Online advertising revenues for the year climbed to a new record of $9.6 billion--up 33 percent from 2003, and 19 percent from the previous record of $8.1 billion in 2000--according to a report released Thursday by the Interactive Advertising Bureau and PricewaterhouseCoopers. Web ad revenues for the last three months of the year contributed $2.69 to the annual total, representing a 24 percent increase from the $2.18 online ad spend in the fourth quarter of 2003. Yearly revenues climbed for the major categories of online advertising: search, which grew to $3.9 billion from $2.5 billion in 2003; display and sponsorhip, which climbed to $2.6 billion from $2.3 billion; classifieds, up to $1.7 billion from $1.2 billion; and rich media advertising, weighing in at $963 million, up from $727 million. "It's all very good news," said Greg Stuart, president of the Interactive Advertising Bureau. "In the past, growth was led by search and classified," he said. "Now that display is going strong, you've got growth on all cylinders." eMarketer researcher David Hallerman added that online advertising was poised for another banner year in 2005. eMarketer projects 33.7 percent growth this year, he said. Still, online advertising revenue accounts for just 3.4 percent of total ad spending--more than business magazines and outdoor ads, but less than consumer magazines, television, direct mail, and other traditional media. The report also disclosed that year-over-year, search advertising grew to 40 percent of the total online ad spend--up from 35 percent the year before--while display ads accounted for 19 percent, down from 21 percent in 2003. The share of classified ads increased to 18 percent from 17 percent, while rich media remained static at 10 percent. Revenues from advertising purchased on a cost-per-thousand impression basis accounted for 42 percent of the total online ad spend for the year--down from 43 percent in 2003--while pay-for-performance ads accounted for 41 percent of 2004 revenues, up from 37 percent the prior year. Hybrid models represented 17 percent of 2004 revenues, down from 20 percent in 2003. Consumer ads in the retail, car, entertainment, leisure, and packaged goods categories surged to 49 percent of the online ad spend from 37 percent in 2003. Computing ads fell off to 18 percent of the total--from 20 percent the year before--while financial services ads increased to 17 percent from 12 percent. Within the consumer category, retail ads represented 40 percent of the total, while car ads accounted for 19 percent; entertainment was responsible for 13 percent; leisure ads came to 16 percent; and packaged goods accounted for 7 percent. As in prior years, the vast majority of money--71 percent in 2004--went to the top 10 ad sellers, such as Google, Yahoo!, MSN, and America Online, and eBay.
New York State Attorney General Eliot Spitzer filed a lawsuit against Los Angeles-based Intermix Thursday, alleging that the company's installations of adware on consumers' computers amounted to deceptive business practices and false advertising under New York state laws. Industry observers say the case has broad implications because the practices complained about in the lawsuit are common within the adware industry. In its complaint, Spitzer's office alleges that Intermix installs ad-serving software on users' computers without sufficient notice. The lawsuit states that an Attorney General investigator who examined the company across seven Web sites for four months found that Intermix bundled its ad-serving software with software such as screensavers and games, and didn't adequately alert consumers that they would receive pop-up ads after downloading the programs. The lawsuit alleges that Intermix both surreptitiously installs adware and that it sometimes buries notice of its adware programs in the fine print of its end-user license agreement. "Intermix either fails to disclose these additional programs in any manner, or hides mention of them deep within a lengthy, legalistic license agreement. Even in the latter case, the information provided is vague, incomplete and often factually inaccurate," states the complaint. Spitzer's office is seeking an injunction against Intermix and monetary damages. Intermix Thursday issued the statement: "Many of the practices being challenged were instituted under prior leadership, and Intermix has been voluntarily and proactively improving these applications and related consumer disclosure and functionality for some time. In an abundance of caution, we voluntarily ceased distribution of the applications at issue earlier this month." The company also stated it expected to continue talks with Spitzer's office. The lawsuit came as a shock to some industry observers because, they say, many adware companies' license agreements are similar to the one allegedly used by Intermix. "The practices that the New York State Attorney General has identified as unfair and deceptive and objectionable, are practices that are very common in the adware industry," said adware researcher Eric Howes, who runs the site Spyware Warrior.com. Reporter Shankar Gupta contributed to this article.
The relationship between publishers, advertisers, and readers that at one time sustained news companies is now obsolete, according to Neil Budde, the founding editor of The Wall Street Journal Online, who was hired by Yahoo! as its news director in November. Budde spoke to OnlineMediaDaily Thursday about Yahoo!'s revamped news site, and the company's role in the evolving news business. "The days when people bought a self-contained package are starting to erode," said Budde. "And because a lot of the economics of the industry were tied to that packaging, the relationship between publisher, advertiser, and reader will never be the same." Since Budde came to Yahoo!, the company has already redesigned its own news site, and as of Thursday, positioned its revamped site--released in beta in mid-April--as its default news page. Yahoo! has moved the site's navigation options from a vertical layout flanking the left side of the page to a horizontal one on top of the page. The site also now offers more defined links and a wider area for stories. And while Yahoo! may compete with news publishers' sites, Budde reinforced his position that Yahoo! is not a news publisher--at least not in the traditional sense. "Our specialty is the technology that improves the news gathering experience for users," Budde said. "Lloyd Braun said something in a meeting yesterday that I really agree with: We want to be best friends with media companies, and coexist with them." Budde continued: "The Internet will only become a better, more profitable proposition for publishers as long as they can reach audiences on a large scale, which our site facilitates." That is, of course, if they are one of about 100 news organizations that have agreements with Yahoo! News so it can display and link to their content. Users also can search through about 7,000 additional online news sources that Yahoo! catalogs for information. "Our role is to provide the most compelling entry point out there, and then all the publishers we have relationships with will benefit," said Budde. In response to the public's interest in a broad selection of sources, the new site invites users to pick and choose from the Associated Press, Reuters, Agence France-Presse, Washingtonpost.com, USATODAY.com, and The Christian Science Monitor, among others. "It's all in an effort to give readers as much perspective as possible in as simple and concise a format as possible." For that, Yahoo! has no reporters, but between 10 and 20 editorial staffers who are responsible for monitoring and repackaging much of the news content that Yahoo!'s automated system brings in. Another new feature that Budde has great hope for is "My Sources," which allows readers to act as their own editors, tying other news feeds from around the Web into their regular content consumption via RSS. "Online news consumption will continue to evolve in a combination of aggregation and editorial content," Budde said. "We want to give users a compelling new package with all the ready recourses to control their consumption."
CNET's Download.com announced Thursday that it would no longer allow bundled adware-supported programs on its site, and purged itself of nearly 600 such products. Software publishers were notified of the ban earlier this month, according to CNET--and given three weeks, ending Thursday, to comply by removing the adware from their products. CNET said the decision was not a new initiative, but an expansion of a longstanding policy prohibiting software components that could interfere with users' control and privacy, including all spyware. "We've chose to extend our policy at consumers' requests," Scott Arpajian, senior vice president of CNET Download.com, said. He indicated that the move, which affected only a tiny percentage of the site's programs, was largely symbolic. "It's clear that removing 600 programs--mostly screensavers, actually--from tens of thousands won't effect anyone's bottom line, but we're hoping that this will be seen as us taking a leadership role--a step in the right direction." Nick Nyhan--president of market research company Dynamic Logic and co-founder of Safecount, a new coalition designed to advocate to preserve digital media measurement mechanisms--praised the gesture. "CNET is taking a leadership position that says we review the technology so you don't have to," he said. "It would be great if more publishers could do public services like this--showing the consumer how to separate good technology from bad," Nyhan continued. CNET joins other companies like America Online, which quietly stopped doing business with adware companies in the fall of last year after it acquired ad network Advertising.com in August for $435 million. Among the largest adware companies affected by the move include 180solutions--which had "less than five" applications on the site, according to a company spokesman--and WhenU. Bill Day, CEO of WhenU, said, "It's unfortunate that there isn't more of an effort to differentiate between spyware and adware," said Day. "Users don't need something symbolic right now; they need more editorial involvement, which is ironic because CNET is involved here with their obvious editorial potential to clear these misunderstandings up." Day, however, was optimistic: "I think in the end this will all be cleared up, and WhenU stands to gain because of our strong business practices."
Consumers who report regularly deleting their cookies usually do so, stated aQuantive's Atlas Institute for Digital Marketing, which Thursday issued a partial retraction and revision of the report "Is the Sky Falling on Cookies?" released earlier this month. More than four out of 10 consumers--43 percent--reported that they purged their computers of cookies weekly, according to both the original and revised report. The original version went on to state that the self-reported weekly-deleters typically kept cookies 45 days rather than seven. But the revised version concludes that the consumers' reported behavior is close to their real-world activity: 50 percent of those weekly-deleters did, in fact, erase their cookies at least weekly, 10 percent did so at least every two weeks, and 11 percent did so at least every month. With the revised report, Atlas is much closer to a Jupiter Research study that shook up the online advertising world last month with the revelation that 39 percent of consumers say they delete cookies at least monthly. Despite the deletions, the report, by Director of Analytics and Atlas Institute Young-Bean Song, states that cookies still are useful because most conversions occur within 24 hours of the click or impression. "Even in a future where users are deleting cookies once a week, cookie-based conversion reporting will capture a large majority of conversion activity," states the report.