Facebook has been rewarded for building up its mobile ad business in the second half of 2012 with higher revenue and renewed investor confidence, symbolized by its share price cracking $30 for the first time in six months on Jan. 9. But Brian Wieser, senior analyst at Pivotal Research Group, warns in a research note that the mobile ad gains will come at a price over time: higher costs incurred in mobile campaigns compared to those on the desktop. He estimates that mobile monetization and other costs of increasing growth, even excluding acquisitions like Instagram, will grow to about $2 billion a year. With Facebook already Pivotal’s year-end 2013 price target of $30, Wieser lowered his rating on the company from “buy” to “hold,” noting that the stock “had a good run to back up this value, leading to the change in recommendation.” Helping to drive the stock’s run up from a low of under $18 in September has been the dramatic rise in Facebook’s mobile revenue, to $150 million in the third quarter from only about $10 million in the prior quarter. Wieser himself projects the company’s mobile ad products will end up generating $1 billion in revenue this year and acknowledges that mobile advertising is favorable for Facebook in “the near-term.” Still, he raises concerns with higher costs associated with the emerging ad category. In particular, he points out that mobile-centric campaigns are typically more labor-intensive than traditional Web efforts. He add that if Facebook’s mobile revenue growth is coming from an increase in mobile campaigns -- including new segments of marketers like mobile apps -- that makes things even more problematic. The shift toward “mobile first” in marketing initiatives could mean smaller campaigns (in dollar size) and lower CPMs. “Even if CPMs were higher, the absolute volume of impressions delivered will be much lower than on the desktop," according to Wieser. For their part, Facebook and its ad partners have touted the superior performance of formats like Sponsored Stories in mobile compared to on the Web, in terms click-through rates and eCPMs. And both AdParlor and Nanigans recently highlighted promising results for newer app install ads that run in the mobile news feed. Wieser points out that some of the risks around higher costs are mitigated by automation, although it’s difficult to say how much. The Pivotal report notes that Facebook doesn’t usually assign a rep to a marketer spending less than $2,000 a month. So smaller campaigns are automated. But those at higher levels might have multiple campaigns running on Facebook, with separate costs. “More importantly, we suspect costs will build upon costs as the company iterates its product offering and establishes new workflows for those new products,” it stated. For agencies and ad-tech players, of course, that’s not necessarily bad news. “More volume of activity from labor intensive media, such as that which is delivered to mobile devices, will be mostly good for agencies,” Wieser wrote, with the same going for technology firms relied on by publishers and agencies. In launching its combined desktop/mobile reporting in November, comScore said Facebook ranked as the top property in terms of total engagement in the mobile channel. In a separate report last week, JP Morgan analyst Doug Anmuth projected Facebook’s mobile ad revenue will outpace that of desktop revenue by 2014. Impressions from Facebook’s Web ads on the right side of the page are expected to decline 6% a year through 2015 as usage increasingly shifts to mobile devices.
Google launched a digital coupon service Friday called Zavers that allows retail stores and brands to reward loyal customers with coupons. The service could support both local and national brands. The service could increase the average order size and improve redemption rates by integrating data that helps retailers and brands better target and track who gets what type of coupon and discount, "so dog owners don't get cat food coupons and parents of teenagers don't get diaper coupons," wrote Spencer Spinnell, director of emerging platforms for Google Commerce, who called it a new way to measure coupon redemption and analyze preferences. Consumers find manufacturer discounts on their favorite retailer Web sites, and save the digital coupons to their accounts, similar to the way Apple's Passport works on newer versions of the iPhone. They shop for those products and check out as usual. Redemption occurs in real-time, with savings automatically deducted at checkout when shoppers provide their rewards cards or phone numbers, no scanning or sorting necessary. Manufacturers only pay when a product is moved off the shelf. Google acquired Zave Networks in late 2011, and then in November 2012, Incentive Targeting allowing retailers and manufacturers to identify customers and create behaviorally targeted promotions. The software also lets Google track the impact on shoppers' behavior over time. Zavers had several retailers working with the company, such as A&P and Pathmark. Now New York's D'Agostino joins as the latest partner in its retail network. In the coming months, Google plans to announce other partnerships with a number of other major retailers.
Driven by the rise of streaming video and better over-the-top technology, cable-led paid-TV services peaked in 2011, and are now on track to decline through 2017. That’s according to new findings and forecasts from research group TDG, which reports that paid-TV subscriptions topped out at about 101 million in 2011, remained virtually unchanged in 2012, and will sink to less than 95 million by 2017. “Netflix and Hulu Plus are one part of it,” Michael Greeson, director of research at TDG, said regarding the fate of paid TV. “But those services are still supplementary for most consumers.” What will really accelerate the demise of pay TV is when consumers adopt new OTT technology -- from Apple and Intel -- as their primary entertainment services, according to Greeson. “The arrival of this next generation of services is what’s going to change things,” Greeson. “They’ll be live in one year,” he predicted. Today, 87% of U.S. broadband households currently subscribe to a pay-TV service -- a decline of almost five percentage points since 2010, according to TDG. More to the point, a growing number of broadband subscribers are now doing without pay-TV services altogether, having either “cut the cord” or never signed up at all, Greeson points out. In total, TDG considers 13% of U.S. broadband households -- 10 million -- to be “pay-TV refugees,” of which 2.6 million have never subscribed to a pay-TV service. By its estimates, 7.4 million once subscribed to pay TV but have since cancelled the service. The majority of cord-cutters (71%) cite the high cost of paid TV as their primary reason for ditching such services, while 28% cite free online video-on-demand services such as Hulu. In addition, 25% cite paid VOD services like Hulu Plus and Netflix as reason enough for cutting their cords. For its research, TDG used an online panel of 500 U.S. adult broadband users, which randomly selected from an online panel of several million consumers.
Adam Broitman, a long-time digital agency executive and entrepreneur, is jumping to the client side, joining MasterCard as senior business leader of the financial services giant’s global digital marketing team, according to a post on his personal blog this morning. Broitman most recently served as chief creative strategist at Los Angeles-based Something Massive, following its merger with Broitman’s digital boutique Circ.us last year.“I will be focused on all things social, mobile, local and beyond,” Broitman says in the blog post about his new role at MasterCard, which officially began Jan. 2. The post, which starts off by quoting Lao Ttzu (“If you do not change direction, you may end up where you are heading") goes on to cite a TED Talk presentation by Google’s Matt Cutts, who espouses trying something new every 30 days.The ever-inventive Broitman appears to be living up to that credo. He began Circ.us after cutting his teeth at seminal digital shops like Digitas, Morpheus and Crayon, as a massive augemented reality art project with founding partner John Swords. And he formed social TV platform TV Dinner with Swords, with whom he also collaborated with as guest editors of a special edition of MEDIA magazine.In this morning’s post, Broitman says his new role at MasterCard “could not have been a better fit for me, and that while he had no specific desire to work for a large corporation, he did have one to work for MasterCard, especially becasue he will be reporting to Senior Vice President-Group Head Global Digital Marketing Michael Donnelly.Describing the moment he decided to take the job on a visit to MasterCard’s Purchase, NY, headquarters, Broitman writes: “I sensed an underlying pulse in the people and spaces I saw. There was a tremendous amount of excitement that, quite frankly, I was not expecting. Without giving any specifics, I can tell you that what I saw on that first visit was big. Ground-breaking things were afoot. I wanted in!”
National brands that do not build effective local mobile ad campaigns will miss a major opportunity to connect with consumers in their neighborhood, Mike Boland, program director for BIA/Kelsey's Mobile Local Media practice, told MediaPost. BIA/Kelsey's mobile ad revenue forecast suggests local, mobile campaigns will grow from $664 million in 2011 to $5.8 billion in 2016, representing a compound annual growth rate of 54.2%. While the word "local" typically conjures up images of small businesses, Boland said national brands have begun to see a clear increase in performance for location-based targeted mobile ads. Adoption has been relatively slow until now, but Boland has begun to see signs of change. That change is coming from national advertisers. As the second-largest mobile ad network, Millennial Media provides statistically significant evidence of mobile local advertising performance. The network reported last year that location targeting in mobile ads rose 53% year-over-year. Similarly, a September 2012 Balihoo survey indicates mobile local ad growth from national advertisers. xAd, YP, LSN, Telenav, Moasis, and WHERE are other networks that provide insight. Boland said supporting Millennial's data, xAd also shows mobile local display ad click-through rates (CTRs) of 0.72%, compared with 0.1% mobile average, and 8.13% for mobile local search, compared with the 5% mobile average. While CTRs offer a good form of measurement, Boland said mobile marketers really need to look more closely at what happens after the click because there's a high likelihood an ad can generate a phone call or request for directions. "We know ads generate user intent, so craft the campaigns to include click-to-call links or an easy way to get directions for those that rely on foot traffic," Boland said. "It provides a tool to measure performance." Some 36% of the search clicks measured by xAd resulted in at least one secondary action. Some 58% were phone calls, followed by 36% for directions, and 1% clicking to view more information about a business.
With the annual Consumer Electronics Show (CES) in Las Vegas winding down on Friday, Online Media Daily caught up with Avi Greengart, research director for consumer devices at Current Analysis, to get his take on this year’s show. Here are some of his thoughts: OMD: Even apart from Microsoft pulling out, has CES lost its standing as the premiere event for showcasing new tech and mobile products? Greengart: Sort of. The consumer electronics world has become very platform-driven, and none of the platform drivers were in attendance. Apple and Amazon don’t go to trade shows, Google takes over Mobile World Congress but skips CES. Microsoft pulled out of CES the one year it absolutely needed to be there to promote Surface and Windows Phone and do damage control on Windows 8 and Windows RT. However, there was plenty of innovation on display, just not from the big device vendors. Sony and Samsung and LG all pushed 4KTV and OLED TV. OMD: What, if any, device trends emerged that will play out in the coming year? Greengart: Outside the traditional device vendors, there was plenty of innovation and several clear trends emerged: automotive, m-health, and app-driven personal devices. OMD: Were there any new phones, tablets or mobile media services that got your attention? Greengart: There were practically no phones announced at the show, so the ones that were announced naturally stand out: Sony’s Xperia Z, Huawei’s Ascend D2 and Ascend Mate 6.1 and ZTE’s Grand S LTE. Most of those feature 1080p displays and quad-core processors. If Sony can get the Xperia Z to market in a timely fashion, it should have a hit on its hands. Nvidia’s Project Shield is vaporware, but really fascinating vaporware. Razer showed off Windows 8 gaming tablets that should find an audience, and Lenovo showed off a 27-inch coffee table Windows 8 tablet that won’t. It’s insane how many cheap Chinese Android tablet vendors there are. No individual one stood out, but in the aggregate, they could impact the tablets and PCs in emerging markets. This may not help Google much, however, since most of them don’t use Google services. OMD: RIM is basing its comeback on its new BlackBerry 10 operating system. Did you have a chance to preview a BlackBerry10 phone? Greengart: Not at CES, but I got a full demo of production hardware and software ahead of the show. I’m under a non-disclosure agreement, but I have been authorized to say that I’m impressed. That doesn't mean RIM will succeed -- it will be terribly behind in apps, content, and services, and it may simply be too late to build a viable ecosystem -- but I was impressed with what I saw.
Google's Director of Engineering Ray Kurzweil, hired in December, wants to build a search engine that integrates artificial intelligence (AI). He envisions a world where search queries get answered without being asked. Kurzweil, an AI expert, believes in hierarchical ideas. In his recent book, "How To Create A Mind," he explains how it works. The hurdle is hierarchical language, and how the brain processes language in a hierarchical way, depending on the stimuli during key stages of development, reports the SingularityHub. Google's quest to organize the world's information, based on semantic content, isn't intended to remain a page of words. Computers, for the most part, have not been able to differentiate between words and meaning, Kurzweil said in an interview. A more intelligent version of natural language processing will give computers the ability to understand the context on the page. Google gives Kurzweil "vast resources" to continue his research. It's unclear what the size of the team is helping Kurzweil, but he anticipates the resources will increase as the project grows in complexity. The system will be built in hierarchies. "You are what you think, and that's a key," he says. The goal is to apply the content to core Google projects and technology. Kurzweil believes the technology will not only keep track of calendar events and searches, but conversations, perhaps text messages, and emails sent and read. It will identify the words to semantically know specific questions and concerns to push information to the phone. While search will move past identifying keywords to understand synonyms, Kurzweil said search engines will need to do a better job of understanding intent.
The Internet service provider Wide Open West has scored a significant victory in long-running litigation, stemming from its partnership with defunct behavioral targeting company NebuAd.U.S. District Court Judge Edmond Chang in the Northern District of Illinois recently dismissed a claim alleging that WOW intercepted the consumers' communications by partnering with NebuAd. Chang ruled that the consumers didn't present enough facts to move forward with a claim that the ISP intercepted their data.Instead, the allegations only amount to a claim that Wide Open West "facilitated" NebuAd's acquisition of data, Chang ruled. "Yes, WOW diverted the communications to NebuAd, but it was NebuAd that actually acquired the communications in the sense of the statute, meaning it was NebuAd that actually accessed the communications when it analyzed them to fashion targeted ads," Chang wrote. The judge did not dismiss the case in its entirety, but it's not clear whether the consumers will be able to proceed given the recent decision.Wide Open Web was one of six Internet service providers to test NebuAd's ad-serving platform in 2007 and 2008. The company, which shuttered soon after news of the tests came to light, worked with ISPs to gather data about Web users' activity and serve them targeted ads. The controversial technology drew objections from privacy advocates as well as lawmakers. One criticism was that ISPs could provide data about everything consumers did online -- including their sensitive searches and browsing activity at noncommercial sites.NebuAd said its data collection was anonymous, and that consumers could opt out of the program.In 2008, after news of the tests came to light, consumers sued NebuAd and the six ISPs, arguing that the companies unlawfully installed "spyware." NebuAd agreed to a $2.4 million settlement, but the ISPs fought the cases.Chang's decision is in line with a recent 10th Circuit Court of Appeals ruling in favor of Embarq -- another company that worked with NebuAd. The appellate court said that NebuAd alone was responsible for any interceptions of subscribers' data.Other ISPs who partnered with NebuAd were CenturyTel, Knology, Bresnan and Cable One and Wide Open West. A lawsuit against CenturyTel was dismissed in 2011, while a case against Knology was sent to arbitration. Litigation against Bresnan is still pending.
It probably is not surprising that one of the leading movie discovery and listings brands on the Web and devices went mostly mobile in terms of revenue in 2012. But the velocity with which Warner Bros.-owned Flixster saw studio ad spend shift lanes is still remarkable. Company CRO James Smith tells Mobile Marketing Daily that back in 2010, 80% of marketing spend was on the Web, and only 20% on devices. But by 2011 that share had shifted to 65% Web and 35% on devices. But in 2012, the percentage flipped completely and quickly. For the year, Flixster reports that studios were putting about 35% of their spend on the Web and 65% on mobile. We caught up with Smith to drill into some of the details behind the migration of marketing dollars. MMD: What ad or marketing formats are proving most attractive to entertainment marketers? Smith: The most popular ad format on Flixster is the mobile “prestitial.” Studios are buying 100% of roadblocks for the weekend. These are native mobile ads that link directly to the trailers on our movie details pages. On average, about 10% of mobile users click through to watch the trailers. Native ads are rare in the mobile world. On mobile, ad networks sell 80-90% of advertising inventory. But it’s native advertising on Flixster that has helped pushed our studio advertisers to mobile from Web. Featured movie placement is another popular, native ad format on Flixster that is drawing studios to advertise with us. MMD: What ad strategies are proving most effective? Smith: From a revenue standpoint, a combination of native ad formats for impact and frequency with standard advertising. MMD: Have you made any changes to the Flixster model that have attracted more revenue to mobile? Smith: No. In fact, the opposite is true. We’ve stuck with our initial, basic model: a consumer-centric, friendly and simple -- yet comprehensive -- brand/tool for movies discovery. Word of mouth, strong reviews and ratings on app stores continue to be our most effective marketing vehicle. Our capacity to scale has been self-fulfilling based on that cycle of strong reviews and more downloads, on smartphones and tablets. We continue to be the largest movies app on all platforms. MMD: Are most buys integrated across Web and mobile? Smith: Most buys are in fact across our Web and mobile properties. Studios sometimes opt out of the "ratings environment" of Rotten Tomatoes for some titles exclusively on mobile. With non-studio-buyers, cross-platform is still proving exponentially more powerful because of the combined reach and the ability to create cross-platform synergies and sponsorships. MMD: Is mobile proving more effective in compelling some actions over others? Smith: Yes, in regard to consumer actions. Our mobile users are more action oriented: they watch more trailers, do more viewing of showtimes and are engaged for longer periods of time than on Web. And the ultimate consumer action is also stronger. We sell more movie tickets on mobile.
The chicken's kind of greasy but very tasty. The company is kind of sleazy but very formidable. The market is kind of fascistic but extremely lucrative. The irony is simply delicious. Yum Brands Inc., a company that for decades has been serially dishonest with its customers about the relative healthfulness of its products, is now under suspicion of pulling a fast one on China. China! The authoritarian police state, where a Great Firewall of human and digital censorship suppresses free expression -- backed by a vast security apparatus and kangaroo judiciary. “News” is delivered overwhelmingly by official state media and compliant private publishers in the pocket of local and regional party leaders. In short, in that country, obscuring the whole truth is a vast sector and a way of life. So where does KFC get caught selling chickens pumped with illegal levels of antibiotics? Hahahahaha! The People's Republic! It's like being accused of shallowness by a Kardashian. The details are a bit murky, but according to The Wall Street Journal, in 2010 and 2011, Yum submitted chicken samples to government testing agencies that contained unlawful levels of antibiotics. The question is whether the company then took corrective action, or covered its tracks and continued to purchase chicken from the two poultry suppliers where the samples originated. Here’s a clue. The chairman and CEO of Yum Brands China, Sam Su, microblogged this statement: "We feel regretful for all the problems. I sincerely apologize to the public on behalf of the company." Regaining lost face in China is no easy trick. We shall see if Sam Su can pullet off. Meantime, Yum Brands sales in China, which according to the Journal accounted for an astonishing 44% of corporate revenue, have plummeted. Now it happens that the official media picked up this particular story and ran with it. But it appears to have gotten more traction via Weibo, China's version of Twitter, and the blogosphere at large. The same happened to another food company in 2011, when the Shineway brand of pork products were revealed to have been processed from hogs fed with clenbuterol, an illegal additive that poisons humans. China’s state media were in no hurry to start a panic, but bloggers broke the story and it went instantly viral. Likewise the derailment that year of the nation's new magnetic-levitation trains killed 38 people and injured 200. The government ordered the Chinese media not to cover the accident, and the media obliged -- but cell phone pictures from the scene spread in social media and soon revealed that the authorities had brought in earth-moving equipment to literally bury the evidence. This gets to the real moral of this story. If you can’t hide from the public in a security state, how does anybody think they can do it anywhere else? When Can't Buy Me Like finally hits the shelves in March, you will be able to see exactly how the digital revolution has forced transparency on every institution on earth, and created an environment in which conduct trumps even the intrinsic qualities of goods and services. Some advice for Yum Brands, which has now finally discovered, in the unlikeliest of places, that it lives in a glass house: You guys can do what comes naturally to you -- lie through your teeth -- but, really, don’t bother. Everyone can KFC you.