The Wall Street equity gods giveth and they taketh away. This morning, they did both, boosting the outlook -- and rating -- for one Internet giant (Yahoo), and downgrading them for another (Google). “We are downgrading Google to HOLD,” influential Pivotal Research Group analyst Brian Wieser wrote in an updated outlook that downgraded Google’s shares from a “BUY” rating. “The stock has risen close enough to our $820 target, and held in the high $700s following an overly positive response to the most recent quarter. However, beyond the valuation call, we are also concerned about the falling margins we think will come with Google's future growth.” One of Wieser’s rationales is that while Google continues to expand strategically into vital new sectors -- especially mobile -- the costs of doing so are high, and its profits are projected to slip as a result. "As we noted previously, for Google to achieve the advertising revenue forecasts we expect, growth will have to come from lower margin sources," Wieser explained, adding: "Further, as Google itself reiterated in its 10-K last week, 'the margins on advertising revenues from mobile devices and other newer advertising formats are generally lower than those from desktop computers and tablets. We expect this trend to continue to pressure our margins'." One “potential offset” that should mitigate concerns for investors, according to Wieser, might also raise some for advertisers and consumers alike: “news that Google will no longer allow advertisers to only target mobile devices. “Years ago, advertisers had to actively choose to include mobile advertising in their campaigns. Then Google changed a default which meant that, unless an advertiser indicated otherwise, a campaign would run on mobile devices.” Wieser projects this tactic has led Google’s mobile revenue to skyrocket, though it was robbing from Peter to pay Paul, as “most of the money would have shown up on desktop.” While it appears that Google is revising this policy, and will enable marketers to target device types more discreetly, Wieser says it corresponds with a broader shift on Madison Avenue that has been collapsing the “industry’s distinction between mobile and desktop” advertising. “The divide will ultimately end as the industry and investors more fully appreciate that few if any advertisers spend money on the basis of geo-location or true mobility, and is instead a divide mostly based on devices, ad tech, and other operational considerations,” Wieser predicts. Or as J.P. Morgan’s Doug Anmuth wrote: “By consolidating separate campaigns across desktop, smartphones, and tablets into a single campaign, Google is advancing a more holistic view toward search marketing and likely accelerating advertisers’ shift toward mobile.” Unlike Pivotal’s Wieser, Anmuth did not downgrade Google’s outlook, but reiterated his “OVERWEIGHT” rating for Google shares. “We believe Google is well-positioned in mobile given an advertising format that ports well to mobile, Android’s strong share, and largely untapped local opportunities. While there could be some near-term choppiness around full migration to Enhanced Campaigns in June, we believe simplifying the cross-device process in AdWords is a big step toward driving greater mobile dollars over time.” Wieser, meanwhile, is upgrading Yahoo shares from “HOLD” to “BUY” for very different reasons -- mainly because of a shift toward “market-based pricing” at Yahoo Japan, news of a deal enabling Google to sell ads on Yahoo’s site, and perhaps most importantly, “favorable sentiment towards Yahoo's core business. “The company announced [Tuesday] that it would allow Google to display ads on various properties using AdSense for Content and AdMob services,” Wieser explained, adding: “We think that Yahoo is likely giving little up in opening up its inventory to Google. Yahoo would be opening up some information about its properties (and, in some form, its users' actions) to Google, and this has some cost, but on balance, we presume that Yahoo would only allow Google to deliver ads where Yahoo was further ahead than if it did not work with Google.”
Supporting the rise of mobile marketing and the decline of browser cookies, Yahoo Japan inked a deal with AdTruth to tap an alternative type of technology that gives marketers the data required to target ads, while protecting consumer privacy. This alliance will support Yahoo Japan's audience recognition capabilities, allowing it to more accurately define and describe its audiences. The results could lead to higher eCPMs and ROI for advertisers, according to the companies. Following AdTruth's recent Tokyo office opening, the partnership further strengthens its presence in the Japanese market. It also points to a shift of control of the data back to premium publishers, according to James Lamberti, general manager of AdTruth. Companies own the relationship with consumers and want to protect relationships, he said. Identifying audiences has become increasingly challenging in recent years with the rise of mobile advertising devices and decline in cookie usefulness. AdTruth's platform doesn't collect personally identifiable information and doesn't leave behind device-side identifiers. Comparing the agreement with U.S. trends, Lamberti said the Japanese market has always been a leading indicator of what U.S. marketers and consumers can expect to see and experience in digital media. More than 70% of Japanese consumers have a smartphone or tablet, compared to more than 50% in the U.S. "The majority of Internet activity in Japan is now via mobile devices," Lamberti said. "Japan is approximately one year ahead of the U.S. when it comes to mobile, and is facing a crisis when it comes to audience recognition, a crisis that the U.S. is just beginning to recognize and understand."
Channel Intelligence, an ICG Group subsidiary and provider of technology to ecommerce-enabled companies, said Wednesday that Google intends to acquire the company for $125 million in an all-cash deal. In an 8-K filing with the Securities and Exchange Commission, ICG estimates gains related to the 2012 consolidation of CI's parent company and the sale of its stake to Google at $43 million -- approximately $26 million of which was recorded in the three months ended September 30, 2012. Approximately $17 million of that will be recorded on the closing of the transaction. ICG should realize $60.5 million in connection with the transaction, which should close during the first quarter of 2013. In June 2012, CI announced executive changes. Rob Wight, founder and CEO of CI, stepped in as chairman of the board and chief software architect. Doug Alexander, president of ICG, would serve as CEO. The transition was intended to support a growth spurt the company experienced at the time. For brands and manufacturers, CI manages more than 80% of all "Where to Buy links" on Web sites, search, blogs and display ads. The company supports brands that sell through Google's services, like Google Shopping, claiming its PLA clients had 466% year-over-year sales growth in the first quarter of 2012.
Yelp on Wednesday reported that its fourth-quarter revenue climbed 65% on local advertising growth buoyed by increased mobile usage. Revenue in the quarter reached $41 million, up from $25 million a year ago. Yelp posted a net loss of $5.3 million, or eight cents a share, compared to $9.1 million, or 56 cents a share in the year-earlier period. Active local business accounts, or the total of businesses that advertise, rose 68% to 39,800 in the fourth quarter. The company had about 86 million monthly active users at the end of the 2012, up 31% from a year ago. "2012 was a tremendous year for Yelp," said Yelp CEO Jeremy Stoppelman in the earnings release. "We completed a successful IPO, launched new products to improve the Yelp experience for consumers and business owners, expanded into new markets while increasing our presence in existing ones, and completed our first acquisition." He added that the company this year would further increase its presence in Europe and continue to make mobile monetization a top priority. During the fourth quarter, Yelp reported that its mobile app was used on about 9.2 million devices, on average, each month. The company began rolling out local ads within its app for the first time in the quarter. A JP Morgan analyst report estimates 45% of total searches (mobile and desktop) take place on Yelp’s app. The firm projected that increased advertising on the mobile side would help the firm increase local advertising 85% to $33.7 million, while brand advertising would be flat at $5 million. Yelp has also been aggressively expanding its international footprint. In October it acquired Qype -- its biggest European rival -- for about $50 million in cash and stock to aid its international expansion. It also opened an international sales office in the U.K. last year and pushed into the Asian market last year with a Singapore launch. In the fourth quarter, it also went live in Poland and Turkey, bringing the total number of countries where it operates to 20. The global push over the last year, however, also contributed to its wider-than-expected loss. The company’s total costs and expenses came in at $46.3 million for the quarter, up from $33.7 million a year ago. Posing a potential threat to Yelp’s growth is Facebook’s new social search offering -- Graph Search. Launched last month, the upgraded search tool lets users make natural language queries to get local recommendations from friends, among other things. Yelp’s stock sank 6.2% the day Facebook announced the beta release of Graph Search. Yelp already competes with services like Yahoo Local, Local.com, Google Local and Foursquare. Looking ahead, the company projects revenue in the range of $44 million to $44.5 million for the current quarter, representing 62% growth. Analysts had been expecting revenue of $43.8 million. Yelp shares closed Wednesday at $22.38, but had fallen about 3% in after-hours trading following its earnings release.
As part of a larger effort to build its digital bona fides, Shout! Factory has named ex-Condé Nast exec Jeffrey Thompson to lead its digital strategy. In the newly created role of vice president of digital strategy and business development, Thompson will be expected to lead development of digital strategies and digital video partnerships. An emerging multiplatform entertainment company, Shout! Factory has built its business by assembling niche TV shows like "Freaks & Geeks" and "Leave It to Beaver" -- then marketing them accordingly. According to Garson Foos, Shout! Factory’s co-founder: “Sharing pop culture faves that we love across multiscreens is an integral part of our expansion strategy.” More recently, the company acquired the worldwide rights to "The Many Loves of Dobie Gillis" and "Fridays" -- a sketch comedy show widely seen as ABC's failed rendering of "Saturday Night Live." Thompson most recently served as vice president of digital strategy and business development for Condé Nast Entertainment, where he developed digital opportunities for brands like Vogue, GQ, Vanity Fair and Wired. Prior to Condé Nast, Thompson served as vice president of global business development at The Walt Disney Company. He is credited with growing incremental revenue for its theatrical and home entertainment releases by implementing strategies to drive conversion to digital platforms, particularly Blu-ray disc and digital distribution platforms.
Google has made changes to the way marketers create, bid and target paid-search desktop and mobile ads. On Wednesday, the company released Enhanced Campaigns, a tool that combines paid-search ads on desktop and mobile. The changes -- which are expected to roll out in February -- rely on time, location, relevance, context and content rather than device distinction. The new campaign structure will simplify targeting and bidding for different devices and locations, especially for small- to-medium sized businesses struggling to create multiple campaigns for one product. Management was too complicated and consuming for all but big-budget sophisticated advertisers, said Larry Kim, Wordstream founder and CTO. "New click-to-call reporting options will allow marketers to make a connection between what they spend and what they get back," Kim said. It means an end to paying $1 extra per call to see what phone numbers were called, when, and how long the calls lasted. Kim said that by June, after the planned auto upgrade, Enhanced Campaigns aims to fill the gap between mobile and desktop cost per clicks. "Enhanced Campaigns will roll out many requested features and betas, including improved reporting for all ad types such as sitelinks at the campaign and ad group level. One very exciting announcement is that all call tracking will be free, potentially replacing third-party call tracking solutions that some advertisers use," said Daina Middleton, global CEO of Performics. Adobe Senior Director of Product Management and Strategy Bill Mungovan believes that by lumping higher-performing tablet traffic with desktop traffic, revenue per search will rise for Google, and CPCs will increase on the combined desktop and tablet traffic. The anticipated changes also affect the way advertisers measure ROI across devices. Mungovan and The Search Agency VP of Marketing Strategy Keith Wilson are concerned that Google is lumping tablets in with desktops, while smartphones are targeted differently. Some 126 million people in the U.S. owned smartphones -- 54% of the mobile market -- during the three months ending December 2012. That figure is up 5% since September, according to comScore. While all three device types have their idiosyncrasies, a Google spokesperson said the focus now turns to content, context, location, time of day and factors other than the hardware. Wilson expects the application programming interface to provide more data points to advertisers, but one major change involves Google's removal of tablet-targeting capabilities in search. "We see conversion rates and behavior differ from tablet to desktop. The removal of tablet targeting is a short-to-midterm negative for search marketers." Marketers point to the positives too, such as ease of use and reporting technologies. Paul DeJarnatt, VP and group director at Starcom, is "intrigued" by the advanced reporting Google promises, particularly in areas that have traditionally been hard to measure, such as in-store purchases. While it's too early to tell how deep reports will go, DeJarnatt notes Google now becomes the gatekeeper to all of that data. "It remains to be seen how easily that will integrate into our clients' existing efforts at attribution across all media," but it comes at the expense of targeting capabilities on mobile, he said. "Our efforts to truly understand and adapt to very unique audiences in mobile become constrained because Google effectively treats all devices, and their audiences, as one large group."
In recent months, the Federal Trade Commission as well as the California Attorney General have issued recommendations for mobile privacy. Now, the self-regulatory group Network Advertising Initiative says it plans to develop mobile privacy standards. In its latest annual compliance report, released on Thursday, the group says it intends to adopt guidelines this year to address the collection and use of data from smartphones and other mobile devices. The NAI also plans to develop rules that will address the tracking technology used by mobile ad networks. Executive Director Marc Groman adds that the NAI will explore how data is transferred between apps, and how location information is collected and stored. Current NAI rules require companies to notify users about online behavioral advertising and allow them to opt out of receiving behaviorally targeted ads. The NAI currently has almost 100 members, but that's only a fraction of the ad networks engaging in some form of online behavioral advertising, or serving ads to people based on their Web-surfing history. Groman says he hopes more companies will join, adding that developing mobile guidelines might spur mobile networks to become members. The NAI says in its report that educational sites it runs, as well as the self-regulatory group Digital Advertising Alliance, drew 10 million unique visitors in 2012. Around 14% of the visitors to the NAI's educational site last year went to an opt-out page, the NAI told Online Media Daily. The prior year, 8 million unique visitors went to the NAI's site, and 10% of them visited the opt-out page. (The new report is the first one to include data about visitors to the DAA's page.) While the NAI and DAA currently offer visitors the ability to set opt-out cookies, browser manufacturers now offer do-not-track headers that theoretically could allow people to opt out of all behavioral targeting with a single click. That type of mechanism is more persistent than the opt-out cookies, largely because privacy-conscious users tend to delete their cookies. But Web companies haven't yet figured out how to respond to do-not-track headers. A committee of the Internet standards group World Wide Web Consortium (which includes the NAI) has been trying to forge a consensus for interpreting the do-not-track signals, but remains at a standstill. Self-regulatory groups, including the NAI, don't currently require members to honor those signals. Groman says the NAI has concerns about how browser-based tools will be implemented and interpreted. "We wouldn't necessarily object to an additional tool that is part of a browser that gives consumers another mechanism for choice," he says. But he says the NAI feels strongly that the header should not be turned on by default. Microsoft activates do-not-track by default in Internet Explorer 10. The compliance report also says that 2012 marked the first year the NAI began using automated crawlers to determine whether members were allowing people to opt out of receiving targeted ads. The group says that opt-out links usually worked, but that the automated testing uncovered "a number of possible issues." Most were fixed within 24 hours, the NAI says. The report reflects that the NAI now requires members to disclose behavioral-advertising segments based on any activity related to health or medical issues. In the last year, Web companies like Microsoft, Yahoo and AOL began disclosing on their sites that they allow companies to target users based on health conditions.
Social media software provider LiveFyre on Wednesday announced closing $15 million in new funding in a third round financing led by U.S. Venture Partners and including prior investors Greycroft Partners, Cue Ball, HillsVen Group, and ff Venture Capital. Launched in 2009, the company has expanded from a system for social commenting to a platform powering llve chat, live blogs, instant messaging, content curation and other social features through its StreamHub product. Clients such as Fox Entertainment, The New York Times, CBS, The Daily Beast, AOL and NBC Universal use the software-as-a-service platform to enhance social interaction on their Web sites and digital properties. LiveFyre said it will use the new funding to continue its growth, expand into new markets and enhance its technology. This funding will support the growth of our team and new technologies, while we strive to maintain the high-quality talent and amazing culture that got us to where we are today,” stated LiveFyre CEO Jordan Kretchmer. The company has raised a total of $20 million to date.
The IAB and the Mobile Marketing Association are doubling down on mobile ad measurement, big retailers are throwing more resources into their mobile commerce plays, and industry experts are heralding 2013 as the true “Year of Mobile.” While there have been some innovative mobile-only ad plays in the last half-decade, the time has come for brands to look beyond mobile to the bigger, cross-device picture.Here is how to begin the cross-device conversation with your ad agency: 1. Ask your agency to stop referring to your target audience by device. I don’t care if you’re an auto manufacturer or a luxury clothing brand—if your ad agency refers to your audience segments by device, that’s a clear red flag. Your mobile searchers, your tablet browsers and your customers engaging with your brand from a laptop are often the same person. Shift the conversation to the collective use of these devices, and work together to understand how your target audience behaves on each throughout the day. 2. Don’t separate ad campaigns by device. (Silo media buying is over) We all know that consumers are increasingly dividing their attention between screens. For digital natives, it’s up to 27 screen switches per hour. So why do we continue to put our mobile, display and video buys in separate silos? Most agencies are aware of the new purchase funnel—smartphones are for researching products, tablets are for browsing products, and computers are often for final purchase decisions. But here’s the hitch: Many are unable to say your ad on a person’s smartphone prompted them to take action on their tablet or laptop. That’s the million-dollar question. Challenge your agency to think about the bigger picture when allocating budget to certain platforms—and not just stick your campaigns in silos. 3. Don’t let yourself drown in device-specific campaign reports. All brands are looking for that 360-degree picture of how current and target customers are engaging with and reacting to you across all devices. You want to know how well each advertising medium is performing for each campaign, and where to ramp up or scale back if needed. If you’re drowning in mobile, display, social, and video engagement reports, you’re not alone. The key is to ask the right questions and find out where the gaps are across each channel. For example, say a daily deals company decided to pour its budget into deploying a mobile ad campaign targeting on-the-go urban moms. Sadly, when the final numbers came in, it showed very low engagement with this target demo across all mobile phones. While many companies would likely to scale back their mobile ad spend after seeing such weak numbers, savvy brands should be wondering: Is it possible that I'm only getting half the story here? Is there a chance that the series of mobile and tablet ads we prompted some to take action on their work computers? These are the tough attribution questions you need to ask. 4. Stay current on how consumers interact with their smartphones, tablets and computers, and work them into weekly conversations with your agency. There is no shortage of research on the ever-evolving patterns of how consumers behave on their Internet-connected devices. For example, did you know that eMarketer expects consumers to make nearly $87 billion in mobile purchases by 2016 or that according to Nielsen, 85% of tablet/smartphone users engage with their device while watching TV? Stay current on these trends. If your agency continues to recommend very separate strategies for mobile, browser and tablet, it’s time to have the talk. If you’re not agile and willing to take charge of your audience across all screens, more nimble marketers will.
Streaming video has gained significant attention in recent times as the market continues to grow. This USA TouchPoints analysis looks at the extent to which TV, Movie and Radio/Audio content is streamed in the average week by different age cohorts.Interestingly, the results clearly show that while the majority of industry buzz is around streaming video, in all age groups analyzed, TV and Movies (individually and combined) were outstripped by the total reach of streaming Radio / Audio.While this may seem counterintuitive to some, a possible explanation may be a plus of audio content -- it does not require fixed attention or even for the individual to remain in place. Also, Radio and any other kind of streaming can be done on the computer while working on the same device -- whether for the purpose of providing background music, sports commentary or other forms of talk-based content. Services such as Pandora will also account for some of this sector.The difference between streaming TV Movies was never more than 4% (in the 18-24 cohort) and that difference diminished steadily until both TV and Movies attained the same reach (3%) among the 54-64 year-olds.Across all three types of content, we see the expectation that younger cohorts will engage more in these sorts of behaviors. The result is that reach among the 18-24 year-olds is highest -- 11%, 15% and 40% weekly reach for Movies, TV and Radio/Audio, respectively. Then, the decline in reach is steady and consistent as we look at increasingly older age groups, with hierarchy of reach remaining constant throughout.