online video commercials in comparison to $32 million sold by TV broadcasters. And, according to a report from the Television Bureau of Advertising, online TV revenues were up 41% in 2006.

The study also found that print media is using the Internet as a new medium to reach TV advertisers, while TV broadcasters have been utilizing the Internet to reach traditional print advertisers. The trend has led to most local TV websites hosting classified ads, and nearly half of the newspaper websites offering video content. This shift in website advertising is changing local advertising with banners and paid listings decreasing, and video ads and paid search increasing.

Broadcasters, are expected to bounce back this year, though. With an increasing number of video streams available on TV Websites, 80% of broadcasters surveyed expect to sell streaming video ads this year, up from 72% who did last year.

According to the study, online competition with newspapers and broadcast TV stations is expected to increase with both sides continuing to develop video products for the Web. Automotive advertisers will be key in the competition, along with real estate, health and employment.

Borrell concludes that the online video advertising market is expected to increasingly revolve around the strength of Websites' video content.

Young Consumers Multitask at the Expense of Radio

MARCH 1, 2007

Internet users under 25 have multitasking in their DNA, but they may be tuning out radio.

Internet, cellphone and MP3 player usage is cutting into radio time among 15-to-24-year-olds, according to a study by Bridge Ratings.

The study covered multitasking during the second half of 2006 and found that Internet use is generally increasing at the expense of radio for 15-to-24-year-olds.

The group was not homogeneous in its responses. For 33% of 15-to-24-year-olds, radio consumption decreased to accommodate more Internet use. For 10%, radio consumption actually went up, at the expense other media. The overall trend for radio, though, was down.

Although online video viewing has not cut into TV time for the general population, nearly a quarter of the 15-to-24-year-olds surveyed by Bridge watched less conventional TV, while 22% said that they spent more time watching video on the Internet on such sites as YouTube, Yahoo! and MySpace, or streamed replays of prime time shows on TV network Web sites.

The study also found that young people are spending most of their total media time online (23%), more than watching television (22%), listening to the radio (16%) and listening to their MP3 players (19%).

In 2004, the Kaiser Family Foundation made one of the first comprehensive attempts to study the multitasking habits of children and teens as part of its "Generation M" media study. By asking study participants to keep detailed diaries of their activities, it found that children spent an average of 25% of their media time multitasking.

So, while they were using some form of media for six hours and 19 minutes of their day, their actual media exposure, including the time spent with more than one medium at a time, was 8.5 hours.

eMarketer senior analyst Debra Aho Williamson cautions that marketers who are targeting adults cannot count on getting their undivided attention either.

"Because of the constant presence of computers in their lives," says Ms. Williamson, "teens may spend more of their media time multitasking than adults do. But multitasking extends across age groups."

Internet Reshapes Role of Media Buyers

WPP's Gotlieb Is Wary Over Proposal to Open Ad-Sales Marketplace

By SUZANNE VRANICA
February 28, 2007; Page B3

About 1,500 advertising and media executives are gathering in Las Vegas today for the ad industry's big annual conference of media buyers, the people who help marketers choose and purchase ad time and space on different media outlets. With the Internet and other new digital technology forcing the ad industry to rethink age-old ways of operating, this year's meeting promises plenty of intense debate.

Once a relatively pedestrian function on Madison Avenue compared with the glamorous creative jobs, media buying has become a critically important role since the Internet and other digital media have exploded the variety of media outlets available for marketers. But not all the changes flowing from digital technology are as welcome. A push by several advertisers for the creation of an online ad-sales marketplace, run by eBay, has proved controversial on Madison Avenue and is likely to be among issues discussed this week.

One of the most powerful media-buying executives in the industry is Irwin Gotlieb, chief executive of Group M, a unit of WPP Group that houses various media services firms including Mindshare and Mediaedge:CIA. Group M-owned firms account for about $40 billion in annual spending on ad time and space around the globe. Below, Mr. Gotlieb talks about developments in the industry.

Wall Street Journal: Much noise has been made about the eBay Media Marketplace, the online system that a group of advertisers hope could make ad sales more transparent. No network has agreed to participate, which casts some doubt on the plan. Why is there so much fear about the idea?

Mr. Gotlieb: A lot of media transactions are complex and don't lend themselves to the kinds of restrictions or constraints that exist when you try to do something through an exchange or auction. ... We very often deal with each vendor separately because each has different circumstances. What is feasible with one may not be with another. There may be a price adjustment that is factored into your negotiations. ... You can't line these deals up so they are identical.

The second element is that we are a business where personal relationships have real impact. Trust and reputation have a lot to do with these transactions. You have to sit down and look someone in the eye and agree. ... We are a business where we know each other and we live up to our deals, and very often one has to sit across from each other to get this done, and I am not sure I want to do that across the platform. Still, if I have to buy 100 spots in 150 of the smallest markets in the U.S. and it's just a volume thing, would I like an exchange to facilitate? Of course; there is a place for all these things.

WSJ: What's your opinion on the system being developed?

Mr. Gotlieb: I would welcome various automated models for this area where we do high-volume transactions. ... I would not welcome these platforms in these areas where we are retained by our clients to ensure they have an advantage and where these platforms level the playing field for all players. Frankly, I have no interest in playing on a level playing field.

WSJ: Last year's "upfront" negotiations were stalled because of the argument over how to value viewers who watch TV shows on digital video recorders. Did that standoff help media buyers get better pricing?

Mr. Gotlieb: What happened last year had little to do with marketplace standoffs, but it had everything to do with a need for a resetting of the marketplace. Historically, there has been a need for the upfront to be favorable to long-term players -- otherwise why make an early commitment that ties you up? If you can buy it later for less, why buy it now? There is an underlying implication that the upfront must be favorable.

In the prior two years, the marketplace had allowed that balance to go slightly the wrong way. It got precariously close to being near parity. So the marketplace needs an adjustment that provides benefit to the long-term players. ... Last year's demand didn't grow at rates that had been hoped for, and the industry took an opportunity to rebalance the relationship between long-term pricing and the short-term pricing.

WSJ: The drumbeat from ad firms about taking back planning duties from the media firms continues to percolate. What is your position on media planning duties and who should own them?

Mr. Gotlieb: I hate to stoop to this. I am reluctant to allow this to degenerate into a catfight. This is not about slugging it out over who does media. It is about how we collaborate and do the best possible work for our clients.

From a structural standpoint, clients made a decision to separate media implementation, what most call media buying, into [an] agency-of-record structure. They did that because by consolidating the volume, they get better deals. ... Any procurement guy will tell you that you are foolish if you do not consolidate that stuff. ... Martin [WPP Chief Executive Martin Sorrell] said a couple of years ago, "Stop talking about it, because the toothpaste is out of the tube, and we can't put it back."

Generational Shift in Media Habits

Advertisers must embrace change in order to draw new audiences
Jeff Dickey & Jack Sullivan
FEBRUARY 12, 2007 -

Now that blogging, YouTube and MySpace have made it possible for anyone to become a reporter, producer or social advisor, what used to be a frightening possibility for advertisers and marketers has become a startling reality. Gen X, Gen Y and other emerging decision-makers cannot be "wished" back into a 50-year-old media world no longer relevant to their personalities, lifestyles or interests. Using traditional media to reach today's new decision-makers is as appropriate as thinking one's dusted leisure suit still has some wear in it. Companies have little choice but to ditch the leisure suit and plunge warily into new venues.

Online games, satellite radio, iPods and smartphones have elevated mobility, community and choice to higher positions in any campaign's list of key considerations. Companies must measure, understand and embrace this permanently changed landscape. If they don't, they risk degradation of brand equity and failure to draw new audiences.

Once a marketer realizes the only way to build a relationship with this generation is to accept who they are (much like their parents have been forced to do, begrudgingly), where they exist in the media universe and what techniques are most effective to bridge the gaps, they can move forward. Marketers that will be successful in reaching Gen X and Gen Y grasp that media choices can—and must—be customized to reach individual decision-makers. The keys to unlocking the generational secrets are:

Creativity New generations of decision-makers are "digital natives." Text and graphics are a bigger part of their digital world than audio and video content. Advertising will evolve to deliver dozens of targeted creatives instead of a few "one size fits all" commercials.

Language They use instant messaging as a primary communications vehicle. They have evolved a very different "language," whereby they communicate in new abbreviations and slang. Marketers must "learn" their language and use it to communicate.

Formats They consider themselves leaders in the adoption of new messaging formats. Marketers must stay close to rapidly changing trends and tendencies.

"People call our generation apathetic. We're not apathetic toward the news, we just don't want to hear the same old bull crap all the time," said John Fiske, a 22-year-old law student in San Diego and a classic Gen Yer. "Nobody caters to us," he said, adding that the big television news cable networks—CNN, Fox News, MSNBC—"think they can attract young people by playing rap music at the beginning and end of their shows. We see right through it."

Media expenditures since the 1950s have gone primarily to television, followed by newspapers, magazines and commercial radio. But this 50-year trend has now realized its apex, with generational declines in consumption among Gen X and Gen Y.

Where we used to have only Web portals and sites, we now have VOIP telephony, digital signage and mobile media. The "descending triangle" of traditional media is being displaced by the "ascending triangle" of Internet-enabled media, composed of all Web-based media, e-mail, mobile media and digital-signage media. We at SeeSaw Networks call this the "Outernet" (or OOH networked media). The Internet is now blending with the "Outernet" to form this rapidly integrating media cluster, which is displacing the descending media triangle of television, print, and commercial radio.

The ascending triangle, digital devices and evolving demographics are driving this change in how media is consumed and the corresponding volume of that consumption. The aggregate consumption of media is rising by generation, as access is no longer tied to the constraints of a physical location. In addition, new technologies provide media consumers new channels of access to information and entertainment. These technologies include a dizzying array of digital music, video players, handsets, DVRs and an almost daily introduction of new and different devices.

Gen Yers are "Influencers" by nature, and they will influence younger and older decision-makers. New devices and services will be bought by/for them, they will encourage older populations to "get with it" and join them, and they will be emulated by younger generations trying to be like them.

The increased usage of multiple devices and services will continue to erode time available for more conventional media choices as media becomes more of an "on-demand" experience—as opposed to a time- or location-based experience. The phenomenon of media multitasking is now in effect: Young influencers regularly watch television, text message and Web surf simultaneously—creating a very convoluted media experience.

The Internet and associated applications are dominant media sources in their lives. They seek out new and improved media that have different consumption patterns than other groups. In order to reach, connect and engage these emerging decision-makers, marketers must first embrace them.

RAEL: Radio Plus Web Equals Better Ad Recall

Katy Bachman

FEBRUARY 09, 2007 -

Radio’s share of local online ad revenue dipped from 4 percent to 2 percent in 2006, according to Borrell Associates, but a new study conducted by Harris Interactive for the Radio Ad Effectiveness Lab could help the industry reverse that trend. The study, the fifth in a series of eight studies designed to demonstrate and explore how radio works for advertisers, found ad recall increased significantly when ad campaigns mixed radio with the Internet.

Adding radio to an Internet-only campaign enhanced unaided recall of advertising by four-and-a-half times, from 6 percent to 27 percent, while aided recall increased 25 to 58 percent.

“Branding was consistently higher with a mix of radio and the Internet. The differences were large and statistically significant,” said Jim Peacock, president of Peacock Research, which is a consultant to RAEL. “The two are powerful complements for advertisers."

Results of the test were based on the responses of two test groups. One group of 800 respondents were exposed to two Internet ads, the other group of 800 was exposed to one radio ad and one Internet ad. Actual advertising campaigns were used in the test from a variety of categories including fast food, grocery/meat, over the counter drugs/headache, travel, restaurant, grocery/canned, over the counter/breath and an electronic device.

The next study on the Ad Lab’s list will examine the hot-button topic of engagement with radio advertising compared to TV. The results will be reported in about three months.

Survey: Users prefer targeted online ads

More users are going online to watch video streams, and for most, an ad before the stream starts is preferable to fee-based services. That is the word from a new Advertising.com survey.

by Kristina Knight

According to the survey, which polled 500 adult web users, 66% said they watched online video streams at least once per week. Another interesting tidbit is that of the 84% said their online video consumption either stayed the same or increased from 2005 levels; an indication that streaming video is showing a growth in popularity.

Other results from the survey include the preference for online ads. According to survey results about 94% of those who watch online videos prefer pre-rolled ads to fee-based services, though most believe online ads should be shorter than traditional television ads (61%), better targeted for the viewer (18%) or created exclusively for the web (15%).

With the increase in viewership, just what are users watching online? News clips (49%), music videos (47%), movie trailers (33%), television shows (26%) and user-generated videos (21%). However, the click-through rate for online ads is highest with online gamers. Gaming sites have a .87% click-through rate, followed by career sites (.71%) and automotive sites (.63%).

Online video is predicted to have explosive growth through 2012, according to research from Informa. Online television and video is expected to bring in about $6.3 billion by 2012 in North America. That is about 10 times more revenue than was generated in 2006.

Advertising 3.0? Considering The Advertising Eco-system

By Joe Marchese
Some of you may notice that my attribution has changed. I can't say much about this right now, but will say that this entrepreneurial venture has influenced many of my Spins over the past couple of months -- and some, such as this week's, far more than others. When I can say more about this mysterious start-up here, I will. Hopefully the perspective of entrepreneur in the world of online brand advertising will prove at least entertaining, interesting and, once in a while, insightful. In the end there will be countless technologies, systems and business that will enable brand dollars to follow people's attention from outdoors to online; hopefully I am working on one of them ;-). For today I would like to discuss what I feel is the key to so-called "next generation" advertising.

After last week's Spin, a reader took exception to a statement I made: Building successful business models for tomorrow's advertising will mean first, and last, evaluating how to improve the entire eco-system you are attempting to enter.

The response implied that first, and last, advertising's goal is to increase sales. I can't imagine anyone disagrees with this. I certainly don't. But let me be a little clearer in what I was saying in this statement. While increasing sales is THE end, there are many means to this end. The goal of advertising will always be to increase sales, but the role of advertising has to evolve. Advertising is changing from the buying and selling of peoples' attention with only implied consent, to a system requiring explicit consent of the people. Advertising where people don't want advertising, or where it interrupts an eco-system (from outdoors to online), will increase sales marginally and for short periods of time while the market and technologies adapt to allow people to block those interruptions. This approach will result in constant battle between advertisers and consumers, one that in the end consumers will win. Sustainable business models throughout the media and advertising value chain will focus on how to seamlessly integrate, and even enhance, content with advertising (again, from outdoors to online). These will be sustainable; these will be the superstars.

What/who is included in the eco-system? In the simplest view, the eco-system includes the content surrounding the advertising, the advertisers themselves and, most importantly, the people (re: consumers, users, viewers). You can look at almost any place there might be advertising and find these components. But defining the components of the eco-system is the easy part. Building, placing and in some cases, even integrating, advertising that adds the necessary value to each component is the tricky part.

What are the goals of each component of the eco-system? For the advertisers, it's easy; increase sales and build brand equity. For the content surrounding the advertising, the minimum is not to disturb the content with advertising messaging; the Holy Grail is to actually enhance the content with the advertising messaging. For consumers, the goal is to receive only informationally and/or emotionally relevant advertising at the right point in time and space.

It may sound like a tall order, but as we all would agree, advertising that doesn't increase sales or brand equity is an obvious waste. The reality that we are dealing with in a world of TiVo, user-generated content and attention fragmentation is that an advertising method that can increase sales, but doesn't address the other components of the eco-system, will eventually be phased out by the people and/or content publishers. When this happens, the advertising certainly can't deliver any longer on its first goal of increasing sales. Since constantly reinventing business models for short-term success is inefficient, the solution it to create technologies and business models built specifically to address all elements of an advertising eco-system in the 21st century.

The solution is even more complicated than the problem. It requires blending the right brain and the left brain, blending creative and algorithms. It requires innovations in technology and levels of human interaction. It requires aspects of professional development and user-generated personalization. In the end, it requires finding the point where Madison Avenue can meet the people halfway, using the next generation of advertising technologies and philosophies.