Aiming to remain a key hub for sharing photos, Facebook acquired mobile photo application Instagram for $1 billion in cash and stock. The transaction -- Facebook’s largest to date -- also underscores the company’s efforts to bolster its mobile offerings. Instagram will continue to operate as an independent business under the same name. Facebook CEO Mark Zuckerberg said in a post that the acquisition would enhance the ability of Facebook users to upload and exchange photos among family and friends. “We need to be mindful about keeping and building on Instagram’s strengths and features rather than just trying to integrate everything into Facebook,” wrote Zuckerberg. “That’s why we’re committed to building and growing Instagram independently. "Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people.” Launched in October 2010, the Instagram app now has more than 30 million registered users. Last week, the company extended the service to Android phones after becoming one of the most popular and best-rated apps on the iPhone. Zuckerberg called the deal an “important milestone” for the company; it’s never before acquired a product with as many users as Instagram. He also suggested that Facebook will not be pursuing many more deals of this scale in the future. Previously, the social network made smaller acquisitions including startups, such as FriendFeed, Hot Potato, Rel8tion and Snaptu. Often these deals were designed to pick up engineering talent or technology rather than a well-known consumer brand like Instagram. Given its rapid growth, Instagram is one of the only recent startups that represented a credible threat to a core element of the Facebook experience: photo-sharing. The acquisition not only removes a competitor but better positions the company for the expansion of social networking to mobile devices. Facebook's 845 million users include more than 400 million mobile users. And the latest data from comScore shows that more than a third (36.1%) of U.S. mobile users access a blog or social network on their phones. The deal comes as Facebook prepares for an IPO to raise up to $5 billion, which would make it the largest Internet offering to date. The IPO expected this spring would value Facebook at between an estimated $80 billion to $100 billion. The Instagram acquisition could make Facebook even more attractive to already eager investors. For its part, Instagram raised $40 million last month at a reported valuation of $500 million, despite having no business model. In his own blog post Monday, Instagram CEO Kevin Systrom reiterated that the company isn’t going away like prior Facebook acquisitions. “We’ll be working with Facebook to evolve Instagram and build the network. We’ll continue to add new features to the product and find new ways to create a better mobile photo experience,” he wrote. At the same time, Zuckerberg said Facebook also plans to keep existing Instagram features, like the ability to post to other social networks. Inside Facebook reported that Instagram has been working on a version of its app for Facebook’s new Timeline feature. The app built with Facebook’s Open Graph platform would allow users to automatically post photos they had taken. Brands could also tie Instagram into their own apps on Facebook. “The biggest benefit will be to highly experiential brands like Nike and Red Bull -- their brands are at the heart of life in-the-moment worth capturing,” said Dave Marsey, senior vice president and media practice lead at Digitas. “Uniting Instagram with the Timeline, for example, creates a more real, engaging experience.” To that end, Vitrue last week added a feature to its social media marketing platform that lets brands build Instagram functionality into their Facebook pages. But Facebook clearly trumped that move with its Instagram acquisition.
Online advertising hit $84.8 billion in 2011, representing a 16% year-over-year increase, and accounting for more than 17% of all global measured ad expenditures, according to GroupM. Across global regions, North America led in terms of overall digital ad spending with an estimated $34.5 billion. The Asia-Pacific region came in second with $24.8 billion, followed by Western Europe with $21 billion, according to the study “This Year, Next Year: Interaction 2012.” This year, GroupM predicts digital ad spending to reach $98.2 billion globally, representing a nearly 16% increase year-over-year, while the figure represents almost 19% of all measured advertising investment. In the 2012 forecast, North America once again ranks first with an estimated $38 billion in digital ad spend, followed by the Asia-Pacific region with $31.4 billion, and Western Europe with $23 billion. In the U.S., digital ad spending hit $32.2 billion in 2011 -- representing a 22% share of the overall domestic market, and a 12% increase over the previous year, according to the study. This year, those figures are expected to reach $35.4 billion for a 23% share and a 10% increase over 2011. According to Rob Norman, GroupM Interaction Global CEO, it’s less about the new than what marketers are doing with existing resources. “It seems that less is brand new and that a combination of scale of usage of an increasingly social and mobile Web, the penetration of devices supported by it, and the continued atomization of audiences and content, in both their creation and distribution combine to tell the story of the year.” GroupM also found that digital advertising’s share of total ad investment rose from 4.4% worldwide in 2004 to a projected 18.8% in 2012. Also of note, the average percentage of consumers’ “media time” spent online increased from 11% in 2006 to 19% in 2011, while the absolute number of broadband homes worldwide has nearly tripled in this period to reach 500 million, and the typical country has seen broadband penetration grow by half. Aside from general monetary inflation, ad investment growth has two main vectors: aggregate audience hours and advertising intensity per individual, according to GroupM. Average online advertising investment per online user doubled between 2006 and 2011, while for the year, Norway had the highest per-capita online ad investment in the study’s sample: $200. GroupM points out that e-commerce now accounts for about 5% of global retail sales, with instant-on devices, secure and simple payment, vouchering, and the optimization of retail for mobile serving as catalysts for growth.
Mobile advertising continues to shake up traditional ad investments for a variety of media. For call tracking, the shift continues to move dollars from national to local ads. Some 61.6% of the pay-per-call share resides in local ads vs.national -- the opposite of a year ago, according to analysis from Telmetrics, which measures pay-per-call ad tracking. Early adoption in pay-per-call tracking originated in national advertising about three years ago, but the most growth today comes from local, small businesses. Pay-per-call ads experienced the most growth from mobile, jumping more than 30 times since last year. Telmetrics tracked about 348% more pay-per-call ads in Q1 2012, compared with the year-ago quarter. The durations of the calls also have increased, suggesting that more advertisers are optimizing campaigns and programs looking for higher-quality leads, according to Bill Dinan, the company's president. "Mobile marketing has opened the door to call-based segments for SMBs," he said. "We have reached the point where SMB marketers can monetize the activity. Calls are worth more, marketers understand it, and they are willing to pay for it." On average, call durations rose 20.1% since Q1 2011. Mobile call durations remain the longest at 3.5 minutes per call, followed by Yellow Pages at 2.8 minutes per call, Internet Yellow Pages at 2.7 minutes per call, and paid search at 2.2 minutes per call. There also was a perceived barrier to entry for those offering pay-per-call services to small and medium-sized businesses. Along with direct media, mobile changed that, Dinan said. Between 35% and 40% of growth today from call traffic from seeing an online ad comes from mobile, and about the same for print Yellow Pages -- followed by billboard, direct mail, and PC-based search. Mobile and local convert well to actions, making it a valuable market segment for pay-per-call ad tracking, which will grow as smartphone and tablet devices proliferate. About $12 billion of advertising revenue will go through mobile this year worldwide, partly as a reesult of device proliferation, according to a GroupM study. Smartphone adoption continues to spike. "People ages 75 years and older are also adopting smartphones, which breaks down the barriers we once knew," Dinan said. "IT puts content in the hands of more consumers."
Google potentially confuses consumers by allowing companies' trademarked names to trigger competitors' pay-per-click ads, an appellate court ruled on Monday. In a 47-page decision, the 4th Circuit Court of Appeals ruled that Rosetta Stone presented enough evidence to justify a trial about whether consumers were confused by AdWords ads. The pay-per-click ads -- for companies other than Rosetta Stone, including sellers of counterfeits -- were displayed to users who typed "Rosetta Stone" into Google's query box. "We conclude that a reasonable trier of fact could find that Google intended to cause confusion in that it acted with the knowledge that confusion was very likely to result from its use of the marks," the appeals court wrote. The ruling reversed U.S. District Court Judge Gerald Bruce Lee's 2010 decision dismissing Rosetta Stone's trademark infringement lawsuit. The case dates to 2009, when Rosetta Stone alleged in a complaint filed in Alexandria, Va. that Google's AdWords policies gave competitors a free ride on Rosetta Stone's trademarked name. Rosetta Stone also alleged that its trademark was being used by counterfeiters, who duped consumers into purchasing bogus software. Rosetta Stone presented depositions of five consumers who said they were tricked into purchasing counterfeits after conducting Google searches for Rosetta Stone. The language learning company also presented surveys showing that a significant percentage of users who search for "rosetta stone" are served ads for competitors" and "are likely to be confused as to the affiliation, endorsement, or association" of those ads. Google's own in-house surveys also showed some confusion when trademarked terms were included in the body of pay-per-click ads, according to the appellate opinion. Lee discounted the anecdotes and surveys, but the 4th Circuit said that evidence created "a question of fact as to consumer sophistication that cannot be resolved on summary judgment." Google could still prevail when the case returns to district court, but the decision to order a trial will "almost certainly" encourage other marketers to take on Google, says Santa Clara University law professor Eric Goldman. "This opinion likely dooms Google to spending millions of dollars more to defend its practices." Legal questions surrounding keyword advertising will continue. "This ruling probably pushes back the date when keyword advertising sales are legal and acceptable in the United States by five to 10 years," Goldman says. A Google spokesperson says its policy of allowing a company's trademark to trigger ads for competitors is consumer-friendly. "Users searching on Google benefit from being able to choose from a variety of competing advertisers. We think that the legitimate use of trademarks as keyword triggers helps consumers to make more informed choices," the company said in a statement. Google added that it is "confident" it will ultimately prevail.
The ad network that pulls together inventory from thousands of branded local mobile sites, Verve wireless, has grabbed from comScore its CTO Chris Nicotra -- who now will be the company’s CTO/EVP product and technology. With the hire Verve indicates its increased emphasis on developing a tech-driven ad platform for localized mobile campaigns. “This is part of our ongoing effort to build a world-class management team and experts in location-based mobile advertising," says Verve CEO Tom MacIsaac. Before leading technology at comScore, Nicotra was the CTO at AOL’s Advertising.com, where he met MacIsaac, then Ad.com’s SVP of strategy. Verve Wireless serves as a publishing platform for about half of its 3,000 local media publishing partners. It provides an ad platform for all partners, including AP, Hearst and McClatchy. MacIsaac says the network now reaches over 90 million uniques a month and serves over 6 billion impressions. About 70% of the campaigns run on the network are location-targeted. Generally, Verve’s own sales force sells national brand clients and the partner/publishers use their own sales forces to sell to local clients. The company began ramping up national sales in the middle of last year and had seen that part of the business grow 100% quarter over quarter. The larger local publishers are reporting a doubling of their mobile business year-over-year. Verve says its staff now stands at 52 -- also double its size from a year ago. The technology on the ad platform enables recent national advertisers like Burger King and Radio Shack to target ads locally by localized content dynamically into localized ad units.
Sometimes, “liking” something on Facebook (particularly if that something is a tragedy or movement against some sort of social ill) isn’t the appropriate response. To that end, DDB Worldwide has created a new social response, the “I Care” Button. “Around the time of the [March 2011 Japanese] tsunami, everyone was [posting stories and information] to Facebook and it felt so wrong when you were looking at these images, to be clicking ‘like,’” Matt Eastwood, chief creative officer at DDB New York, tells Marketing Daily. “We felt there must be another way to solve this problem. If you could tell people ‘I Care,’ that means so much more than ‘like.’” Thus was born the button, which is currently in beta test with Facebook, which allows website publishers and bloggers to append it to the information they post on the web. When the button is clicked, the article (or information) is shared via Facebook. “The hope is people can embed the code into their blogs and websites in the same way that other buttons sit at the bottom of the story,” Eastwood says. Though the code is only enabled for Facebook right now, Eastwood says the agency plans to extend it to other social networks (such as Google+) soon. The publishers who use the “I Care” button can also customize action based on a click, potentially leading people to donate to support a cause or sign an online petition in support of a social movement, Eastwood says. In addition, DDB New York’s icare-movement.com will also collect information on which stories are garnering the most clicks, creating a real-time gauge on what’s resonating with the public. Though the button is still in beta, MTV Networks has already picked up its use for its new MTV Voices platform, which highlights socially positive and inspirational content from a group of correspondents, international and local music artists and MTV’s audience. One article out of the UK amassed 274 “I Care” clicks, compared with 9 tweets and 64 Facebook “likes.” “Obviously, the plan is to go way beyond there,” Eastwood says. “It’s most appropriate to news organizations and anyone who publishes a blog.”
The App Store has over 500,000 apps for work, play and everything in between. There are apps for news, finance, travel, social networking, games and everything else you can imagine. There is even a turkey call app for those who enjoy turkey hunting. (For the record, the authors of this article do not condone that activity – so please no letters!) But at what cost are all these apps? For consumers, it is the loss of privacy. For members of the app industry, it is the constant scrutiny of their privacy and data collection practices on both the state and federal level. Scrutiny at the State Level In February, the California Attorney General announced a global agreement with the leading operators of mobile application platforms, including Amazon.com, Apple, Google, Hewlett-Packard, Microsoft, and Research in Motion, which commits the operators to improved privacy protections for app users. One such improvement is the requirement that mobile apps collecting personal information conspicuously post a privacy policy describing the apps’ privacy practices (a notable development, given the fact the majority of mobile apps today do not include a privacy policy). App users will also have a means to report apps that fail to comply with applicable policies and/or laws. Notably, developers that fail to comply with their stated privacy policies could be prosecuted under California’s Unfair Competition Law and/or False Advertising Law. While no timetable has been set for implementation, the California Attorney General will meet with the leading mobile app operators in six months to assess privacy practices in the mobile space. Scrutiny at the Federal Level Last month, House Representatives Henry A. Waxman and G.K. Butterfield sent letters to 34 makers of popular apps, including Twitter, Facebook, Foursquare and Instagram, requesting information about their data collection practices. The requests follow reports that certain social networking apps pulled users' address book data without permission. Congress is seeking this information to better understand what information is collected by particular apps, what these apps do with this information and what notice they provide to app users. Then, they can “begin building a fact-based understanding of the privacy and security practices in the app marketplace.” This congressional scrutiny comes on the heels of the Federal Trade Commission’s report on mobile apps for kids --“Mobile Apps for Kids: Current Privacy Disclosures are Disappointing” -- which found that there was a lack of privacy information available to parents before downloading mobile apps for their children. According to the FTC, app developers should provide privacy information in simple and short disclosures or icons that are easy to find and understand on the small screen of mobile devices. To this end, on May 30, 2012, the FTC will host a public workshop on revising its online advertising disclosure guidelines -- known as “Dot Com Disclosures” --to provide clear and conspicuous disclosures in the current online and mobile advertising environment. Given the astounding rate of growth of mobile apps, it is not surprising that regulators and lawmakers are focusing on the privacy issues raised by such apps. In light of current scrutiny on both the state and federal level, the mobile app industry must pay special attention to developments in this area.