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Microsoft takes a $6.2 Billion Writedown for an online advertising deal from 2007.

 

Microsoft's $6.2 Billion Writedown Shows It's Losing War With Google.

Jul 4, 2012, by Matthew Zeitlin

 

Fighting for online advertising dominance with Google, Microsoft bought aQuantive in 2007-and wrote down almost the entire $6.2 billion purchase price Monday. Matthew Zeitlin on Microsoft's next field of battle.

 

In April 2007, Google purchased the online advertising company DoubleClick. A month later, Microsoft, looking to challenge Google's aggressive move into display advertising, announced the purchase of another online advertising company, aQuantive, at a generous premium over its share price and well over the $3.1 billion Google paid for DoubleClick. On Monday, Microsoft announced a $6.2 billion writedown in its online services division, the result of the acquisition's failure to expand the company's online advertising business. The original price for aQuantive? $6.3 billion.

Although Microsoft has given no signal it plans to cease investment and activity in search and advertising, Tuesday's results are a sobering reminder for the software giant that despite years of mergers, partnerships, and product development, Google is still dominating online advertising and search.

Microsoft's announcement was not the first indication that its online services division, which includes the search engine Bing, the online portal MSN, and its display-advertising business, was a drag on the company's otherwise solid core business. The last year that online services turned an operating profit for Microsoft was 2005. Since then, the company's expansion efforts have led to nothing but year after year of losses, despite the flurry of activity and investment, as well as frequent promises of future positive returns from Microsoft CEO Steve Ballmer.

The all-cash acquisition of aQuantive was one of several big moves Microsoft made into search and online advertising. Just a year after the acquisition, Microsoft attempted to buy Yahoo! outright for $44.6 billion of cash and stock, and the following year it launched its own search engine, Bing, and entered into a partnership with Yahoo to provide Bing search technology to the troubled Internet giant. Microsoft was optimistic that its new products and partnerships could turn into a rival to Google. After European and American authorities cleared the deal, Ballmer described the Yahoo partnership as an "exciting milestone" that would "promote more choice, better value, and greater innovation to our customers as well as to advertisers and publishers."

At a conference in 2009 following the announcement of the Yahoo-Microsoft partnership, a senior executive in the online-services division told a group of analysts that the "online advertising industry is in a very good state" and predicted an "ongoing influx from dollars that move from offline to online". He was right about the online advertising industry as a whole, but the dollars went to Mountain View, not Redmond. Google reported revenues in 2010 and 2011 of $29.3 and $37.9 billion, respectively, with 96 percent of it coming from online advertising.

Microsoft was optimistic that its new products and partnerships could turn into a rival to Google.

Tuesday's announcement of the massive loss stands in stark contrast to the last international news splash from Microsoft: the unveiling of its new tablet computer, Surface. With its moves in search, advertising, and now tablet computing, Microsoft has devoted significant time and resources outside its core operating system and software operations to challenge the core business of a massive and profitable competitor: first Google, now Apple. Microsoft investors are hoping that five years from now, the return on this latest venture is not just big, but also positive.

 

 

Microsoft bringing the right to surfer privacy back into Online Advertising!

June 26th, 2012

 

Microsoft is single handedly going to make online advertising honest again. What? You see everything you search for in certain browsers is tracked and sliced and diced to show you exactly the ad that you will have a higher probability of clicking on. Now Microsoft announces that their new browser IE 10 will be setup at a default level to prevent all tracking and cookies so that you will not be tracked in everything you do so as to make the most money off you. Microsoft will offer its Internet Explorer 10 browser to the world with "do not track" as its default setting. YES you can go in and change the settings and be tracked every time you surf the net (just like you are with all other browsers) if you want. WPP Chief Executive Martin Sorrell and Vivaki CEO Jack Klues are among the execs who have protested the move by the Redmond, Wash. software maker because they worry that such a change will signal a move to all surfers to protect their privacy when surfing. The new default will signal a big change in what online advertising is all about. Surfers will now have full knowledge of whether they are tracked or not, and will agree to it, or not. Prior to this change surfers had to opt-out of targeting and we all know nobody even knows how to change browser settings so tracking every move and click was a given in the online advertising industry. Microsoft has taken the bull by the horns and will show all surfers the respect they deserve. All we can say is "Well done Microsoft!". This default setting will change the way surfers are tracked, and will change the way online marketing is done. Needless to say Google's system of tracking the websites you click on will have to be reviewed so as to conform to the new wave of surfer privacy. Some say browsers like Mozilla or Chrome will have to follow suit. Time will tell if surfers even care about their own privacy.

 

 

Record Online Advertising revenues for Q1 2012 at $8.4 Billion, that's HUGE.

June 13th, 2012

 

NEW YORK, BUSINESS WIRE -- Internet advertising revenues for the first quarter of 2012 set a new record for the reporting period at $8.4 billion, according to the latest IAB Internet Advertising Report from the Interactive Advertising Bureau (IAB) and PwC U.S. It is the highest first-quarter revenue ever measured by the IAB and PwC and a $1.1 billion-- or 15 percent increase -- over the $7.3 billion figure reported in the first quarter 2011.

 

"More online consumers than ever are taking to the internet to inform and navigate their daily lives--by desktop, tablet or smartphone," said Randall Rothenberg, President and CEO, IAB. "Marketers and agencies are clearly -- and wisely -- investing dollars to reach digitally connected consumers."

 

"Digital media captures consumers' imaginations, and marketers increasingly turn to interactive advertising to successfully speak to their customers," said Sherrill Mane, Senior Vice President, Research, Analytics and Measurement, IAB.

 

"The year-over-year growth between Q1 2011 and Q1 2012 sets quite a milestone," said David Silverman, Partner, PwC U.S. "Moreover, a 15 percent increase over the comparable period in 2011 is a solid affirmation the internet is delivering on its promise to attract consumers and the advertising dollars that follow."

 

The IAB sponsors the IAB Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PwC. The results are considered the most accurate measurement of interactive advertising revenues because the data is compiled directly from information supplied by companies selling advertising on the Internet. The survey includes data concerning online advertising revenues from Web sites, commercial online services, free email providers, and all other companies selling digital advertising.

 

The full report is issued twice yearly for full and half-year data, and topline quarterly estimates are issued for the first and third quarters. PwC does not audit the information and provides no opinion or other form of assurance with respect to the information. Past reports are available at www.iab.net/AdRevenueReport.

 

About the IAB

 

The Interactive Advertising Bureau (IAB) is comprised of more than 500 leading media and technology companies that are responsible for selling 86% of online advertising in the United States. On behalf of its members, the IAB is dedicated to the growth of the interactive advertising marketplace, of interactive's share of total marketing spend, and of its members' share of total marketing spend. The IAB educates marketers, agencies, media companies and the wider business community about the value of interactive advertising. Working with its member companies, the IAB evaluates and recommends standards and practices and fields critical research on interactive advertising. Founded in 1996, the IAB is headquartered in New York City with a Public Policy office in Washington, D.C. For more information, please visit www.iab.net.

 

About the PwC Network

 

PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See www.pwc.com for more information.

 

(C) 2012 PwC. All rights reserved. "PwC" and "PwC US" refer to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate and independent legal entity.

 

 

Could Facebook IPO force Zuckerberg to focus more energy towards Online Advertising.

May 16th, 2012

 

Just days before Facebook’s highly-anticipated initial public offering, some investors continue to fear an exodus of Facebook’s biggest advertisers if Mark Zuckerberg fails to tighten his focus on ad sales. The concern follows a report on Tuesday that General Motors will stop buying ads on Facebook, as it sees them as ineffective. The Detroit automaker, which is the third largest U.S. advertiser behind Procter and Gamble and AT and T, has spent about $10 million on Facebook advertisements, sources close to the matter told The Wall Street Journal.

 

While the investment isn’t all that large in the lucrative online ad business (it’s as much as a third of some of Facebook’s bigger advertisers), it’s still a serious concern for Facebook, whose $3.71 billion in annual revenue is made up 86% by online ads. "A major player such as GM withdrawing from Facebook’s paid advertising does not bode well for the company who is so reliant on advertising revenue,” said Kenneth Wisnefski, social media expert and CEO of WebiMax. Yet, while Facebook continues to be criticized for its meager ad offerings heading up to an expected $104 billion IPO, especially when compared with industry leaders like Google, social media experts say GM’s departure represents more of a public relations black-eye than the start of a mass exit.

 

“It will make people rethink how well their investments are working on Facebook but I can’t see a bunch of people following suit,” said Peter Kim, chief strategy officer of Dachis Group, a big-data marketing group. Either way, it’s a reminder that the social titan still has some work to do on its advertising platform heading into one of the biggest IPOs in history. “Facebook has never really been able to figure out a way to integrate an effective market strategy for clients,” Wisnefski said. “That’s what they need to figure out to make Facebook less of a fad and more of a legitimate company.”

 

The Google Lag

 

In the first quarter of this year, Facebook posted $1.06 billion in revenue, down 6.5% sequentially, while Google’s display network grew 1% to $2.9 billion, according to online marketing software company WordStream. That’s partially a reflection of Google’s superior advertising offerings, but also a reflection of Facebook’s lack of emphasis on advertising, unwillingness to publish click through rates, which is a key measurement used to determine the success of an online ad based on the number of times the ad is shown and number of clicks it gets, and failure to support mobile advertising, according to WordStream chief technology officer Larry Kim. It’s not all that surprising Facebook’s revenue still trails Google’s display ad sales given the search engine’s sheer size and expanse on the web (its display network includes Google properties like YouTube and Blogger as well as more than 2 million other participating sites). However, Facebook earns just 22 cents every time an ad is featured on its site, while the industry average is around 50 cents and Google earns as much as $2 to $4. According to data from Webtrends, Facebook’s average click through rate was 0.051% in 2010, down from the year prior and nearly ten times below Google’s 0.4%.

 

"From an advertiser’s perspective, Facebook currently falls short," WordStream’s Kim said.

 

Of course, all advertisers have different objectives, so while General Motors may find Facebook ads unworthy, a company just trying to interact with customers may find the platform effective. “If you’re like GM, and you need to sell cars, I would certainly think it makes sense to try out other marketing venues,” Kim said, whose WordStream published a report about Facebook’s ad revenue Tuesday morning. That’s because the current Facebook targeting options and “boring ad formats” don’t work nearly as well as other Internet advertising options, he said. Without support for better ad targeting options and formats, companies just end up wasting marketing dollars.

 

So far, the concerns have yet to hamper demand. Facebook on Tuesday increased its IPO price range Tuesday morning that put it on track for a valuation of up to $104 billion and ramped up the size of its IPO by nearly 25% on Wednesday.

 

Is Zuckerberg in Denial?

 

While Zuckerberg has long backed the company’s advertising method, saying he wants to concentrate on improving the product and not have ads clutter the site, the immature ad platform has put Facebook at a disadvantage to more advanced competitors. The 28-year old CEO has long been criticized for his unwillingness to focus on driving revenue as the social media giant heads into a massive IPO. In his 2,500-plus word letter to shareholders in February, Zuckerberg only mentioned advertising once. He instead focuses on Facebook’s mission to make the world more open and connected.

 

“I think Zuckerberg is in denial here,” Wordstream’s Larry Kim said. “He wants to be this cool company that’s all about ‘connecting people,’ but 85% of his revenue is driven from Internet advertising - the sooner he figures this out, the higher the chances that Facebook is actually worth $100 billion-plus.”

 

If the social network embraces advertising’s potential to build value for advertisers and users, helping businesses connect to consumers, it may be able to catch up to the success of Google’s advertising platform.

 

“Given its impressive global reach, Facebook has the potential to be as much of an advertising behemoth as Google,” Larry Kim said. “But the question remains – does Mark Zuckerberg even want Facebook to be an advertising-based company?”

 

Wisnefski said he “wouldn’t be surprised” if Facebook already plateaued as far as revenue. To be sure, the Google Display Network took years to evolve into what it is today. It was originally called the Google Content Network and for a long time was considered inferior to the search network by most AdWords advertisers. It could all come together for Facebook given Zuckerberg's massive support team led by global sales vice president Carolyn Everson, formally the head of ad sales at Microsoft, Dachis Group’s Peter Kim said.

 

“Facebook is cognizant of the need to drive revenue,” he said.

 

 

Online Advertising booming in Canada, can these silly Canucks know how to make a buck?

July 1st, 2011: Happy Canada Day!

 

Hey while the US is in a recession or depression or double dip or whatever it is Canada is doing very nicely indeed and with respect to Online Advertising life couldn't be much better. Yes folks online advertising in Canada 2009-2010 COA Revenue Survey pegs growth rates stronger in online advertising compared to any type of advertising, with an increase of 14 percent since 2008. WOW!

 

Yes of course there are those that will say so what. To those people we say this is a sign of a massive wave to come. YES online advertising was knocked down a bit by the recession and now it is back in full bloom. Go Baby Go!

 

So what is the big deal about this Canadian Online Advertising Revenue Survey? What's it all about Alphie? Well it has been out every year for eleven years and the data is compiled by accountants Ernst and Young LLP on behalf of the Interactive Advertising Bureau of Canada (IAB). All that to say who knows if it is real or fabricated, but heck it sounds great.

 

Now if you are a born skeptic like me than you say so what about some growth rate big deal for that. Well over the past eleven years of number crunching the online advertising revenues have grown from $98 million in the Y2K year, to over $2.4 billion in 2011 (that's an expected number). In English that means this business has gone from $1 per year of sales to $24 per year of sales in just 11 years. Now that is impressive even for a skeptic.

 

Yes Online Advertising is vibrating at a higher and higher frequency in Canada, no doubt. Well how about the break down in spending. It is great to say things are going well. But where is the money being spent - any clue?

 

OK that was a leading question if I ever wrote one but the majority of the spending is in Search Advertising. YES folks these darn Canucks are showing the world the path to enlightened online advertising by selecting SEM above all other forms of online advertising at 41 percent of the total spend. Not far behind is banner or display advertising at 32 percent of the total market, and then online classifieds at 32 percent of the total. Golly Miss Molly I really didn't consider classifieds that much - guess I should look into that a bit.

 

Here you have it then - Search Advertising, Banner or Link Advertising, and then Classified Advertising being 99 percent of the online advertising market in Canada - well Fancy that AAY?

 

For those of you who think all advertising in Canada is booming sorry that just is not the case. In fact while online advertising grew almost all other sectors of advertising showed a decline of between 5 percent and 18 percent. Yup all advertising is not so rosey in Canada.

 

Well isn't that wonderful then all the good news about online advertising!

 

Wait a minute - there's more! Really?

 

Here's the best news of all for us Online Advertising FREAKS!!!

 

Total Online Advertising spending in Canada still makes up a mere 13 percent of total advertising in Canada. WHAT? HAHAHAHA! YOU'VE GOT TO BE KIDDNG ME AAY? Nope TV is still the biggest advertising racket in Canada.

 

Well to be honest it is not that grand in the US either as online advertising is just 14 percent of total advertising. You'd have to go to the UK where online advertising is busting out at 27.3 percent of total advertising (probably because of all that legal online gambling). Yeah that's it!

 

So what does this great report say about the future of online advertising in Canada (and elsewhere)?

 

Well this report no surprise goes on to say that CPM and CPC rates will continue to decline as new players enter the market. Also they say to go full out in your video efforts and to look at mobile advertising and tablet platforms too (ever heard of an iPad?). OK you get the picture.

 

Oh also they say to look into social media for advertising - hey great idea.

 

The future looks pretty bright for online advertising then. You could say that the numbers have nowhere to go but up.

 

 

What is the future of online advertising in the Mobile space in the US.

Mobile advertising estimated between $550-$650m in 2010 in the US

 

April 2011

 

Mobile advertising for 2010 is estimated to be between $550–$650 million in the US, according to an industry survey conducted by PwC and sponsored by the Interactive Advertising Bureau (IAB).

Internet advertising revenues in the US totaled $26 billion for the full year of 2010, with Q3 2010 accounting for approximately $6.5 billion and Q4 2010 totaling approximately $7.5 billion.

 

Internet advertising revenues for the full year of 2010 increased 15 percent over 2009.

 

“With a strong rebound from 2009, the $26 billion spent on Internet advertising points to a continued focus on digital media ad spend, with dollars catching up to the eyeballs. More time spent online, especially with increases in digital video and social media, has certainly helped to fuel the continued growth,” said David Silverman, Partner, PwC.

The second half of the year is seeing an increasingly larger part of the revenue, as 53 percent of revenue in 2010 was spent in the second half, compared to 52 percent in 2009, continuing the trend of greater revenue later in the year.

Search revenue accounted for 46 percent of 2010 revenues, down slightly from the 47 percent reported in 2009. In 2010, Search revenues totaled $12.0 billion, up over 12 percent from $10.7 billion in 2009.

Display-related advertising revenues totaled $9.9 billion or 38 percent percent of 2010 revenues, up 24 percent from the $8.0 billion reported in 2009. Display-related advertising includes Display Banner Ad (24 percent of 2010 revenues, or $6.2 billion), Rich Media (6 percent, or $1.5 billion), Digital Video (5 percent, or $1.4 billion), and Sponsorship (3 percent, or $718 million).

 

 

March 13th, 2011

 

Companies are using social media more often.Small and medium-sized companies are looking to invest more in social media, search, display and email advertising, according to a new report from Borrell Associates, emphasizing the importance of B2B online advertising for these firms.

 

The small business market accounts for nearly 70 percent of all online advertising budget, highlighting the growing importance of integrating online marketing to a company's promotional campaigns. As ClickZ notes, 84 percent of all small businesses plan to spend money on digital advertising in 2011, with 53 percent intending to increase their budgets from one year ago.

 

"Spending on their websites, social media marketing and email is set to grow more than 30 percent," observes ClickZ. "Meanwhile, local print media, newspapers, directories and radio will take double-digit hits in 2011 among those who buy those formats."

 

Social and search are growing increasingly paramount, with the majority of Americans leveraging both platforms to make more informed purchase decisions. According to a survey from GroupM Search and comScore, most Americans start their product research on either search engines or social networks and finish it on the other platform.

 

Display Advertising Online to reach $200 billion by 2021.

Feb 27th, 2011

By Mike Shields

Google CEO: Display Ad Market Could Become $200 Billion Biz

Eric Schmidt says it could happen in less than 10 years

 

The online display market could quickly become a $200 billion ad business—if it gets its act together.

 

That’s according to outgoing Google CEO Eric Schmidt, who delivered the opening keynote at the Interactive Advertising Bureau’s annual meeting in La Quinta, Calif.

 

Schmidt said that the industry could reach that zenith in less than 10 years. “It’s happening faster than all of our predictions,” he said.

 

Wearing a grey v-neck sweater and no tie, the relaxed-looking CEO—who is relinquishing his role in April—said that the display ad business has emerged stronger than ever following the recession. Yet that’s not to say it doesn’t have problems.

 

“It’s still too complicated to get a campaign up,” said Schmidt. “It’s just too hard. It’s really a problem.”

 

Schmidt’s remedy, predictably, was to better automate the multiple laborious processes involved in executing digital media campaigns, as well as simplifying measurement. Though short on specifics, Schmidt shed some light on his philosophy—and Google’s—regarding brand advertising.

 

When asked by an audience member how digital ads can improve, he opined that ads should demonstrate what a product does better or differently than other products, focusing on its attributes, not imagery or emotions—the strengths of TV advertising, which still garners the lion’s share of brand advertising.

 

That point was driven home with some urgency just prior to Schmidt’s speech by incoming IAB chairman Bob Carrigan, the CEO of IDG Communications.

 

While Carrigan also noted that the online display business is growing at a healthy clip, his take was less rosy that Schmidt’s, as he cited an “urgent need” for the industry to go after brand dollars more aggressively.

 

While brand advertising represents about a third of the $26 billion online ad industry in the U.S., “The problem is there are still billions of dollars left on the table.”

 

How many? Carrigan estimated that if the Web had the same proportion of brand dollars as TV currently does, the industry could pull in another $6 billion this year alone.

 

 

Video usage in Online Advertising to increase by 45% in 2011!

January 22nd, 2011

 

If you own a small business in America you are like every other small business owner who is asking themselves how they can bring revenues to the table. And the answer in 2011 is VIDEO ADVERTISING! Yes indeed everyone loves to watch videos online. In fact videos are so hot that YouTube is now the second most busy search engine behind Google. Now who would have though that? Google did since they bought YouTube a couple of years ago for over $1 billion dollars. It pays to keep track of what Google is doing since they are always a few years ahead of the curve. So guess what small businesses in America are going to do to get more business in 2011? Well if you said make a video and put it online then you are right on! In fact 45% of every small business in America is planning to create and market their video over the Net this year.

So if you are someone who considers themselves tuned into the latest online advertising trends you will want to make a video and get it online as fast as you can.

Oh and by the way just about half of every small businesses in America are planning to boost up their online advertising budget this year. Yes creating and marketing a new video for their business is part of the online marketing initiative.

 

 

Online Ad Revenue to Grow 10% in 2011, S & P Predicts

by Erik Sass

December 29th, 2010

 

Online advertising revenue and online retail spending will both grow by 10% in 2011, according to the latest forecast from S&P Equity Research, which also issued predictions about major players and the industry as a whole -- not all of them rosy.

Combining S&P's percentage-growth figure for 2011 with a separate 2010 estimate from eMarketer, that means total online ad revenues will grow from $25.8 billion this year to just under $28.4 billion next year. According to these predictions, the rate of increase will slow slightly in percentage terms -- down from 13.9% this year -- as well as actual dollar amounts (from a $3.14 billion increase in 2010 to a $2.6 billion increase in 2011).

Turning to specific players, S&P Equity Research Information Technology Analyst Scott Kessler predicts that Yahoo will engage in at least one significant transaction, possibly the sale of its stake in Alibaba Group or an acquisition focused on the international, social media or mobile markets. Meanwhile, S&P expects Baidu to make progress toward international expansion beyond China, as Google continues to struggle with censorship within that country, possibly related to the registration and operation of Google Maps.

Google will also face continuing regulatory and legal woes in the U.S., with potential trouble spots including the Department of Justice blocking its acquisition of ITA Software and Oracle's claims against Android. The search giant will continue to focus on the local market through a major alliance or acquisition.

On the retail side, Amazon.com will enjoy its sixth straight year of revenue growth exceeding 25%, as more and more consumers make their purchases online. S&P also predicts that Apple will finally bring iTunes to "the cloud," allowing customers to access media anywhere via their online accounts (as well as wireless syncing of iTunes).

Last but not least, the surge of activity in social media will not necessarily result in companies going public, as Facebook, Twitter, and LinkedIn are "in no rush to become publicly traded entities." With cash on hand and plenty of financial flexibility, S&P sees no immediate need for these closely held companies to assume all the headaches of the public marketplace.

 

 

 

U.S. Marketers Will Double Investment in 'Digital Data' by 2012, Offsetting Expected Declines in Offline Media Spending Marketing data industry undergoing rapid transformation amidst changing channel demands and business requirements, says new white paper from leading strategic consulting firm.

 

NEW YORK, Sept 08, 2010 -- U.S. marketers will more than double their annual spending on online-derived data sources over the next two years -- investing as much as $840 million by 2012 on information about digital audiences, transactions and "clickstream" behaviors.

That's one of the principal findings of a new white paper released this morning by Winterberry Group, a New York-based strategic consulting firm that serves the advertising, marketing services and digital media industries. Entitled The Changing Mission of Marketing Data, the report explores how the utilization of data for marketing purposes has been impacted by the accelerating shift in investment to digital advertising channels, and further examines the impact of this shift on both marketers and the rapidly changing industry of data-driven marketing service providers.

The report was jointly sponsored by Acxiom(R) Corporation (a recognized global leader in marketing data, services and technology) and Netezza Corporation (the global leader in data warehouse and analytic appliances).

Among other conclusions, Winterberry Group determined that U.S. marketers invested a total of $7.8 billion in marketing data in 2009 -- including spending on both original information and complementary services such as hosting, hygiene and analytics (focused both on- and offline). That total is expected to increase slightly over the next two years -- to $8.0 billion in 2012 -- but all of that growth will be driven by "digital" channels including e-mail, online display advertising and other integrated media.

"Over the next few years, it's clear that a substantial sum -- perhaps as much as $1.5 billion -- will be chasing new marketing and data models onto the Internet, pushing the boundaries of what's now possible with respect to targeting and optimization," said Bruce Biegel, a managing director at Winterberry Group. "This has the potential to make online acquisition and engagement channels significantly more effective and accelerate the shift of even more advertiser spending from traditional to online channels."

The white paper outlines five trends that illustrate the substantial shifts now defining the marketing data industry. They include:

The current wave of new data investment was initially driven by marketer desire to apply the basic principles of direct mail -- embodied by the "right offer, right audience, right time" targeting concept -- to underleveraged online channels such as e-mail, affiliate marketing and search. But rapid advances in technology and an explosion of information availability have given rise to a new set of data-driven digital applications (including Web site optimization, lead generation and real-time media buying) that align with a broader array of business objectives and integrate inputs from multiple sources.

Companies are increasingly coming to view virtually all data sets as critical core assets, with insight into such (as enabled by analytics processes and tools) representing an important source of potential differentiation and competitive advantage. Though the same marketers are anxious to make use of the burgeoning quantity of "unstructured" information being generated across the Web, most remain hamstrung by inefficient data management infrastructures built to handle "structured" data funneled through a well-defined set of channels.

The service provider landscape supporting integrated data utilization has yet to fully coalesce. But it is already clear that the industry will grow increasingly fragmented, led by new influencers including online data compilers and exchange platforms, database management vendors, publishers, e-commerce platforms and a wide range of technology-focused performance optimization providers.

The most fundamental execution challenge facing the users of "integrated data" -- that which is derived from both on- and offline sources -- is rooted in technology and infrastructure. Both digital and traditional data sources must be compiled, standardized, segmented and made appropriate for use in near-real time, demanding process controls, storage technologies and segmentation algorithms that can efficiently manage high data volumes and progressively "learn" from past performance.

Among the potential obstacles that are likely to vex users of "integrated data" in the years ahead, one supersedes all others: the still-unsettled question of what standards count as "responsible" with respect to data security, transparency and consumer choice. Marketers overwhelmingly say they want to abide by a set of universal best practices in this regard, but rapid technological proliferation and the continuing threat of regulation are raising concerns about their ability to collect and use virtually any online data, especially when that information is embedded with personally identifiable ("PII") elements.

"We are at a turning point in history with new digital channels creating an explosion of data -- a 'digital exhaust' -- as consumers interact with them. This is a defining moment for modern marketers, since many of their most critical marketing challenges are now actually technology and large-scale data analysis challenges," said Brad Terrell, Netezza's vice president and general manager, Digital Media. "This study helps provide marketers with a roadmap to help them navigate the previously uncharted landscape of marketing data that is becoming their primary source of competitive advantage."

"The proliferation of data is something that marketers have been seeking to address -- and capitalize upon -- for many years," added Todd Greer, Acxiom's senior vice president for Consumer Insight Products. "But 'proliferation' isn't just about gathering more of the same traditional sources of information. Real insight comes through integrating multiple dynamic data streams -- including the vast quantities of information generated on the Web. While that may have made for good marketing theory in the past, now marketers and suppliers are applying the theory for effective returns on their investment."

The Changing Mission of Marketing Data is available for complimentary download via the Our Insights page of Winterberry Group's Web site, located at www.winterberrygroup.com/ourinsights.

About Winterberry Group: Winterberry Group is a unique, global strategic consulting firm that helps advertising and marketing companies grow shareholder value. Through a combination of corporate strategy, market intelligence and transaction support solutions, the Firm leverages its deep expertise, industry relationships and years of experience to help marketers, service providers, technology developers and the financial community identify opportunities for growth and achieve transformative business results. The Firm is affiliated with Pesky Prunier LLC, a leading investment bank serving the marketing, information and digital media industries.

Winterberry Group's clients represent every segment of the advertising and marketing industries, and extend their offerings across virtually all consumer-facing vertical markets. They include Alta Communications, Alterian plc., American Capital Strategies, arvato Services (the marketing services division of Bertelsmann AG), Canada Post Corporation, Capital One Financial Corp., The Carlyle Group, Eastman Kodak Company, eCircle AG, Epsilon, Experian, Hewlett-Packard Co., MediMedia USA, Meredith, Onex Corporation, Quadrangle Group, Rosetta, Transcontinental, Inc., Xerox and Yahoo!.

 

 

 

Global online advertising spend to rise 12 percent in 2010.

 

NEW YORK: Global spending on online advertising is expected to rise by 12 percent this year, continuing a steady upward trend, according to a report issued Wednesday by advertising and marketing research firm EMarketer.

 

The firm believes the Internet is starting to rival television as the place to find audiences, and spending will hit to $61.8 billion in 2010.

 

Online Advertising took an 11.9 percent market share last year, which should rise to 17.2 percent in 2014, according to eMarketer.

 

EMarketer expects online ad spending to rise to $96.8 billion in 2014, with an 11.9 percent compounded annual rate of increase. That compares with the 3.8 percent increase expected this year in total ad spending for all media worldwide, to $482.6 billion. EMarketer doesn't think total ad spending will return to 2008 levels until 2012.

 

The firm is forecasting total ad spending of $564 billion in 2014, however that could end up being low as online gambling is legalized worldwide, which will cause a huge demand for online advertising in the tens of billions of dollars per year.

 

 

 

NBC unviels combined online advertising platform.

 

NEW YORK (AP) - NBC Universal on Monday unveiled an advertising network that pools together ad inventory for all of its 21 websites. The move means advertisers now can buy ads to target certain audiences, instead of by website.

 

NBC Universal, a unit of General Electric Co., said its Universal Audience Platform will compile display ad inventory for its sites which collectively reach nearly 60 million individual users each month.

 

Audience profiles include demographic information, location and behavior patterns. NBC Universal may supply additional internal data about the audience.

 

The platform will start with inventory from at least 20 of its sites, including NBC.com, USANetwork.com, Telemundo.com, BravoTV.com, NBCSports.com and others.

 

In a joint venture with GE, Comcast Corp. is buying a 51 percent stake in NBC Universal for $13.75 billion in cash and assets.

 

Shares of GE, based in Fairfield, Conn., rose 43 cents to close at $16.14. Comcast shares rose by 7 cents to $19.39.

 

 

Google vs Apple mobile ads: it is on

by Marie Boran, April, 2010

 

There is no disputing the fact that Google reigns supreme when it comes to online advertising - in January 2009 it had 76pc of the US search advertising market - but the announcement of the Apple OS 4.0 software update has brought with it a brand new mobile ad platform to challenge the status quo.

 

While Google Mobile Ads allows developers to monetise their apps through in-app ads comprising of text or an image, what happens when a user clicks on this ad is that they are brought out of their application and to the advertisers' website. Not ideal. iAd will be a game changer.

 

Apple's new iAd platform is probably going to be a game changer. Leaving aside Apple's exuberant claims that it "combines the emotion of TV ads with the interactivity of web ads" what is really happening here is that in-app advertising will no longer be distracting, intrusive and most importantly will not take the user out of their current application if they click on it.

 

The problem with in-app mobile ads right now, as Apple sums it up, is that "users must then navigate back to their app, and it is often difficult or impossible to return to exactly where they left."

 

What iAd does is display full-screen video and interactive ad content without ever leaving the app, letting users return to their app any time they choose.

 

It also makes it easier for developers to drop ads into their applications, with 60pc of ad revenue going into their pockets. 'Search is not where it's at'

 

While Google's advertising empire is built on search, Apple CEO Steve Jobs has declared that when it comes to the mobile device, "search is not where it's at".

 

"People are not searching on a mobile device like they are on the desktop," he told reporters at yesterday's Apple event.

 

As reported in the New York Times, Google spokesperson Carolyn Penner stated that Google Mobile Ads were doing well, growing to five times bigger than it was two years ago due to smart-phones users searching the web between 30 and 50 times more often than regular handset users.

 

This may be the case, but with more than 10,000 apps available on the App Store and 3bn applications downloaded in less than 18 months as of January 2010, the market size for iAd is potentially huge so the smart-phone money is on Apple.

 

 

Getting Ahead Of The Advertising Curve -- New technology brings new opportunities and challenges to marketing efforts

 

By Shaun Tolson, February 2010

 

As millions of people gather around television sets to watch the 44th Super Bowl on Feb. 7, 2010, the one thing they will not see during the Super Bowl is a Pepsi Ad. This year marks the first time in 24 years that the soft drink company will not have a Pepsi plans to skip Super Bowl advertising for the first time in 24 years. The decision by the soft drink giant is seen as a sign of the times, as more marketers go online and mobile to reach consumers.Super Bowl presence. Instead of producing multiple, 30-second Super Bowl commercials—at $3 million a pop—this year Pepsi will be investing that money in a community service initiative marketed mostly online. And while no small business in Central Massachusetts can compete with Pepsi’s advertising budget or the size of its audience, it can look for new online opportunities just the same. The general consensus among local advertising experts is that new online advertising opportunities do exist; businesses just need to know where to look.

 

Within the last year and a half, businesses of all sizes have created corporate profiles on social networking web sites like Facebook, but that hardly qualifies as breaking news. Social networking sites are still at the forefront when it comes to online appeal, with Facebook leading the charge, and there are significant opportunities to cash in on the market.

 

But, cautions Joe Giacobbe, general manager at Palley Advertising in Worcester, simply creating a Facebook page for a business is not enough.

“If you don’t really have something to say, it just becomes noise to a certain extent and people just tune it out,” he said. “At some point, people are just going to stop looking and that defeats the whole purpose.”

A corporate Facebook page may work for companies with the size and scope of Pepsi or Starbucks, but for many local businesses, it will lead to a dead end. Instead, Giacobbe says businesses should look toward Facebook and other social networking sites as an advertising medium.

“Ads are being served pretty much everywhere on the Internet,” he said. “We have many customers that advertise on Facebook, but it wasn’t an easy sell. It’s become a much easier sell over the last few months.”

Now that Facebook is almost 6 years old and with more than 350 million users, it might seem surprising that companies are only beginning to consider the advantages of advertising on the site, but Giacobbe believes that’s a product of the recession more than it is a representation of corporate understanding.

“I don’t think last year was a question that they didn’t understand it,” he said. “I think they just didn’t want to spend the money on it.” New technology might create new avenues for advertisers, but it also poses some challenges for marketing via more traditional mass media, such as television and radio spots.

iPods and satellite radio have rendered many of the “old fashioned” music radio stations obsolete; while TIVO and DVR technology have made television commercials a thing of the past, too. But as Andrew Davis, president of Davis Advertising in Worcester explains, advertisers can’t jump ship altogether. “Is there any question that it’s harder and harder to reach people? Yes,” he said. “You have to be more selective as to what channels you pick and what programs you pick.” When it comes to television and radio, Davis said it’s all about focusing on local news and programming.

“People still turn into local radio stations and local sports, and they’re not going to get that from satellite,” he said. “And the ratings will reflect what people are watching. People are not TIVOing the news.”

 

The Next Big Thing

 

Of course the next big thing for online marketing could come in the form of an iPhone, a Blackberry or any other variation of a smart phone. With new applications coming online every day, advertising agencies are beginning to tap into mobile applications as a way to create one-on-one marketing. “When you can customize something to a specific user and their specific habits, that’s where the money is being spent,” said Rich Suitum, president of Exsel Advertising in Spencer. He says it’s still in the early stages, but there are signs pointing to smart phone applications being a bigger draw for advertisers in the coming months. “It might not be as far off as we think,” he said. “Marketers are trying to find where the consumer is and the younger demographics live on their phones.” For advertisers, in the end it comes down to staying up to date with the latest technologies and the possibilities that exist with each of them, while still understanding that at the core, the goal hasn’t changed.

 

“I’ve been in the advertising agency for 35 years, but I never thought we’d be hiring computer science engineers,” said Dave Monti, senior vice president and manager of the RDW Group’s Worcester office. “It shows you how quickly the technology is changing and how seriously the advertising agency is taking it. It all boils down to reaching target markets in the most efficient, cost-effective way, and that hasn’t changed. That’s what driving the whole thing.”

 

Online Advertising Dips 5.3 percent in the First Half of 2009.

 

October, 2009, By Mike Shields

 

The online ad industry might consider adopting a new slogan for 2009: "We're healthy, all things considered."

U.S. Internet ad spending dipped by 5.3 percent through the first half of the year to $10.9 billion, according to the latest joint spending report by the Interactive Advertising Bureau and PricewaterhouseCoopers. Similarly, during the second quarter, spending slid by 5.4 percent to $5.4 billion.

 

Following a record fourth quarter in 2008 and several years of unabated double-digit growth, the online advertising industry is clearly feeling the impact of the Great Recession of 2009. But during a press conference on Monday, officials took great pains to put the Web's spending declines in context.

Sherrill Mane, the IAB's svp of industry services, pointed to estimates issued by Nielsen and TNS that tracked declines for overall media spending during the first half of the year at about 15 percent. "The Internet decline is relatively minor in the big picture," she said.

 

Indeed, the word "relatively" was spoken often during Monday's conference call with the media. Guest commentator Professor John Deighton of Harvard Business School said that despite a rough ad environment, the Internet is still benefiting from increased advertising excitement because it remains a rapidly growing medium. The declines seen in online advertising are "attributable to the economy and not diminished interest in the medium," he said. The industries that pulled spending from the Web are the industries that are hurting the most, like autos and financial services.

Meanwhile, the entertainment and media categories are actually putting more money on the Internet. "Advertisers follow audiences and eyeballs are moving online," he said.

 

More eyeballs are shifting to online video -- which provided a bright spot in the IAB/PwC report. Video ad spending surged 38 percent during the first half of '09 to $477 million.

However, that figure is relatively small in an industry that is still dominated by search. As advertisers pumped more performance-focused dollars into the medium, search spending actual rose during the first six months of the year by nearly 2 percent, reaching $5.148 billion, or a hefty 47 percent of the total online advertising market. Performance-based advertising now accounts for 58 percent of all dollars spent online vs. 38 percent for CPM-based spending.

 

Despite that trend, however -- and even with pricing challenges in the display ad market -- spending on display declined just 1 percent to $3.759 billion.

 

The hardest hit segments this year have been rich media (down 13 percent), classifieds (down 31 percent) and sponsorships (down 20 percent).

 

 

Only online advertising to show Growth in 2009.

 

July, 2009 - Kate Holton

 

(Reuters) - The downturn in global advertising is approaching its lowest point and, after a fall of 8.5 percent in 2009, the industry should see a mild recovery in 2010, a leading media agency predicted on Monday.

 

ZenithOptimedia said it had revised down its forecast for 2009, from an earlier prediction of a 6.9 percent drop, after the first quarter came in worse than expected.

 

WPP's (WPP.L) GroupM agency said in June it expected global advertising to drop 5.5 percent in 2009 before a mild recovery in 2010.

 

"Faced with extreme uncertainty, advertisers in most sectors planned for the worst and cut their costs in anticipation of steep drops in revenue," the Zenith report said.

 

Of the different platforms, the Internet is the only medium expected to grow in 2009, while television, cinema and outdoor advertising are set to decline by less than the overall market.

 

Advertisers say using the Internet allows brands to be flexible and see consumer response rates, which is important during a downturn.

 

Zenith forecast online advertising expenditure growth of 10.1 percent in 2009 and said it expected the medium to account for 15.1 percent of all advertising expenditure by 2011, from 10.5 percent in 2008.

 

"Most of this growth will come from paid search, which is an ideal method of reaching consumers looking for bargains," the report said.

 

"In the U.S. we predict search advertising to grow 20 percent in 2009, while traditional display grows 3 percent and classified grows just 1.8 percent.

 

However with the move of money from print to online, the newspaper industry has been hurt. Newspaper advertising was predicted to shrink 14.7 percent while magazines face an even tougher time as luxury advertisers pull back.

 

Zenith said the sectors of finance, autos and business travel had all suffered steep revenue decline while retail, fast-moving consumer goods and value products fared better.

 

"For all sectors the shape of the rest of the year is becoming clearer," it said. "Q2 was not quite as tough as Q1, and we have held our expectations for the rest of the year steady, as signs emerge that the downturn is approaching its nadir."

 

For 2010, Zenith predicted a recovery and growth of 1.6 percent.

 

"Looking at the different regions, those that went into the ad downturn first will suffer the most and come out of it last. We expect North America to shrink a further 2.4 percent in 2010, after shrinking 3.7 percent in 2008 and 10.3 percent in 2009."

 

 

U.S. Online Advertising Shrinks in Q1, 2009

 

June, 2009

 

U.S. online advertising spending, which has been key in financing the Web 2.0 wave of Internet innovation, shrunk in the first quarter, the first year-on-year quarterly drop since 2002.

 

Spending hit US$5.5 billion, down 5 percent when compared to 2008's first quarter, the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) said Friday.

 

The last time the market experienced a year-on-year quarterly drop was during the dot-com crisis, when spending fell for eight straight quarters, from 2001's first quarter through 2002's fourth quarter.

 

The 2009 first-quarter drop thus breaks a string of 24 consecutive year-on-year quarterly increases in U.S. online spending that began in 2003's first quarter.

 

The slowdown in online advertising has been precipitous. Spending grew 35 percent in 2006, 26 percent in 2007 and 11 percent in 2008.

 

If spending shrinks in 2009, it will be the first annual decrease in U.S. online ad spending since 2002, which recorded a 16 percent drop.

 

The news is clearly bad for all advertising-supported Internet companies, from big ones like Google, Yahoo, Microsoft, Facebook and AOL, to small startups with ad-dependent sites and Web applications.

 

The silver lining, according to the IAB and PwC, is that online advertising has been hit less severely than other types of advertising and that growth in this market is expected to resume once the U.S. economy recovers.

 

Local Online Advertising companies hiring a lot of salespeople.

report by Borrell Associates - May 2009

The slowdown in local online advertising is having a unexpected effect on the newspaper business. Newspapers stopped the downward spiral in local ad revenue of the past four years, according to a report by local media analyst Borrell Associates, while the web companies not tied to what Borrell refers to as "legacy media" like print and broadcast actually began to lose ground.

The report entitled "What Local Media Sites Earn", concluded that it helps to have a lot of salespeople, especially in a downturn. Unlike the pure-play internet companies Borrell cites Google (NSDQ: GOOG), Local.com, Interactive Corp., Marchex, ReachLocal as examples. The traditional media side has roughly 98,000 feet-on-the-street salespeople who have existing relationships with local advertisers and can cross-sell online advertising products. And those companies are adding "internet-only" sales reps at a rapid pace, which could help offset the severe downward pressures related to the recession. At the beginning of 2009, this collective online-only sales force numbered about 9,000, up 30 percent from a year ago, according to Borrell. So far, Yellow Pages companies averaged nearly 11 percent of their gross revenues from online sales, while newspapers realized 7 percent from web-only, while radio and TV stations received 3.4 percent each from digital.

Overall, Borrell is calling for a rebound in local online advertising by next year, with spending expected to rise to $15.1 billion from the slightly better than flat $13.3 billion this year. Spending will peak in 2011 at $15.9 and then start to slowly decline to $15.3 billion in 2013.

Total 2009 Projected Local Online Advertising is supposed to hit $13.3 billion. This is good news despite the recession. You can compare this with 2008 data where local newspapers had Online Revenue $3.4 billion, local TV broadcasting $1.1 billion, local Radio: $220 million, and Yellow Pages (which are considered local advertising) $1.4 billion.

 

 

A pricing revolution Looms in online advertising.

Demographic profiling and behavioral targeting by such companies as Google, Quantcast, and ValueClick is slashing ad costs and threatening Web publishers.

April, 2009. By Ben Kunz

 

Look just to the right of this article. There, on your computer screen, lies a little, two-dimensional secret that will soon threaten major online publishers and their precious advertising revenue.

 

It's called the banner ad, and its cost may plummet.

 

For a decade, Web site publishers have relied on an old advertising model: Publishers provided advertisers access to readers, and the more desirable those readers, the more an online publisher could charge. WSJ.com, for example, charges advertisers as much as $64.60 to show a banner ad to 1,000 viewers. (In advertising language, this is called CPM, or cost per thousand impressions.) In the past these fees made sense because The Wall Street Journal's readers are highly affluent, a perfect target for many upscale brands. The better the audience, the more advertisers are willing to pay for ad space.

 

But what if marketers could find new ways to reach the same audience—with ads on sites that won't charge nearly as much? What if those other ads cost as much as 95% less?

 

Profiling and Targeting Site Visitors

 

Online publishers face a big revenue squeeze as companies become more sophisticated in their ability to determine who is visiting what Web sites and when—just as marketers look to squeeze more from dwindling ad budgets.

 

The old online ad model is getting turned on its ear by such firms as ComScore (SCOR) and Quantcast. These and other upstarts specialize in such methods as so-called demographic profiling, which pinpoints the types of people visiting each Web site, and behavioral targeting, which helps advertisers reach a desired audience based on a person's past Web-surfing behavior.

 

Marketers can use these tools to reduce online ad costs dramatically. Say your company sells "Bidgets," a luxury product. Ordinarily you'd run banner ads on FancyOldSite.com, which reaches your target audience of men and women who earn more than $150,000 a year. The ads are expensive—say $60 per thousand impressions—but they reach your ideal audience.

 

You might instead embed a snippet of code in the banners that run on FancyOldSite.com. This places so-called cookies on the computers of everyone who sees the ad so you can track them when they visit other Web sites. That's where retargeting kicks in. Every time a former FancyOldSite.com reader who saw your ad visits other Web sites, your Bidget banner ads pop up again. The banner ads reappear because the cookie on that computer flags a retargeting "network" of thousands of sites, saying "This desirable reader is back." These new ads are cheap—$3 CPM—but they reach exactly the same audience.

 

Here Comes Google, via DoubleClick

 

Congratulations! You just used behavioral targeting to reduce your ad costs from $60 to $3 CPM, a 95% savings. (And yes, those cost quotes are based on real client experience.) Online targeting of individuals has been around for more than a decade, notes John Ardis, vice-president for corporate strategy at ValueClick (VCLK), another firm that specializes in online advertising. But interest has surged during the recession. "Obviously today's economy has advertisers looking to do more and more efficient things," he says. Not only are costs lower; results are often better. ValueClick, which provides retargeting, says click-through rates on such ads are 110% to 840% higher than average because they reach an audience more likely to be interested in a product or service.

 

Google (GOOG) is using its $3.2 billion acquisition of DoubleClick to get into the behavioral targeting game, using the data it monitors from millions of Web users to place more relevant ads. The size of the prize is significant; today Google has less than a 2% share of the $8 billion U.S. market for online display advertising, compared with its 63% share of the U.S. search market.

 

Quantcast is breaking some of the most interesting new ground in consumer targeting. Several services such as ComScore estimate Web audience demographics by using panels, or small, representative groups of people who agree to have their behavior tracked. Quantcast, however, makes 6 billion direct observations a day from cookies on computers that track the media habits of more than 900 million people worldwide. Quantcast then uses mathematical models to track the paths of consumers through millions of Web sites to determine, for instance, if you are a man age 35 to 44 with more than $100,000 in household income. The data is not individually identifiable—neither your name nor your address are collected—but the sheer size of the data set lets advertisers know exactly what type of people visit each Web site. This approach is relatively new. Quantcast launched its directly measured data service in 2006 and has been rapidly expanding it to new publishers.

 

And that's the rub. If you, an advertiser, know every Web site visited by your most desirable audience, you can find many ways to reach them other than through such marquee Web sites as WSJ.com (NWS), BusinessWeek.com (MHP), or that of The New York Times (NYT)—especially if the cost is lower. "Why would I pay $60 if I can pay $4?" asks Ardis of ValueClick. "There is really going to be a backlash. Newspapers felt it. Magazines felt it. There is a reckoning coming in online channels, too."

 

Publishers Can Use Data to Fight Back

 

But online publications don't have to go the way of newspapers—if they, too, learn to use the new customer data. "It will give them new and more innovative ways to sell the audience," says Quantcast Chief Marketing Officer Adam Gerber. Consider a site whose visitors are 80% male. In the past, that site may have attracted only advertisers who wish to reach men, leaving some inventory unsold. But with better data about readers, the site can now sell to a new set of advertisers the 20% of its space that attracts women.

 

Christine Peterson, president of 212, New York's Interactive Advertising Club, agrees that publishers can defend themselves. For example, they could charge an advertiser a premium if they can predict that readers are in the market for that advertiser's services. "Just because I looked at a financial page doesn't mean I'm ready to hear from Charles Schwab (SCHW)," she says. "But if I've been back and forth to multiple financial pages in recent days, could they charge Charles Schwab more? Yes."

 

The new, behavioral-targeted data could spur demand for online advertising. "We had a marketer who was launching a low-carb bread when Atkins and the South Beach diets were all the rage," Ardis notes. "They were targeting women—but it turned out a huge portion of those who signed up were men in their 40s who were starting to develop a little paunch." The advertiser started to spend more on advertising to reach the newly discovered male audience, he says.

 

So hope remains for online publishers: Find unsold segments of your readers and sell them to advertisers that previously couldn't access them. Use data on past reader "click streams" from other Web sites to help advertisers reach the consumers who are most interested in their products.

 

Publishers, your audience data is waiting. Advertisers want it. But you'd better hurry, because the price of your old online business model is falling fast.

 

 

In a broad recession the only online advertising company that is safe is Google.

Digital Shops Begin to Feel the Effects of the Economy - in a depression is any part of advertising safe from cutbacks?

 

NEW YORK - March, 2009; None of the ad world, not even the high-growth areas in digital, is immune to the ill winds blowing through the global economy.

 

To be sure, online advertising is not in recession, which is classically defined as three straight quarters of negative growth. Still, spending in many areas of digital marketing has declined sharply. Forecaster IDC last week predicted online ad spending would decline in the first quarter, the first time that's happened since the industry recovered from the dot-com bust in 2001.

 

But there are still some hopeful signs. Direct-response tactics like search remain in relatively high demand, for instance. Clients continue to shift budgets to digital channels, according to agency executives and publishers. And consumer habits are still shifting to digital channels, said Karsten Weide, an analyst with IDC.

 

"This is a function of the overall economy, it's not a function of online advertising," he said.

 

If there's one area that's struggling, it's display advertising. Display ads have a classic supply-demand problem: there is an overwhelming glut of ad impressions on the market. According to comScore, U.S. Internet users saw an estimated 345 million display impressions in December 2008, the latest month it has figures. Ad networks have filled the void for publishers, leading to a race to the bottom. Ad network CPM rates were a mere 60 cents to $1.10, according to an Interactive Advertising Bureau and eMarketer study. That means that for every one thousand ads viewed the source of the ad got $0.60 to $1.10. Given the December 2008 impression data that means the total revenue generated from display advertising was between $207,000 and $379,500 for the month. That is terrible.

 

That revenue stream translates into lean times for many publishers. Gawker Media last Sunday folded its Hollywood blog Defamer into its flagship Web property Gawker, the sixth blog it has closed, spun off or merged with Gawker. The Washington Post plans to shut Sprig.com, its environmental offshoot. The biggest sellers of display ads -- Yahoo, AOL and Microsoft -- all reported sharp declines in their banner businesses. That's likely to continue through the year, according to Weide, as brand managers risk toppling media-mix models if they didn't scale back online.

 

"Nobody wants dramatic changes in marketing departments," he said. "The savings they're being asked to make are so great that they have to take money out of display, even if they don't want to."

 

Digital agencies are seeing a steadying of business following a steep drop in the fourth quarter, when budgets froze. Since then, the economy has worsened -- or in the words of one agency CEO, "fallen off a cliff" -- leading to even longer sales cycles and a return of shops undercutting on price. What's more, clients aren't eager to make commitments, which means even agencies that have fared better than expected so far are cautious about the back half of 2009.

 

"Clients are not giving a ton of visibility so it's hard to figure out the entire year," said Liz Ross, U.S. president of Tribal DDB, part of the Omnicom Group. "There's a high level of anxiety out there."

 

Corporate America's cautionary attitude has already affected some shops. For Microsoft-owned Razorfish some big Web-build projects worth $2 million to $3 million were put on hold late last year. That led to Razorfish laying off employees at some offices to account for shelved projects and pullbacks by financial services and auto clients.

 

"We went from a world where we [couldn't hire] enough people to all of a sudden it was a client cutting its budget," said Clark Kokich, Razorfish's CEO.

 

Some high-flying shops have trimmed their outlooks. Independent AKQA, which enjoyed 40 percent revenue growth in 2007 and 22 percent in 2008, now expects a more modest 10 percent expansion in 2009. Even that's dependent on the economy not worsening significantly.

 

Yet the shop is still hiring, noted Tom Bedecarre, AKQA's CEO, and clients are still shifting budgets to digital media. Challenging environments tend to separate the weak from the strong, he said, since boom times often make every shop look successful.

 

"The herd gets winnowed out," said Bedecarre. "Agencies will close, some will get weaker and there will be more consolidation."

 

AOL Names New Online Advertising Guru

February 2009 -- Internet giant AOL has named a former Yahoo executive as head of it's online advertising department, as it struggles to transform itself into an advertising-based company.

Gregory Coleman will be the third person to take on the position in the past 17 months. He is former executive vice president for global sales at Yahoo.

AOL Chief Executive Randy Falco said in a statement that Coleman was chosen as someone who understands that "online brand building is the next frontier in digital advertising."

Last year, Coleman departed Yahoo when the company reorganized its management structure.

AOL is a unit of Time Warner Inc. that is striving to transform itself into an advertising-based company. Leadership wants to shed the firm’s roots as an Internet access provider, a role it dominated in the 1990s before steadily losing customers to faster connections.

David Hallerman, a senior analyst with eMarketer Inc., said the announcement of Coleman’s new position has important timing. It falls one day ahead of the Time Warner's quarterly earnings report.

"It's likely due to pretty poor results," said Hallerman, who estimates the company's net advertising revenue for 2008 was down 15.6 percent.

AOL’s suspected loss is compared with year-over-year growth at competitors Google Inc., Yahoo Inc. and Microsoft Corp.

AOL was enjoying rapid advertising growth until 2006, when it decided to give away e-mail accounts and software previously available only to customers. The idea was to drive new traffic to AOL's free, ad-supported Web sites.

However, growth soon began to slow down, and online ad revenue dropped 6 percent, for the first time in the third quarter of 2008.

AOL said last week it is cutting 700 jobs, or 10 percent of its work force.

Shares in Time Warner rose 35 cents, or 3.7 percent, to close Tuesday at $9.78.

 

Youtube online advertising latest click to buy program generating revenues.

In the battle for online advertising dollars, YouTube has been rolling out new products in recent months to grab more revenue. In its latest move, the Google-owned video site is expanding its click-to-buy program.

The feature lets visitors purchase songs and video games while watching videos on the site. Partners include Amazon and Apple's iTunes Store. YouTube initially launched the concept in the United States and the United Kingdom, but is now moving affiliate ads to Germany, Spain and the Netherlands.

"The past few months have demonstrated that great content on YouTube leads to increased sales," YouTube said on its corporate blog. "For example, when Monty Python launched their channel in November, not only did their YouTube videos shoot to the top of the most viewed lists, but their DVDs also quickly climbed to No. 2 on Amazon's Movies and TV bestsellers list, with increased sales of 23,000 percent."

The expansion shouldn't be surprising. When YouTube launched the ad model in October, Glenn Brown, YouTube's strategic partner development manager, said it was just the beginning of building a broad e-commerce platform.

He said YouTube's vision is to "help partners across all industries -- from music, to film, to print, to TV -- offer useful and relevant products to a large yet targeted audience, and generate additional revenue from their content on YouTube beyond the advertising we serve against their videos."

Besides moving into three new regions, the program also removed some limits. YouTube said the program is no longer restricted to tracks on videos uploaded directly by YouTube partners. Partners can add these links to videos uploaded by users by using YouTube's Content ID tools to claim videos that use their content.

YouTube also said it has already experimented with links to purchase DVDs and video games, and intends to experiment with links to additional types of products soon.

"We're also expanding and improving the ways in which these links are displayed. You may start to see click-to-buy links appearing as semitransparent overlays that appear in the bottom of the video for a short period of time," YouTube said. "This increased visibility should help even more people take advantage of this program."

Click-to-buy links are non-obtrusive retail links positioned on the watch page beneath a video with other community features. That means users can buy products the same way they share, comment on, and respond to videos.

Greg Sterling, principal analyst at Sterling Market Intelligence, said YouTube's decision to expand click-to-buy suggests one of three things: The company has seen promise in the concept, it is already driving revenues, or it holds promise for the future. "Whatever the combination of reasons for expanding click-to-buy," Sterling said, "the trend is positive."

Positive indeed. As people spend more time watching online video content, the share of Internet users regularly viewing video ads will grow, reaching four out of five users in 2012, according to eMarketer.

What's more, the latest comScore research noted that YouTube accounted for 98 percent of videos viewed at the top-ranked Google sites, where the average viewer streamed 54.7 videos in July.

 

Outlook revised for online advertising growth.

 

The outlook may be dim for online advertising. A marketing research firm is reducing its Internet advertising outlook for the next four years.

EMarketer now estimates that U.S. advertisers will spend $25.7 billion on the Internet next year — about $2.7 billion, or 10 percent, less than it predicted three months ago.

The more sobering projections extend through 2012, when eMarketer envisions $37 billion being spent on U.S. online ads. That figure represents a drop of $13 billion, or 26 percent, from the 2012 estimates eMarketer drew up in August.

EMarketer’s new estimates represent an even bigger comedown from another projection the firm made in March. Back then, eMarketer predicted that Internet ad spending in the United States would hit $30 billion for the first time in 2009.

EMarketer still expects the Internet ad market to grow by 9 percent next year. That would represent a slowdown from an 11 percent increase projected by eMarketer for this year.

EMarketer predicts that U.S. search ads will rake in $12.3 billion next year, up slightly from its August estimate of $11.9 billion. In other words keyword based search activity will continue to grow dramatically in 2009..

The Internet’s "display ads" won’t hold up as well. EMarketer anticipates online display advertising will rise nearly 7 percent next year to $4.9 billion, down from its August estimate of a 14 percent increase to $5.9 billion.

 

Mobile and Online Advertising ready to boom.

 

Mobile advertising is the form of advertising using mobile phones or using other mobile devices. Mobile advertising is a part of mobile marketing. Mobile advertising is closely related to online advertising. Mobile advertising involves displaying text, graphic image and animated ads on data enabled mobile devices. The world’s wireless infrastructure is moving in the right direction, and the catalog required attracting mobile advertisers is ever increasing. Even the dot MOBI domains are catching on, with big partners like Google, Yahoo, Microsoft, Verizon, and Samsung as major partners in the dot Mobi phenomenon.

There are different ways of advertising on mobile phones, like SMS, calls, MMS, blue tooth, internet gaming, screensaver or wallpaper logos as well as keyword based advertising across a number of specialized mobile websites.

The current mobile advertising includes broadcast SMS, brand jingles as caller ring back tones (CRBT), product placements in mobile phone games and banner advertisements on Internet-accessed through mobile phones. India's online advertising is expected to reach an inflection point by 2009-end - a time when mobile advertising is predicted to grow at a remarkable pace.

Mobile advertising is going in a slow but fixed pace. The reason is that marketing people and consumers have to understand the benefits and the technology needs to be offered at competitive rates, especially now considering the weak world economy.

Many believe that there is more of talking then action in mobile marketing platform, however in search and in text messaging we believe the gains will be impressive and long lasting.

Mobile advertising will grow bigger than any other form of digital advertising or internet advertising, except for perhaps video advertising - in the future when video mobile advertising is possible we believe that will have the best conversion rate of all online advertising.

One must always remember that the number of people that use a mobile device is increasing rapidly, in many parts of the world a mobile phone is the only form affordable electronic connectivity.

We believe that most current mobile advertising opportunities will involve SMS or MMS or WAO Applications.

The response rate is higher on mobile as compared to other online advertising devices, since the prospect is often ready to take a call to action right there on the phone (or PDA).

Advertisers can arrive at their target audience more accurately.

The biggest challenge for mobile advertising or online advertising now is educating the system that mobile is not the same as the Internet, simply due to the advanced functionality of phones and networks.

Mobile advertising and internet advertising has gone away from the testing stage by brands, which now see it as a reasonable option for the promotional dollars. The operators have played a vital role in helping the association develop guidelines for internet advertising or mobile advertising. Over the past few years mobile advertising has become a reasonable advertising channel. This is due to the fact that unlike email over the public internet, the carriers who control their own networks have set guidelines and best practices for the mobile advertising industry (including mobile marketing). The IAB (Interactive Advertising Bureau) and the Mobile Marketing Association, as well, has established guidelines regarding the use of the mobile channel for marketers.

 

Carat revises Global Advertising Spending Forecast

 

Carat lowered its growth forecasts for global advertising expenditures in 2008 and 2009, predicting 4.9 percent growth in 2008 (vs. 6.0 percent it estimated in March) and a growth of 4.8 percent in 2009 (vs. a 4.9 percent estimate in March), writes Marketing Charts Inc.

The main driver of the reductions for 2008 is downward revisions for ad spend in four economies: the US, the UK, Spain and China. Elsewhere, the majority of the developed economies are predicted to contribute less than 5 percent growth, with the impetus - and double-digit growth - coming from emerging economies in Central and Eastern Europe, Central Asia and Latin America. It's clear that the worldwide economic issues affecting businesses are having an impact on where and how advertisers spend their money, said Jerry Buhlmann, CEO of Aegis Media.

Similarly, whilst TV's share of spend has stabilized, online advertising is continuing to drive spending ahead of other sectors in nearly every region. Internet is set to overtake radio this year to become the world's third most popular medium, behind TV and print, he added.

With search now central to the planning and execution of any campaign, online media brings a greater level of accountability not just to itself but to TV, print and other forms of advertising. This is why we are predicting further strong growth for internet, even when advertisers are cautious in many of the other sectors, Buhlmann concluded.

Breakdown by Medium

TV is set to grow this year and next ahead of 2007 performance levels. Similarly, cinema's growth is strong, but it comes from a very low base. Only newspapers are predicted to decline on a worldwide basis. Spending on online advertising continues to grow ahead of all other sectors, albeit not at the same rate as 2007, and Carat predicts that the slowdown in growth will continue through into 2009. The growth of the internet is primarily at the cost of print advertising spend, even though newspapers and magazines together still dwarf internet's share; meanwhile, TV is predicted to grow its share year-on-year in both 2008 and 2009.

Regional Breakdown

The trend for growth in developed regions - North America, Japan and Western Europe - remains below the global figure with 2-3 percent on average forecast for both 2008 and 2009. The global figure is lifted by the fast growth in emerging economies, most notably Russia (22.8 percent), India (21.0 percent) and Mexico (20.0 percent). Despite the downward revisions since March, China is still one of the fastest-growing markets for advertising with growth of 18.2 percent predicted for this year. For 2009, the fastest growth regions are Central and Eastern Europe at 15.2 percent and Latin America at 14.1 percent.

US, UK, China and Spain

Growth in the US is predicted to slow to 2.1 percent from Carat's earlier forecast of 3.8 percent, with newspapers, magazines and radio all declining this year - but there will be growth in TV, thanks to the presidential elections and the Olympics, and in the internet.

The UK's overall forecast has been cut from 4.3 percent to 2.5 percent, with a downward revision of 1.8 percent points.

China's growth has been revised downward by a percentage point for this year, as the true picture of the impact on 2008 of the May earthquake and what will happen to spending post-Olympics becomes clear. 2009 is forecast to see a more significant decline in growth, with forecasts down from 13.2 percent to 10.9 percent in what will become the world's third-largest advertising market.

However, Spain's ad spend forecasts have changed the most, down from 3.8 percent to -2.3 percent as a result of local macro-economic trends and the severe housing downturn. The majority of spend is coming out of newspapers, magazines and TV, with forecast declines of -6.2 percent, -4.5 percent and -3.9 percent respectively. The internet is predicted to grow by 25 percent to make up 7.1 percent of total spend in the country. The Spanish economy is expected to pick up again in late 2009 with -0.8 percent growth forecast.

 

Intel's Growth Focused On Digital TV, Internet Advertising

Pairing integrated processors with media partnerships could help the chipmaker tap into the $51.1 billion Internet advertising market predicted for 2012.

August 20, 2008

TV, the longtime powerhouse in advertising, is poised to get much stronger as a result of the Internet.

That was the consensus of a panel discussion at the Intel Developer Forum that followed the introduction of a new system on a chip for digital TVs and other consumer electronics. Intel (NSDQ: INTC) unveiled Media Processor CE 3100, formerly code-named Canmore, along with a new software framework from Yahoo (NSDQ: YHOO) for delivering the Web to the TV screen.

More Personal Tech InsightsWhite PapersKleer Advantages Over Bluetooth Why Virtual Worlds Can Matter Internet advertising is on track to surpass newspapers, cable TV, and broadcast TV by 2012, according to IDC. The analyst firm predicts that overall revenue from the Internet will double to $51.1 billion in four years from $25.5 billion last year.

But the line between the Internet and TV is blurring with the introduction of software like Yahoo's Widget Channel. The user interface makes it possible to access Web services, such as news, sports, online video, photo services, or social networks, on the same large TV screen where people could also be watching a movie or their favorite TV show.

Such a product opens up a huge advertising opportunity, because it's able to reach people as they watch their favorite medium for entertainment -- the large-screen TV.

"It puts television not on an even footing with the Internet, but it could leapfrog it," said panelist Irwin Gotlieb, chief executive of GroupM, a media advertising management company.

Gotlieb said blending TV and the Web will make it possible to target groups of people like never before. "Targeting improves relevance and relevance improves effectiveness," he said.

Others agreed, saying that new Web-accessing technology is becoming less intrusive, which means it's more likely to be accepted by the TV audience. "We're not altering the TV experience," said Albert Cheng, executive VP for digital media at Disney (NYSE: DIS)- ABC Television Group. "We're enhancing it."

Tony Werner, chief technology officer for cable company Comcast (NSDQ: CMCSA), said a major benefit with Intel's technology is the use of the x86 architecture, an industry standard. Developers building software for the Intel platform for the PC can quickly move that software to a mobile Internet device or a digital TV with one of the chipmaker's products.

"The idea of writing an application once and having it play on all environments is incredible," Werner said.

Intel plans to ship the CE 3100 SoC next month. Intel's next generation of SoC for consumer electronics, code-named Sodaville and based on its new Atom processor, is scheduled for release next year.

Other members of the panel included Tasuku Yazaki, general manager of product planning of the Vaio division at Sony (NYSE: SNE). Eric Kim, VP and general manager of the Digital Home Group at Intel, hosted the discussion during his IDF keynote.

 

A weakened economy likely won’t hurt Online advertising will thrive despite economy, Jupiter says

 

August 1st, 2008

A weakened economy likely won’t hurt online ad spending, as retailers and other online marketers shift more of their marketing budget toward the more accountable and ROI-driven online channel, according to a new report from JupiterResearch LLC., which predicts that total online ad spending will grow 20% from last year to reach $23.8 billion this year.

 

Jupiter’s “U.S. Online Advertising Forecast, 2008 to 2013,” also predicts that online advertising spending including search, display and classified ads will increase at a compound annual growth rate of 13% to $43.4 billion in 2013. By contrast, offline ad spending will increase at a compound annual growth rate of only 4% during that time.

By far, search will continue to account for the largest share of online advertising over the next five years, reaching $20.9 billion from $9.1 billion in 2007, according to Jupiter. However, growth in search advertising spending in the short term will slow as the paid search market matures and as the result of Google’s recent Quality Score Initiative that bans low-quality ads from the search engine; that is, ads that simply lead to pages with more ads, Jupiter says. Jupiter predicts that costs per click on Google will rise as a consequence.

Spending on online display advertising will grow at a compound annual growth rate of 14% over the next five years, Jupiter predicts. Improvements in targeting technology will help increase the CPM (cost per thousand impressions) paid by online advertisers. Spending will shift away from static ads as advertisers pursue rich media and video ads, with Jupiter predicting that video ad spending will more than quadruple from $0.7 billion this year to $3.4 billion in 2013.

 

Online advertising surpasses radio commercials in Germany.

July 15th, 2008

 

Hamburg - Online advertising revenue surpassed radio commercials sales in Germany this year for the first time, according to Nielsen Media Research figures Tuesday that underlined the growing importance of the internet.

Nielsen assessed German spending on online ads in the first six months at 665 million euros (1.04 billion dollars), a year-on-year jump of 40 per cent. Radio commercials were steady at 627 million euros.

However, online advertising placements were still outstripped 15 times over by traditional advertising. Revenues for newspapers, magazines and broadcasters from advertising in the first half totalled 10 million euros, Nielsen said in Hamburg.

 

 

Google woos Family Guy, Seth MacFarlane

July 5th, 2008

WEB search and advertising company Google has signed a deal with Seth MacFarlane, 34, creator of the Fox animated TV show Family Guy to produce short cartoons for the web.

Google spokesman Daniel Rubin announced this week the cartoons will be paired with Google's AdSense advertisements placed on targeted websites, and will also be available on the Google-owned video-sharing site YouTube.

The series, titled Seth MacFarlane’s Cavalcade of Cartoon Comedy, will consist of 50 clips no longer than two minutes.

Each clip will have a variety of short ads embedded in them, with MacFarlane receiving a percentage of ad revenue.

MacFarlane is one of the highest-paid talents in TV after this year signing a deal reported to have been worth at least $US100 million ($105.24 million) with 20th Century Fox TV, a unit of News Corp.

While the internet has many players producing content exclusively for the web, it has few creators with the production budget and pay scale MacFarlane is accustomed to.

 

Major entertainment companies have increasingly tried to expand into the web in recent years.

In 2005, News Corp - the parent company of the publisher of NEWS.com.au - bought US social networking site MySpace for $US580 million ($610.39 million), and it has since rolled out different versions in other countries.

Last year, NBC Universal, which is operated by General Electric, teamed up with News Corp to found Hulu.com, a site that relies on advertising to bring users free episodes of their favourite shows on the internet.

While relying on advertising to underwrite the cost of programming has worked on TV since its inception, the approach is still meeting with mixed results online.

In another high-profile initiative, Sony Pictures Entertainment, a unit of Sony Corp, this week announced plans to make the Will Smith action film Hancock available online to owners of the web-connected Sony Bravia TV before the movie goes out on DVD.

In doing so, the studio will change, albeit slightly, the traditional distribution chain of motion pictures. After their initial run in cinemas, movies are typically released on pay-per-view television services, then via DVD, internet downloads or streams, and finally on free broadcast TV. The new initiatives highlight how old media is using the internet as a critical tool for reaching customers.

Seth MacFarlane’s Cavalcade of Cartoon Comedy will launch in September.

 

Google aims to rule advertising world

Wednesday, June 25th, 2008

Grant Surridge, Canwest News Service

 

TORONTO - Google Inc. became one of the world's most famous companies by helping people find what they want on the Internet as quickly and easily as possible. Now the tech giant is poised to do the same for advertisers.

Google unveiled the details of its Ad Planner service June 24 in New York, with some observers saying it has the potential to revolutionize how companies spend their online advertising budgets and rival established web traffic measuring companies like ComScore Inc. and Nielsen Online.

"One of the barriers, no question, has been the lack of bulletproof measurements," said Toronto-based technology consultant Kaan Yigit. He referred to the skepticism about the accuracy of established Web traffic measuring companies that has held back online advertising spending.

But there are also a myriad of explosive issues surrounding Ad Planner and a company that is already the destination for so many online advertising dollars.

Foremost is Google becoming involved in advising companies on how to spend those advertising budgets.

"Once you control a whole lot of money, and then you try to control how the rest of it is spent, in effect that could be seen as restraint of trade," said Rob Enderle, president of market research firm Enderle Group in California. Representatives from Google declined to be interviewed.

Google's new service will differ from competitors like ComScore and Nielsen in that it will use automated web servers to track the way people surf the Internet.

Existing services largely rely on what is called panel tracking. In much the same way as TV ratings are compiled, a sample of web users volunteer to have their online habits tracked over a period of time.

The accuracy of panel tracking has been questioned in several quarters, as some believe that people self-censor their Internet habits when they are being watched.

The biggest advantage server-based measurement would have is that it would allow for more in-depth measurement, and potentially provide more accurate information about the viewing statistics for smaller sites with less traffic.

Armed with such information, Google could then create plans for companies to best optimize their online advertising dollars.

For example, a company may elect to advertise with a host of smaller sites instead of just one large one, because it would better target their demographic.

Another factor working against Ad Planner is that because Google collects so much of its revenue from advertising, companies may believe the new service is biased, said Enderle. He said the Internet giant may be better off positioning the service as an arms-length company and believes this will force Google to strive for a transparent means of showing how the data is collected.

Companies may also worry that Google could use information garnered from one ad campaign and then give that same information to a competitor, he said.

Given the way Google has positioned itself as an information company, the move into measuring and analyzing web traffic was bound to happen sooner of later, said New York-based Internet equity analyst Colin Gillis.

"When you take that as the over arching context of what they're trying to do, this is of course a natural extension," he said.

© Financial Post 2008

 

 

Google admits it still cannot make money from YouTube.com.

June, 2008, by Sarah Arnott

 

Almost two years after it paid $1.65bn (£848m) for the YouTube video-sharing site, Google still has not worked out how to make money from the business, its chairman and chief executive conceded, even though hundreds of millions of people visit it every day. In a public interview in San Francisco yesterday, Eric Schmidt said that Google while wants to change the world, it had yet to transform YouTube into a money-spinner.

"The goal of the company is not to monetise everything, our goal is to change the world – monetisation is a technology to pay for it," he said. It "seemed obvious" there should be "significant amounts of money" to be made from YouTube, he added, but the company has not yet come up with the formula.

While Google remains committed to retaining its hugely successful model of offering all services for free, the question of how sites such as YouTube can make the most of their enormous success does not yet have a satisfactory answer.

Mr Schmidt's admissions may come as a relief to critics who have become increasingly anxious about Google's worldwide dominance of the internet. Despite Google's much-vaunted "don't be evil" corporate slogan – which Mr Schmidt said was a joke designed to provoke internal ethical debate – the company's meteoric expansion into, most significantly, the online advertising market, is causing concerns about privacy for individuals and commercial organisations.

Still, Google is certainly looking for ways to make money from YouTube. It is due to launch video-based advertising of an unspecified new type on the site in the coming months, having already tried using banners and "in video" ads.

Although Mr Schmidt rejected accusations of market dominance on the grounds that Google only leads the market in search advertising – Yahoo wins on display ads – it is the future that worries both his company's rivals and some of its customers. Google takes a massive 85 per cent share of search advertising, and pockets some 50 per cent of the UK's total online advertising spend, which includes display, search and classified. Not content with auctioning sponsored links to run alongside its searches, Google is also taking over other links in the chain.

The $3.1bn (£1.6bn) takeover of DoubleClick that was cleared by regulators this spring, for example, creates a platform linking to any number of individual, smaller sites, as well as providing Google with an unprecedented amount of commercial data.

Google's dominance has also acted as a catalyst for an internet landgrab as technology companies such as Yahoo and Microsoft rush to reinvent themselves as advertising platforms – Yahoo through the $300m purchase of BlueLithium, Microsoft by buying Acquantive for $6bn – as the only way to hope to compete.

 

"Google is establishing a vast advertising ecosystem," said Nigel Gwilliam, of the Institute of Practitioners in Advertising.

 

Is the biggest online advertising deal about to happen?

May 27th, 2008

 

YHOO-MSFT-GOOG: Still Talking, Still No Deal - by Aaron Task

Still talking, still no deal is the bottom line of the ongoing Microsoft-Yahoo-Google saga after a long weekend many believed would bring a transaction of one kind or another.

To summarize: Takeover talks between Yahoo and Microsoft are ongoing to buy all (Yahoo's preference for the right price) or parts of the company (what Microsoft wants), writes Kara Swisher. Of course, discussions between Yahoo and Google for a search-ad outsourcing deal are also still on the back burner.

That said, there continue to be murmurs from within Google about whether such a deal with Yahoo is worth the likely regulatory scrutiny. Meanwhile, Yahoo's top brass -- including Sue Decker in her Tech Ticker appearance -- cooled on the Google outsourcing idea once Microsoft walked away.

In other words, the brinksmanship between and among these three companies continues apace, and there's still the unresolved issue of Carl Icahn's agitation.

Notably, Bill Gates, Steve Ballmer, Jerry Yang, and Decker are scheduled to appear at Swisher's D: All Things Digital conference, this week. Sarah Lacy is reporting from the conference, so stay tuned.

 

Why Yahoo! cannot go it alone.

May 20, 2008

 

By Elizabeth MacDonald

 

Could Yahoo! survive as a stand alone company, much less a web portal?

Getting the answer to this question now on the lips of Wall Street traders, and likely billionaire Carl Icahn who has sunk tens of millions of dollars into Yahoo!, shows how weak Yahoo!’s business is as it appears to be striving to go it alone and instead tries to strike an ad partnership with Google.

Microsoft now wants to buy only what it wants, Yahoo!’s search engine, while investing a minority stake in the rest. The idea apparently has met with a lukewarm response from Yahoo!, and is seen as pressure by Microsoft to put public pressure on Yahoo! not to pursue a separate search-ad deal with Google.

A deal for just Yahoo!’s search engine would clearly cost Microsoft much less, estimates have it at $21b, lower than a full $40b+ buyout Microsoft initially offered. Collins Stewart analyst Sandeep Aggarwal estimates Yahoo’s display advertising operations would be worth $14b and its international holdings at $9.25b.

But whether Yahoo! could survive as a stand alone company, or even as just a portal is a big question, the question of the hour.

It depends if Yahoo! ceo Jerry Yang and his cohort can succeed in their ambitious turnaround plan, a plan that would turn Yahoo! into a premier portal for Web surfers, the starting point for consumers logging on, and whether that would be enough to attract the advertising dollars that would supposedly follow them.

Yang staunchly believes the Sunnyvale-based company is on the brink of a turnaround that will prove he was right to turn down Microsoft, a turnaround he thinks will prove Yahoo! is really worth more $50b. Starting next year, Yang has (over)promised that Yahoo!’s net revenue will increase by 25% annually–more than doubling its recent rate of growth.

Here is the case both for and against Yahoo! as a stand alone company.

I said from the beginning, the day Micosoft’s offer to buy Yahoo! was announced, that the Microsoft-Yahoo! battle would be a fight over the deal’s value, that Microsoft would be seen to be overpaying for Yahoo! Internet trends, notably in ad spend, are just one part of the serious challenges Yang must contend with.

First, the overly optimistic–with emphasis on overly–view of long-term growth in Internet advertising.

Seemingly unbeknownst to the cheerleaders on Wall Street, Yahoo! has been in a bit of a profit slump, its operating expenses have been soaring, so the big question is, does Yahoo! have the wherewithal, the stamina, and the earnings power to turn its throng of users into a profitable portal?

The key here is how much a Yahoo! portal would get in the way of online advertising. The three companies, Yahoo!, Google and Microsoft are fighting over online advertising, thought to be worth about $40b a year and is expected to double by 2010.

However, there’s a serious debate about those numbers as they rosily factor in estimates about the amount of ad dollars spent on places like social networking sites and sites such as YouTube, when a growing number of analysts note that advertising doesn’t seem to work on such sites.

Who wants to waste time looking at distracting ads when you are talking to your friends or watching talking dogs videos? Don’t ad dollars matter more when people turn themselves into laser beams searching for furniture or pet medicine on line?

Also, Yahoo! has a confusing site that turns off users and its display ad results are not that strong. Yahoo! tosses its vast offerings at web surfers willy nilly, and makes users, including me, feel as if they are chasing gnats in a hurricane. I often wonder whether I am getting attention deficit disorder just by looking at its unfocused site, as I reach for the Ritalin. Instead, Google has more focus and seems to prioritize its offerings.

What Yahoo! has going for it is what it claims is its daunting amount of traffic, nearly 500 million unique users per month from around the planet. Also web surfers spend a lot of time on its site each month, since Yahoo! has one of the most popular e-mail services, as well as news, financial information, sports and music. Yahoo! visitors averaged just over three hours and 12 minutes on its site in March, according to Nielsen Online. It came in second to AOL, which averaged nearly four hours.

Google averaged less, about one hour and 16 minutes of time spent on-site by its average visitor, but the numbers show it is gaining fast. Of course, Google is tremendously efficient in extracting revenue from its visitors because of its dominant position in search, where it garnered a 68% market share in April compared with 20% for second-ranked Yahoo, according to Hitwise.

But another problem is Yahoo!’s display advertising business. That business has not been that strong. Plus this business may get worse. Recent data on advertising spend patterns show that online advertising buyers are moving toward search advertising and away from display ads. The New York Times says “the prices paid for online ads bought through ad networks dropped 23% from March to April, according to PubMatic.” That’s huge.

Also Yahoo! has been in a bit of a profit slump. Without huge paper gains from its stake in Alibaba, its net income and operating income would have been microscopic. See my prior blogs, “Why Microsoft Should NOT Up its Bid for Yahoo!” and “Why Carl Icahn May Fail at Yahoo!”

Also don’t buy into just yet the naively bruited about talk of a partnership between Yahoo! and Google, where Yahoo! would outsource at least some of its search advertising to Google and thus get $1b in extra cash flow.

This deal would let Google show some of its ads alongside Yahoo!’s search results. But glowing talk of such a deal ignores the fact that it could easily be stopped. Such talk underestimates the power of the anti-trust cops in Washington, DC as well as opposition from Microsoft’s top executives, including chief exec Steve Ballmer, who is not shy about attacking mergers between competitors as monopolistic to the anti-trust squads in Washington and overseas.

Any partnership between Google and Yahoo! would surely face antitrust obstacles as the two companies would command more than 80% of the U.S. search advertising market. With Yahoo!’s share price still trading with a merger premium built in, as if a merger or some kind of deal is inevitable, the real question now is whether shares in Yahoo! will fly south faster than a goose in winter if Yang stubbornly opts to chart an independent course for the company he co-founded.

 

 

What are the barriers to advertising online?

 

We ‘asked the experts’ at this IAB event.

April 2008

 

As part of the IAB’s remit to help grow the internet marketing industry, we thought it would be useful host an event where a panel of industry experts could discuss the possible impediments to the continued growth of the medium. We structured the seminar in a way that enabled delegates and visitors to our site in the lead up to the event to pose their own questions and concerns around the subject to our panel.

Our genius bar of online advertising experts contained our very own Guy Phillipson, Andrew Bradford of AOL, LBi’s Jo Simmonds and, representing the client side of the equation, Scott Gallacher of BSkyB.

Here is a brief outline of what these experts saw as the main barriers to advertising online:

1. Guy Phillipson pinpointed the various ‘digital divides’ as an important issue that needs to be bridged. The divide between consumers online and not online, the varying degrees of advertiser knowledge from the early adopters to those who have merely experimented with the medium and the agency divide – the knowledge gap between traditional and digital and how this impacts on integrated campaigns.

2. Gallacher believes that resources and proof are the two main impediments to online advertising. He argued that advertisers were reluctant to take resources from their traditional marketing plans that are working for them and put them into online advertising, particularly as he thinks despite all the measurement metrics at our disposal advertiser’s still lack proof of the efficacy of the medium. Clearly there is still a lack of trust issue when it comes to online advertising.

3. Andrew Bradford opened with the point that the internet is still an immature format, ‘we are like what TV was in the late fifties’ he said. Bradford went on to say that a lot of work had to be done to educate the industry of the complexities of the medium and that you could have the best creative advertising in the world, but if you weren’t managing your reputation and what your consumer was saying about you online it would be for nothing.

4. Jo Simmonds stated that a ‘skills shortage’ is common place within many agencies and it will many years before agencies have planners that can coordinate the strategy for all parts of an integrated campaign. She also argued that digital was still being considered too late in the briefing process. Simmonds concluded by saying that there was not enough great work, or examples of agencies ‘going the extra mile’ to show advertisers online was worthy of their increased investment. Nobody knows how to make money in online advertising. Can you get that folks?

... and here are the really really big questions.

 

1. What do you think about the quality of digital brand building work online? Is it up to the same standards of traditional advertising?

Scott Gallacher argued that direct marketing may be ugly but it delivers results for the boardroom. Joe Simmonds’ agency perspective on the issue was that too often agencies are asked to deliver a watered down online version of the above the line work and again, there is a problem with the briefing process.

2. Are we being too ambitious and making online advertising more complicated than it needs to be?

Andrew Bradford agreed that there were a lot of skill sets in online and that there was a need for, simplification and explanation instead of education, but he argued that it is was the complexities that made internet marketing attractive. Scott Gallacher said that the internet was not regarded as an advertising medium in the sense that consumers don’t necessarily come to online for advertising compared to TV where it’s imprinted within the structure. Scott also remarked on the ‘silo effect’ in organizations between all the different parts from the product, search, display, affiliate marketing, video and as well as social media where appropriate. All these ‘different components need to be married together’.

3. Is it just a lack of knowledge that is the real barrier to online advertising, or is there a lack of knowledge with regards to brand building in online advertising agencies?

Jo Simmonds responded by saying that the internet is exciting, but complex, with a lot to it. The immigrants from above the line are yet to be fully educated of all its internal workings and there are very few ‘uber planners’ but she believes that we are starting to see a blurring of the lines.

4. Do you think using traditional advertising agencies is a hindrance to online advertising?

The consensus of the panel was that the migration of personnel from traditional to digital media was a good thing because of the insights and big brand ideas that were being brought into the online advertising realm. Scott Gallacher raised a slight concern that talent from offline traditional advertising agencies might not have the breadth of knowledge required to initially have an impact in an online advertising world.

5. There is this belief that you have to click on an ad to be engaged with it. Does the panel have an opinion on this?

The event chair, Kieron Matthews, was first to respond to this question saying that there are some kinds of ads online that someone might never click on, but you are aware of. A point Andrew Bradford picked up on by saying we make conscious and subconscious decisions about ads that are served, taking them in as either a good or bad memory. He added the subconscious intake of adverts are inherent to everyone within the audience, although someone may not consciously look at an ad, it will most likely be picked up by the brain and effect the consumer later down the road when they may come across that brand - or so the online advertising theory goes.

Guy Phillipson added that online video has changed the online adveritising game in terms of allowing the internet to be viewed more as brand building medium. Scott Gallacher concluded this particular question by saying that if we stopped now with our achievements with skyscrapers and buttons then we would not be fulfilling the medium’s potential. For example banner advertising by some companies will simply offer the option ‘to buy or not to buy’. Although this method may sift customers who have no interest in the product, it ultimately deters other consumers in the future who may decide to go for a competitor who runs a more appealing campaign. People need to be intrigued by advertising to take that step through the window. He said that click-through rates might be a very measurable commodity but added, “we are drowning in data, but devoid of insights.”

6. On the subject of behavioural targeting consumers still perceive it as illegal. How do we give consumers reassurance that behavioural targeting is in their interest?

The ‘disclosure versus reward’ was pointed out by Andrew Bradford as being the equation for behavioural targeting, if consumers are not receiving anything in return for providing data ‘they simply won’t disclose their information’. Scott Gallacher added that ‘consumers don’t trust marketers with all their information’, and that they should have the chance to view information held about them.

Jo Simmonds added that the internet has created a ‘generational gap’. Online advertising is an on going diary for a lot of young people on social network sites like Facebook, Bebo and Myspace and many will not think twice about entering their personal information online. Whereas there are still older consumers who are still very suspicious of even purchasing a product online.

7. What should media owners do to convince people to advertise online?

Jo Simmonds said a closer collaborative relationship is needed between the advertiser and media agencies to show what can be done with the medium.

8. One of the perceived barriers to online advertising is a lack of time in the planning process? Does the panel believe this is still the case?

Kieron Matthews said through his experience on TV, an 18 month turn around for a piece of creativity is the norm, whereas online usually has as little as three weeks from idea to completion. This is a factor in the quality of creative as it leaves little time to produce and deliver a smart and original piece of work. Kieron added that by shooting your online advertising assets at the same time and at the same location as your ATL, it saves time, money and effort in the long run.

Despite the event raising lots of potential barriers to the continued growth of internet marketing, all of the impediments discussed could be resolved either by increased communication or with the growing maturity of the medium. The conversations and debates could have raged on into the night and the audience were sent away wanting more.

 

LONDON - According to the latest report by Strategy Analytics, global expenditure on online advertising rose by nearly a third to $47.5 billion in 2007 and is set to pass the $100 billion mark by 2012. The report entitled Online Advertising: Global Market Forecast, notes that while web video commercials are a relatively recent innovation, they already generated revenues $1 billion last year, and are expected to be the fasting growing online ad format, reaching $7 billion by 2012 at an average annual growth rate of 48%.

Increased broadband speeds and rampant growth of all forms of online video in 2007 have created a foundation for web video commercials, comments Martin Olausson, Director of Digital Media Research at Strategy Analytics. However, while this emerging genre has great growth potential, it will continue to be dwarfed by the power of search and banner formats for the next five years.

Wider adoption of broadband internet services will help drive online advertising revenues towards $101.3bn by 2012 at an average annual growth rate of 16.3%. The report provides a five-year outlook for global and regional online advertising expenditure across N. America, W. Europe, CE. Europe, APAC and CALA, and segments revenues by Classifieds, Search, Display Ads, Rich Media Ads and Web Video Commercials.



NEW YORK--The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC) today announced that Internet advertising revenues exceeded $5.2 billion for the third quarter of 2007, representing yet another historic high for a quarter and a $1.1 billion increase, or 25.3 percent, over Q3 2006. The results, published in the IAB Internet Advertising Revenue Report, are nearly 3 percent higher than Q2 2007, itself the last record-setting quarter. All three quarters in 2007 have set new highs—Q1 at $4.9 billion, Q2 at $5.1 billion, and now Q3 at $5.2 billion. Revenues for the first nine months of 2007 totaled $15.2 billion, up nearly 26 percent over the $12.1 billion recorded during the first nine months of 2006.

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

Internet advertising revenues are on an annual run-rate exceeding $20 billion, further demonstrating the industry has truly come into its own, said Peter Petrusky, director, Entertainment, Media and Communications Practice, PricewaterhouseCoopers. The emergence of new platforms, including broadband video, rich Internet applications, mobile, and social media promise to deliver new benefits for consumers, and create exciting new venues for marketers to realize value in digital media.

The results of the survey continue to underscore the value that interactive advertising brings to the marketplace, as marketers and agencies build on established guidelines and best practices to control costs and maximize returns from their growing interactive budgets, added David Silverman, partner, Assurance, PricewaterhouseCoopers.

Conducted by PricewaterhouseCoopers, the IAB Internet Advertising Revenue Report was started by the IAB in 1996, and represents data from all companies that report meaningful online advertising revenues. The results are considered the most accurate measurement of interactive advertising revenues because the data is compiled directly from information supplied by companies selling advertising on the Internet. The survey includes data concerning online advertising revenues from Web sites, commercial online services, free e-mail providers, and all other companies selling online advertising.

First and third quarter revenue reports are estimates, with the actual figures being released along with second and fourth quarter data, respectively. PwC does not audit the information and provides no opinion or other form of assurance with respect to the information.

The IAB sponsors the IAB Internet Advertising Revenue Report, which is conducted independently by PricewaterhouseCoopers. The full report is issued twice yearly for full and half-year data, and top-line quarterly estimates are issued for the first and third quarters.

Fears of Mortgage Fallout May Hit Online Advertising - the evolving mortgage crisis could threaten the fast pace of online spending from mortgage lender Countrywide Financial (nyse: CFC - news - people ), argues Paul R. La Monica.

Netratings estimates that the company spent $34.8 million on internet advertising in July alone, and since the company has announced plans to scale back its business, it has reason cut back in this area.

Countrywide stock has been getting crushed all week on concerns about the health of its business.

Of course, Countrywide is far from the only mortgage-related firm to advertise heavily across the net.

Still, if there is trouble, nobody is letting on just yet.

Yesterday, financial information site Bankrate (nasdaq: RATE - news - people ) put out a release affirming the company’s existing guidance in a move to quell investor worries.

It too has seen its stock fall sharply in recent weeks.

The company specifically addressed the advertising question, saying “Given the volatility in the financial markets, we want to affirm our financial guidance to update investors on our progress...Our business remains strong; traffic and advertiser demand for both our rate table and display business is tracking as expected.”


Ad spend growth to slow, study says

Spending towards internet advertising will increase by 34 per cent this year, but slow to 30 per cent during 2008 as broadband take-up and growth and the amount of time consumers spend online reach a limit, a new report claimed this week.

Media investment management firm GroupM said that overall media and marketing spend would grow by almost three per cent to £26 billion in 2007.

It claimed the industry would rely on increased internet spending for most of its growth, while traditional advertising media would likely underperform in the long term.

The report suggested that zero per cent growth was expected in spending towards TV advertising during the next two years, while radio spending would see zero per cent growth this year, rising to one per cent next year.

GroupM also noted that advertising on the internet was larger than most people predicted because advertising on all websites has never been measured conclusively and neither has investment from advertisers in their online content.

 

Internet Advertising Revenues Grow 35 percent in 2006.

Fourth Quarter 2006 Revenues Total $4.8 Billion, Marking Highest Revenue Quarter Ever

NEW YORK (BUSINESS WIRE) The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC) today released the Internet Advertising Revenue Report which shows record results for the full year and final quarter of 2006. Internet advertising revenues in the U.S. continued upward totaling $16.9 billion in 2006, a new annual record exceeding 2005 by 35%. Q4 2006 internet advertising revenues totaled $4.8 billion, representing record revenues for a single quarter and a 35% increase over same period in 2005.

Interactive advertising revenues continue to show solid growth as advertisers and agencies recognize that it is a medium that can uniquely affect consumer behavior from product awareness, to purchase intent, to actual purchase and then brand loyalty, said Randall Rothenberg, President and CEO of the IAB. We have every confidence that this growth trend will continue as marketers allocate more of their total marketing dollars to interactive and the industry delivers effective and innovative platforms for connecting with consumers.

The report states that search, display, classifieds and lead generation all continue to grow at a healthy rate with an increase in both performance-based and CPM or impression-based pricing. Consumer advertisers continue to represent the largest category of internet advertising spending.

The continuing strong growth of interactive advertising as evidenced by the full year 2006 survey results proves the importance of this medium to all types of marketers, says David Silverman, partner, Assurance, PricewaterhouseCoopers. The ability for these marketers to achieve both performance-based and branding objectives with interactive advertising is the foundation for this exceptional growth.

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, notes Peter Petrusky, director, Advisory, PricewaterhouseCoopers. Online publishers may continue to experience growth as marketing budget allocations to all interactive forms continue to increase.

Conducted by the New Media Group of PricewaterhouseCoopers, the Advertising Revenue Report was launched in 1996 by the IAB, and aggregates data from all companies that report meaningful online advertising revenues. The results are considered the most accurate measurement of interactive advertising revenues with the data compiled directly from information supplied by companies selling advertising on the Internet. The survey includes data concerning online advertising revenues from Web sites, commercial online services, free e-mail providers, and all other companies selling online advertising. First and third quarter revenue reports are estimates, with the actual figures being released along with second and fourth quarter data respectively. PwC does not audit the information and provides no opinion or other form of assurance with respect to the information.

A copy of the full report is available at IAB.

The IAB sponsors the Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PwC. The full report is issued twice yearly for full and half-year data, and top-line quarterly figures are issued for the first and third quarters.

About PricewaterhouseCoopers:

PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 140,000 people in 149 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

About the IAB:

Founded in 1996, the Interactive Advertising Bureau (www.iab.net) represents over 300 leading interactive companies that actively engage in, and support the sale of interactive advertising. IAB members are responsible for selling over 86% of online advertising in the United States. On behalf of its members, the IAB evaluates and recommends standards and practices; fields interactive effectiveness research, and educates the advertising industry about interactive advertising.

Is there money in all this online advertising?

Jefferies: Online Advertising Spending Could Exceed $60B By 2010

BUOYED BY GROWTH IN SEARCH, along with strength in display advertising, investment bank Jefferies & Co. raised its estimates for the worldwide online advertising industry to more than $60 billion by 2010--up from the $54 billion it projected in 2006. The bank also revised its estimates of $26 billion in total revenues for fiscal year 2006 to $30 billion, up 34% year-over-year.

Jefferies released its revised estimates and offered additional insights into the online ad market on Wednesday at its 3rd Annual Internet Conference.

Jefferies' estimates for the sector, which are among the most bullish, come as eMarketer earlier this week projected that online ad spending will slow to less than 19% this year after three straight years of more than 30% gains.

It's no secret that search is fueling a lot of the growth in online advertising: Jefferies projects it will reach $14 billion for fiscal year 2006, with a 25% compound annual growth rate through 2010. It says search will account for nearly half of all ad dollars spent online.

Display or brand advertising online--including non-search segments such as classifieds and lead generation--will experience a 19% compound annual growth rate through 2010, driven in part by traditional advertisers shifting at least a portion of their ad budgets online, according to the bank.

Attributing its forecast revisions to the fact that the online channel is quickly becoming a mainstream marketing channel with proven return on investment, Jefferies pinpoints the online advertising segment at nearly $30 billion globally and $16 billion in the U.S..

Still, it says online represented just 6% of total ad spending in the U.S. However, that trend will shift as advertiser dollars increasingly migrate online; Jefferies projects that online will represent nearly 10% of total ad spending in the U.S. by 2010.

Search advertising reached nearly $14 billion globally in 2006--and will continue to grow, but at a slower rate of 25% through 2010. Search accounted for 46% of all ad dollars spent online in 2006. Brand or display advertising represented $16 billion in revenues and accounted for 54% of all online ad dollars in 2006; Jefferies projects it will grow at a 20% clip through 2010.

 

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