May 31st, 2008 elitani
Sites no longer expected to grow as fast as once predicted this year says eMarketer
May 13, 2008-By Mike Shields
Advertising on social networking sites is no longer expected to grow as fast as once predicted this year, says a new report issued by eMarketer, suggesting that enthusiasm is waning among buyers for the still fast growing category.
Spending will reach $1.4 billion in 2008, according to eMarketer’s latest report, down from the more bullish $1.6 billion estimate the researcher had previously issued in December. That new spending benchmark would represent growth of 55 percent — still enviable by any media standard — but down significantly from the 163 growth spurt exhibited last year.
eMarketer pins the dip in expectations on the uncertain economy and the lack of established advertising practices in the still emerging segment, which is driven primarily by user generated content. In recent months, MySpace has reorganized its advertising sales operations as the company fell short of parent company News Corp.’s stated revenue goals. Meanwhile, Facebook is still recovering from it’s bungled Beacon program, which attempted to take advantage of the viral nature of the site by publishing its users purchases and brand preferences to their respective friend groups.
Those two sites, according to eMarketer, take in the majority of ad dollars in the space (72 percent), and the researcher has downgraded growth predictions for both. MySpace, which accounts 53 percet of total US online social network ad spending “has had monetization difficulties,” said the report, leading to a forecast or $755 million in ad revenue for this year, down from eMarketer’s previous forecast of $850.
Meanwhile, eMarketer has also lowered its ad revenue expectations for Facebook from $305 million to $265 million. That move is in part due to the growth of the exploding number of widgets and applications built specifically for Facebook, which according to eMarketer provide marketers with alternative means of advertising on the popular site.
Still, eMarketer expects social networking advertising to grow at a healthy rate over the next several years. By 2012, spending is expected to reach $2.6 billion, down just slightly from eMarketer’s previous prediction of $2.7 billion for 2011.
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May 31st, 2008 elitani
Mark Sweney The Guardian, Monday May 19 2008
Next year UK advertisers are expected to spend around £3.6bn on the internet, an amount that will outstrip the £3.4bn that is forecast to be spent on TV ads. Internet advertising has unquestionably reached a point of maturity where digital spending is not just about search advertising. “The internet is not one medium, its growth rate is a blend of three distinct businesses growing at different speeds: search, display and classified,” says Adam Smith, the futures director at WPP-owned media agency Group M.
Looking ahead to 2010, the seemingly inexorable growth of UK internet spend will see it hit £4.36bn, according to media agency ZenithOptimedia. Within that search advertising will be a massive £2.45bn, online classified ad spend will reach £876m and spend on display advertising will crack £1bn.
The rise of the online display advertising sector, which will command more ad money than consumer magazine, or radio or outdoor advertising by 2010, is particularly interesting. Digital display advertising includes standard banners and buttons, as well as more rich-media advertising involving the use of animation and video, and is considered a brand awareness medium.
“There is a groundswell of opinion and enthusiasm for using online for branding activity,” says Rhys McLachlan, head of broadcast implementation at media agency MediaCom.
A nascent area within display is the growth of video advertising, such as ads before or within TV programmes, music videos, etc. TV broadcasters, among others, are desperate to exploit it as a significant revenue stream. ITV aims to increase revenues from ITV.com, which includes its online TV service, to £150m by 2010.
With most broadcasters building broadband TV services - ITV, BBC Worldwide and Channel 4 have Project Kangaroo in the pipeline for later this year - the expectation is that video advertising will be lucrative. “There is absolutely enough professionally produced content for a robust market,” says McLachlan. “Consumers are piling in and therefore so are clients from GSK to Audi”.
A key attraction is that such online video ads, particularly those that run around quality programming, command a price premium. “The high-quality display end is moving towards video, which can cost more than ordinary TV,” says Smith. The cost for an advertiser for 1,000 views of a video ad, the CPM rate, varies from about £15 to £40.
James Wildman, the managing director of ids, the sales house that handles cross-media advertising for clients including Virgin Media TV and UKTV, says that the online video opportunity is definitely gathering pace. He claims that all of the video advertising inventory offered through the online TV service on the Virgin Media website sells out each week.
His company, which offers video content including online highlights of the Premier League, delivers around 20m views per week. “We are increasingly seeing more video usage and therefore more ad inventory, and we are selling out,” he says. “But then it is easier around key programming such as sport and Britain’s Next Top Model. The reason Google can’t monetise all the user-generated content on YouTube is because it can be lower quality, it can’t be compared to football highlights.”
Video advertising aside, the main form of display advertising consists of lower-priced ad formats, such as banners, that are sold by online advertising networks. Google’s acquisition of DoubleClick is one example, Microsoft’s $6bn purchase of aQuantive another, of the recognition of the potential of the display ad market. Research firm E-consultancy estimates that in 2008 around 50% of spend on display advertising will go through networks.
Of course when it comes to the search advertising market, by far the largest chunk of the internet advertising pie, Google is completely dominant. In the UK Google is predicted to make around £1.75bn this year. This is more than UK advertisers are forecast to spend on national newspaper ads or on TV ads across ITV1. Google UK has recently sought to rake in even more by controversially allowing companies to bid for competitors’ trademark names: previously typing search terms such as Nike or Tesco into Google would produce the companies’ sites as top listing, and they didn’t have to bid to retain their names. Now, potentially, they do. It’s a move that has ruffled feathers, as it’s likely to entail costs going up for advertisers, who will have to spend more on securing their brand name from rival bidders.
Tesco has said it will not bid on competitor names, while Lastminute.com has stated that the policy could cost it “millions” and that it will look at European trademark protection law.”Trademarks used to be the cheapest way of getting a response from consumers because there was no bidding competition,” says Smith. “One thing for certain is that the cost of doing business will go up.”
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May 31st, 2008 elitani
May 11, 2008
By Eric Newman
Social networking is all about linking people with common interests. For most, brands are a part of those interests. So much so that 56% of respondents to a new survey by online marketing consultancy Prospectiv, Woburn, Mass., said their social networking experience would be better if marketers pushed more targeted ads.
Sixty-two percent of the nearly 800 online social network users polled in March said they’d be interested in offers from their preferred brands.
The problem is marketers are failing to provide social net users with information and offers about products they want to use. The vast majority of respondents (87%) said very few or no ads matched their interests or preferences. About 54% of participants said they never respond to an ad they see on social networking sites.
“These users want, and welcome, information about new products, savings and other offers, and they’re clearly stating that if the ads were more targeted and relevant, it would be worthwhile to them,” said Jere Doyle, CEO of Prospectiv.
Why is there a disconnect? Brands too often consider social network campaigns as an extension of their mass media campaigns, so the creative isn’t properly tailored for the medium, said John Paulson, president of interactive agency G2, New York, a member of WPP and a partner agency of Grey Worldwide. Brands “are treating the space like they would another, traditional content site. That doesn’t work.”
Another issue: There is a surplus of ad-space inventory not managed by the sites themselves that accounts for untargeted messages, per media buyers. Plus sites are not mining enough data from consumers to provide deeper targeting.
Jeff Berman, president of sales and marketing for MySpace, said the site has made great strides in this area. TJ Maxx and Target, for example, have reached consumers based on an expressed interest in fashion or a musical genre. Those efforts have netted “performance increases of up to 300% when compared to standard demographic targeting, and we’re still just in the early stages of optimization.”
On Facebook, a wedding photography agency, Bella Pictures, greatly boosted its business by placing ads for a photo-package sweepstakes on the profiles of women who had listed themselves as being engaged.
Mike Murphy, Facebook’s vp-media sales, said increased targeting of ads benefits not only the brands and the users, but also the networking sites themselves. “The perception is that advertising is a cost that users pay to experience a free site. But the more that we can do to reduce that perceived cost, by providing targeted and relevant advertising, the better.”
G2 is currently working on a variety of widgets for its clients that fit seamlessly into the social networking environments. Paulson said, “We have to work within their universe to add value to them.”
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May 31st, 2008 elitani
Mark Sweney guardian.co.uk, Friday May 16 2008
Sir Martin Sorrell’s WPP, the world’s second largest marketing services group, has struck a deal with Yahoo to enable its agencies to improve their digital display advertising buying operation.
The strategic partnership, which will initially involve a collaboration between Yahoo and WPP’s combined media buying operation Group M and 24/7 Real Media, will see the development of a “proprietary media trading platform”.
One aim will be to develop a digital media trading platform for WPP that connects to Yahoo’s own Right Media Exchange.
WPP agencies will work with 24/7 Real Media to “integrate their proprietary targeting capabilities” into the new media trading platform.
The partnership will also aim to “develop custom trading strategies”, which can be seamlessly executed via the Right Media Exchange on a highly targeted and cost-effective basis.
“More and more, we see the need for agencies and media and technology companies to work together to create a new level of value,” said Mark Read, the WPP director of strategy and WPP Digital chief executive.
WPP will also work with Yahoo to develop a “WPP marketplace” that will give greater access to advertising inventory, visibility across the market and insight into the value of particular campaigns.
The marketing group intends to draw ad inventory for the WPP Marketplace from Yahoo’s owned and affiliated networks and 24/7’s Global We Alliance.
WPP and Yahoo are aiming to open the marketplace to third-party publishers.
Irwin Gotlieb, the chief executive of WPP’s Group M, added: “This partnership with Yahoo will give our agencies and, in turn our clients, an advantage in securing more relevant, high quality digital media inventory.
“And, it will be aggregated to our bespoke needs, at the best value for our clients.”
Earlier this year, WPP rival Publicis announced a link-up with Google to develop advertising technologies
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May 26th, 2008 elitani
Strong growth, good prospects
For the full year 2007, online ad revenues totaled $21.2 billion, according to the Interactive Advertising Bureau (IAB)/PricewaterhouseCoopers (PwC) “2007 Internet Advertising Revenue Report.” That was 26% higher than 2006, which was itself a record year.
The IAB and PwC said that Q4 2007 Internet advertising revenues reached $5.9 billion, the highest ever for a single quarter and 24% higher than the same period in 2006.
“Despite the current state of economic uncertainty, 2007 was another record year and the 13th consecutive record quarter,” said David Silverman, partner, Assurance, PwC, in a statement.
The IAB and PwC said that search, display, classifieds and lead generation all continued growing. As in prior years, consumer advertisers were the largest category of Internet advertising spending, at 55% of 2007 full-year revenues, up from 52% from the full year 2006.
eMarketer predicts that despite continued strength relative to most other media, Internet ad spending growth will drop to about 16% in 2009. This slowdown reflects a combination of the maturing online ad market and overall economic weakness.
There will be a bounceback in 2010 due to a recovering economy and a much larger influx of branding-oriented ad dollars flowing online. One major source of those escalating spends will be video ads, which are relatively expensive and greatly desired.
“By 2012, the anticipated boom in online video advertising combined with continued strength in more established Internet ad categories, such as paid search and classifieds, will mean spending growth greater than 20% for the first time since 2008,” said David Hallerman, senior analyst at eMarketer.
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