In its first quarterly report since going public in December, social games powerhouse Zynga posted a net loss for the fourth quarter, but beat analyst estimates for its adjusted earnings. The company had a net loss of $435 million, or $1.22 a share. Excluding certain costs, it would have earned $37. 2 million, or 5 cents a share. Revenue increased 59% to $311.2 million. Analysts had forecast adjusted earnings of 3 cents a share on revenue of $302 million for the quarter ending in December. Zynga, creator of popular games such as FarmVille and Mafia Wars, pointed to continued gains in usage in the fourth quarter. It said daily active users (DAUs) increased 13% to 54 million from a year ago, while monthly active users (MAUs) rose 23% to 240 million. Average daily bookings (or revenue) per daily user rose 11% to 61 cents. It also reported a new metric -- monthly unique payers -- which was up 13% to $2.9 million in the fourth quarter from $2.6 million in the third quarter. Zynga’s $1 billion IPO late last year didn’t live up to the hype as its price slipped below the $10 offering price on the first day of trading. On Tuesday, however, the stock hit an all-time high of $14.55 before closing at $14.33, on rising investor sentiment. Still, the company needs to convince Wall Street that it can expand beyond Facebook, which accounts for nearly all of its revenue and takes a 30% cut of sales it earns from the platform. Building up its mobile business is a key to Zynga’s strategy to drive growth independent of Facebook. In that vein, the company said mobile titles Dream Zoo, Words with Friends and Zynga Poker showed strong uptake during the quarter. They were among the top 10 grossing games on iOS devices duirng the quarter, and are among the first of what are expected to be many more mobile titles from Zynga. JP Morgan analyst Doug Anmuth expects Zynga to publish up to 15 games this year, 10 of which may be for smartphones. The company launched 12 games in 2011, including eight for mobile devices and four for the desktop Web. In recent months, Zynga has also has acquired several mobile gaming start-ups, including the Germany-based Gamedoctors and Page44 Studios in San Francisco. In its IPO filing last year, the company had stated, "our growth prospects will suffer if we are unable to develop successful games for mobile platforms." Looking ahead, the company projected bookings to be in the range of $1.35 billion to $1.45 billion for 2012, with stronger growth coming in the second half of the year. Adjusted net income will fall between $390 million and $440 million. Analysts are forecasting earnings of 4 cents per share on revenue of $319 million for the current quarter ending in March. In a research note Tuesday, Anmuth said he expects strong growth at Zynga in the first quarter on the strength of newer releases, including CastleVille and Hidden Chronicles. Zynga shares were down about 7% in after-hours trading to $13.35 on Nasdaq.
In the latest chapter of the digital ad industry’s favorite soap opera, the plot has once again thickened for Yahoo. Specifically, a lucrative deal to sell off its Asian assets in a $17 billion swap with China’s Alibaba Group appears to have faltered, causing investors to rethink prospects for the online display advertising giant. “What now,” queried J.P. Morgan’s Doug Anmuth in an equity research update sent to investors this morning. Anmuth had estimated that the Alibaba deal would have resulted in a significant boost in the price of Yahoo’s shares, and now believes its demise will surface “other scenarios” for the storied digital publishing giant. “While less than ideal, a taxed sale of some or all Asian assets could still yield a higher stock price in our view,” he said, speculating that those assets may yet go on the block, either as part of a “revaluation” of its asset swap with Alibaba, or a possible private equity investment for a minority stake in Yahoo itself. Either way, Anmuth questioned the logic of moving forward on that front, despite the potential short-term benefit to Yahoo’s stock price. “We don’t see how Yahoo! benefits here as it doesn’t need cash and now has a new CEO in Scott Thompson,” Anmuth wrote, adding that “noise around a proxy battle is already intensifying, with institutional investor Third Point “stating it will nominate four new board members in the coming weeks.” In other words, the Yahoo soap is likely to continue for a while. In the meantime, Thompson is expected to stick to his knitting, focusing on ways to improve Yahoo’s core product, introduce new ones and try to regain its stature among online users and advertisers.
Publishers have been stepping up marketing services in hopes that brands and agencies will consolidate their list of publishing partners and invest ad dollars in fewer coffers. The move has begun to affect the profitability of ad exchanges. Online Publishers Association president Pam Horan said agencies and marketers want fewer publishing partners that can build large-scale multiplatform campaigns to reach consumers across devices and media. Marketers want to consolidate spending with a couple of key players across platforms. Horan said the evidence is the investments that Meredith and Hearst have made. "The macroeconomic environment set that up, and I don't think that's going to change," Horan said. Hearst acquired iCrossing in 2010 for an estimated $325 million to offer a series of marketing and mobile services. A study that OPA conducted with Harris Interactive around the same time analyzed the link between consumers and content, identifying a "deeper connection" between consumers and media sites, rather than with Facebook or portals, Horan said. This focus by publishers helped OpenX, an ad exchange based in Los Angeles, reach profitability in Q4 2011, exceeding an annualized revenue run rate of more than $100 million, according to Tim Cadogan, OpenX CEO. The company’s advertising technology services, including OpenX Enterprise, achieved a Q4 year-over-year growth rate of 100% compared with the same period in 2011. Cadogan said OpenX is capitalizing on the trend by publishers to build-out services. These content hubs need ad exchanges that can remove the complexities of managing ad serving across media channels. Building one foundation enables other companies to integrate services consistently through an application programming interface.
Collective has developed a model to determine online ad attribution and plans to release a study Wednesday pointing to flaws in methods marketers use today, such as click-through rates, post clicks, and impressions. The strategy -- causal attribution -- aims to support ROI from display and video advertising by linking it to advertising spend, including identifying campaigns that don't work. Jeremy Stanley, SVP of data sciences at Collective, said today's methods don't prove the causal link between the advertising expenditure and resulting purchase. Instead, they confuse correlation with causation, misleading advertisers. He calls such methods "misleading" and "subjective." The study considers Forrester Research's estimated $12 billion in U.S. display ad spend in 2011 -- and assumes that 75% of it went to direct response campaigns. It also assumes 20% of that spend was wasted due to misleading measurement systems, suggesting companies in the U.S. threw away $1.8 billion last year. Causal attribution relies on the creation of an experiment that measures outcomes caused by advertising. Collective describes this model as one that monitors change in desired outcomes through A/B testing for both online and offline ad campaigns. The tests are based on random audience groups, rather than randomly selected impressions. It measures the cumulative effect of multiple advertising impressions over time on individual users. The six-step process requires limiting the experiment to cookies likely to remain in the person's browser for the entire duration of the experiment. This is done to limit the impact of cookie deletion. Collective defines a stable cookie as one seen at least once within the last 28 days and on at least two separate days over the life of the cookie. Step two requires dividing the users into test and control groups, before delivering advertisements only to the test group in step 3. Steps 4, 5, and 6 observe and measure desired outcomes, along with calculating the causal lift, respectively. However, two major limitations exist in the model: dependence on browser cookies, and time it takes to achieve statistical significance. If someone deletes the cookie in their browser there is a chance it can weaken the experiment; the model requires the ability to track the cookie for 48 hours. Collective can analyze more than 20 billion impressions and identify cookies likely to persist beyond 24 hours. It can limit the findings to about 200 million users who don't continually delete cookies. The company says it can work with any online conversion or action, such as purchase, registration or download, or social action. It also works with offline conversions with anonymous point-of-sale, credit purchase data, CRM purchase or value data. The model supports brand measurement to determine awareness. Campaigns with significant volume can return results in two weeks. Stanley looks for data that helps build a brand over time, rather than "chasing their tail trying to increase click-through rates."
Coinciding with the rise of online ad verification as a requisite for buyers and sellers, the Interactive Advertising Bureau has released a set of related guidelines and principles. Developed in conjunction with the Media Rating Council, the standards were designed to provide a common set of methods and practices for ad verification. “Consistent and transparent conduct of ad verification is vital for deepening confidence in the industry and driving the advancement of digital advertising,” said George Ivie, executive director and CEO of the Media Rating Council. “We believe the issuance of these guidelines represent a major step toward achieving these goals.” The guidelines cover mobile, email or lead generation campaigns of all types and address a wide range of topics, including ad-serving prevention ( or “ad blocking”), which carries larger implications to buyer and seller because intended ad-serving transactions can be interrupted. The guidelines recommend that ad blocking may be used in instances where the relevant domain or page-level URL is already on a blocking list, for competitive separation and fraud prevention. However, ad blocking should only be built into ad-serving systems, so decisions are made pre-serve. Also of note, nested iFrames are often recognized as legitimate technology -- but because of browser operational/security considerations, there is limited visibility into the legitimacy of iFrames filled with content from outside the parent domain. As such, the IAB recommends that ad verification vendors have procedures to classify and report whether advertising served into iFrames from other domains has been appropriately executed. In addition, the general nature of the verification tools used to view iFrame content should be disclosed, according to the IAB. Moreover, it recommends that the industry minimize the use of nested iFrames. Meanwhile, as geotargeting IP-based processes can vary in quality based on the geotargeting vendor used, the IAB suggests that geotargeting vendors subject their processes to independent auditing, and that natural differences in geotargeting accuracy between vendors be taken into account. Steve Sullivan, vice president of advertising technology at the IAB, noted that the lack of accountability "created tension between the publishers and marketers.” Showing the sector’s growing prominence, comScore agreed to buy ad verification company AdXpose for $22 million late last year. Earlier in 2011, meanwhile, DoubleVerify closed a respectable $33 million funding round.
The Associated Press on Tuesday took aim at Meltwater, a company that offers a paid clipping service to clients including the U.S. Department of Homeland Security. "Meltwater has built its business on the willful exploitation and copying of the AP's and other publishers' news articles for profit," the AP alleges in a lawsuit accusing Meltwater of infringing copyright and misappropriating so-called "hot news." "Meltwater contributes no creative content and provides no editorial commentary," states the complaint, which was filed in the Southern District of New York. "Its business serves no independent purpose other than the distribution of news created by others." The lawsuit accuses Meltwater of infringing copyright by "routinely copying verbatim the heart of the AP's and other publishers' news stories and selling that content to its subscribers for a profit." Meltwater said in a statement that it was "surprised" by the lawsuit. "It is unfortunate that the AP did not seek to discuss this with us prior to taking this wholly unnecessary step," the company stated. Meltwater added that it is "confident" its service doesn't violate copyright law. "Meltwater respects copyright and operates a complementary service that directs users to publisher websites, just like any search engine," the company stated. The AP asserts in its complaint that Meltwater scrapes news sites, indexes articles to make them searchable and also keeps copies of articles dating back to 2007 in its own database. The company also allegedly allows subscribers to search its database for AP articles, including ones that are no longer available for free online. The AP argues that Meltwater differs from other news aggregators because it's only available to paid subscribers and therefore is "not a means of expanding public access." Elizabeth McNamara, a lawyer for the AP, adds that the company is not seeking to restrict other publishers' right to link to AP content. "What distinguishes Meltwater is the entire business model, which provides no content, no commentary, and is simply built on the backs of news organizations," she tells Online Media Daily. But many of the arguments put forward by the AP in its complaint seem applicable to other aggregators. For instance, the AP says in its complaint that online aggregators are partly responsible for the financial problems facing newspapers today by "taking subscriptions, licensing revenue and advertising dollars away from traditional news organizations and wire services, leaving the news content providers unable to continue bearing their high costs of creating content." The AP says that it has lost clients like the Department of Homeland Security to Meltwater, and also has lost licensing fees from Lexis Nexis and Factiva due to Meltwater. The wire service also argues that Meltwater is misappropriating the AP's "hot news" -- that is, its time-sensitive scoops -- by sending out article headlines, excerpts and other material. The hot-news concept dates to a 1918 U.S. Supreme Court decision establishing that rewriting another publication's scoops is actionable as a hot-news misappropriation. That ruling stemmed from a lawsuit by the Associated Press against a competing wire service that rewrote AP stories. Tech companies like Google and Twitter have said that principle is no longer valid given the speed with which news travels online. Recently, the 2nd Circuit Court of Appeals sided with a Web site that was accused of misappropriating hot news by publishing banks' stock recommendations. In that case, the appellate court said that the site TheFlyOnTheWall.com had the right to collect and publish factual information, despite the banks' "understandable desire to protect their business model" by restricting that data to their clients. The AP is seeking an injunction against Meltwater and monetary damages.
Trying to go beyond the limitations of the “Like” as a standard metric for social media, a new Compete study combines a variety of measures to assess the success of online travel brands on Facebook. While the analysis focuses on the travel category, the approaches taken could apply to other industry verticals on Facebook. Compete argues that the number of Likes a brand collects via Facebook is a common but potentially misleading measure because it’s cumulative rather than current. Using a weather analogy, it compares the obsession with Likes to looking at how much snow has fallen in total over the past 10 years versus how much is falling now or this winter. Perhaps not surprisingly for a Web measurement firm, it points to unique visitors as a better indicator of current engagement. In that regard, Orbitz in December 2011 led the travel segment with 16,100 visits to its Facebook page. But Expedia led the group of four travel sites Compete studied, also including Priceline and Travelocity, with 1.5 million Likes. Looking at the ratio of Facebook visitors to Likes is one way to show the current “productivity” of all those likes, according to the study. By that combined measure, Priceline easily had the highest social “productivity” rate, with 98, 631 Likes and 10,334 monthly unique visitors. Orbitz was second, at 5.2%, followed by Travelocity at 3.8% and Expedia at 1.1%. Given that most marketing campaigns are designed to drive travel bookings, the study also looked at the overlap between visitors to each brand’s Facebook page and primary site. Priceline again came out on top here, with 77% of its December Facebook visitors also going to Priceline.com. The other three online travel agencies averaged just 30%, suggesting they have room to improve in driving traffic from their Facebook pages. The Compete study also recommends other possible ways to gauge the value of Facebook activity. For one, a travel brand might look at whether visitors to its Facebook page are more or less likely to book with that brand. Another option is to quantify the extent to which people visiting the primary site and Facebook pages are more loyal to that brand by learning which are less likely to shop with rivals. The report noted Expedia, in particular, should do a better job of leveraging its sizeable lead in Likes to boost engagement on Facebook. Maybe it should hire William Shatner, now that he has ended is 14-year run as “The Negotiator” for Priceline.com.
A new report suggests that TV watching via broadband is on the rise, while devices facilitating over-the-top viewing are gaining more traction. Parks Associates found that 31% of homes with broadband regularly watch TV online. Meanwhile, nearly 13% of U.S. broadband homes have a device facilitating OTT, viewing such an Apple TV or Roku box. The research firm said holiday-season sales were robust, and it predicts 14 million units will be sold this year. Parks Associates reported during the 2011 holiday period that 4% of households bought "one of these inexpensive, single-function devices" that enable OTT consumption from "Internet-based services, such as Amazon Prime Instant Video and Netflix." And it's not just younger viewers who may engage in cord-cutting. Kurt Scherf, a vice president at Parks, stated: "Nearly 20% of these holiday-season buyers are over 45 years of age, so these devices have achieved relatively broad appeal among multiple consumer segments." He added: "While this trend does not yet frequently equate to canceling pay-TV services, it can mean shaving some premium channels for a set of households." That would be good news for Netflix, where CEO Reed Hastings recently suggested the company's biggest competitor is HBO. Netflix recently launched its first original series, "Lilyhammer," which it has begun advertising with the creative featuring star Stevie Van Zandt. As Parks makes its forecast of about 14 million OTT units to be sold this year, it said Apple reported 2.8 million Apple TV units were sold in a fiscal 2011 period, with an additional 1.4 million in the holiday quarter, while Roku sold 1.5 million units in 2011.
The full media court press that is the Valentine’s Day drop of Sports Illustrated’s legendary swimsuit issue has had mobile extensions for years. Calendar apps, model apps, enhanced magazine editions -- all have been in the portfolio of digital releases. Part of the franchise’s larger marketing role is to demonstrate the sports brand’s mastery of cutting-edge media. And this year is no different. Bikini and bodypaint lovers will see their favorite models in apps across iOS and Android devices this week. This year SI introduces a new way to leverage mobile interactions with print. A dedicated Swimsuit Viewer app for iOS and Android recognizes models in the magazine and serves up additional content. Employing Digimarc watermarking technology, the app uses the device camera on select pages to trigger 19 relevant videos in the app. The effort was done in partnership with mobile marketing company Nellymoser and sponsored by DirecTV. The companies say this is the first time that a top 100 magazine has used watermarking technology to promote video content. While 2D codes in magazines are not new by any means, the implementation here denotes two trends in mobile code use in magazines. First, while the use of QR codes and other coding systems has become rife in magazines, both magazine designers and many advertisers recoil at the intrusion of these codes in otherwise sculpted visual design. Watermarking hides the visual cues and lets the underlying artwork fill a page unimpeded. And unlike other uses of 2D codes, which require some third-party scanning app, the SI project maintains a branded experience. The SI branded app gives the publisher the opportunity to create a scanning environment that is its own and can even be sold to a sponsor like DirecTV. And this being the wall-to-wall affair the Swimsuit issue tends to be, the Viewer is not the only app to include models. The freemium SI Swimsuit 2012 strips the franchise down to its g-string essentials -- photographs. In this year’s version of the app, however, developers have included a 360-degree view of the three bodypainted athletes that is available only in the smartphone versions of the franchise. The Swimsuit app employs in-app purchases to get beyond image sampling. A $6.99 upgrade (free for SI subscribers) unlocks the full trove of content.
The post-PC era is upon us, Apple CEO Tim Cook reiterated yesterday (Feb. 14) in a keynote for a Goldman Sachs conference. He reported that the iPad and iPad 2 have sold more than 55 million units to date -- “something no one would have guessed.” Cook explained that sales of the device have been “off the charts” and that people are quickly integrating tablets into more of their everyday digital media consumption. “But I strongly believe the tablet market will surpass the unit sale of the PC market, and it’s just a matter of the rate and speed and time that that happens,” Cook said. Cook’s quotes come from a transcript of the talk published by CNNMoney. BI Intelligence lent some support to Cook’s prediction in its new report claiming that tablet sales will reach 500 million a year worldwide by 2015. Including e-readers in their analysis, BI expects a compound annual growth rate of 50% for the category of devices for the next five years. Lower prices and growth in the sub-$500 segment will help drive the market, as will increasing adoption in enterprise and education. Cheaper tablets will also have a strong appeal in emerging markets, giving more people a lower barrier to digital entry. Cook even noted that there has been some cannibalization of Mac sales by the iPad. But when it comes to cannibalizing sales, he said, “we prefer we do it than have somebody else do it.” Still, he believes tablets will eat more into Windows PC sales than into Macs. Addressing directly the issue of pricing and Amazon specifically, Cook acknowledged that its rival’s $199 Kindle Fire entry into the market showed “different strengths” from the iPad. “Amazon is a different kind of competitor,” he said. “They’ll sell a lot of units -- I think they have and they will. But the customers that we’re designing our products for are not going to be satisfied with a limited function kind of product,” he added. According to many reports, Apple is set to reveal its third-generation iPad in early March, complete with a substantially upgraded display and faster processing. Cook also addressed a range of issues that have been reported around the Apple brand in recent weeks. Controversy over working conditions across the Apple supply chain internationally has sparked investigations. Cook says Apple tries to educate managers and workers throughout the supply chain about their rights and working conditions. He said that eliminating underage labor in the supply chain is a priority, as well as imposing a code of conduct across suppliers that includes a 60-hour work-week cap. As a result of violations, he claims that Apple is beginning to micromanage work hours, and claims 84% compliance. Cook also reported that 37 million iPhones had been sold in the last quarter. He notes that China represents one of the largest growth opportunities for Apple. The newly launched iCloud storage service that synchronizes apps and content across devices will have a profound effect on the company, he said. Since October over 100 million people have signed in using the iCloud. “It’s a strategy for the next decade or more,” he added. On the topic of entering the TV business Cook remained as obtuse as ever. He reported that Apple TV sold 1.4 million units last quarter, showing a growth trajectory. Despite widespread reports that the company is working on an Apple-branded TV system, Cook maintained the long tease. “We’ve always thought there was something there,” he said, although reiterating Steve Jobs’ famous characterization of Apple TV as a “hobby.” “And that if we kept following our intuition and kept pulling the string, then we might find something that was larger.”
The filing of the Facebook IPO has caused many to speculate about the future of Facebook advertising. With a new focus on revenue generation -- a continuous pressure for any company, especially a publicly traded one -- what will this mean for marketers who previously leveraged Facebook as a relatively low-cost tool for consumer engagement? There are some potentially exciting opportunities ahead for brands. New targeting opportunities, new advertising products, additional reach through mobile, and hyper-localization are all potentially positive outcomes. On the other hand, increased clutter, higher costs and backlash from users could negatively impact the social giant’s reputation and audience base. We all should proceed with caution. Here are a five points to consider: 1. Who wants more ads? For the users who want to share pictures of their kids’ latest dance recital, debate their views on the Komen-Planned Parenthood controversy or gloat about their college alma mater’s big win, I would think not. The new focus on revenue generation could mean more ads, which could adversely impact user experience. Relevancy to the user must be at the forefront of any campaign strategy. More advertising products also means more competition for eyeballs and clicks. The cost of Facebook advertising has skyrocketed. But can conversions keep pace? As always, successful campaigns will need to provide value for users. 2. Many paid campaigns focus on driving “Likes” as a key performance measure, but the value of a “Like” continues to be elusive. In the new age of Facebook, content will need to focus less on Likes and more on engagement. Are the new advertising opportunities going to be up to the challenge? To further complicate matters for marketers, changes to the News Feed make earned media a tougher proposition. 96% of people who “Like” a brand page never go back to that page. Sharing through the News Feed is key to continued engagement, which means marketers will need to post more frequently, with relevant content, to generate interaction. 3. Will new mobile opportunities be able to deliver? Since the filing of the IPO, bloggers and industry news sources are abuzz about opportunity in the mobile space. Will the mobile platform be able to deliver an optimal ad experience for Facebook users? Maybe for iPad, but without the right content, smartphones will be a challenge. Banner ads, currently the most popular mobile display unit, won’t win here. Limited real estate and the threat of intrusion will be big barriers to overcome. Facebook’s mobile ad format will need to integrate seamlessly with content experience to provide value for the mobile user. 4. GPS capability is baked into smartphones today, opening up a world of opportunity for location-based targeting. Marrying this with the Facebook’s user base could be a big win for brands, so marketers should be thinking about how to leverage this technology, specifically when it comes to testing paid ads as part of their targeting toolbox. 5. Marketers must be mindful of the differences in devices. They will need to craft their campaigns to meet the unique needs of tablet versus the smartphone, as well as how users of each device prefer to get information. Design considerations, content strategy and user experience may need to be different for each device The new frontier has some exciting potential, along with certain pitfalls. Marketers should ensure their content strategy is tight, and their mobile house in order.