How much will your company spend on digital advertising this year? GroupM estimates positive growth for digital media. The company released a digital spend media forecast as part of its biannual worldwide report. It forecast that growth in measured digital media investments will rise between 16% and 18% to approximately $99 billion globally in 2012, compared with a previous 16% forecast. The figure represents 20% of the 2012 measured ad spend. Internet advertising budgets continue to grow in every country. The GroupM report forecast a 22% spending uptick in 2013, as digital spending trends continue an upward trend globally, regardless of local economic conditions. In the United States, GroupM estimates search engine marketing will reach $18 billion in 2013, up from $16 billion in 2012, and $15 billion in 2011. Not the same story for all ad spending. GroupM revised global ad spending in general downward, estimating 5.1% growth to $506 billion for global media spend in 2012, down from 6.3% projected late last year. GroupM, which oversees agencies Mindshare, MediaCom, MEC and others, had predicted 6% growth for the year, reaching $522 billion in global ad spend. The 70-country forecast released in the biannual worldwide report "This Year, Next Year," also predicts global ad spending in 2013 will rise 5.3% to $533 billion.
Businesses that are building online reputations through Google+, Facebook and Twitter along with search tools are finding their hard-earned recommendations disappearing, impacting their reputation and rankings in search results. Since Google migrated Google Places to Google+ Local in May, taking Zagat along with it, adding reviews and recommendations behind the Local tab in social network, there have been problems. Some business owners complain that new reviews don't show up and others mysteriously disappear. Abel Carpet Tile and Wood had a decrease from 25 reviews to 18. Mike Fasano, company owner, began to ask clients to write reviews on Yelp instead -- but the only "problem is most people use Google to search and not Yelp." Aside from recommendations and ratings, reviews contribute to rankings of Web sites and pages in Google's organic search results. The glitch could have small businesses reducing the money they spend with Google on AdWords. Fasano said he cut his monthly spend on Google in half since the problems with recommendations and ratings began. Paul Farah owns a taxi cab company in Phoenix. Until Google integrated Places into Local, he had 25 reviews. Some 22 had five stars; two negative reviews; and one with a rating, but no comment. A few weeks ago, half of the reviews disappeared from Google sites, leaving Paul's Taxi with 13. Now he has three. "I suddenly went from a five-star rating down to a one star literally overnight," he said, explaining that business has declined by one-third this weekend compared with the last few weeks. Google tries to copy old reviews when businesses migrate from Google Places accounts to a Google+ pages, but Larry Kim, founder and CTO at WordStream, admits it appears the search engine isn't migrating certain reviews that look like spam. It is also possible the migration process from Google Places to Google+ business pages is buggy and broken, and legitimate reviews are getting lost in the process. "This is really unfortunate for local businesses, because building an online reputation can take a long time, and is a tremendously valuable asset to lose," Kim said. "There are a lot of Google business pages that have old reviews on them, which leads me to believe that this is some weird bug or spam filter." As an experiment to see if a review would post, Farah created a Yahoo email account and then went down the street to Kinko's and logged into one of their computers to review his own business. It never registered. One issue seems related to new Google+ accounts. The system will not allow people to open an account and then post a review. Google explains the issues around disappearing reviews, but the problem continues. Farah isn't the only small business that is struggling. Some small business owners like Drake Hatfield, who runs Hatfield Media, a video production company in Louisville, Kentucky, got so frustrated he made a new Google+ page and decided to start the review process from scratch. Graphic designer Nick Harris explains that reviews seem to appear and disappear without notice. "This is the third time I have had to ask customers to write reviews on my Google Places page," he explains."As a small business, this is killing me."
Juniper Research issued a new forecast Wednesday projecting revenue from mobile search and discovery will nearly triple to $15 billion worldwide in five years. The U.K.-based firm says growth will be fueled in part by high click-through and cost-per-click rates for different types of mobile search. Users are often looking for a discrete set of products and services and can be accurately targeted by advertisers. Juniper suggests local search apps like Poynt, Qype and Yelp represent a bigger opportunity for advertisers than the Web-based mobile search because they provide more relevant ad results and a better user experience. “Web search results, by their very nature, are more generalized, despite the local parameters search engines offer. Furthermore, the Web sites linked-to in search results are often not optimized for mobile devices,” according to report author Daniel Ashdown. Among other findings from the Juniper report: *Google’s domination of the mobile Web search space means other players need to find ways to differentiate their products in a largely commoditized market. *Augmented reality search is increasingly being deployed as an add-on feature, rather than a standalone product. *Adoption of discovery services for apps is driven by the high number of applications on leading storefronts, but faces challenge from big brands, with Apple acquiring Chomp and Facebook launching an app center.
Google is Goliath, and in many people’s eyes, Facebook (especially after the drubbing it took following its lackluster IPO), David, despite that fact that Facebook passed Yahoo in U.S. display ad revenue in 2011 to become the top ad-selling company, according to eMarketer. A February 2012 report from eMarketer found that Google had also passed Yahoo to settle in at the No. 2 spot at $1.71 billion in revenue to Facebook’s $1.73 billion. And by 2013, the projections indicate Google will begin to leave Facebook and the rest in the dust, with Google’s revenue from u.s. display predicted to reach $4.76 billion.Google has, of course, long dominated search, and the growing display part of its business accounts for just a quarter of its revenue. Facebook’s dramatic revenue growth is expected to drop off just as dramatically, sinking to 27.6 percent in 2013, while Google’s display revenue is expected to continue to surge, with its 2013 revenue growth rate predicted at 45.3 percent. eMarketer reports: “Google is expected to surpass Facebook in 2013, when the company’s U.S. display revenues grow 45.3 percent to $3.68 billion, eMarketer estimates. us display ad revenues at Facebook will grow 27.6 percent to $3.29 billion that year.” At this point, the revenue expectations can be plainly seen in the perception of the companies’ display ad offerings. The Google Display Network is The Predator, stealthily cloaking itself, observing its prey and then targeting it with deadly accuracy. And, as one character famously puts it in Predator 2: “There’s no stopping what can’t be stopped — no killing what can’t be killed.”By comparison, with its soft ad approach of “Let’s be friends” and “I ‘like’ you, you ‘like’ me,” Facebook’s display ads are more Barney the purple dinosaur. And there are signs that the approach is becoming as grating to brands as a toddler screeching Barney’s theme song incessantly is to most people over the age of 6.“One of the problems with Internet advertising is that users have tuned out banner ads. It’s a huge problem,” says Larry Kim, founder and chief technology officer of WordStream, a digital marketing company focused on search marketing, which conducted a much passed-around study comparing Google Display Network to Facebook Ads. “In order to combat that ad fatigue, advertisers are looking to advertise on the venues that have the most support for the most rich and engaging ad formats.” And when it comes to providing rich and engaging ad formats the numbers certainly do not favor Facebook.“Facebook, while it has a significant audience, does [not] have very engaging ways for advertisers to engage with that huge audience, nor does it have very sophisticated ways of targeting the exact people they want to engage with in that audience. Nor does it provide any way of really reporting on the effectiveness of those advertising campaigns,” says Kim.It’s a challenge to get consumers to click on ads, and Facebook is lagging in a head-to-head comparison. “Our study showed that Google is way ahead here,” reports Kim. The independent analysis of 11,000 Facebook campaigns (Facebook does not publish a ctr) showed an average click-through rate of 0.051 percent.Google supports industry-standard banner formats with a variety of rich media like Flash and video ad formats, offering what Kim calls “engaging experiences, not just dumb static images.” Facebook has two static ad format products. (The recently introduced sponsored-story format is still unproven and has already been the subject of a class-action lawsuit by users who objected to being used to “endorse” a product.) Google has a tremendous amount of support for mobile, whereas Facebook has, by its own admission, little or none (in its S1 filing to the sec in anticipation of the ipo, Facebook reported it did not “generate any meaningful revenue” from mobile — a glaring deficiency for a service that is accessed via mobile device by over half its users.) This spring Facebook did roll out the ability for brands to purchase “sponsored stories” that display in mobile newsfeeds of friends of fans — so that expansion of the sponsored story program, at least, is something. “If an ad platform allowed an advertiser to deliver a meaningful ad experience to a targeted audience, you would expect users to click on that ad, right? But conversely, if you did not provide advertisers rich and compelling advertising options, if you did not provide them with sophisticated targeting methods to connect with the right audiences at the right time, you would expect your ads to be ignored,” reasons Kim. “And I think that’s what’s happening on Facebook, where we can see the click-through rate of .005 percent. That’s half of the click-through rate of the average banner ad on any Web site in America, and it’s a tenth of the click-through rate of the average ad on Google Display Network [which is reported at 0.4 percent].” And, for good measure, let’s also consider that it’s a hundredth of the CTR on a Google Search ad.If you need further proof: See gm’s hissy fit over Facebook Ads. This is more complicated than gm just not getting the rich media ads it would get on, say, Yahoo or YouTube, though. Could it have been just that gm is not used to being told no? Well, that would explain the timing. Someone at gm really wanted to screw Facebook over, pulling their $10 million in ad budget the very week of Facebook’s ipo, but the fact remains that gm must have seen its Facebook ads were not performing even at half if industry standards.“These ads are being ignored, and that is indicative of challenges with the ad formats and targeting options they offer their advertisers,” Kim says.Facebook is a closed system. Facebook advertisers using the Facebook ads are doing it to drive “likes” to their fan pages — essentially using paid media to drive something akin to newsletter sign-ups. And the roi of having a big fan page following is yet to be determined. “We don’t know what the value [is] of having 1,000 fans or 2,000 fans. If you spend $2,000 to get that, what is the value of that?” asks Kim. And then, once a fan base is established, there is the time, effort and money to maintain it and continually reach out to fans. “Buying ads on Facebook was always a very easy way to check the box on ‘doing’ social media, even if it was just buying other types of advertising,” says Michael Greene, a senior analyst at Forrester. “That’s allowed Facebook and other marketers to kind of gloss over the fact that you are essentially competing in a very cluttered environment —we’re still very uncertain if it’s even a very good environment for consumers to be receptive to advertising.”There are serious doubts about whether Facebook ads, as they are currently constituted, will ever be able to perform up to satisfactory levels. And many assume that much of the money that has been dumped in so far has been exploratory or experimental dollars. Further, says Greene, “you have none of the deep analytics in tracking that you’d get with a more conventional type of media buy. Facebook almost seems like an ecosystem in and of itself … It’s very hard for marketers to prove that this is an effective use of their marketing dollars. As opposed to buying more traditional display advertising where they have a lot more flexibility, not only from a creative standpoint, but they have much deeper tracking and analytics, and they can actually drive traffic to their own Web sites, which offers them higher prospects for ultimate conversion.”The old concern, once common in interactive circles, that Facebook might be the answer to a trivia question in 10 years, all of a sudden seemed very real again after an ipo that was widely perceived to have been bungled, intense Wall Street scrutiny of the company, and in the face of Mark Zuckerberg’s assertions that Facebook was on a “social mission” and never designed to make money. Statements like “Simply put: We don’t build services to make money; we make money to build better services,” while they may sound good to some, don’t fill investors or potential advertisers with confidence. “He’s saying [advertising] is like a side project just to pay the bills,” says WordStream’s Kim. “Until that mentality changes, I don’t see how they’ll ever catch up.” While Forrester’s Greene brings a healthy skepticism to the topic of Zuckerberg’s altruistic “we-just-want-to-make-enough-money-to-do-cool-things” pose: “What’s enough money and what’s doing cool things?” Greene asks. “It’s a posture that sounds really cool in pr pitches, but at the same time gives them enough flexibility to pursue whatever they deem to be ‘cool’ or whatever they deem to be ‘enough money.’ These are things that can easily be redefined over time.”By virtue of its remarkable scale, Facebook will continue to be a top player in the display ad space. But, asks Greene, “can it really become integrated into the larger media-buying world? Can it stop being a separate experimental budget and really hold its own as a line item in the broader media plan?” And to do so they’re going to have to deliver advertising experiences that are well beyond what they’re offering today, say Greene and other analysts. To stave off Google, “Facebook would have to embrace the idea that advertising isn’t something that will potentially ruin Facebook,” says Kim, “but that it can be something that could potentially — if it were relevant and targeted and compelling — be additive to the user experience on Facebook.”What would it take for Zuckerburg, the boy ideologue, to become pragmatic? What if Barney puts on the Predator’s armor? What happens to the market if Facebook does become open — does become part of the larger media-buying ecosystem? “If you can start buying it through conventional advertising methods and measuring it holistically with the rest of your media buying, then a substantial amount of inventory floods into the market all at once,” says Greene. “This also potentially opens up the use of Facebook’s vast amounts of consumer data to be used on a much broader scale outside of just the Facebook walled garden.”Reps at Facebook had no comment on the company’s plans for future ad products.Yahoo, despite seeming like an afterthought in much of the digital world, has a strong reputation among ad buyers and figures to remain somewhat competitive in the space. “Yahoo is pretty good at the large account management. They treat their big accounts well,” says Kim. “Yahoo has carved out a niche in providing display advertising to the big brands.” Yahoo’s interim CEO, Ross Levinsohn, is a media guy, and we can expect him to steer the company toward emphasizing proprietary holdings and continuing to build the company’s relationship with advertisers. And with the most recent name bandied about to take over the ceo post being former nbc honcho Jeff Zucker, you can bet that the company will continue to further morph into the online equivalent of a traditional media company.Of all the portals though, perhaps Microsoft is in the best position to become a larger factor. Of all the major players, Microsoft has been the most aggressive in terms of pursuing opportunities in the exchange channel. “Microsoft has the right partnership strategy and the right resources internally to take advantage of a space to be able to capture dollars there,” says Greene.AOL may shape up to be little more than a hitchhiker in the ad space. Its quarterly display ad may finally be pulling out of the nosedive it was in for the past few years, but even in the three-way deal between it, Microsoft and Yahoo to sell each others’ remnant inventory, aol seems like something of an afterthought.Yahoo and Microsoft will take their pieces, and aol and the exchanges will lick up the scraps, but Google and Facebook will have their whole faces in the pie. It’s no foregone conclusion that Google becomes the behemoth of display, but it certainly looks likely. It would take a dramatic move by Facebook, whose ad revenue may actually be atrophying, to knock Google from its trajectory — and the social network’s track record of having introduced three ad formats in seven years certainly doesn’t suggest a propensity for a shift in its game plan.
Yesterday may have been Yahoo’s best day in the last five years. Marissa Mayer will be CEO, and Yahoo couldn’t have found a better person to guide it. The impact of this move was so surprising that many people -- including myself -- at first thought it was a Google April Fool’s Day prank in July. But fortunately, it wasn’t. I’m old enough to be an original user of Yahoo, dating back to 1994, and have followed its entire path closely since that time. Make no mistake about it - Yahoo is one of the original Internet media companies, and it has a legacy audience dating back to that period. It also has a legacy in search, and in finding things on the Internet. Though it is no longer a novel idea, the concept of creating a directory to categorize and classify Internet documents was unique and highly useful back in 1994. As Yahoo grew parallel to the increasing amount of information on the Web, its strategists realized that a search engine was needed. Inktomi and various other crawlers backfilled Yahoo’s results in the 1990’s, as did Google. Yes, for those who don’t remember or never knew, Google actually provided search results for Yahoo in its earliest days, and even offered itself for sale to Yahoo for a paltry $100 million at one point. As Google continued to grow, Yahoo subsequently got deeper into the search business, and acquired what seemed to be every major search property in sight. It acquired Altavista, Inktomi and Overture, among others. With Mayer on board, Yahoo now has a leader who truly understands their core business. I am not suggesting that the solution for Yahoo is a search or social one, but rather that Mayer at least understands Yshoo’s business and legacy in a different way from her predecessors. Her decisions will be made with a solid foundation and vision for creating first class digital experiences. Like many others in this industry, I have been very critical and disappointed with Yahoo in this column on many different fronts over the last few years (see “Yahoo's Updated ToS: The Fox Eats The Hens, The Eggs And Itself,” and “Bing's Gain Will Be Yahoo's Loss, While Actual Google Share Varies By Vertical.”) The company basically lost sight of its identity, and had strategists who did not understand its core value -- especially to the marketers and audience who provided its primary revenue streams. Yahoo also enabled a bloodless coup by allowing Bing to provide search results, effectively giving up on the search business. Since that time, I have had little need to make Yahoo a primary consideration for search strategy, as it was mostly mirroring Bing results. But with Mayer as CEO, Yahoo won’t be ignored any longer. Even if it doesn’t take on search again, it has the opportunity to innovate and redefine digital media in a significant way. I haven’t been this excited about Yahoo for many years, which is way too long. This is going to be a fun company to watch.
The other day, I was going through some background research for a client. What struck me, as I waded through the reams of PowerPoint decks and research reports, was how integral digital was to the core functions of this particular industry. Whether it was key influencers in the purchase decision, reasons for doing business with a company or competitive differentiators, technological proficiency was right up there with traditional factors like price, value, convenience and reliability. As potential customers, we expect companies to have their digital acts together. More than this, it appears we’re ready to reward companies that aggressively invest in raising the bar of their own connected maturity level. Why, then, are companies so loath to place significant bets on their own digital future? I deal with big companies all the time, and when it comes to investing in their own websites, online marketing, web support platforms and other planks in their digital platform, they seem to prefer hedging their bets, squeezing out miserly budgets at a level that would make Ebenezer Scrooge seem hopelessly profligate. None of them are looking at digital proficiency as a way to distance themselves from the competition. Instead, it seems that they prefer the security of the herd, nervously watching the pack for signs of movement and only investing when they feel they have to to avoid being trampled by a stampede. It’s Geoffrey Moore’s classic Crossing the Chasm behavioral pattern, writ large. It's not the first time this has happened. The same thing took place about 100 years ago, as Industrial America embraced electrical power. The entrenched manufacturers had all invested heavily in steam power. Despite the obvious benefits that electricity offered (cleaner, safer, more efficient factories) they never did fully embrace it, jury-rigging factories and doing ad hoc retrofits, stranding themselves in a competitive no-man’s land between electricity and steam. New competitors built new factories that maximized their advantages, and the old guard never recovered. In a decade, most of them were gone. Economists refer to this as a regime transition. In hindsight, it seems hedging your bet when it comes to new technology is not really “playing it safe.” To me, it seems obvious we’re in exactly the same place. History is repeating itself. If these companies look at their own research, it’s easy to see the signs. Yet research tends to be digested in context, and often people see what they want to see in it. What’s potentially worse, they fail to see what they don’t want to see. Even more frustrating, the cost of making a significant, best-in-class investment in accelerating digital maturity is relatively minimal -- perhaps even infinitesimal -- given the other operating costs these companies are carrying. When it comes to digital maturity, I find the real acid test is how effectively companies connect with their customers, both present and future, through online channels. Is the website truly effective? Do they have good search visibility? Have they found a way to play in social that recognizes the importance of authenticity and the forging of true relationships? Do they understand how their customers might use a mobile device to connect with them? If a company can do these things right, chances are they’re well advanced in the digital maturity model. The other thing to look for is how the company is using digital technology to reinvent the traditional ways it does business, especially when it comes to handling relationships with real people. I find sales to be one of the last bastions of “we’ve always done it this way” thinking. If a company is seriously considering how to make its sales force more effective by leveraging digital channels, it’s a good sign for the future. In my opinion, betting the farm on digital maturity seems to be a no-brainer -- especially when, in terms of real dollars and cents, it’s a relatively small farm we’re talking about here.