Microsoft on Wednesday said it is investing $240 million for a 1.6% stake in Facebook--a deal that values the hot social network at a staggering $15 billion. Beating out Google, Microsoft also won exclusive global rights to sell third-party banner ads on Facebook. Microsoft has had an agreement to sell ads on Facebook in the U.S. since August of last year. Expanding the deal internationally was seen as critical because 60% of Facebook's nearly 50 million registered users are abroad. Microsoft believes that user base is on track to exceed 200 million and eventually 300 million members, said Kevin Johnson, president of Microsoft's platforms and services division, during a conference call Wednesday. On the call, Johnson downplayed what one analyst called the "faddishness" of Facebook. "Figured with [Facebook's] monetization opportunities," said Johnson, "you could very quickly get to the valuation" of $15 billion. Analysts agreed that whatever Facebook's prospects, social networking can no longer be considered a fad. "These are seasoned companies making well-thought-out investments," said Gartner analyst Andrew Frank of the deal. Johnson said he was pleased with Microsoft's ability to monetize Facebook's network thus far, but that there are "many initiatives underway to drive that higher." Johnson did not provide details regarding these initiatives. Owen Van Natta, Facebook's vice president of operations and chief revenue officer, did allude to Microsoft's recent acquisition of aQuantive, saying the deal was "a deep strategic move for them." Beyond mere ad-serving opportunities, Johnson said the partnership with Facebook was largely strategic. "You can sit back and watch how this partnership is going to develop," he told one analyst. To align further with Facebook, Microsoft reportedly faced intense competition from Google, which had previously bested Microsoft in bidding wars involving AOL and DoubleClick. Even with this latest win, however, Microsoft still faces an uphill battle against Google in the fight for online ad dollars. In its fiscal year ending in June, Microsoft's online ad revenue rose 21% to $1.84 billion. During the same period, Google's ad revenue totaled $13.3 billion. Van Natta said the investment would be used to fund further "innovation and growth." Van Natta pointed to a high demand for more Web developers, in particular, and estimated that Facebook would have more than 700 employees by next year. This year, Facebook is reportedly expecting a profit of $30 million on revenue of $150 million. While MySpace remains the top social network, Facebook has grown much faster over the past year. Facebook attracted 30.6 million U.S. visitors during September, compared with 68.4 million at MySpace. Microsoft's social networking offering, "Windows Live Spaces," attracted an audience of 9.8 million, according to comScore.
Google is working on a "fully functional marketing dashboard" that will integrate data from advertisers' search, display and offline marketing efforts, allowing them to "look across assets, metrics and user engagement cycles," Tim Armstrong, president of advertising and commerce for North America, told analysts during an Analyst Day session. No further details or timeline for the dashboard were given, but Armstrong said the "high velocity of interest from brand agencies and media partners" in Google's offline solutions, as well as newer ad models like Gadget Ads and YouTube overlays, warranted the development of a robust, integrated reporting platform. "The more measurement you can put on this type of functionality the better," said Armstrong--noting that once the DoubleClick acquisition closed, its display metrics would add yet another layer of functionality. Analysts got a deeper look into the key components of Google's "Search, Ads and Apps" strategy on Wednesday, with presentations from the search giant's top brass as well as product managers (almost all of whom were recent college graduates). The panelists and demos offered insight into advancements that have been made on all three fronts--from both a consumer and an enterprise perspective--and also gave details on future developments. Such brands as Nissan and Global Hyatt have already made use of the search giant's lesser-known assets like Google Trends. According to Albert Cheng, product manager for Google Trends, the feature was created to "make our search data universally accessible and useful." Consumers were "tapping into the wisdom of the crowd" to figure out the answers to their questions (Cheng and his wife had used Google Trends to determine the most popular way to spell their soon-to-be-born son Connor's name), but even Global Hyatt had used the data to determine whether to dub their newest Caribbean property "Hyatt Regency Trinidad" or "Hyatt Regency Port of Spain." Ultimately, the hotel giant chose the former (undoubtedly after considering other factors), but said the sheer volume of searches for the keyword 'Trinidad' compared to the relative lack of searches for 'Port of Spain' was a primary reason for the decision. Meanwhile, Nissan used Google Trends data to help determine whether the multichannel campaign (including product placement in NBC's "Heroes", print, TV and online ads) behind the launch of their new Rogue crossover SUV was working. The automaker compared search volume for 'Nissan Rogue' and 'Honda Pilot,' and noted that there was a definite spike in queries that coincided with the launch efforts. At that point, "the marketing manager can ask for more money," said Cheng, "because it's clear that the campaign is working."
WPP is getting additional new media assets with the acquisition of Vancouver-based interactive shop Blast Radius. Founded 10 years ago, Blast Radius's client roster includes AOL, Electronic Arts, Nike, and Starbucks. It earned roughly $60 million in revenue this year, and has offices in San Francisco, New York, Toronto, Amsterdam and London. Following closing, Blast Radius will be aligned with Wunderman, WPP's marketing services and relationship marketing network. "With its focus on creating interactive experiences with the customer at the core," said Wunderman CEO Daniel Morel, "Wunderman and Blast Radius are well-situated to provide unparalleled online relationship marketing capabilities." Industrywide, independent ad agencies have become a rare breed. Along with several private equity firms, other agencies reportedly vying for Blast Radius' attention were Omnicom's TBWA network and Publicis Groupe's Saatchi & Saatchi. Just last month, WPP acquired Schematic, a Los Angeles-based full-service digital agency with a client roster full of media and entertainment leaders. Terms of the deal were not disclosed. And this summer, its G2 Worldwide unit acquired independent digital shop Refinery, which generated revenue of $21 million last year, and whose clients include Merck, Campbell Soup and Merrill Lynch. Also this summer, G2 acquired Star Echo, a China-based agency offering activation marketing throughout that region. Other recent grabs include MDS Boole, a data and metrics consultancy in Spain. Schematic, which late last year was hired by the UK's ITV to design its video-on-demand site and media player, also regularly works with ABC, NBC Universal, MTV, CNN, Comcast, Time Warner and Turner. The eight-year-old agency had revenues for the year ending March 31 of $29.6 million, with gross assets of $8 million.
It looks like NBC managed to make a good thing better when it attached a stylized social network to its popular series "The Office." As part of its larger "The Office 360" initiative, NBC launched The Dunder Mifflin Infinity site early last month for fans to congregate and perform weekly tasks tied closely to the story line of each week's show. With the hope of further engaging viewers and their imaginations, the site goes so far as to assign registered users a position at Dunder Mifflin--the colorless paper company where the series is set. Since then, the show's site has attracted over 800,000 unique users--100,000 of whom decided to enlist in the company's virtual workforce --along with eight million page views. Not long ago, it seemed that every media and brand marketer was commissioning a social network to solve their reach and engagement issues. What they didn't realize, according to Gartner Research analyst Andrew Frank, was that successful social networks grow out of an affinity for a property or brand, and not the other way around. "Marketers have learned that you need more than community features to build a successful community online," said Frank. "You need an existing affinity around a property, and NBC definitely had that with 'The Office.'" NBC must have known that "The Office" had a highly engaged audience when a newsletter promoting its new site was met with a 73% unique open rate and a 56% unique click-through rate. Since the summer, NBC Digital Entertainment has attempted to foster community involvement around many of its properties by adding new tech and content features. Its science fiction drama "Heroes" has received similar "360" treatment, which emphasizes multi-platform presentation like WAP mobile sites for new and returning shows. Further using the Web to promote its TV shows, NBC last year filmed 10 Webisodes of "The Office" for release on NBC.com--the first time the network ever created video programs exclusively for the Web.
The U.S. mobile video audience has grown by more than one-third this year to eight million, according to a new study by mobile market research firm MMetrics. With 6.8 million viewers, viral clips have proven to be the most popular category of mobile video. The audience figures include video viewed directly on wireless carriers' decks or sent by friends or family members as of Aug. 31. Viewership for video delivered on-deck increased 28% since January to 2.7 milion. The increasing numbers are a promising sign for mobile publishers and advertisers, say MMetrics analysts. "If operators and handset manufacturers or publishers are hoping to see a mobile video take off, this is good news," says Mark Donovan, senior analyst at MMetrics. For advertisers, he acknowledges that the audience is still small compared to the Internet and TV. Video watchers represent only a tiny fraction of all cell phone subscribers in the U.S. Those who watched over-the-air mobile TV broadcasts and/or video clips at least once a week amounted to less than one percent. Those tuning in monthly represented 3.7%. Similarly, only 3.2% of mobile subscribers watched videos sent by friends or family. Almost 30% of U.S. mobile phone users own video-capable mobile phones, according to a study last year by the NPD Group and the Mobile Marketing Association. Donovan noted, however, that mobile advertising is driven by qualitative as well as quantitative factors. "Not only can you deliver messages and offer promotions to people on mobile phones, but they have a mechanism right there to respond whether click-to-call or a short code number." he says. Market researcher eMarketer predicts that U.S. mobile ad spending overall will grow from an estimated $421 in 2006 to $4.8 billion in 2011. Mobile marketing and content tied to broadcast TV also will climb to nearly $1 billion within three years. Boosting demand for carriers' on-deck programming have been aggressive promotion, wider distribution of 3G phones, and more compelling content. "Sprint's performance is particularly noteworthy, as the carrier's subscribers comprise more than 36 percent of the total audience for programmed video," says Seamus McAteer, chief product architect and senior analyst at MMetrics. Overall, text-messaging remained by far the most popular mobile activity among U.S. subscribers, with 43% thumbing away on keypads. A distant runner-up was photo-messaging at 19%, followed by e-mail and instant messaging, each at about 9%.