With investment banks crumbling and Wall Street engulfed in a full-blown financial crisis, eMarketer CEO Geoff Ramsey urged marketers Thursday not to halt spending in fear of the growing economic upheaval. Speaking at the OMMA Global conference in New York, Ramsey tried to keep the sense of doom from spreading to online advertising by encouraging those assembled to remain steadfast in pushing ahead with digital marketing plans. "You need to stay determined in this market," he said. "You can be fearful and freeze budgets, and not do anything, or come out fighting and be determined to win." To emphasize his point, Ramsey showed a slide of Robert DeNiro in boxing pose as Jake LaMotta in "Raging Bull." The image was part of a fast-moving keynote presentation by the Web uber-analyst that tried to keep things upbeat amid the increasingly gloomy economic outlook. Ramsey backed up his determined optimism with a raft of eMarketer data points showing that online advertising would continue to enjoy double-digit growth even as media spending overall was stagnant. Already this year, the market research firm has trimmed its forecast for online spending twice from $27.5 billion to $24.9 billion. It has also lowered its estimate for social media to $1.4 billion and revised downward its estimate for online video from more than $1 billion to $505 million (partly as a result of applying a different methodology to the category). And that was before the financial cataclysms of the last week, including the government bailouts of Fannie Mae, Freddie Mac and American International Group and the collapse of Lehman Bros. and sale of Merrill Lynch to Bank of America. Separately, new data from Nielsen Online released Thursday showed that a 27% drop in financial services display-ad spending online has led to 6% decline overall in display advertising for the first half of 2008 (see related story). Ad dollars coming from the financial sector are only likely to dwindle further during the second half of the year. The same Nielsen report also showed that automotive and consumer goods spending were up, respectively, 45% and 32% over the last year. Ramsey acknowledged that the financial picture will probably get worse before it gets better, but pointed to a comment from WPP Group Chairman Martin Sorrell saying no one is going to get shot or fired "'if they invest a little more in digital.'" He also highlighted research showing that only 24% of business executives consider themselves digitally savvy and most are dissatisfied with how their companies are using Web 2.0 tools. "The answer is experimentation," said Ramsey, who also warned the audience against F.O.G. (fear of Google) and fear of accountability. Specifically, the concern is that "the data might show that (campaign) results aren't what they should be. We need accountability," said Ramsey. And if eMarketer's forecasts turn out to be wildly off, people will have the chance to offer feedback by rating the firm's reports starting next week.
Opt-Intelligence, a leader in the burgeoning field of opt-in advertising, has quietly begun rolling out a new, self-service system that will enable mid-size, small and even self-publishers that comprise the so-called "long-tail" marketplace to automatically tap ad budgets in search of qualified, permission-based leads. The new platform, dubbed LeadServe, literally generates leads automatically from consumers who are opting into advertising offers while registering on Web sites. "The opt-in rate is much higher at registration than on any other form of lead generation," said Dan Felter, co-founder of New York-based Opt-Intelligence, who along with his partner Joe Broumand have managed to get big advertisers such as Circuit City, eBay, HP and Procter & Gamble to opt-in to their consumer lead-generating system. With a proven appetite from marketers seeking qualified, permission-based leads, they have created LeadServe to tap into smaller publishers and advertisers that comprise the fastest-growing segment of the online universe. "We made a decision a long time ago not to be in the list game," said Felter--noting that Opt-Intelligence, which launched nearly five years ago, already has generated more than 100 million opt-in leads to date. "It's all about finding those good-quality partner Web sites that generate good-quality leads for our advertisers," he said of Opt-Intelligence's approach. Most of those leads come from consumers who proactively agree to offers and ad messages when registering, but some also come when ancillary offers are made available at various Web sites. Importantly, Opt-Intelligence does not work with any sites or schemes that utilize incentive-based opt-in programs that offer consumers premiums to register. Felter said the approach has generated impressive yields. Sites that participate in Opt-Intelligence's program typically generate consumer opt-in rates of about 20% at registration, and the percentage can be as high as 50% for some publishers. Advertisers like the leads because they are 100% permission-based, relevant to their brands and offers, and generally lead to high conversion rates. Publishers like them because those variables translate into high CPMs for their advertising inventory. Felter estimates that the effective CPM yield for a typical publisher is "50 to 100 times" that of conventional advertising inventory. "They seem to bring in fairly good quality relative to everybody else," said Justin Hill, director of panel development at YouGovPolimetrix, a survey research site that utilizes lead-gen firms to recruit panel members to its research surveys. "I'm getting good conversion rates. For me, this is mainly about the targeting and the easy of use," he said of the new automated LeadServe system. Historically, he said, the site has utilized either conventional static advertising banners or programs like Google AdWords to generate leads--but LeadServe has proven more effective, especially in terms of attracting difficult-to-reach demographics or specific geographic audiences that are essential to building a representative research panel. Other publishers that have begun utilizing LeadServe range from Hearst to Zacks, but Felter said the real payoff may come from the smallest members of the online publishing community. "LeadServe is mainly for the small- to medium-size business owner. We're reaching out to blogs," he said, estimating that the long-tail aspect of opt-in advertising ultimately will grow to eclipse the one currently being generated by big publishers, and could be worth upwards of billions of dollars over time. In fact, Opt-Intelligence's Broumand likens it to the online advertising equivalent of Google's AdWords and AdSense search advertising systems because of its ease-of-use, its effectiveness, and its ability to make a market between buyers and sellers of leads regardless of their size and scale.
Advertisers shilling financial services spent 27% less on display ads in the first half of 2008 than they did in 2007, and their pullback helped drag down the entire "image-based" online ad market by 6%. That's according to the latest stats released from Nielsen Online. Public services advertisers also cut back sharply--slashing budgets by nearly 40%, although they have historically been a much smaller segment in terms of overall spend. Meanwhile, telecom and retail brands decreased their display ad buys by at least 5%. But there are signs that other sectors have begun to pick up some of the newly available inventory. For example, automotive companies spent more than $301 million on display ads in the first half, up 45% year-over-year. Consumer goods brands pumped over $292 million into the market--up 32%--and entertainment brands upped their spending by 47%. Hardware and electronics advertisers also saturated the display market in the first half, spending more than $146 million for a 19% increase year-over-year. "The good news is that we saw large gains from brand advertisers including Anheuser-Busch, Unilever, Toyota and General Motors, among others, which bodes well for the future," said Jon Gibs, Nielsen Online's vice president, media analytics. Gibs said that the display cutbacks also have the potential to be offset by increased spending in other online ad channels like search and video. Spending on rich media ads, for example, was up 60% year-over-year. "The early 2008 decline in image-based online ad spend reflects the macro movements in the overall economy, particularly within the financial services industry," he said. "(But) the shift we're seeing from display ads to rich media and text formats opens up even more creative possibilities for advertisers and should drive continued growth in the online advertising sector."
The financial meltdown unfolding this week will accelerate the shakeout of digital media startups--especially among me-too companies such as online ad networks, agreed venture capital executives gathered at the OMMA Global conference Thursday. Assembled on a panel titled "Dot Bomb 2.0?," the venture investors acknowledged that capital won't flow as freely in the wake of the financial crisis gripping Wall Street, but they did not predict a replay of the dot-collapse of 2000-2001. Warren Lee, a principal at Canaan Partners, said there has been a "fairly rational allocation" of about 20% of overall venture dollars to technology companies, reducing the risk of having funding concentrated too heavily in any one industry. Even so, he acknowledged that "there is a mini-bubble for some sectors clearly overfunded and that don't have proven business models." While Lee did not specify any particular category, others were quick to nominate ad networks as one type of Internet company that is likely to suffer as a result of broader economic woes. With the proliferation of some 400 ad networks of every stripe, especially in the last year, panelists predicted a thinning of the ranks. "I'd say a percentage of companies are going to go away," said Satya Patel, a principal at Battery Ventures, who also pointed to mobile startups as potential casualties of the downturn. To survive in a harsher climate, ad networks will have to show that they can turn reams of data into valuable information for clients and have staff capable of interacting easily with agencies, he said. When it comes to social media, moderator Henry Blodget of Silicon Alley Insider challenged Dennis Miller, a general partner at Twitter investor Spark Capital, to explain how the company that created the mini-blogging craze was going to make money. While Spark aims to capitalize on the huge audience Twitter has built, Miller said it would be "arrogant to say we knew what the (business) model looked like." But he added: "There are very few companies that have the potential to become a verb, and at the end of the day, those are multimillion-dollar companies." Obviously, Google comes to mind, but whether Twitter will come close to matching the search giant's success is still a long shot. Miller faulted marketers for being too reluctant to jump into online advertising at the same time that they are willing to advertise on cable networks such as Spike that feature in-your-face programming like ultimate fighting contests. "The slowness of advertisers is one of the biggest obstacles to growth," he said. The deteriorating economic picture is not likely to embolden advertisers who were already squeamish about placing their brands against emerging media. By contrast, Miller said, "our job as investors is to place big bets." For his part, Porter Bibb, managing partner at MediaTech Capital Partners, did not sound as if he was about to make bets on any companies that were not showing the promise of profitability. "Anybody not making money is in trouble," said Bibb, who cited a portfolio company supplying closed-circuit TV to 35 million Chinese college students, as among the firm's most exciting investments. Brian Wieser, direct of industry analysis for Magna Global, said the problem for many ad-driven new media startups is the difficulty the biggest advertisers and agencies have sorting out which could actually benefit their brands. And until marketers are able to easily advertise across all media, newer formats will have a tough time.
WidgetBucks has expanded beyond shopping widgets, adding travel and local ads to its roster. The Seattle-based widget ad network partnered with Marchex and Kayak to populate the units, which currently run on a cost-per-click (CPC) basis. The local widgets feature geographically targeted ads and content. A user from Salt Lake City, for example, might see the latest weather conditions and prices from the closest, cheapest gas station (powered by GasBuddy) alongside offers from local businesses. The ads drive consumers to Internet Yellow Pages (IYP) listings seeded by Marchex (through its affiliations with AT&T's Yellowpages.com and Idearc Media's Superpages, among others). The travel ads offer users deals on flights, hotels and whole vacations, as well as themed excursions like skiing or snowboarding trips. Consumers get real-time pricing info, and can even shuffle between packages. WidgetBucks pulls data from Kayak to populate the widgets, although the units feature deals from many of the major online travel exchanges (including Orbitz and Travelocity). WidgetBucks Chief Revenue Officer Kirby Winfield said the company plans to roll out cost-per-thousand (CPM) pricing on the new units in the future, keeping in line with the hybrid impression- and click-based model it offers with its shopping widgets. The CPM buys would be aimed at luring in more brand advertisers, which Winfield said are increasingly reluctant to have their ads run on certain networks and smaller sites. "With most ad networks right now, it's tough to tell a brand advertiser that visitors to a given site are actually showing intent--particularly if you're on a social media site or a really niche blog," Winfield said. "It's like, 'trust us, they're in the travel category so there's intent.' But there's really no way to prove that. With these widgets, consumers are interacting with them--either scanning to find a restaurant or searching for a low-priced flight, so the intent is clear."
Starbucks and Disneyland--Those are the two business models that Hulu most closely follows, according to its CEO Jason Kilar. Like the premium-content streaming platform, Starbucks rests its success on appealing to consumers' immediate impulses--and, like Disneyland, Hulu rests its success on a fanatical attention to detail and quality consumer experiences. "We're very similar to Starbucks in that we're an impulse business," said Kilar during his opening keynote at OMMA Global on Monday. "They put (coffee) everywhere and make it easier to consume, and we try to do the same with content." In regard to Disneyland, Kilar hearkened back to family vacations when--even as child--he would marvel at the theme park's obsession with detail and cleanliness. "We obsess over every little pixel," he said. "I can give you a hundred examples of that," Kilar added as he showed OMMA attendees one Hulu page dominated by content for sci-fi drama Battlestar Galactica. "The last thing we wanted to do was get in the way of the show." The six-month-old platform, co-owned by NBC Universal and News Corp., is now drawing about 8 million users per month who are consuming approximately 119 million video streams, per comScore. Industrywide, more than 11.4 billion videos were streamed online last month. In addition, the Hulu video player has been embedded roughly 500,000 times on 27,000 U.S. Web sites, according to Kilar, through which over 90 content partners now stream their premium content. "I love Hulu," said Geoff Ramsey, CEO of research firm eMarketer. "Hulu is a treasure trove." According to data cited by Kilar, publishers are already reaping the rewards of their content-sharing partnerships with Hulu. Fox, a unit of News Corp., has more than tripled its video viewers since aligning with Hulu, according to Kilar. For marketers, Kilar had three pieces of advice to best reach and engage consumers through Hulu and similar new media platform: Make good use of the tool available online, be part of a strong user experience, and leverage the power of influencers. With regard to online tools, Hulu is presently testing an ad-serving model, which allows consumers to choose between one of three ads they would like to see with their program content. "This allows for higher return on investment for advertisers, and users like to have the choice," Kilar said. Sometimes, however, the most effective models are the oldest models as in the case of the "Brought to you by" messages that Hulu often features before content. "It's very old-school, but the recall rates are very high," Kilar said. "This is about being part of a strong user experience." To say that Hulu operates in a competitive and volatile space is an understatement. Just this month, rival Comcast reached agreements with several major content providers--ABC, CW, HBO, The Food Network, and Showtime--to offer their shows on its entertainment Web site, Fancast.com. While Fancast launched two months before Hulu officially debuted, Hulu recorded vastly more video streams--119 million--than Fansite's 2.2 millions streams in July. This great divide is largely attributed to Hulu's distribution deals with top portals, including Yahoo, MSN, MySpace, and even Fancast itself.
The digital rights groups Electronic Frontier Foundation and Public Knowledge have gone to court to seek more information about an international anti-piracy treaty that they fear will curtail Web users' civil liberties. The organizations this week filed a lawsuit in federal district court in Washington against the Office of the United States Trade Representative, seeking to force the agency to reveal documents concerning the Anti-Counterfeiting Trade Agreement. They argue in their complaint that the records "involve a matter of substantial public interest" and that there is an "urgency to inform the public" about the treaty. The agreement is a work-in-progress, but information that has surfaced about it so far have spurred fears that it will infringe on people's privacy in an attempt to crack down on online copyright infringement. Documents that surfaced on Wikileaks earlier this year led some observers to believe that the pact could require Internet service providers to police subscribers for copyright infringement. It's not clear, however, whether those documents are genuine. Earlier this week, Public Knowledge and the Electronic Frontier Foundation were among a host of organizations that asked people to contact their representatives and demand more answers about the treaty. In fact, little about the pact is definitively known. Last October, United States Trade Ambassador Susan Schwab announced that the agency would negotiate an anti-piracy pact with Canada, the EU, Japan, the Republic of Korea, Mexico, New Zealand and Switzerland. Since then, there's been near silence from the agency, other than a request for comments that appeared in February in the Federal Register. Public Knowledge and the Electronic Frontier Foundation allege in the lawsuit that they filed Freedom of Information Act requests for documents concerning the treaty, but haven't received satisfactory responses.
Leading up to this evening's OMMA Awards in New York, Online Media Daily will publish the synopses of the three finalists in various OMMA Awards categories. The complete lineup can be viewed here. Finalists in the viral campaign category include: Element79 for Gatorade's "Ball Girl"; Brief Attention Span Communications for Serena Software's "Just @#$% It" and "Go @#$% Yourself!"; and McKinney for Virgin Mobile's "Promiscuous Text" .
You start a company, call it Gator and offer unsuspecting users a free download app that will save all of their personal password/login data. But really, you are using the app to track Web-surfing habits in order to serve up ads, including annoying pop-ups. This gets you blacklisted as spyware. So what do you do? You change the name to Claria, trying without success to stay in the ad business, but two years ago abandon it to use your personalization know-how to enter the personalized home page market. That flops. What do you do? Go back to coaching rec league soccer? Study to become a broker? No, you go back to the VCs (who are supposed to be smart guys who actually read the fine print and who say out loud, "What in the f*** are you talking about?") and get nearly $12 million to launch what? Something vital like a tax return template that uses advanced algorithms to assure users never have to pay the IRS again? Or a download to your car's GPS that rebalances your engine torque and pushes MPG to 87.5? No! You get the money to launch an AD NETWORK! So much for the notion that you can't fool all the people all of the time. Bill Tancer, who apparently has too much time on his hands, has analyzed search terms from over 10 million Web users to conclude that as social networking traffic has increased--particularly for 18- to 24-year-olds--visits to porn sites have decreased. "My theory," he told the press, "is that young users spend so much time on social networks that they don't have time to look at adult sites." No, Bill. Teens have found the few porn sites that deliver free top-quality video and have bookmarked them; thus the decline in porn searches. But, hey, good luck with that book anyway. In the clearest evidence yet that PR doesn't work, a search firm and the University of Alabama (could have knocked me over with a feather, too--who knew there was actually a campus surrounding the football team?) did a survey to discover that "top U.S. PR leaders" (which apparently doesn't include moi) think there is "a vacuum in strong leadership in the public-relations and communications industry." Nearly 30% said nobody came to mind when asked to name a PR leader. Which can only mean that not enough of them are reading Jason Calacanis' blog. Speaking of Jason, a rather sizable number of senior American marketers--19%--say their organizations have bought advertising in return for a news story, despite growing criticism of these "pay-for-play" practices, according to a recent survey conducted on behalf of PRWeek and Manning Selvage & Lee by Millward Brown. Nothing breaks down the separation of church and state like a soft economy. When Jason Heller--co-founder/CEO of Mass Transit Interactive and later, managing director of Horizon Interactive, and marine life conservationist--led a Humane Society protest at the annual Montauk Shark Tournament because "sharks are a critical 'apex predator' that help keep marine ecosystems in balance and are being decimated due to over fishing," he suffered a series of painful shark bites. Forensic dentists later identified the bites as coming from Jeff Bewkes, Martha Stewart and J. Michael Arrington. Words to Live By: A working-class suburb of Chile's capital earlier this year began handing out free Viagra to senior citizens. Lo Prado Mayor Gonzalo Navarrete said he launched the program because "an active sexuality improves the overall quality of life." In a late addition to the countless exhibitions and seminars that launch next week as part of New York's chest-pounding Advertising Week, Dorothea Poggi--the Bronx owner of Keebler, the Chihuahua which cares for pit bulls and which has saved 25 kittens by nursing them back to health--will host a panel on corporate responsibility. Among her guests will be the CEO of Pepsi-Cola, which is constructing a distribution facility in her Ferry Point neighborhood displacing raccoons, possums and the neighborhood's feral cats. Keebler is expected to outdraw Mark Cuban, Alec Gerster, Donny Deutsch and Sarah Fay. The story you have just read is an attempt to blend fact and fiction in a manner that provokes thought, and on a good day, merriment. It would be ill-advised to take any of it literally. Take it, rather, with the same humor with which it is intended. Cut and paste or link to it at your own peril.