Web portals lost 5% of online ad dollars last year to narrower content sites and search engines as spending followed consumers across a more fragmented Web landscape. That's among the key findings in the annual outlook report on digital advertising trends based on 2007 billings of $735 million. Overall, vertical sites accounted for 39% of spending; search, 31%; portals, 19%; and ad networks, 11%. Underscoring the continuing shift away from portals to more targeted properties, the agency last year more than doubled the number of sites it bought ads on, from 863 to 1,832. "We're seeing more ad spending being pushed from the head, which is the portal, down the long tail of sites," said Jeff Lanctot, senior vice president of global media at Avenue A|Razorfish. "It's generally accepted now that portal prominence is not as high as it once was." That's also reflected in portal CPMs that increased only 7% last year compared to 30% for vertical sites and 20% on average. Entertainment and community sites--including YouTube and social networking sites such as MySpace and Facebook--have been among the biggest beneficiaries of the migration of ad dollars away from portals. Spending in both categories grew by more than 50%, to $51.5 million and $55 million, respectively, in 2007. "If ad models and industry standards solidify...healthy increases in these two verticals are likely to continue over the next several years," according to the report. None of this bodes especially well for a Microsoft-Yahoo merger, which would not necessarily reverse the flow of ad dollars back to portals or lead to either company gaining a top social networking site. On the flip side, Micro-Hoo would likely benefit from the trend of ad network spending consolidating among the top networks. Through its purchase of aQuantive last year, Microsoft acquired DrivePM, one of the five-largest ad networks. Improved targeting allowed the top five players to increase CPMs by 18% last year. When it comes to search, Google remains dominant, but technology upgrades by Yahoo and Microsoft helped the category increase its market share by three percentage points to nearly one-third last year. The report cited gains by Yahoo's Panama search marketing platform and Microsoft's adCenter in helping advertisers better optimize campaigns, leading to a larger chunk of ad budgets in 2007. "Microsoft and Yahoo are doing a nice job of improving their paid search products, but they're still not putting a dent in the giant that is Yahoo," said Lanctot, who kicks off a new blog today for Avenue A|Razorfish based on the report at www.jefflanctot.com. The challenge for the two companies is increasing their share of overall query volume against Google. A merger would boost their market share closer to about 30%, but still not threaten Google's commanding position. For mobile advertising, it's another case of wait 'til next year. "Mobile is real today, but we're still probably a year off from seeing real traction in the ad business for mobile," said Lanctot. As far as the agency's clients, most are ready to test mobile advertising, but "it's not a must-have for digital campaigns," he said. (Remember to check if the agency says the same thing next year.) Even so, Lanctot sees an emerging role for mobile as the "connective tissue" among all other media, whether it's a billboard providing a mobile text code for a promotion or the ability to vote for America Idol contestants via cell phones. Avenue A|Razorfish also judges online video advertising to be a year away from prime time as experimentation with standards continues in 2008. After an initial focus on pre-roll ads, different formats began surfacing last year including overlay ads (on YouTube), contextually targeted ads, and advertising "skins" that surround media players. Which will emerge as the new incarnation of the 30-second spot remains to be seen. Among other predictions, the agency expects the recession to have an adverse impact on online advertising. It will be more insulated from spending cutbacks, however, because of its greater accountability and efficiency than other media. CPMs are expected to rise modestly, with most of the agency's media planners expecting an increase of 1% to 10%. Don't count on another round of "digital upfronts" in 2008. Yahoo, AOL and Microsoft held their versions of TV's annual upfront ritual in 2007 to help stoke enthusiasm for portal media-buying. But the report throws cold water on the concept, saying media buyers have "little interest in such an event," since only a minority of online buys are made 9 to 12 months in advance. Furthermore, NBC's recent shift to a year-round programming schedule suggests that traditional TV-time buying may begin to resemble digital media planning and buying rather than the reverse.
Employers see social networking sites as one of the most promising channels for finding new hires, and 61% anticipate spending more of their recruitment budgets on sites like Facebook this year, according to a new report from Classified Intelligence, LLC. Business networking sites like LinkedIn and employee referral programs followed closely behind, with 55% of employers saying they will allocate more dollars to them in 2008--while roughly the same amount said that they plan to spend less on print. Altamonte Springs, Fla.-based Classified Intelligence partnered with ERE Media Inc., an online recruitment community, to survey more than 170 recruiters in late 2007. "Newspapers have a very difficult challenge trying to provide new tools for recruiters," said Peter M. Zollman, founding principal of Classified Intelligence. And as employers continue to shift their dollars away from print, they're willing to experiment and be creative--even using virtual worlds to find candidates, Zollman said. "Our research even shows online job sites don't fare as well as they used to," he said. Indeed, just 35% of employers said that they plan to increase their spending on sites like Monster and CareerBuilder, down slightly from 2007. Some 14% said that they will decrease spending on those sites this year--a shift being driven by a glut of poor-quality candidates and a one-size-fits-all mindset, according to Connie Thompson, managing editor at Classified Intelligence. "Recruiters want to target specific types of candidates, rather than sift through a plethora of resumes from candidates who don't come anywhere near meeting their needs," Thompson said. "That's why the niche sites are faring a bit better. We believe that in eight to 10 years, niche sites of all types--verticals and local--will be much more important than general-purpose recruitment sites, and those will have developed their own multiple niches." Video recruitment tools--including Web-based interviews via submission sites like Video Job Shop--were gaining traction, she said. "It's certainly an area to watch over the next year," Thompson said. "The report shows several examples of recruiters who experienced a tremendous increase in quality response through the use of video." As for the virtual worlds, Thompson said they deserved a mention because this was the first year that multiple employers said they planned on using platforms like There.com and Second Life for recruitment. "We don't know how serious they are, but it does show that recruitment is moving in a new direction," she said.
In a move to leverage the global distribution of the Internet, digital magazine publisher Zinio has team with a unit of Havas Media to extend the reach of consumer magazines into Europe and Latin America. The deal, which combines Zinio's digital magazine publishing platform with Acceso, a powerful media management system jointly owned by Havas Media and ISP, is expected to greatly expand the number of consumer magazine titles utilizing Zinio's system from about 850 currently to more than 2,000 over the next year, executives at the companies said. The move comes as Zinio, already the magazine world's dominant digital publishing platform, has been seeking to step up its profile on Madison Avenue. Earlier this month, Zinio raided Jeanniey Mullen, a top digital media executive at WPP Group's OgilvyOne unit, to serve as chief marketing officer. By tapping into Acceso Group, Zinio gains both expanded global reach, as well as access to a system utilized by some of the biggest consumer magazine advertisers. Acceso, headquartered in Barcelona, Spain, is used by Havas Media to provide media content intelligence services and communications management solutions for leading multinational marketers such as Vodafone, Repsol, Nike, Coca-Cola, Telefonica, Nabisco, Volkswagen Group, Wrigley, Sol-Melia and BBVA. "We believe that Zinio's superior technology and online marketing services for publishers will drastically increase the appeal and usage of digital publications," Alfonso Rodes, CEO of Havas Media, stated. "We want to be ahead of this process and be able to fully exploit for our clients the possibilities of this promising interactive channel,"
Betting on consumer demand for an easier-to-navigate blogosphere, a startup has launched a blog-ranking social network, which, if successful, could also help bloggers get more money from advertisers. "There's really no good resource for people to simply find quality and useful blogs," according to Kenneth Yeh, who founded Blogged.com late last year with partner Gladys Kong. There are, in fact, several services available for consumers to search the blogosphere, including Technorati, IceRocket, Google's blog search, and the Nielsen BuzzMetrics service BlogPulse. Yet, even the competition sees promise in a streamlined, consumer-facing blog-ranking social network. "There's probably an untapped demand among everyday consumers for an easier way to find good blogs," said Pete Blackshaw, executive vice president at the Nielsen Online Strategic Services division of the Nielsen Company. "BlogPulse is a little industry-facing, and Technorati might overwhelm some consumers. There's always value for consumers in simplicity." At launch, Blogged.com is reaching out to both bloggers and readers to connect through its online discovery, exploration, and sharing community. And while the site is designed to help bloggers connect with audiences, Blogged.com is marketing itself as a consumer-facing site. The site, which is already attracting roughly 10,000 unique visitors daily, contains a database of nearly half a million English-language and what its founders consider "qualified" blogs. Still, its founders have yet to approach investment firms for venture capital, or ad networks to monetize the site. "Our immediate goal is providing usefulness to consumers," said Kong, adding that her team is in the process of choosing the right ad network with which to partner. Yeh and Kong plan to eventually launch their own ad network--which could, in theory, be distributed across a network of blog partners. In Blogged.com's index, a blog's quality is not based on traffic, but on what the company's staff of 10 full-time editors consider satisfactory based on look, writing style, and relevancy to a particular topic area. Along with an editorial ranking of 1-to-10, blogs with a large enough audience are given viewer rankings. If Blogged.com's model takes hold, it could prove to be a boon for bloggers who feel undervalued by advertisers, according to Nielsen's Blackshaw. "A more complete ranking system could give bloggers the ammunition they've been looking for with advertisers," Blackshaw said. "We're researching a lot of the same things, trying to figure out better ways to measure the value of blogs." For each blog in the Blogged.com index, there is a detailed overview page where people can learn more, find related blogs, view recent posts with direct links to full posts, and contribute their own reviews. Visitors can browse by categories, sub-categories, or keywords and sort by user rating, popularity, and editor rating. Visitors are encouraged to create a profile dashboard featuring additional information about themselves, a listing of their reviews, friends, favorites, shared blogs and comments. The profile dashboard also features a mailbox for communicating with other members of the community.
With concerns mounting over access and usage of consumer data, the Interactive Advertising Bureau (IAB) Sunday unveiled new interactive advertising privacy guidelines that are designed to ensure users' control over the use of personal information by interactive media and advertisers. The guidelines, which were approved by the IAB's board during the opening day of the bureau's annual conference in Phoenix, Arizona, on Sunday, also are expected to improve the delivery of relevant marketing communications to consumers. The guidelines are not specific edicts to online advertisers, agencies and publishers, but represent "high level concepts" dealing with consumer notice, choice and data security, and are intended to serve as a "roadmap" for industry players who collect and/or use data to deliver relevant ads online or via other platforms. The guidelines, which were developed over many months with the IAB Policy Development Task Force and Policy Council, come as advocacy groups and federal regulators have been turning the heat of up on the industry, especially as online marketers and publishers get more sophisticated about leveraging consumer data and so-called behavioral targeting techniques. The IAB said the new guidelines would be submitted officially to the Federal Trade Commission by the end of February. The move comes amid a series of similar house cleaning initiatives enacted by the IAB, which also recently released a set of guidelines concerning online lead generation practices. The moves appear intended to nip regulatory actions or recommendations that would curtail industry trade practices. The new guidelines, IAB President-CEO Randall Rothenberg, noted, are "more flexible" than those suggested by the FTC in late 2007. "IAB's principles are an important first step in the creation of stronger industry self regulatory programs," said Dave Morgan, departing executive vice president-global advertising strategy of AOL and co-chair of the Task Force that developed the principles. "We believe that all existing and future types of interactive advertising should fit within these criteria and we will move swiftly towards promulgating more granular best practices based on this document." The news guidelines include five basic principles: * Consumers should be provided meaningful notice about the information collected and used for interactive advertising. * Consumers should be informed of their choices regarding interactive advertising and empowered to exercise those choices. * Businesses should implement appropriate information security practices and procedures. * Businesses should be responsive and accountable to consumers. * Companies should educate consumers about the benefits of interactive advertising.
AOL has launched AOL.com.mx, a Spanish-language Web portal for Mexico, and rolled out AOL Home, a U.S.-based home improvement and domestic enthusiast site. Both endeavors highlight a key step the Web giant has taken in its struggle to break the shackles of its former subscription-based business. By partnering with media outlets and other companies, AOL can offer relevant, must-have content that draws in monetizable traffic. AOL Mexico will feature original news, sports, entertainment and lifestyle content, as well as offer users free e-mail and instant messaging (through AIM). The hub will also feature MP3s and streaming audio and video, as well as the video search engine Truveo. The Web giant partnered with Time Inc.'s Grupo Editoral Expansíon to deliver business news and analysis via RSS feeds and articles from the CNNExpansion.com site (a joint effort between Grupo Editoral Expansíon and CNN). Mexico City-based Grupo Editoral Expansíon will also serve as AOL's in-country ad sales support team. AOL will also develop two co-branded AOL Mexico portals--one with HP and the other with Alestra (the Mexico-based subsidiary of AT&T). Meanwhile, at AOL Home, users will find original editorial content, as well as tips on decorating, entertaining and keeping their home organized from publications like Hearst Magazines Digital Media's RedbookMag.com, CondéNast's Domino and Time Inc.'s Real Simple. AOL also snagged Eric Stromer of TLC's "Clean Sweep," and Rib Hills of "Extreme Makeover: Home Edition," to host their own original home improvement and maintenance videos.
Interactive advertising revenues will increase significantly from $45 billion in 2007 to $147 billion globally in 2012--representing a 23.4% compound annual growth rate, according to The Kelsey Group. Interactive advertising--including search, display advertising, classifieds and other interactive ad products--grew its share of global advertising revenues from 6.1% in 2006 to 7.4% in 2007, per "The Kelsey Group's Annual Forecast (2007-2012): Outlook for Directional and Interactive Advertising." By 2012, Kelsey Group analysts expect the interactive share of global ad spending will reach 21%. The forecast does not include mobile ad platforms. The Kelsey Group's mobile forecast, released in September 2007, will be updated later in 2008. The global advertising market grew to just over $600 billion in 2007. The firm expects global ad revenues to grow at a CAGR of 2.7% and reach $707 billion in 2012, propelled in large part by considerable growth in the interactive segment. "It's no surprise that the global advertising industry is experiencing a full-scale shift to mixed-media platforms, with interactive driving a significant share of overall industry growth," said Matt Booth, senior vice president, Interactive Local Media at the Princeton, N.J.-based Kelsey Group, in a statement. "We see Internet development--including increased subscriber/user access and broadband penetration--as a driver of both interactive advertising revenue as well as migration of traditional ad spending to new media platforms." During the forecast period (2007-2012), the U.S. will see interactive advertising revenues grow from $22.5 billion to $62.4 billion (22.6% CAGR), with interactive revenues in Canada increasing from $1.3 billion to $3.3 billion (21.3% CAGR). Global directional advertising revenues--including local search, print and Internet Yellow Pages--will grow from $33.3 billion in 2007 to $41.4 billion in 2012. Local search revenues will grow from $2.1 billion to $6.6 billion (25.5 percent CAGR).
In a move that could force search engines to change how they operate, an arm of the EU has ruled that companies that collect users' Internet Protocol addresses must adhere to Europe's tough privacy safeguards. "Search engines fall under the EU Data Protection Directive ... if there are controllers collecting users' IP addresses or search history information, and therefore have to comply with relevant provisions," the EU's Article 29 Working Group said in a statement issued last week. The group is expected to issue a full report outlining new privacy measures in April. Currently, Google and Yahoo log searchers' IP addresses and retain records linking particular addresses with search queries for up to 18 months, while Microsoft does so for 13 months. But search engines might be required to delete IP logs much sooner, given the EU's ruling. While the EU only has jurisdiction over companies doing business in Europe, industry watchers said it's likely that Google, Microsoft and Yahoo would also adhere to new privacy standards in the U.S. Digital rights advocates cheered the report. "It's possible that there will now be some genuine privacy protections," said Marc Rotenberg, executive director of the Electronic Information Privacy Center. "Search companies will be under greater pressure to limit the length of time they keep information." While the EU has yet to issue specific rules, the data protection directive generally provides that companies must obtain people's consent before collecting personal data--and even then, can only retain it for as long as is necessary. Search companies have argued in the past that they need to store IP logs to improve search results and to guard against click fraud. But advocates say that many Web users use search engines to get information about medical conditions, financial matters or other sensitive topics, without realizing their searches are being stored. "If you think about search from a user perspective, the expectation is quite likely that once the search request is fulfilled, the request would be deleted," Rotenberg said. Google disagrees with the characterization of IP addresses as personal. "A black-and-white declaration that all IP addresses are always personal data incorrectly suggests that every IP address can be associated with a specific individual," wrote Google software engineer Alma Whitten on the company's public policy blog on Friday. The company argues that the same users connect to the Web from more than one IP address when they sign on from different locations--home, work, public cafes, and the like. In addition, Internet service providers sometimes assign IP addresses dynamically, so that the same computer can have different IP addresses at different times. In a concession to European privacy regulators, Google last year said it would "anonymize" the IP addresses after 18 months by altering the last two numbers, but privacy advocates questioned whether that effectively masks people's identity. Microsoft Friday indicated it would consider deleting IP addresses when anonymizing them. "We believe that it is important to implement a range of privacy protections for search queries--including deleting the entire IP address when anonymizing them--and we will continue to work with privacy advocates and officials to address this important area of online privacy," said Brendon Lynch, Microsoft's director of privacy strategy, in a statement. Correction: This article misstated the length of time companies keep IP logs. Microsoft said recently it will delete IP logs after 18 months, while Yahoo anonymizes the IP addresses associated with user queries after 13 months.
Microsoft has not given up on its plan to acquire Yahoo, a company executive told employees in an internal e-mail on Friday. "If and when Yahoo agrees to proceed with the proposed transaction, we will go through the process to receive regulatory approval, and expect that this transaction will close in the 2nd half of calendar year 2008," wrote Kevin Johnson, president of Microsoft's platforms and services division, in the e-mail. "Until this proposal is accepted and receives regulatory approval, we must continue to operate our business as we do today and compete in this rapidly changing online services and advertising marketplace." Meanwhile, two Detroit pension funds have sued Yahoo and its board of directors, saying they breached their duties to shareholders in trying to thwart the takeover by Microsoft. The lawsuit was filed in Delaware Chancery Court late last week by lawyers representing Detroit's police and fire retirement system and general retirement system, as well as "all other similarly situated public shareholders." Johnson said Microsoft's proposal includes a "thoughtful integration planning process for a Microsoft-Yahoo combination. It is important to me that this process includes leaders from Yahoo and Microsoft and is done in a way that enables us, together, to make decisions in a collaborative way. Importantly, this will be an inclusive process with Yahoo employees, as they are a key part of our success as a combined company." "It is important to note that once Yahoo and Microsoft agree on a transaction, we can begin the integration planning process in parallel with the regulatory review," he wrote. "We can create the integration plan, but we cannot begin to implement it until we have formal regulatory approval and have closed the transaction. Because the integration process will be critical to our success as a combined company, we are taking this very seriously. We have recent--and successful--experience in this arena, including our integration planning with aQuantive and Tellme, both of which led to successful combinations of talent, assets, and infrastructure." Johnson outlined the benefits of a Microsoft-Yahoo combination. "First, the industry needs a more compelling alternative in search and online advertising," he wrote. "I have personally met with top executives of the major media companies, and I know there is a desire for more competition in search and online advertising. Without this, there's less innovation, less competition, and less value being generated for consumers, advertisers, and publishers. Together, Microsoft and Yahoo would have an opportunity to change and evolve the experiences and value we deliver to all of these groups." "For consumers and developers, our expanded R&D capacity would allow us to drive innovation in emerging user experiences in areas such as search, video, mobile, commerce, and social media," he wrote. "Already, our collaborative work with Yahoo on interoperability between our instant messaging services has benefited consumers and made it easier for them to stay connected with friends and family." "For advertisers and publishers, scale economics would allow us to deliver more value to this customer base. By combining search and non-search advertising inventory on a single ad platform, yield is also improved. The other benefits and opportunities may include improving return on investment and decreasing the cost and complexity of running multiple campaigns. We also believe in an extensible ad platform. From my discussions with top advertising agency executives, they share this belief and want to play a key role in extending this ad platform for incremental value to advertisers." Microsoft will not uproot Yahoo Inc. from its Sunnyvale, Calif. headquarters if it succeeds in its bid to buy the Web portal company. "In bringing the companies together, we would be committed to maintaining Yahoo's significant presence in Silicon Valley," Johnson wrote. "While some overlap is expected in any combination of this size, we should remember that Microsoft is a growth company that has hired over 20,000 people since 2005, and we would look to place talented employees throughout the company as a whole."
"Big Shot Live," the Internet/local TV talent contest show, is only two weeks old--and clicking with viewers. With only 45 TV stations up and running, the five- to-seven-minute-long daily Internet show is averaging 350,000 users a week and 5 million page views. These metrics are about 20% higher than what was expected at this time, says Jak Severson, chief executive officer of Madison Road Entertainment, one of the show's producers. "The traction has been insane," says Severson, one of the "Big Shot" producers. "People are spending 10 to 14 minutes per session--more time than Facebook. The combination Internet/local TV show gives TV stations Internet ad time on the BigShotLive area. This includes a pre-roll commercial, and a 300 x 250 rich media Internet ad. In return, those TV stations run on-air TV promos directing contestants to the Web site. CBS Television Distribution has distributed the show to 197 TV stations. So far, "Big Shot Live" has two national advertisers: Southwest Airlines and DSW Shoes. But Severson says three other national advertisers--an automotive manufacturer, a quick service restaurant and a credit card company--will start campaigns next week. "Big Shot Live" is getting 1.4 million advertising impressions per week. BigShotLove.com partitions its entertainment contests for different days of the week: modeling (Monday), singing (Tuesday), dancing (Wednesday), acting (Thursday), TV host (Friday), comedy (Saturday), and sports tricks (Sunday). Each day, contestants sign up online, upload their auditions, then ask friends to vote for them. At 5 p.m, the voting stops, and experts pick a single winner from the top five vote-getters. Those winners are flown to Los Angeles to appear in special entertainment appearances. Their visit is videotaped as part of the "Big Shot" show. Specific markets are doing well. KARE-TV Minneapolis has the most winners to date--four. Severson says the station has been putting a lot of effort into the show, selling a local ad package to Wendy's. Other big market winners are Washington, D.C. with three, and Birmingham, Ala. with two. Severson expects traffic to climb dramatically in a few days. That's when more TV stations will be coming online, finishing up their respective February sweeps activities.