Adjusting to what it calls the "realities of today's marketplace," MySpace on Tuesday announced plans to reduce its workforce by a whopping 30%. The "restructuring" plan crosses all U.S. divisions of the News Corp.-owned social network, affects some 425 employees, and lowers its total number of domestic staff to 1,000 workers. "MySpace grew too big considering the realities of today's marketplace," Jonathan Miller, News Corp.'s CEO of Digital Media and chief digital officer, said in a statement on Tuesday. "I believe this restructuring will help MySpace operate much more effectively both structurally and financially moving forward." The move marks MySpace CEO Owen Van Natta's first major move since replacing MySpace co-founder Chris DeWolfe in April. "Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company," Van Natta said in a statement. "Our intent is to return to an environment of innovation that is centered on our user and our product." Recent reports speculated that MySpace could be planning to lay off as much as half of its total workforce. Van Natta, who most recently was CEO of online music company Playlist, Inc., previously served as chief revenue officer and vice president of operations for Facebook. Also, in March, MySpace chief operating officer Amit Kapur announced his plans to exit the company with two other senior executives to start a new venture. Once the undisputed king of social networking, MySpace has fallen to a distant second place during the past year. Today, market leader Facebook has over 200 million users, compared with MySpace's 130 million, according to comScore. "The one thing that is clear about social networking is that regardless of how fast a site is growing or how big it is, it can quickly fall out of favor with consumers," Jon Gibs, vice president of media and agency insights at Nielsen Online, recently told Online Media Daily. "Consumers have shown that they are willing to pick up their networks and move them to another platform, seemingly at a moment's notice." Of note, MySpace is seen to be winning the critical arena of Web video, according to Nielsen. With 120.8 million video streams, Nielsen recently found that MySpace was the top social networking destination when ranked by streams and total minutes spent viewing video. MySpace visitors spent 384 million minutes viewing video on the site, with an average of 38.8 minutes per viewer. By comparison, Facebook visitors spent only 113.5 million minutes viewing video in April, with an average of 11.2 minutes per video viewer, according to Nielsen.
While contrasting content is popular among many marketers, relevance is the more effective strategy, according to newly released data from Condé Nast in conjunction with research firm McPheters & Co. Indeed, ads running on Web sites with related content were 61% more likely to be recalled than ads running on sites with unrelated content, according to a recent study conducted in collaboration with CBS Vision using McPheters & Co.'s AdWorks methodology. Recall of particular ads varied by the type of sites on which they were viewed. Social networks, along with shopping and food sites, generated the highest recall levels of 29% to 39%. "Targeting by site yields important benefits for advertisers," said Scott McDonald, Condé Nast SVP of research. Search and portal sites, meanwhile, generated the lowest recall levels, according to the study. Of note, there were large differences in recall by type of product advertised. "While we have long known that context is important for print advertisers, we welcome proof that the same is true online," said Drew Schutte, SVP and chief revenue officer for Condé Nast Digital. "These results reinforce the importance of a marketer being associated with category-specific Web sites with established brands," Schutte added. In the analysis, each of some 400 ads for which recall was measured was associated with the Web sites in which they appeared. Ads were segmented by whether they appeared on Web sites with related content. Recall of ads was measured among Internet users who were directed to surf the Internet at will for 30 minutes. According to data released earlier in the year by Condé Nast and McPheters & Co., nearly two-thirds -- 63% -- of banner ads were not seen by Web users. Respondents' eyes "passed over" 37% of the Internet ads and "stopped" on slightly less than a third, McPheters found. In contrast to online ads, TV and magazine ads generated a strong propensity to be seen and recalled, according to the research. Full-page, four-color magazine ads were determined to have 83% of the value of a 30-second television commercial, while a typical Internet banner ad has 16% of the value.
It's no secret that video games have become more popular as consumers look for ways to entertain themselves through the recession. While PC games revenue will decline this year, console, handheld and wireless games will pick up the slack. Analysis from PricewaterhouseCoopers released Tuesday suggests that in-game advertising will lead the category, with 13% growth annually during the next five years. Video game advertising, which generated $30 million in North America in 2004, will reach $886 million this year and jump to $1.4 billion in 2013, according to PwC. While Nintendo still does not permit in-game advertising in any of its games, according to PwC, Sony began to permit advertising in some games during mid 2008. Microsoft has been placing ads in its Xbox 360 games for several years. Experts might argue the nascent in-game ad market has nowhere to go but up, but David Sturman, IAB Games Committee co-chair and principal architect for Microsoft's in-game ad company Massive, says that climb has been slow and steady. Sturman says in-game ads have begun to move out of the "experimental buy" bucket and into the media plan because advertisers now realize that ads in games produce results. "We have had many repeat advertisers," he says. "For all advertisers, especially in current economic times, they want to know what they get for their money. Measurement is very important." Companies have the analytics to monitor the success or the failure of advertising in games, but the industry lacks tools to keep measurements in line and reporting consistent. As demand increases, executives need standards to present numbers to clients that want to keep closer tabs on budgets and change. Developing a common method to count impressions and provide key measurements and definitions will help marketers better understand the value of advertising in games, Sturman says. Earlier this week, the Interactive Advertising Bureau (IAB) released new in-game advertising guidelines for public comment to establish a common methodology for counting impressions and to simplify the process of buying and selling in-game advertising. With the aim of encouraging market growth, the IAB's proposed new guidelines cover dynamic, in-game advertisements that appear in PC or console-based games. Microsoft's advertising arm also has been involved in a study that examines the emotional reactions consumers have toward advertising campaigns in and around video games. The first phase of the study -- conducted with EmSense, a neuroscience company -- compares the findings with similar results from television commercials. The companies discovered that the interactive elements in the video game ad campaigns evoke stronger emotional connections with consumers and more positive emotional associations with the brands. EmSense analyzed several different advertising campaigns on Xbox 360 games, Xbox Live and MSN Games. Some brands involved in the study include Doritos, Kia, Sprint, Hyundai and Microsoft. The Kia Motor's Xbox Live spotlight interactive campaign, for example, drew in viewers with images of the Kia Soul, evoking 15% more positive emotions and 11% more cognition from respondents compared to the database average.
With a focus on short-form content, Publicis' VivaKi unit on Tuesday launched the second phase of its Pool initiative -- a highly collaborative effort to develop a more consumer-friendly replacement for the standard pre-roll ad unit. "We have formulated 'Lane 2,'" Tracey Scheppach, SVP and video innovation director at Starcom USA, said during the OMMA Video conference on Tuesday. Scheppach, who is credited with conceiving the Pool, said the ambitious initiative is now open to all VivaKi clients. For Lane 2, the Pool's seven publishing partners include AOL, BBE, CBS, Fancast, Microsoft Advertising, and Tremor Media. Marketing partners, meanwhile, include Bank of America, General Mills, and U.S. Cellular. Additional marketers from across the broader VivaKi network are currently being signed and are expected to be confirmed in mid-July. "We have increased the number of partners based on internal demand at VivaKi," VivaKi Nerve Center President Curt Hecht said regarding Lane 2. "And also, the number of media companies -- in both returning partners as well as new ones, which brings more diversity to the types of companies participating." Along with "beating pre-roll," Scheppach promised that the Pool's resulting ad unit is guaranteed to "scale and create empowerment." And empowerment is exactly what ad units are most lacking today, she said. "What we have found is that pre-roll doesn't take advantage of one of the key elements of the Internet: Empowerment." From OMMA Video on Tuesday, Alan Schulman, chairman and chief creative officer, U.DIG >The Digital Innovations Group, questioned whether the industry isn't moving too fast to effectively nail down a solution to advertisers' video issues. "I'm not sure the industry is going to stand still long enough," he said. Last November, Publicis' VivaKi brought together top online video suppliers (AOL, Broadband Enterprises, CBS, Discovery, Hulu, Microsoft and Yahoo) -- along with a half dozen major marketers -- to embark on the Pool initiative. The team began with 30 ad models that they voted down to five, which were then subjected to qualitative testing to arrive at the two remaining units. In April, Scheppach said those two models -- which "have very different flavors in terms of length of time" -- are still undergoing extensive quantitative tests, and the winner is expected to debut by February 2010. The winning unit, added Scheppach, will not be unfamiliar to the experienced Web user. "Most of the units you have seen in the marketplace," she said in April. The original idea of Pool -- named to connote group effort -- was to improve the effectiveness of online advertising for the industry, and the quality of the viewing experience for consumers, according to Curt Hecht. Advertisers participating in the broader initiative -- all clients of Publicis agencies -- include Allstate, Applebee's, Capital One, Nestle and Purina, each of which has been guaranteed rights to purchase the first new inventory that will be made available with the new format. According to Scheppach and Hecht, participants in the Pool's development each had to cover the costs of the research and development process. Scheppach also assured that plenty of invaluable data is coming out of all the Pool's testing -- none of which will be released until later in the year.
Can Fred Figglehorn save online video? That's a question raised by the morning keynote talk Tuesday by Eileen Naughton, director of media platforms for Google, at the OMMA Video conference. "Fred," in case you're unaware, is the obnoxious, frenetic 6-year-old portrayed in a series of Web videos by Nebraska teenager Lucas Cruikshank who's become a YouTube sensation. With more than 1 million subscribers on the video site, he owns the most popular "channel" on the video site. What's more, he now commands "seven figures" and has generated "5 to 10 million" ad-supported views on the site, according to Naughton. "'Fred is the most valuable real estate on YouTube," she said. The cranky character's emergence as a homegrown YouTube star has come about even as the company has stepped up efforts in the last year to offer more professional content through deals with the likes of Sony Pictures, CBS and MGM. To lure advertisers, it has also introduced new ad programs including "promoted videos," allowing marketers and others to tie videos to particular search keywords, as well as offering more eye-catching display placements on the YouTube home page. Under greater pressure from the economic downturn, YouTube and smaller Web video players like Metacafe have increasingly shifted away from user-generated material toward more advertiser-friendly content and ad units highlights this year to prove that online video can be a viable medium in its own right. Magna Global, part of the Interpublic Group of Companies, has projected that online video advertising would not grow as fast this year as previously forecast, and that most of the growth would come from traditional players like ESPN.com, CNN.com and Hulu. The research unit revised its projection to 32% growth for the category, to $699 million -- down from a 45% increase to $805 million. While referring to online video as the "bright light in the sky" compared to ad spending declines in 2009 in traditional media, Naughton nevertheless acknowledged the disparity between growth in online video consumption (77% of U.S. Web users watch online video) and the share of ad dollars it gets -- 4%. Analysts estimated that YouTube made only about $200 million last year in advertising, with the bulk of revenue coming from display ads. So what's holding back more spending? The obstacles pointed out by Naughton are familiar by now: confusion around ad formats, questions about the ability to target specific audiences, and the need for standard metrics. Fred's breakout on YouTube underscores some of the unpredictability and confusion for advertisers related to online video. The Web series is user-generated content -- "pro-sumer" at best -- but should it also be classified as "premium" video because of its popularity, with accompanying ad rates? And how, if at all, should all the comments and other community interaction among Fred's rabid young fans be valued? Naughton seemed to agree with an audience member who suggested that Fred can't just be measured in CPM's. "What are the metrics against which we as providers of video platforms should be held to, and what are marketers looking for? That conversation keeps evolving as the functionality and tools keep expanding," she said. More than likely, Fred will turn out to be another one-hit wonder like Lonelygirl15 and other short-lived video stars of yesteryear. After all, how long can he still play a 6-year-old when he's 32?
Google and Forbes Insights Thursday will release findings from a study that examines the type of content C-level executives might consume, and where they find it online. Google -- along with Forbes Insights -- conducted the study after service companies, such as Accenture, IBM, FedEx, General Electronic, Siemens and UPS, came to Google asking for help to reach C-level executives at large corporations. They wanted to know if these high-level executives spend time on the Internet, and if they do, what type of content they might consume. Stereotypes may have C-level executives delegating research to others, but the study reveals that 53% prefer to search the Web and locate information themselves. Sam Sebastian, director of local and B2B marketing, says easy-to-use tools and personal accountability may have something to do with C-level executives taking personal responsibility to research information themselves. "That might be signing and authorizing financial statements," he says. "They are taking much more personal responsibility." And while executives are also more likely to click links from content than ads, the less intrusive the ad, the more likely they are to follow the link. For example, 86% said they occasionally or frequently click on linked words from Web articles and content, 58% click on paid search listings in search engine results, 53% click on Web site banner ads, and 37% click on pop-up or other interruptive ads from Web sites. More than four in ten -- 41% -- of executives under age 50 say they will frequently click on paid search listings, compared with 6% of those 50 or over. A similar split occurs with Web site banner ads, with 34% of those under 50 clicking frequently, while just 2% of those age 50 or over say they do. Executives were also asked to rate the value of different online and offline information sources. Across the board, search engines were considered more important than other options for locating information, including interacting with colleagues. Eighty-seven percent rated general search engines as very valuable, followed by guidance from colleagues at work, 77%; guidance from personal networks, 65%; links from online content, 58%; subscription search engines, 54%; and guidance from outside advisors, 53%. Marketers looking to catch the eye of C-level executives might have a better chance with video than text if they are under age 50. Thirty-three percent of C-level executives under age 50 reveal that they view work-related videos daily on business-related Web sites, compared with 11% of those age 50-plus. This will increase as the next generation of CEOs, CFO and COOs move in. "Today, you might not reach a bunch of CEOs and CFOs with blogs, RSS feeds or Twitter, but these online tools will be mainstream as the next crop move in during the next couple of years," Sebastian says. "We will see many enter that camp in another 24 to 36 months, and it will have a huge impact on the way companies reach these executives." Forbes Insights, along with Google, surveyed 354 U.S. company executives with annual sales exceeding $1 billion during March and April this year. In the one-on-one interviews, 47% held C-level titles. The remaining 53% held senior-level titles, including EVP, VP and director.
When Apple released its long-awaited iPhone two years ago, the company arranged for AT&T to serve as the exclusive wireless carrier. To this day, AT&T is still the only company authorized to provide wireless service for iPhones in the U.S. Now, some lawmakers are questioning whether that arrangement is legitimate. This week, Sen. John Kerry (D-Mass.) along with three others -- Roger Wicker (R-Miss.), Byron Dorgan (D-N.D.) and Amy Klobuchar (D-Minn.) -- asked the Federal Communications Commission to investigate whether "exclusivity agreements unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace." The Senate Commerce Committee will also examine that issue at a hearing this week. Kerry also authored a blog post -- "Who Really Owns Your iPhone?" -- arguing that exclusivity contracts limit consumers' ability to use the newest phones. "Today, we've got a wireless marketplace where four companies account for more than 85 percent of all subscribers. These large carriers strike deals with the companies creating the newest and most innovative phones, leaving smaller regional wireless carriers without access to the latest technologies to attract consumers," he wrote. The post is available at the net neutrality site SaveTheInternet.com. In May 2008, the Rural Cellular Association asked the FCC to investigate exclusivity arrangements and potentially issue rules banning them in some circumstances. The group argued that deals that tether devices to wireless carriers end up giving carriers monopolistic control over handsets and result in higher prices. The organization also said that such deals prevent some consumers from purchasing particular devices at all. "For carriers able to command these exclusive arrangements, the end result is a significant and unfair advantage over competitors," the group said in its petition. A&T filed comments in February asking the FCC to reject the petition. The telecom argues that exclusivity deals promote carrier and manufacturer investment. "When an exclusive handset gamble pays off for one carrier, that provokes competitive responses and further innovation from other carriers and manufacturers, benefiting all consumers," AT&T said in its comments.
The Senate Commerce Committee appears to be poised to confirm Julius Genachowski, President Barack Obama's choice to head the Federal Communications Commission. In a hearing that lasted around 90 minutes Tuesday afternoon, Democrat and Republican lawmakers praised Genachowski, with committee chairman Sen. Jay Rockefeller (D-W.Va.) going so far as to say he was "thoroughly impressed" with the nominee. For his part, Genachowski promised to draw on the decade he spent working in the private sector to bring a "spirit of common sense" to the agency. "I saw first-hand how communications technologies and networks can serve as foundations for innovation and for expanding our economy," he said in his written comments. "I learned the power of pragmatism and the danger of dogma." At the same time, lawmakers made it clear they expect Genachowski to reform the FCC. "Fix this agency, or we will fix it for you," Rockefeller told the nominee. "Prove to us that the FCC is not battered beyond repair." Among other criticisms, Rockefeller said the agency had previously been too closely aligned with cable companies and telecoms. "Too often FCC Commissioners have focused on making sure that the policies they advocate serve the needs of the companies they regulate and their bottom lines," he said. But, for all of the criticism that the FCC was too cozy with cable companies when Kevin Martin was at the helm, the agency surprised many by taking a pro-net neutrality stance last year in a case involving cable company Comcast. In that instance, Martin led the agency to rule 3-2 that Comcast violated neutrality principles by impeding peer-to-peer traffic. Known as a strong proponent of net neutrality and improved broadband availability, Genachowski addressed the importance of Internet access in his opening remarks. "A world-leading broadband infrastructure in America can be an ongoing engine for innovation and job creation throughout the country, from our rural towns to our inner cities, while helping address vital national challenges such as public safety and education, health care and energy independence -- ultimately helping give all of our country's children the future we dream for them," he testified. Broadband advocacy groups Free Press and Public Knowledge called on the Senate to quickly confirm Genachowski. "For years, the FCC has been stuck in reverse on critical issues like broadband competition and media ownership," Free Press said in a statement. "We're confident that Genachowski's commitment to the public interest, his entrepreneurial eye, and his open, data-driven approach will finally move us forward."
Last reports I saw had Facebook at over 200 million active worldwide unique users (and growing) and an estimated $200m-plus in annual revenue in 2008. Pretty kooky to claim it'll be a failure, eh? Let me start by saying that social networking itself is a utility that is not routinely differentiated by any particular protectable intellectual property. It's a utility that demonstrates a better way for the online and mobile web audience at-large to connect with each other. But it's also a utility that ultimately threatens to be its own worst enemy. The context of Facebook is "social networking." It's all the rage right now-the novelty of connecting or reconnecting, of building your network, of watching the torrent of trivia flow to and from your network of peeps. But ultimately we as people-at least most of us-aren't social networking hobbyists. It isn't one of the "three things" I'd choose to do in my leisure time. But I do ski, mountain bike, camp, fish, and adventure travel. We are pet owners, golfers, mothers and fathers, gardeners, foodies, and a myriad of other passions, hobbies and industries. Facebook simply cannot be the best at serving each of those niches or mega-niches, and what Facebook offers at its core *will* be offered as well (and likely better) by niche social media programmers. In fact, as frameworks for utilities such as social networking, media sharing, micro-blogging, etc. improve and evolve, and the understanding of how to employ them becomes more pervasive. The "tribe leaders" for those multitude of affinity groups are more and more likely to be classic magazine publishers, narrowcasting cable nets, specialty web destinations or other media companies (old and new) who cater specifically to that niche market. There is no barrier to, say, a soccer gear company or a soccer magazine to offer to their specialty community of millions of street soccer players an iPhone app that sits side-by-side to the Facebook iPhone app. If the gear company or magazine *gets* social media and how to properly create and program that app for their community, at any given time the soccer lovers will activate the soccer app long before they open Facebook for anything that relates to their passion/hobby of soccer. Some might say-well, Facebook could just offer "groups functions" to its users. Yep, it could (and does). Two reasons this is fraught with problems: (1) "General" is rarely as good as "specific" in engaging an audience, given equal utility. Generalizing a technology platform to accommodate all the idiosyncrasies that might appear across thousands of affinity groups and their native behaviors isn't easy, and perhaps not possible... at least not likely as doable as a singular entity focused on a singular community; and (2) Competing directly with trillions of dollars of economic momentum is hard. Classic media has woken up to social media. Facebook will be competing directly with major media groups (and savvy brand marketers and advertisers) who are now "getting social media" and have awoken to the fact that they should not be intermediated in their relationship with their affinity group communities... and don't have to. Online and mobile web now have achieved primacy as a mechanism to engage humans. Companies who spend the time, money and effort to engage an audience of any kind via other media-print, television, film, radio-are getting better at using that existing relationship and marrying it with a web/wireless engines of engagement that they ultimately lead and influence (I hesitate to say "control" as that would be antithetical to a well-considered social media strategy). So where does that leave Facebook? In trouble. With depressed CPMs around general social networking "content," the context of which they cannot assure advertisers will be safe or appropriate, and fighting with big media brands who know how to serve large slices of the Facebook audience better than Facebook does. Even potentially fighting with big advertising brands who may have social media aspirations of their own (read: can more cheaply and effectively reach a target affinity group using their own engines of engagement than "buying space on Facebook"). And certainly fending off upstart "next generation" social networking engines, while struggling to keep users who have a very low cost of switching to the next best thing, and that next best thing may indeed be a social nichework led by subject-matter experts. While it is likely that Facebook will find a viable and scalable business model somewhere within the monthly engagement of 200 million people, its future is anything but certain.