Beating Wall Street's forecasts, Microsoft reported strong quarterly sales and profits on Thursday. Year-over-year, the software giant saw revenue rise 13% in the third quarter to $16.43 billion. Revenue from Microsoft's online services division grew 14% year-over-year, which the company attributed primarily to increases in search revenue. Bing's U.S. search share increased to 13.9% this quarter. "We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses," Peter Klein, CFO at Microsoft, said Thursday. "Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications." The Entertainment & Devices division grew 60% year-over-year -- fueled by Kinect for Xbox 360, the fastest-selling consumer electronics device in history, continued strong Xbox 360 console sales and growth of Xbox Live. Overall, operating income, net income and diluted earnings per share for the quarter were $5.71 billion, $5.23 billion, and $0.61 per share, which represented increases of 10%, 31% and 36%, respectively, when compared with the prior-year period. Diluted earnings per share included a $0.05 tax benefit primarily related to an agreement with the U.S. Internal Revenue Service to settle a portion of their audit of tax years 2004 to 2006. Microsoft Business Division revenue grew 21% year-over-year. Since its release last spring, Office 2010 has become the fastest-selling version of Office in history, according to the company, while the integrated innovation with SharePoint, Exchange, Lync and Dynamics CRM is driving significant growth for the division. Server & Tools revenue grew 11% year-over-year -- the fourth consecutive quarter of double-digit growth, according to Microsoft. Meanwhile, while Microsoft heralds Windows 7 as the fastest-selling operating system in history, revenue for the segment was down 4% in the third quarter. Looking ahead, Microsoft reaffirmed operating expense guidance of $26.9 billion to $27.3 billion for the full year ending June 30, 2011.
Which gender should brands be targeting to help spread their message? While women outnumber men online -- 53% vs. 47% -- males are more likely to share digital media content -- 51% vs. 49% -- according to a newly released study conducted by AOL and Nielsen. Men are also more likely -- by a clear margin of 41% to 32% -- to share information they deem "important" and feel will be helpful to others, from how-to tutorials to traffic reports. "Men will share content that positions themselves as experts," explained Kristin Kovner, senior marketing director at AOL. Conversely, women are slightly more likely -- 33% vs. 31% -- to share information pertaining to a common interest like politics, arts and parenting. In other words, said Kovner, "women share to build community." Finding a direct relationship between content sharing and brand messaging, AOL and Nielsen found that a full 60% of content-sharing messages specifically mention a brand or product name. Overall, 53% of time spent online is directly attributable to content consumption, according to the study. What's more, showing the targeted and personal nature of sharing online, the majority of consumers claim to share content with friends and family. Email remains the primary sharing tool -- at 66% -- but as Kovner noted, the lines between email and social-networking platforms continue to blur, particularly since Facebook debuted its own email service. Nearly one-quarter, or 23%, of all social-media messages contain content sharing, while 47% of social-media messages about key focus areas -- including auto, tech, finance, entertainment or news -- contain it. On a daily basis, about 27 million pieces of online content are shared domestically, according to Nielsen. As 36% of content shared across social platforms is embedded, AOL suggests branded-entertainment initiatives to ensure that marketing messages are not lost in the sharing process. Also, since 60% of content shared on social platforms includes a link to an external site, marketers' messages should "be there" when users link back to engage with information. At the behest of AOL, Nielsen used its NM Incite Social Media Monitoring tools, online behavior panel and attitudinal analysis, tracking more than 10,000 social media messages and surveying more than 1,000 Nielsen Online panel members for 10 consecutive days last December. The study's main takeaway, at least according to AOL, is the idea that content is responsible for fueling the social media boom, and should therefore remain key to any marketing buy. "As marketers, content is the way to become involved in that social conversation in an authentic, additive way," said Kovner. It should be noted, however, that AOL has hinged its future on content, and increasingly competes against social-media platforms for ad dollars.
Search campaigns generated stronger click-through rates overall in the first quarter compared with a year ago, suggesting healthy growth for the paid-search industry this year. In fact, impressions, clicks and budgets rose across numerous industry segments -- not only suggesting more searches made, but that consumers connected with ads, according to Marin Software's "Key Trends & Insights for Q1 2011" report. On average, advertisers spent 61% more on paid-search campaigns during the quarter, compared with the first quarter last year. Plus, consumers displayed a higher propensity to click on them. Most of the extra ad spend is being driven by larger budgets and higher CTRs, per the report. Marin analyzed the behavior of six industries and uncovered a few unexpected trends. The insights range from median values for click-through rates and cost per click across verticals to sequential and annual changes to key metrics for industry-specific trends. Automotive, business-to-business, education, finance, retail and travel spent more on paid-search marketing campaigns in the first quarter than in the year-ago quarter. Investments for the respective industry segments increased in the quarter by 221%, 78%, 27%, 78%, 59%, and 93%, respectively, compared with 2010. More people clicked on paid-search ads in the quarter, as well. Automotive experienced a 127% jump in clicks on paid-search campaigns, while B2B followed with 101%; education at 36%; finance at 76%; retail at 51%; and travel at 74%. Click-through rates varied during the period. Clicks related to the automotive industry rose 63% year-on-year; B2B jumped 59%; education, 10%; retail 17%; and travel, 11%. Finance CTRs, however, fell 35%. Most segments took a beating on sequential CTRs. Automotive rose sequentially 23%, and travel 3%; but B2B fell 9%; education, 28%; finance, 6%; and retail, 3%. How much more did the industry segments spend per click for the first quarter? Automotive spent 42%; B2B 12% less; education 7% less; finance 1% more; retail 5% more; and travel 11% more. Analyzing each industry segment points to the automotive sector demonstrating the strongest annual and sequential gains -- but CPCs increased by 42%, suggesting tougher competition and an opportunity for campaign optimization, according to the report. Educators increased the amount spent on ad campaigns sequentially, but clicks rose by a disproportionately higher percentage. Marin noticed a slight year-on-year decline for CPCs, implying improved campaign and budget efficiencies. In the finance sector, companies spent more and the volume of clicks rose significantly, but CTRs declined as a result of increased competition. For retail, CPCs rose on average 18% during the holiday season, but only saw a 5% year-on-year increase. Marin calls this "positive." CTR increased 17% year on year, indicating more engaged consumers and more effective search programs.
In the battle for domination over Madison Avenue's media-buying processing marketplace, venture capital-backed MediaBank has made an aggressive push to diversify deeper into marketplace systems, acquiring AdBuyer.com, a so-called "DSP," or demand-side platform, enabling advertisers and agencies to manage online advertising campaigns across both search engine networks and display advertising exchanges. The move is the latest push by MediaBank to diversify the services it provides big agencies, expanding beyond the traditional roles "back-office" systems providers provide, exchanging data with media sales reps, and providing software and data processing to manage the workflow associated with buying and paying the media. The move comes as MediaBank's chief rival, Donovan Data Systems, is poised to release a new and completely revamped version of its iDesk digital media management system, and some other big overhauls of its massive enterprise management systems. It also comes two months after the market's third biggest player, Comcast-owned Strata, introduced Ambit, a new system enabling big agencies to control which data they use to measure the effectiveness of their clients media buys and advertising campaigns. MediaBank said it will integrate AdBuyer's platform with its agency management systems and will expand it into other media, including TV, to create a "single, unified command center spanning digital and traditional advertising." Effective with the acquisition, MediaBank said its current system clients will immediately be able to utilize AdBuyer's platform to plan and buy search and display ad campaigns across most major exchanges, including Google/DoubleClick, Yahoo Search, Bing, Right Media, and OpenX, and to bid within those exchanges in real-time. MediaBank clients also will have access to major online audience data targeting exchanges such as BlueKai, eXelate, TargusInfo, Rapleaf, and AlmondNet. Terms of the deal were not disclosed.
In a deal involving two Washington, D.C.-area firms, digital agency Tailor Media Group has acquired the creative side of KCW Design Group, which will retain its IT staffing business. The value of the transaction was $3 million, plus stock and cash options, says Tailor Media president Ben Taylor. The acquisition swells the size of Tailor's Arlington, Va.-based staff from 67 to 113 employees -- and, key to the deal, hands the 11-year-old agency a previously untapped client base in one of the region's prime industries: governments. Previously, Taylor noted, Tailor Media had focused on the private sector and KCW on the public sector. As a result of the merger, Taylor said the agency now has contracts involving the U.S. House of Representatives, Department of Defense, Marine Corps, Air Force and other government business. Holdover clients include national work for Imax Theatres, plus the NFL's Washington Redskins and the NHL's Washington Capitals. In addition to entertainment and sports, Tailor Media has a large focus in the hospitality, legal and IT industries, with services including social-media strategy, search engine marketing, branding and identity, Web development and application.
For the first time, a majority of all new mobile phones bought in the U.S. during the first quarter were smartphones -- at 54%, according to new data from market research firm NPD Group. That follows on the heels of research from Nielsen this week indicating that 36% of U.S. mobile consumers own smartphones, up from 31% at the end of 2010. Aided by the launch of the Verizon iPhone, Apple became the third-largest handset maker in the first quarter overall in the U.S., behind Samsung and LG. Apple claimed 14% of the market, compared to Samsung's 23% and LG, 18%. Rounding out the top six manufacturers were HTC, Motorola and BlackBerry-maker Research In Motion. Verizon, which began offering the iPhone 4 in February, last week said that it sold 2.2 million units of the Apple device during the first quarter. Apple itself reported selling a whopping 18.7 million iPhones during the first three months of the year, more than double the year-earlier period. Both Apple and Verizon could see a further boost in sales from today's release of the long-awaited white iPhone 4. The Verizon iPhone also helped Apple's iOS platform gain some ground against Android, which lost market share during the first quarter for the first time since the second quarter of 2009. Android-based phones slipped to 50% of smartphone unit sales from 53% in the prior quarter, while iOS gained nine percentage points to comprise 28% of the smartphone market. The BlackBerry OS dropped five percentage points to 14%. "Apple and Verizon had a very successful launch of the iPhone 4, which allowed the iPhone to expand its market share, previously held back by its prolonged carrier exclusivity with AT&T," said Ross Rubin, executive director of industry analysis at NPD. "While some of that growth came at the expense of the Android operating system, Android models still accounted for half of all smartphones sold in the quarter." Other data released by Nielsen showed that Android had eclipsed iOS as the smartphone platform most in-market smartphone shoppers want to buy. And half of those surveyed in March who had purchased a smartphone in the past six months said they had chosen an Android device. That matches up roughly with the NPD findings. Driven by growing smartphone sales in the first quarter, the average price for all mobile phones rose 2% over the previous quarter to $102. At the same time, the average price for smartphones fell 3% to $145.
Omnicom's OMD unit this morning named Ben Winkler its chief digital officer. Winkler who was senior vice president-director of digital at Interpublic's Initiative, was one of two top digital appointments announced. The other was Colin Sutton, who joins OMD as head of OMD Word, the media agency's social media unit, from managing director of GroupM's M80. Before Initiative, Winkler was vice president-interactive media at the Martin Agency, and before that, media director of i33 Communications. He reports to OMD US CEO Alan Cohen. Sutton will report both to Winkler and Cohen.
Google has been hit with a potential class-action lawsuit stemming from reports last week that the company's Android operating system tracks the location of cell phone users. "If Google wanted to track the whereabouts of each of its products' users, it should have obtained specific, particularized informed consent," Michigan residents and Julie Brown and Kayla Molaski allege in their complaint. The lawsuit was filed on Wednesday in the U.S. District Court for the Southern District of Michigan. The case marks the first legal action against Google related to location-tracking. Apple is also facing at least two similar lawsuits. The litigation stems from revelations by security researchers that smartphones and other devices collect extensive data about their owners' whereabouts. iPhones and iPads store that information on a "consolidated.db" file contained in the devices. Androids also reportedly store location data in unencrypted files on devices. In addition, Androids reportedly send the information back to Google. Google has said that any location data it gathers is anonymous, and that it only collects information from users who have consented. The first time Android users access location services through the set-up wizard, they are shown a screen with a pre-checked box consenting to the company's collection of the data. People who don't affirmatively opt out are deemed to have consented to the data collection; if people never go through the set-up wizard, Google doesn't gather location information. Android users Brown and Molaski allege in their lawsuit that Google did not provide enough details about the location tracking to have obtained informed consent. "Google's terms of service do not disclose its comprehensive tracking of users," they say. They also argue that storing location data on their phones creates a "serious risk of privacy invasions, including stalking." Among other counts, the complaint alleges that Google violated the federal Computer Fraud and Abuse Act by accessing their devices without authorization. They are seeking an injunction ordering Google to stop tracking users and damages of more than $50 million.
Wieden+Kennedy and Publicis-backed BBH New York have won interactive gold honors in the 90th Annual Art Directors Club Awards. Wieden+Kennedy won for its Old Spice direct-response campaign that used YouTube and Twitter. For three days last July, according to W+K's Web site: "The Old Spice guy engaged directly with his fans and consumers of Old Spice, sending those who responded to the work a personalized message." By the following week, W+K reported, Old Spice had the all-time, most-viewed YouTube sponsored channel. BBH won gold for its 2-minute YouTube video, Google Chrome Speed Tests, in which the Web browser is tested against the speed of sound waves, lightning and potatoes. Since the video's posting last May, it has been viewed more than 4.6 million times. BBH also picked up an interactive bronze award for Google's "Chrome Extensions" campaign, with merit awards going to WPP's Y&R New York for its Airwalk athletic gear campaign, and to MDC Partners' Crispin Porter for a Microsoft campaign. W+K's Old Spice direct-response campaign also picked up a "hybrid cube," said to honor "the year's most game-changing, innovative and inspiring work, and the most relevant, entertaining, engaging brand experiences and advertising solutions." Another hybrid cube went to New York's R/GA for its "Pay With a Tweet" ecommerce platform. These and more than 210 other ADC awards -- including the so-far unannounced Best in Show and Interactive Agency of the Year honors -- will be presented to their winners May 10 in New York City.