AOL acquires Buy.at to boost online ad business

February 5, 2008 (Computerworld) AOL LLC said today that it has purchased Buy.at, an online affiliate marketing network, as part of its strategy to boost its online advertising business. Financial terms of the deal were not disclosed.

AOL said that London-based Buy.at will be run as a unit of its Advertising.com business. Buy.at offers advertisers and online publishers a platform for e-commerce marketing based on performance.

Buy.at allows advertisers to pay merchants only when a user takes a specific action, such as buying an item or signing up for a free trial in response to an advertisement on the merchants' Web sites, according to AOL.

"[This] will position AOL's Advertising.com to serve merchant and retail advertisers with the industry's most comprehensive set of performance marketing offerings to drive sales and other transactions, leveraging Advertising.com's Web advertising network and search engine marketing services and now Buy.at's innovative affiliate network," said AOL Chairman and CEO Randy Falco in the statement.

Buy.at is the fifth advertising acquisition AOL has made in the past 12 months, a sign of AOL's intent to capitalize on the growing online ad market. Last year, AOL acquired Quigo, a contextual advertising firm; Tacoda, a company that specializes in delivering ads based on users' online activities; Third Screen Media, a mobile advertising network and software provider; and AdTech AG, an international online ad-serving company.

Total Ad Spending Slows for the First Time Since 2001

By E&P Staff

Published: September 11, 2007 11:15 AM ET
NEW YORK Total U.S. advertising expenditures fell 0.3% to $72.5 billion for the first half of 2007, according to TNS Media Intelligence. It's the first time since 2001 that ad spending declined for two consecutive quarters.

"While the protracted downturn in automotive spending has been a prime contributor, the overall results reflect weakness across a wide range of industries and advertisers," Steven Fredericks, president and CEO of TNS Media Intelligence, said in a statement. "Given the uncertainties about near-term economic growth and consumer spending, we expect core ad spending will continue to face challenges during the second half of the year."

Newspapers recorded the largest drops in ad spending compared to other media measured by TNS. Overall, ad expenditures dropped 5.8% to $12.9 billion. Local newspapers experienced a decrease of 5.8% to $11 billion while ad expenditures in the nationals were down 6.4% to $1.6 billion. In Spanish language papers, ad spending slipped 4.4% to $172 million.

Spending on the Internet soared 17.7% to $5.5 billion.

Newspapers lost share as well, according to the report: 17.8% of advertising is spent in newspapers, down from 18.8% from the same period a year ago. The Internet increased its share edging out radio. Ad spending on the Internet was up 7.6% compared to 6.4% for the same period a year ago. Radio's share fell 7.1% from 7.3%.

Online Advertisers Start to Think Locally

AUGUST 30, 2007

Who you gonna click?

eMarketer projects that local online advertising spending in the US will reach $2.9 billion in 2007.

Interestingly, that is still only 13.4% of the total Internet ad market.

"The promise of local online advertising, at this stage, surpasses the reality," said David Hallerman, eMarketer senior analyst and author of the new report, Local Online Advertising: Measuring the Market.

"But a number of factors are set to accelerate growth in the market: the wealth of small and midsize companies potentially available as online advertisers, the increased use of local Internet sites and services by individuals and the development of local online ad networks connected with local media, such as newspapers," he said.

Local online advertising's share of total media ad spending has fallen slightly, year over year, according to Universal McCann.

By 2011, eMarketer estimates that less than one-third of all US ad spending will be locally targeted.

Spending will not match the time spent online. In four years' time, the Internet will account for only 7.6% of all local ad spending.

"Nevertheless, as audiences continue to migrate online and away from traditional local media, such as newspapers and radio, it is only a question of time before online local ad spending catches up," Mr. Hallerman said.

Report: Offline Ads Are Heavy Drivers of Search

Report: Offline Ads Are Heavy Drivers of Search
By Kevin Newcomb, The ClickZ Network, Aug 20, 2007

While many search marketers understand that there is a connection between online and offline marketing, some may not understand its full extent. According to a new study by Jupiter Research and search marketing agency iProspect, a surprising two-thirds of searchers are led to search on a given keyword as a result of offline marketing.

Specifically, 37 percent of respondents said that in the last six months, a television ad prompted them to conduct a search on a particular company, service or slogan, while 20 percent said a magazine or newspaper ad led them online. Twenty percent said a company's store drove them online, and 17 percent were influenced to search by a radio ad. A smaller number were influenced by outdoor ads.

Only 33 percent of respondents said they had not been influenced to search by any offline media in the past six months. For daily searchers, the influence of offline media was even more apparent, with only 28 percent of searchers saying they had not been prompted to search by any offline media in the past six months.

"Today, it's incumbent upon marketers to integrate search with their offline efforts," said Robert Murray, iProspect's president. "Quite simply, their offline messaging needs to be memorable and facilitate search, and their search efforts need to echo that messaging and integrate those keywords. The bottom line is that integration is no longer optional."

The most common keywords searched were company names, or names of products or services mentioned in an offline ad. In 44 percent of cases, the keyword was the company name. To take advantage of this, marketers should prominently feature company and product/service names in their offline advertising, and make sure their sites are organically optimized for those keywords, and they are showing up in search ads on those keywords as well.

If an offline ad features a tagline or slogan, search marketers should also ensure they are showing up in either organic or paid results for that as well, Murray said. "Offline ads have a short window of time to get the message out to the audience. People often tune out ads, but remember snippets of them. That makes search even more important," Murray said.

Besides driving traffic, offline media tends to drive quality traffic, according to Murray. The study asked those users influenced by offline media if they had ultimately made a purchase at that site as a result, and found that 39 percent had done so.

That 39 percent conversion rate is generally higher than the rate achieved by either search or offline channels alone, Murray said. While the offline ad gets attention and creates demand, it's search that can harness that demand and drive the potential customer to the company's site and turn it into a sale, he said.

"Sure, offline channels can drive traffic, but at the end of the day, it's pretty much meaningless if a purchase isn't made," said Murray. "Marketers want to know the pay-off. And the data from this study suggests that search and offline produce extremely impressive results."

While many marketers are aware of the relationship between online and offline media, it can still be difficult in some organizations to coordinate online and offline campaigns, due to the siloing still present in many marketing departments, Murray said. Many offline marketers don't want to give up any control to their online counterparts, but Murray has found that laying out the situation clearly can help both sides adopt more of a team attitude.

"Search is no longer an add-on consideration for marketers," said Murray. "It is front and center. And while it is a powerful channel on its own, it's clear that its efficacy is multiplied when combined with offline channels."

Online ads to overtake US newspapers

By Aline van Duyn in New York

Published: August 7 2007 05:03 | Last updated: August 7 2007 05:03

The rapid growth of online advertising is expected to see the sector overtake US newspaper advertising in terms of size by 2011.

The forecast comes against a backdrop of declining advertising sales reported by newspaper groups this year in spite of continued strength in the US economy.

The findings are from a widely-watched annual research report on the media sector by Veronis Suhler Stevenson (VSS).

In the 2007 study, published on Tuesday, VSS forecasts that online advertising will grow by more than 21 per cent per year to reach $62bn in 2011, making it bigger than newspaper advertising, which is expected to total $60bn in 2011.

Broadcast television and cable and satellite television combined will continue to take the biggest share of advertising dollars, and are forecast to reach $86bn in 2011. “The path of online advertising and newspaper advertising is a continuation of what we’ve been observing for many years, but it is finally getting to the point where the lines will cross,” said James Rutherfurd, managing director at VSS.

The shift in advertising spending from traditional media to online and digital alternatives is taking place across the globe. Already, some forecasters expect newspaper advertising to be overtaken by online spending in the UK and Sweden this year.

The VSS forecasts also illustrate the lag between changes in consumers’ behaviour and advertising spending.

The survey also measured the time spent on different media, and in 2007 the amount of time spent reading newspapers is expected for the first time to be overtaken by time spent online.

Indeed, the shift to digital media has led to a slight decline in the overall amount of time spent consuming media.

In 2006, media usage per person per year declined half a percentage point to 3,530 hours. The study found that while people typically watched television for at least 30 minutes per session, they tended to watch user-generated video clips on the web for five to seven minutes.

The use of media in the workplace increased, however, up 3.2 per cent to 260 hours per employee per year, VSS found.

Spending by companies on information and media, including business-to-business magazine and trade shows, is also increasing, up 8.1 per cent in 2006 to $227bn.

“Knowledge and information industries drive the US economy, meaning that information is a critical tool,” said Mr Rutherfurd.

“Companies are prepared to pay a lot of money to get that information.”

ONLINE AD WAR

August 7, 2007 Web advertisers are spreading their online ad dollars across more sites and are paying lower rates in many cases, putting pricing pressure on established Internet players.

Several companies are already feeling the heat after reporting results that showed weakness in online ad revenue from Web banners and other display ads.

Time Warner's AOL reported a sharp ad sales slowdown last week. In mid-July, Yahoo! posted disappointing revenue from display ads and cut its forecast for the rest of the year.

At least three other big Web publishers - the New York Times, the Washington Post and the technology-focused Cnet - reported slowing Internet ad growth recently.

Analysts and ad execs say established Internet sites - namely, the big portals and large content providers - are starting to feel the pinch after years of charging top dollar for space on their sites.

The pricing pressure is apparent in AOL's most recent results, in which ad growth slowed to 16 percent from nearly 40 percent over the past few quarters.

Online ad growth at the Washington Post fell to 11 percent in the second quarter, compared with 36 percent a year earlier.

"People are still buying display ads, but they are buying them elsewhere and for less than if they bought them from AOL or Yahoo!," said Jupiter Research analyst David Card.

This shift is benefiting newcomers - such as social networking sites like Facebook, MySpace and YouTube - at the expense of more established rivals that were once considered "must buys."

"We have a lot more choice and a lot more options out there," said T.S. Kelly, head of research at Media Contacts, the interactive arm of media buying firm MPG.

It used to be that if an advertiser wanted to reach a lot of potential car buyers, their options were limited to buying the homepage of a portal like Yahoo! or a car review site like Edmunds. com.

Now, technology has made it easier to deliver ads to the right person at the right time across a multitude of Web sites.

Ad networks, for instance, aggregate Web publishers and allow advertisers to buy ads on hundreds of sites and target users based on location and other characteristics. There are also ad exchanges that automatically pair buyers with sellers.

Both give advertisers easy access to tons of cheap ad inventory that might otherwise have gone unsold.

"Advertisers have shown a willingness to embrace ad exchanges and ad networks offering inventory at lower rates," said Darren Chervitz, an analyst for the Jacob Internet Fund.

Not surprisingly, Yahoo! and AOL have sought a piece of that business by buying their own ad networks and exchanges. Yahoo!, for instance, bought ad exchange Right Media to sell more of its "non-premium" inventory, while AOL owns ad network Advertising.com.

Ballmer: We are 'hell-bent' on succeeding in ads

By Martin LaMonica

http://news.com.com/Ballmer+We+are+hell-bent+on+succeeding+in+ads/2100-1012_3-6199030.html

Story last modified Thu Jul 26 12:13:02 PDT 2007

Hefty investments in online services and consumer electronics will let Microsoft maintain its historically rapid growth rate, CEO Steve Ballmer told financial analysts on Thursday.

The largest software company is hosting its Financial Analysts Day at its Redmond, Wash., headquarters, where Ballmer described Microsoft's strategy as making several big bets on emerging businesses while drawing more revenue from its mature desktop and server software franchises.

Microsoft is transforming its product development and business models around "software plus services," or software complemented with online services, he said. The company has been criticized by financial analysts for being slow to capitalize on advertising revenue as search giant Google has done.

"We are hell-bent and determined to allocate the talent, the resources, the money, the innovation to absolutely become a powerhouse in the ad business," Ballmer said.

Company founder Bill Gates, who made a presentation before Ballmer, announced that Microsoft is opening a dedicated center to research online advertising and search called the Internet Services Research Center. Headed by Harry Shum, the center's research will focus on search relevance, spam prevention and searching scanned images, such as book pages.

Ballmer said that the company is tackling disruptive technology changes head-on, namely the shift to advertising-supported Web services. Its commitment to online services and consumer devices are necessary because they provide avenues for the company's software.

He defended continued investments in two unprofitable divisions: Online Services and its Entertainment and Devices division. Microsoft's multiyear commitment in server software for corporate data centers diversified the company and created a multibillion dollar revenue engine.

"We're bringing the same kind of vision and tenacity that is in our DNA that drove us into the enterprise business into consumer devices and online services," Ballmer said. "We are going to be an advertising company, and we are going to be a devices company."

Even coming off a strong fiscal 2007 performance, Ballmer said he has "never been more optimistic" about Microsoft's prospects, outlining areas for more revenue. Those included stepped-up sales of Windows through PC manufacturers, Xbox game consoles, Windows Mobile phone software, increased market share of server software, office worker productivity software for small and medium-size businesses and advertising from online services.

Giving some upbeat reports on its mature business, Microsoft said it has sold 60 million copies of Windows Vista since its launch earlier this year and that its SharePoint Web portal business has grown to $800 million. Ballmer said that by the end of its fiscal year 2008, there will be over 1 billion copies of Windows installed on PCs.

Furthering its strategy to court Web developers and designers, Microsoft said that by the end of the week it will release Silverlight 1.0 Release Candidate. Silverlight is a download for displaying media and interactive content in Web pages. It competes with Flash and other plug-ins that add interactivity to Web sites.

During Gates' presentation, he described Microsoft's vision for improving users' computing experience with online services; better user interface technology, such as speech and cameras; and a smooth transition among handheld devices, PCs and other devices.

He said that broadband is allowing Microsoft engineers to reconsider the computing paradigm, where resources typically confined to a single machine, like storage, can be done in the Internet "cloud."

Microsoft is building a platform for that new computing paradigm with Chief Software Architect Ray Ozzie "driving the revolutionary new platform that is service centric," Gates said.

The State of the Online Advertising Market

The State of the Online Advertising Market

To try and make sense of the recent M&A frenzy in the online advertising market, I put together an overview of what the current landscape looks like (click on the image to enlarge):


One of the first things that stands out when looking at this overview are the battle lines that are currently being drawn between Google and Microsoft, both of which clearly intend to dominate the advertising market. With the assets they've been stockpiling recently, we can expect even more of a clash between these two giants over the next few years.

It's also interesting to note that the recent run of advertising acquisitions have almost all been for ad servers - DoubleClick, Atlas, RightMedia, Strategic Data Corp., and 24/7 Real Media. This may indicate that companies are looking to lock up as much inventory as possible, given that CPM rates are only expected to increase along with more demand and better optimization/targeting. Ad servers may also be a way to gain direct access to advertisers and their agency representatives.

Given how much startup activity there is in both of these spaces, I was surprised to see how little M&A activity there's been so far in the video and mobile advertising markets. It could be that most companies are choosing to simply build their own solutions, or in the case of mobile advertising perhaps perceive the market as still being too early (although I do feel we are fast approaching a tipping point with mobile advertising).

Looking at the gaps in the market, it's clear we can expect a lot more M&A activity in the online advertising space over the next few years. Who's next? Here's a list of some of the more likely candidates:

AdMob
Arguably the leading mobile advertising company today, having already served over 3 billion mobile ad impressions since being founded by Omar Hamoui in 2006. Almost every mobile app I talk to is buying inventory from these guys. Check out some of the early entries on Omar's blog to get an idea of how fast this company took off.

BlueLithium
Massively profitable online ad network serves over 10 billion ad impressions a month to over 100 million unique users. Able to deliver relevance through effective behavioral targeting and optimization technology. With ValueClick under investigation, BlueLithium has emerged as one of the leading remaining ad networks.

SpotRunner
SpotRunner is interesting in that it represents both a new agency model for smaller advertisers, as well as the potential to apply online advertising targeting and optimization techniques to an off-line medium such as cable TV. The company has already raised $50 million from Index Ventures, and corporate investors including Interpubic, WPP and CBS. Will they add to Index's recent successes with TellMe and Last.fm?

Tacoda
The leading behavioral targeting company in the market, reaching over 120 million unique users a month. In addition to the ability to deliver increased relevance, behavioral targeting also allows advertisers to spend much less to reach the same prospective customer, which may help to explain why this segment of online advertising is projected to have double digit growth for the next several years.

VideoEgg
With it's broad reach and 15 million + videos served each day, VideoEgg (a First Round company) is already one of the largest video-based ad networks in the market. Although video advertising is still in the very early stages, and online video ad spending remains a small fraction of overall online advertising revenue, the explosion in online video, as well as the opportunity to blend video's high brand engagement with the Internet's interactive, tracking and targeting capabilities is expected to drive 60%+ yearly growth in this segment for the next several years.

Revver Revs Up 'Impressions,' Adds CPM Model To Online Video Ads

Revver Revs Up 'Impressions,' Adds CPM Model To Online Video Adsby Joe MandeseIn a sign that the social media and user-generated content market may be developing a traditional advertising model, revenue-sharing online video aggregator Revver this morning announced a plan to begin offering "impression-based advertising products" to advertisers and agencies. - Read the whole story...

Pingology - a Skill-Based Alternative to Pay-Per-Click Search Engines

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/07-12-2007/0004624397&EDATE=

GOLDEN, Colo., July 12 /PRNewswire/ -- Pingology,
http://www.pingology.com, is a new paradigm search engine. It allows Users
to find more relevant information in less search time. Webpage Owners are
offered a skill-based alternative to costly pay-per-click on a free or
fixed-price subscription basis.
Businesses are finding top placement of the best key words on pay-per-
click search engines very expensive. ROI can be variable to say the least.
A $1000 pay-per-click budget will often not purchase a week's worth of top
ranked placement. Key words can cost over $20 a click-through. No wonder
pay- per-click is a $10 billion a year industry.
On Pingology, skill and relevancy determine placement -- not how much
money you can spend!
Pingology offers a fixed-cost, skill-based alternative. Webpage Owners
"cloak" their pages by filling out a questionnaire designed to provide more
specific information to the User than is available from only key word text-
descriptors and simplistic bot IDs such as "image," "video" and "link."
Users fill out a corresponding questionnaire of what they seek. The
more closely those responses match cloaked responses by Webpage Owners, the
higher the webpage is ranked in the search results seen by the User.
Webpage Owners and Users effectively "ping" each other, engaging in an
anonymous, ongoing dialogue between needs of the User and content offerings
of the Webpage Owner. The more effectively Webpage Owners cloak their pages
in relationship to User wants, the higher will be their ranking. Users get
more relevant results and webpage owners get qualified click-throughs.
Users and Registered Webpage Owners will have access to short-form,
long- form and specialized questionnaires. A Reports area allows Webpage
Owners to monitor searches and realign webpage content to meet User needs.
Pingology User Rollout is set for October 16, 2007. Between July 6 and
September 16 during the Webpage Owner Rollout Pingology is offering webpage
owners free short-form cloaking of up to three unique URLs. Pre-rollout
discounts on long-form and specialty form questionnaires is also being
offered.
Advertising will be offered but will not affect rankings or placement
and space will be limited.
Pingology will be free to Users.

Contact:

Michael Archer
303-274-0515
marcher@pingology.com

Media Inquiries:
media@pingology.com

Investors:
investors@pingology.com
This release was issued through eReleases(TM). For more information,
visit http://www.ereleases.com.

Britain Says 'Cheers' for Online Adverts

JULY 3, 2007

The old guard is changing, and fast.

If your impression of Britain is a bloke in a bowler hat, think again. Far from being set in its ways, the UK is becoming a model for the future of advertising around the world.

In fact, Britain is set to account for over half of all online ad spending in Western Europe this year. That share will rise to 52.6% of regional online spending by 2011 — amounting to nearly £4.5 billion ($8.2 billion).

"Several recent developments, including Google's planned acquisition of the ad-serving company DoubleClick and Microsoft's announcement that it hopes to buy aQuantive, another player in the advertising sector, signal a radical transformation of online advertising," says Karin von Abrams, eMarketer Senior Analyst and the author of the new report, UK Online Advertising. "The UK will be in the vanguard of this change."

The health of the UK economy will continue to provide a firm underpinning for online advertising in Britain. Today, few advertisers remain unfamiliar with digital media, and both new and established brands increasingly have the funds, the will and the agency partners to invest confidently in online campaigns.

"Several sectors will drive the UK online advertising market between now and 2011," says Ms. von Abrams, "such as paid search, social networks, mobile platforms, rich media and personalization."

The importance of the rise of Internet spending is difficult to overemphasize.

With the rate of advertising growth declining, and Britain's share of world spending also diminishing, the growth of the online marketplace has made a remarkable contribution to the UK's advertising landscape, and given an enormous boost to spending overall.

Data from the Advertising Association and GroupM illustrate the impact of online spending dramatically — and projections for 2007 show the trend continuing.

The rate at which online spending is growing against spending in all other media is easing somewhat, however.

Recent projections by ZenithOptimedia anticipate that online advertising will account for 16.6% of the total in 2007 — a less optimistic estimate than the 18% calculated by GroupM — and will forge ahead to claim just under 23% in 2009.

"A world transformed by the convergence of browsing, searching and ad-serving technologies isn't here yet," says Ms. von Abrams. "In the meantime, in Britain traditional display formats remain central to the online marketplace, even as more complex types of messaging and interaction emerge."

To get more of a peek into the future, read the new eMarketer report, UK Online Advertising.

In Shift, EMarketer Raises Online Ad-Growth Estimates

Continued Strength in Search, Display Spur Revised Prediction

By Abbey Klaassen

Published: June 26, 2007

NEW YORK (AdAge.com) -- What slowdown? While there has been some speculation that the dramatic growth in online display advertising is starting to level off, that is not the case this year or next, said eMarketer, as the research firm revised its online ad spending estimates upward for 2007 and 2008.

Negative predictions about the economy as a whole haven't necessarily panned out, partly leading to eMarketer's revised upward estimates.

Mearly 30% growth
EMarketer is bumping up its 2007 totals from $19.5 billion to $21.7 billion, which means instead of 18.9% growth the industry will experience 28.6% growth. While 2007 was expected to be the first year in the past three that growth dipped below 30%, now it will at least come close.

Growth in 2008 is expected to be more robust -- again more than 30% -- to a total $28.8 billion, thanks to an injection of political spending dollars from the presidential election. In 2009 eMarketer is finally predicting a slowdown, with online ad revenue growing at a reduced 18.1% clip.

"A combination of seeing continued growth not just from Google but seeing it at places such as AOL, and seeing that when there's any good news from traditional media it's been online," said David Hallerman, senior analyst at eMarketer. And the growth isn't only coming from the usually hyped sectors of search and video.

"One of the things that's most interesting is continued strength of display," Mr. Hallerman added. "It's become almost a standard add-on for campaigns. Yahoo's weakness ... has been in search more than display."

What's changed?
What has changed since the earlier 2007 estimates? For one thing, when the estimates were created in September, Yahoo was issuing warnings of weaker-than-expected display revenue in a couple key categories. As Mr. Hallerman notes, they are still the second-biggest contributor after Google to the U.S. online advertising revenue. "But it wasn't clear other publishers would be gaining as much as they have," he said.

Additionally, there were more negative predictions about the economy as a whole -- and those predictions haven't necessarily panned out.

Online advertising as a share of the total media budget will surpass radio this year, eMarketer said, and top 10% next year. EMarketer benchmarks its estimates against figures from PriceWaterhouseCoopers and Interactive Advertising Bureau.

Where'd you go? Advertisers know

MICHELE GERSHBERG

Reuters

June 21, 2007 at 9:57 AM EDT

NEW YORK — Personal identity has taken on a new meaning in the digital age, where basic facts like your name, address or age are far less important to some people than the collected records of what you were looking at online.

Technologies for monitoring and interpreting Internet habits as a predictor of future behaviour cropped up at the start of this century, but only now are gaining momentum as the newest gold mine for Web sites and their advertisers.

Known as behavioural targeting, the premise is to follow the sites you visit and build a picture of what products may interest you, then deliver related advertising in time for you to choose your purchase.

U.S. marketers will nearly double their spending on such advertising to $1-billion (U.S.) next year from $575-million in 2007, according to research firm eMarketer. By 2011, behavioural targeting will surge to nearly $3.8-billion of online ads.

Industry executives say it's a boon to the consumer, who in an ideal world will only receive commercial messages that suit them personally, while enjoying online entertainment or information for free.

“As long as I'm seeing relevant advertising and as long as I am receiving free content, I am a pretty happy person,” said Bill Gossman, chief executive of behavioural targeting firm Revenue Science. The company's clients have included media outlets from Reuters Group Plc to Walt Disney Co.'s ABC News and Gannett Co. Inc.'s USA Today.

To protect individual privacy, U.S. companies who sell such services say they do not link the behavioural data with the actual names and addresses of computer users.

“We have no idea of who that individual is and I don't want to know,” Gossman said. “What marketers want to know is, what is their intent?”

Critics charge the technologies will only stoke corporate efforts to accumulate an ever-increasing pile of data on a person's behaviour whether on the Internet or elsewhere.

“My concern as we give away ever more data about ourselves, our activities, our behaviour in the world, our choices ... is that fairly rich data sets can be built up, maybe not in one place but relationally across the Web,” said Adam Greenfield, a futurist and user experience consultant.

The greater danger, he said, involves the ability to match data on Web behaviour with information such as a person's location, via their cell phones, or commercial transactions.

For a marketer, there is no such thing as too much information when it comes to making a sales pitch.

“The picture isn't complete until you literally plant tracking devices inside somebody's arm,” said Emily Riley, an analyst at JupiterResearch. “When I go to the mall, nobody at Google is going to know what stores I have visited.”

WHAT'S A DEMOGRAPHIC?

For example, a person comparing automobile brands online is likely interested in buying a car. Behavioural targeting narrows those categories further: Is the car a model that would seat a family? Did the individual inquire about hybrid vehicles, suggesting interest in protecting the environment? Did they also look for an infant's safety seat?

From that data, enough information could be gleaned about a person to know that they might be interested in not just the latest Volvo or Honda model, but perhaps biodegradable diapers as well.

“The ideal is where they literally know your preferences and what motivates you,” said Riley. “That is really personalized. If we are at Web 2.0, that would be Web 3.0, where your entire personality is online.”

Build a database of such people's habits and you can index their interests to create an “audience” of individuals. They may be at different places online and in the real world, but they all show a preference for environmentally friendly products, or tend to spend more money on shoes than on hats.

That proposition has turned traditional advertising, long dominated by the television commercial, on its head. In the Golden Age of U.S. advertising, a marketer could be confident that buying time for a commercial on three TV networks would reach a wide swathe of the domestic audience.

Those audiences were defined by demographic categories like age and gender. TV networks based the price of their ads on a small sample of the viewing habits of U.S. consumers, charging their highest premium for programs popular among young males.

As people now get their entertainment on everything from cell phones to video games, the audience has dispersed from their living rooms. That makes them harder to track down, but offers the advantage of more precise information once they are found.

Internet advertising agencies are reaping the advantages of these fundamental changes, largely because they help figure out where to find a specific audience and build campaigns tailored to the Internet as a medium.

“This is going to be a Golden Age of advertising,” said Scott Howe, president of the DRIVEpm behavioral unit of online marketer aQuantive Inc. “It's the ability to deliver messages in sequence and tell a story. Advertising is going to become fun again. It's going to become serialized.”

Howe said behavioural ad campaigns can be just as useful for filtering out certain consumers. In one campaign for a software product, the manufacturer targeted customers who selected the product for their online shopping cart but deleted it before making their final purchase.

The rationale was these customers had already shown interest in the product, and just needed some further incentive to make an order.

“It was the worst-performing campaign. It turned out these people weren't buying the software in the end because it was incompatible” with their computers, he said. The marketer then used the same list of customers to make sure they didn't receive such advertising in the future.

Just try to do that on television.

European Online Ad Spending

JUNE 12, 2007

Display ads are popular on the Continent.

Online advertising spending within the 13 countries of the IAB Europe network was Eur8.003 billion ($10.08 billion) in 2006, according to the Interactive Advertising Bureau (IAB) Europe's "Pan-European Online Advertising Spend" study, analyzed by PricewaterhouseCoopers

The UK accounted for the largest share of European online ad spending, at 39% of the total. Germany accounted for 22%, France for 15% and the Netherlands for 7%.

Alain Heureux of IAB Europe said, "These figures demonstrate without any doubt the significance of the European online advertising industry."

Nearly a third of online advertising spend in 2006 was on all forms of display advertising, 45% on search advertising, 22% on classifieds and directories and 1.6% on e-mail marketing.

In 2007, eMarketer estimates advertisers will spend $7.5 billion to reach all Western Europeans, up 25% from $6.0 billion in 2006.

Online advertising in the UK will account for as much as 18% of all media spending this year, according to GroupM. It is also the most expensive country in the world for online advertisers. By 2010, eMarketer estimates advertisers will spend $217 per Internet user in the UK, compared with $136 per French user and only $10 per Italian Internet user.

The US audience is something of a bargain by comparison: Advertisers spent $86 per American user in 2006, and they are projected to spend $130 per user in 2010.

Web's Q1 Ad Rev Up Again; Hits Record $4.9 Bil.

Mike Shields

JUNE 06, 2007 -

Online advertising’s hot streak continues to roll on, as the industry started off this year with yet another record ad revenue quarter.

During the first quarter of 2007, Internet advertising revenues hit $4.9 billion, up slightly from the previous record set just in the fourth quarter of last year ($4.8 billion) while representing a healthy 26 percent increase versus the same quarter last year, according to the latest figures released by the Interactive Advertising Bureau and PricewaterhouseCooper. Just a few weeks ago, the two partner organizations announced final revenue figures for 2006 that highlighted the growing strength of the online ad market, as revenues surged 35 percent for the year, totaling at $16.9 billion.

Officials at both firms predict that these spending trends should continue, particularly as broadband connections become more pervasive and advertisers continue to gravitate to more dynamic Web ad formats. “The recent results are particularly impressive when the size of the advertising revenue base is taken into account,” said Peter Petrusky, director, PricewaterhouseCoopers. “Given these results, we may expect continued strong revenue growth buoyed by an expanding broadband subscriber base, which could translate into more users spending more time online and offers a platform for rich media and video ads that dial-up connections can’t render.”

The Brave New World of Ad Serving

by Dana Ghavami, Wednesday, Jun 6, 2007 6:00 AM ET
THE AD SERVING INFRASTRUCTURE FOR online advertising has undergone a dramatic transformation in just a few weeks. A relatively transparent public-facing business for the benefit of the entire online ad industry has been bought out by owners which I suspect will put their own interests above those of the industry as a whole.
The Shake Down
Having nearly all the major ad serving companies being acquired is like breaking in to the Central Bank of Media and taking over the tellers. All deposits and withdrawals now go through the new owners. This will not be without consequence.
Coercion
Taking control of the industry ad serving infrastructure is just the beginning. Next might be control of your unsold inventory in return for reduced or cost-free ad serving. Upon seizing the site, an ad exchange marketplace will be built around the notion of maximizing bids for unsold ad space. Down the line, an attempt will be made to buy and sell all ad space in an automated manner.
Once the power of ad serving has been ceded, these brokers of the new millennium will dictate their cut/commission on all digital ad revenue. Isn't this where talks broke down with GoogleTube when they tried to muscle the rules of revenue sharing with the actual producers and copyright holders of the media content?
Data Laundering
Acquisitions of the two largest ad serving companies, DoubleClick and 24/7 RealMedia, gives their new owners access to a treasure trove of vital and competitive data. Imagine GoogleClick owning all of FIM's MySpace data: agency, advertiser, ad impressions served and sold, and dollar amounts of buys. All while FIM is leading the charge with media alliances to counter a GoogleTube monopoly, while its every move is exposed to a direct competitor.
Imagine WPP representing Pepsi and Coke's agency utilizing 24/7 Real Media technology to allocate the sites and buys of a competitive product to WPP's client. Needless to say, it would be very tempting to take a peek or -- even worse -- use the data to your competitive advantage.
Organized Profit
The days of product management and client services in the interest of the customer (either publisher or agency) are over. All features and offerings will be in the interest of the new owner's pocket, no longer the technology platform customer. The concept of customer will vanish into being an element of a vast network.
Big media companies on licensed versions of DoubleClick or RealMedia will be left out in the cold since these products are very likely going to be phased out, given the whole point and value behind these acquisitions is amassing the data for owners to decide how best to profit. The integrity of every ad impression served will also be called into question. Brand publishers will continue to sell their own space via sales reps without a doubt for the next 5+ years.
Is your system serving each impression you sold in your interest or is the ad serving algorithm biased towards picking a campaign that will benefit a big corporate owner? A very concerning and rude awakening of what's behind these multi-billion dollar bets will be on the minds of the major stakeholders of digital advertising revenue.
Protection
Once you've turned over control of your revenue-generating system, you will need to pay for protection. There are plenty of imaginable circumstances and many that will unfold over time. Isn't this what GoogleTube is attempting when they will only provide available content filtering technology to protect partners?
Outcome
Big media will look for independence and offset the endless appetite of these would-be dominant forces in online advertising by using their own or independent ad management technology. Isn't the Checks and Balances system what makes the American democratic system so great? Imagine the inverse: blank check, no balance!

Borrell: Local Web Ads Expected to Be Up 31.6% in '07

JUNE 04, 2007 -

Local online advertising is expected to hit $7.5 billion this year, a 31.6 percent increase over 2006, according to new estimates scheduled for release Tuesday by Borrell Associates.

While local ad growth began to slow in 2005, it is still growing faster than national online advertising, which is expected to see a 20.7 percent increase to $22.1 billion.

Newspapers will continue to pull the dominant share of local online advertising at 35.9 percent, followed by pure-play Internet companies (such as Google, Yahoo, Monster) at 33.2 percent. Yellow pages are expected to control 11.7 percent of ad dollars. Local print magazines have 9.2 percent. TV stations have 7.7 percent and radio stations, 2.2 percent.

For 2007, newspaper online ad revenue is expected to reach $3.2 billion, while TV stations will pull in $602 million and radio stations, $189 million.

“If newspapers are engaged in an online feeding frenzy and TV stations have set out on the hunt, radio stations are rubbing their sleepy heads and wondering what’s for breakfast,” the Borrell report noted. Although radio stations have doubled their share of the local online ad market, Borrell pointed out that growth has come at the hands of a few aggressive operators such as Cox Radio, Emmis Communications and Clear Channel.

During the past year, companies making a play for local online advertising focused on building their organizations to capture more dollars; several media companies appointed corporate-level interactive executives. Some of the largest local sites now employ two dozen or more online-only sales people.

Most local media operators are generating 2 to 5 percent of their revenue from Web operations. Some media companies, most notably newspaper companies, are getting more. Online ad revenue represents 10.7 percent of The Washington Post’s gross revenue; the New York Times and Morris Communications, 8.1 percent; Scripps, 7.0 percent; and McClatchy, 6.6 percent.

Are Banks Ready to Cash In Online?

JUNE 1, 2007


The virtual world of finance is starting to add up to some real money.

Financial institutions large and small are rushing to open virtual branches, offering higher savings yields and lower interest rates to entice consumers to switch or stay.

eMarketer estimates nearly 80 million US adult Internet users will conduct at least some of their banking activities online this year, an increase of 9.5% over 2006.

By 2011, 101 million adult Internet users in the US will be banking online.

"When you look closer at the numbers, however, you find that growth in the US online banking population is actually slowing, at least at the top 10 online banks," says Lisa E. Phillips, eMarketer Senior Analyst and the author of the new report, Banking and Bill Paying Online: Chasing Those Digital Dollars. "comScore's online banking report showed the online banking population grew 47.3% in 2004 and dropped to a 27.1% growth rate in 2005."

And growth will slow further, to 6.7% next year and just 6% through 2011 — when eMarketer expects about 48% of the US online adult population to conduct some form of banking on the Internet.

"Nevertheless, financial institutions from banks to insurance companies are trying to move more business online, where the operating costs are lower and profit margins higher," says Ms. Phillips.

Aite Group estimates that for every new account opened online and not through another venue, financial service providers could save $50.

"With an average of 4.2 million applications for all forms of financial products made online per month in 2006, the potential savings are huge," says Ms. Phillips.

By 2010, Aite Group predicts 13% of all checking accounts will be opened online in the US, up from just 3% in 2006.

There are other reasons for banks to push their users online. According to TowerGroup, consumers who bank online interact more often with their banks.

In addition, TowerGroup projects that growth in transactions made online will outpace transaction growth in all other innovations introduced to date — ATMs, branches and call centers — and by 2010 the Internet will handle 31 billion consumer banking transactions per year, compared with 17.8 billion through call centers and 14.7 billion each through branches and ATMs.

Online Ad Spending Hits New Record

MAY 25, 2007

Search and display continue to lead.

US Internet ad revenues totaled $16.9 billion in 2006, up 35% from 2005, according to the "Internet Advertising Revenue Report" from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC).

Search, display, classifieds and lead generation all grew, as performance-based and CPM pricing both increased.

Consumer advertisers continue to represent the largest category of Internet advertising spending.

"The results for 2006 show the Internet continues to offer marketers the widest spectrum of advertising formats, from search-based text ads to dynamic rich-media and broadband video ads," said Peter Petrusky of PricewaterhouseCoopers. "Online publishers may continue to experience growth as marketing budget allocations to all interactive forms continue to increase."

The numbers topped eMarketer's revised estimates for 2006 by half a billion dollars. The estimates were based on IAB and PWC data, for which the last full year measured had been 2005.

"One key market shift can be seen in how display ad spending grew at a higher rate than even paid search advertising," says eMarketer Senior Analyst David Hallerman. "Brand-oriented marketers are just starting to ramp up spending, and we'll see greater growth in that area over the next few years."

Advertising's Brave New World

Different Lineup of Players Emerges With Online's Rise

By EMILY STEEL
May 25, 2007; Page B1

For decades, advertising has been a relatively simple process dominated by a clubby world. Long-established advertising and media-buying agencies, most owned by half a dozen global giants, make TV or print ads and negotiate for airtime or space with TV networks or publications, most owned by a handful of other big media companies.

But as a series of recent high-profile deals makes clear, the emerging importance of digital advertising is making for a shifting and more complicated advertising terrain.

"The biggest innovation in the advertising industry during the last 70 years before digital was color TV," says Ajaz Ahmed, chairman and co-founder of independent digital marketing agency AKQA. "The agency of the future will be half a software company and half an entertainment company because that's the new landscape."

A host of newer firms from outside the traditional ad mainstream dominate the technology-rich process of making and delivering ads to the Web. And while TV networks, magazines and newspapers have a presence online, much of the Internet media is controlled by companies such as Google Inc. and Yahoo Inc.

Marketers -- seduced by the perception that Internet ads offer a more cost-effective way to reach specific consumers and measure results -- have shifted more of their ad budgets online. Internet advertising has grown into a $16.9 billion industry -- 5.9% of the $285 billion total U.S. advertising market in 2006, up from 4.7% in 2005, according to the Interactive Advertising Bureau.

To try to get a slice of that online spending, both traditional ad companies and Silicon Valley titans have battled for a stronger position in the digital-ad food chain. Google bought Internet-ad broker DoubleClick for $3.1 billion last month; Microsoft Corp. struck a deal to acquire Seattle-based online ad concern aQuantive for $6 billion last week; and ad giant WPP Group PLC last week acquired search-marketer and ad-network 24/7 Real Media Inc. for $649 million.

Much of online's allure can be traced to its precision. In television, for instance, media buyers from Madison Avenue try to place an ad on a TV show that attracts the highest concentration of target customers. Someone wanting to promote their wares to young women, for instance, might advertise on ABC's "Grey's Anatomy." But audience measures for television are, at best, rough approximations, based on surveys of a small number of viewers, and advertisers have always found it difficult to judge whether their costly TV ads succeed in driving sales.

Online, advertisers can be much more scientific in where they place their ads. Using behavioral targeting companies, such as independently owned Tacoda Inc. or Revenue Science Inc., marketers can track the online habits of potential customers. For instance, if a consumer clicks on two car sites then visits the Web site for Us Weekly magazine, car ads might show up on the magazine site, in addition to the car sites. That way the ads will appear in front of the person most likely to respond -- even when that person is on a site unrelated to cars.

"We might know what term they just searched on, which is essentially them raising their hand and saying give me information about this subject," says Jeff Lanctot, senior vice president of global media at digital marketing agency Avenue A/Razorfish, a unit of aQuantive.

What's more, the most popular category of online advertising -- paid search -- requires advertisers to pay only when a consumer has clicked on their spot. With paid search, which accounts for 40% of online ad spending, advertisers pay Internet search engines such as Google or Yahoo to post a link to their Web site next to a specific word or phrase that visitors plug into the search engine.

Up until now, paid search has benefited just a handful of players, particularly Google and Yahoo because those ads have mostly attracted smaller businesses that don't use ad agencies. With bigger companies becoming more involved in paid search, agencies and search-marketing firms are playing a greater role. Also firms have sprung up to help marketers design their Web sites to make it easier for search engines to understand what information appears there. The goal of this "search-engine optimization" is for a company's Web site to show up at the top of a search engine's free results listings when a person is looking for information related to that particular company or industry.

A more diverse cast of characters dominate the other forms of online advertising, including display ads -- such as banner ads -- online video and the various types of animated ads that dance across the screen. These ads are usually designed by digital ad agencies and then transported to various Web sites through a circuitous route often involving a number of technology-focused companies. It is this area that has seen most of the acquisition activity in recent weeks, as bigger ad players try to streamline the online advertising process.

For example, Avenue A/Razorfish bought ad space on a total of 863 individual sites last year for its clients, which include Kraft Foods Inc., Walt Disney Co. and Nike Inc. To line up all that space, Avenue A/Razorfish used firms that deal with hundreds or thousands of Web sites. These firms, called ad networks, buy space from sites and resell it to advertisers at a premium. Among the major ad networks are Advertising.com, acquired in 2004 by Time Warner Inc.'s AOL, and 24/7 Real Media.

In the middle of this process are another set of players, called "ad-serving firms," technology companies that get the ads from the advertiser to the Web sites that the ad network firms have lined up. The top two ad-serving companies are DoubleClick and Atlas, another unit of aQuantive. Ad-serving companies save the digital information that creates an online ad on a computer server and then deliver that data to the sites where marketers bought advertising space. This lets ad agencies change the contents of an online ad or where it runs on a site by switching that digital information on the computer server instead of communicating with each of the hundreds of sites where an ad might appear.

"Ad serving is kind of like oxygen. You need it for every major [online advertising campaign] that you run," says Sarah Fay, president of Aegis Group PLC's digital-marketing subsidiary, Isobar U.S.

Some ad-serving companies also have ad-network arms. DoubleClick, for example, provides both these services for advertisers and Web sites.

All of the major digital ad players also generate measures to track the effectiveness of campaigns. While in the traditional media, marketers assess response to their ads by surveying audiences before and after the ads have run, digital advertisers can gauge response within minutes by using a number of metrics -- including how many people clicked on an ad, the time a consumer spends with the ad, what a Web surfer does after viewing the ad.

If advertisers find that a certain creative component of the campaign isn't working or if a specific Web site isn't delivering, they can make a switch at the click of a button to try to improve the results. These data ultimately determine where advertisers spend money on the Web and is expected to become an increasingly important aspect of the industry as other aspects of the business -- such as delivering an ad -- become more streamlined.

"The Internet was built on little companies," says David Kenny, chairman and CEO of Digitas and digital strategy chief for Publicis Groupe SA. "Now that we've got big advertisers putting money on the Internet, they need big scalable operations."