Kanoodle.com founder and Chief Executive Officer Kent Keating refers to his company as "kind of the biggest search engine you've never heard of." But with today's news that the company has secured an additional round of financing and hired a trio of top execs from online ad innovator Sprinks, Kanoodle may not languish in supposed obscurity much longer. The new funding (from Insight Venture Partners) and hires could potentially mark a turning point in the four-year-old company's existence, as Kanoodle now boasts the resources to add content- and local-targeted sponsored links to its keyword search business. Analysts project that content-targeted advertising will become a $1.4 billion market by 2007, so those companies that can immediately offer such services and expertise stand to benefit tremendously. Given that Sprinks more or less pioneered content-targeted sponsored links, snaring its top personnel gives Kanoodle immediate authority within the segment. The company's new Content Division will be headed by the three Sprinks veterans: Lance Podell (president), Doug Perlson (senior vice president, partner development and operations) and Mark Josephson (senior vice president, marketing and business development). To accommodate the expansion and get closer to the ad agencies it hopes to charm, Kanoodle has opened a New York City office. Podell identifies two factors that motivated his move to Kanoodle: a lack of resources ("they had enough to do about five percent of what we wanted to do") and Google's purchase of Sprinks on October 24. "Google bought pieces of the Sprinks product - Sprinks as it existed went away," he notes without any bitterness. "We were sort of cut off at the knees." As a result, Podell and his team went looking for a place to continue their work, and found a willing partner in Kanoodle. "Entering into the contextual market means more choice for advertisers," Keating says. "It was the right fit for everybody involved." Where Podell sees a point of differentiation between Kanoodle and its competitors is in the variety and specificity of its offerings. "Advertisers loved [Sprinks] because we gave them the most control over their media buy," he explains. "We sold a content product and a keyword search product. You bid on them distinctly and measured them distinctly - we were the only player in the marketplace that offered it that way." When asked why none of his competitors tried to emulate this model, Podell responds, "They assume there is a technology solution to everything. What makes this business work is the human element plus the technology." Podell also notes that being a cog in a massive media machine (Sprinks was owned by Primedia) gave Sprinks a better understanding of how to interact with advertisers and publishers. As for increasing Kanoodle's visibility, the company has a compelling story to tell. Although rarely mentioned in the same sentence with commercial search giants like Overture and Google, the company has enjoyed 16 consecutive quarters of increasing revenue, and is currently outpacing its 2002 performance by a whopping 185 percent. "It's necessary to get our name out there," Keating says. "With that visibility, hopefully we can convince advertisers and publishers that we have the superior product." Opening a NYC office should help in this regard, he adds: "[New York] is where the ad agencies are. We should have more access to them."
Tuesday is the most popular day for companies to send emails to users, but it is Wednesday that most recipients actually open them. Those are among the seemingly logical conclusions of the Delivery Trends Report, the first in what is expected to be a quarterly series of email marketing reports from EmailLabs. Weekday traffic aside, the report also reveals a potentially alarming development that may have gone unseen by many email marketers. While recipients are tending not to "unsubscribe" from their email lists, many are likely to simply delete unwanted emails. As a result, EmailLabs finds many email marketers are taking steps to eliminate names of subscribers who do not open a specified number of emails in a row, or are asking those subscribers to re-opt in. During the third quarter of 2003, EmailLabs found he average unsubscribe rate for HTML and text messages was 0.17 percent, a decline from 0.19 percent during the third quarter of 2003 and 0.29 percent during the first quarter of 2003. Interestingly, test messages were unsubscribed at a slightly higher rate than HTML messages. In terms of email marketing traffic levels, the report shows that Tuesday remained the most popular day of the week for sending email messages for the second consecutive quarter. The study finds that Tuesday accounted for 25.4 percent of all email transmissions, followed by Wednesday (23.3 percent) and Thursday (18.3 percent). Not surprisingly, weekends were lightest with Sunday accounting for 1.4 percent and Saturday for just 0.9 percent. "The most obvious implication is that during the middle of the week your email messages are battling with a greater amount of legitimate email than on other days," explained Loren McDonald, vice president of marketing at EmailLabs. "Flexibility remains essential. Depending upon your content, the relationship you have with your recipients, who they are, the frequency of your emails and other factors, days other than the middle of the week may in fact generate better results." The decline in overall unsubscribe rates is not surprising, said McDonald, noting it likely is a result of an increasing lack of trust in the unsubscribe process among recipients. And in an even more insidious development, he said it is possible that users simply are growing inured to unsolicited email messages, and that the explosion of spam has made consumers accustomed to deleting dozens, if not hundreds, of emails per day. "Email marketers should always watch their unsubscribe rate closely, but if it is in fact declining for your company, don't assume that you have a higher retention rate," he recommended. "Make sure your unsubscribe process is simple and functioning, and instills a sense of trust. Second, consider weeding out in-active subscribers from your list. For example, ask subscribers that haven't taken any action over a specific time period to re opt-in."
Analysts frequently discuss the Internet as if it was one homogenous user base, but new research points to some marked differences in both penetration and online user behavior between U.S. minority groups and the general online population. African Americans and Hispanic Americans, for example, index well below Anglo Americans in terms of Internet access, while Asian Americans skew much higher. The report, released Tuesday by Forrester Research, finds the trends are driven more by household economics and education levels than by a desire to utilize online media. The study finds that only 42 percent of African Americans have online access, compared with 57 percent of Hispanic Americans, 67 percent of whites, and 79 percent of Asian Americans. The research also points to distinct cultural differences in online behavior among ethnic groups. Despite their relatively lower online penetration level, Hispanic Americans are most apt to share photos online and to use instant messaging services. Asians are most likely to access multimedia content such as music, video and software downloads. One thing that is common to all ethnic groups is email. It is the No. 1 activity for all groups, says Forrester. The report, "Marketing to America's Ethnic Minorities," which was developed by Forrester's Consumer Technographics group, underscores the need for online marketers to "analyzes the key differences in the consumptive habits of Asians, African Americans, English-speaking Hispanics, and Whites." The data was compiled from a mail survey of 54,817 US households. Surprisingly, the results show that high tech device ownership, while highly correlated with income, does not alone explain users likelihood to own devices. Factors like having children and being motivated by entertainment also play a large role. For example, even though they make $16,000 less on average than Whites, Hispanics are more likely to purchase entertainment-based devices like MP3 players, video game consoles, and digital video camcorders. Results show that African Americans and Hispanics respond more positively to advertising than Whites and Asians. In fact, Whites rated very low in all areas of advertising receptiveness, and Asians not much higher. According to the data, African Americans and Hispanics find advertising more entertaining and trustworthy and are more likely to watch TV commercials. Fifty-four percent of African Americans and 42 percent of Hispanics say they watch TV ads, compared with only 32 percent of Whites. Similarly, African Americans are twice as likely to purchase a product because the advertiser sponsors family or educational programming. Asians, African Americans, and Hispanics are more likely to rate personalization and ad relevance as important features of online content sites than Whites. "Marketers should take note," said Jed Kolko, principal analyst at Forrester. "Our survey results show that there is more to reaching minorities than understanding demographic differences. Income, for instance, does not necessarily determine what technology someone invests in and what influences them to purchase it."
While online ad spending is rebounding in the United States, its relatively robust 15-20 percent rate of growth in 2003 is nothing compared to projections for at least one other major industrialized market. With 2003 online ad spending up 85 percent through the first half of the year, the U.K. Web advertising marketplace is on a pace to grow more than four times that of the United States, according to estimates released by the Interactive Advertising Bureau UK. The trade group estimated that U.K.-based Web publishers took in $264.3 million during the first half of the year - an increase of 85 percent over the first half of 2002. At that rate, U.K. Internet ad growth far surpasses ad spending increases for other U.K. media. In fact, on the whole, ad revenue is down. According to the Advertising Association, 3.38 billion pounds were spent on advertising in the third quarter of 2003, representing an inflation-adjusted decline of 2.6 percent from a year earlier. U.S. Internet ad spending growth pales by comparison. For the first half of 2003, according to the IAB, online ad spending rose to $3.29 billion - a somewhat disappointing 10.5 percent increase over 2002's decidedly sluggish spending figures. Britain is Europe's largest online advertising market, and by year's end it should comfortably reach the 300 million-pound milestone for the first time, giving online advertising a two percent share of total UK ad spending. This is a 100-million-pound increase over 2002. "The tide has turned," said Danny Meadows-Klue, chief executive of the IAB, adding that this has been "fuelled by rapid product innovation and unstoppable audience growth as British consumers have turned to the Internet for everything from entertainment and job hunting to shopping and news." Many attribute the upsurge to increased U.K. broadband adoption. In fact, according to ZDNet UK, last Wednesday British telecommunications regulator Oftel announced that the United Kingdom's three millionth high-speed Internet connection had been installed. ZDNet sources further suggested that the precise figure for weekly broadband adoption could be as high as 49,000 new connections per week. David Edmonds, director general of Oftel, said in a statement last Monday that broadband is "transforming the way consumers and businesses use the Internet, and is now becoming an important market in its own right." He adds that "in the last five years the Internet has moved from the margins to the mass market, with half of all U.K. households and two-thirds of all businesses now online." While broadband adoption in the United Kingdom is certainly expanding rapidly, 3 million broadband connections account for just 12% of the its online population, compared to the United States, where 40.9% of users have access to a high-speed connection, according to data compiled by the MediaDailyNews.