the neXt GOLD RUSH !!!

2004-06-27T14:34:00.000+05:00

Banners Being Used as Branding Tools

As click-throughs hover below 1 percent and Internet marketers debate the branding effect of banners, research by AdRelevance has learned that the majority of all online ads and impressions are geared toward branding.

Branding ads (positioning, awareness, and feature/benefit) account for 63 percent of all online ad units and 54 percent of all impressions, according to AdRelevance. Within the branding category, ads generating awareness garner the most impressions (33 percent of all impressions), followed by ads positioning the brand (20 percent), and ads promoting a feature or benefit of a brand (1 percent). Among direct marketing ads, those driving traffic (28 percent of all impressions) are more prevalent than ads driving sales (17 percent).

Industries leading the branding charge are entertainment (73 percent of impressions devoted to branding); hardware and electronics (83 percent); retail (64 percent); Web media (63 percent); automotive (56 percent); and travel (54 percent). On the other hand, industries focused more on direct marketing include telecom (72 percent of industry impressions devoted to direct marketing); financial services (60 percent); consumer goods (61 percent); and business-to-business (54 percent).

"Online advertising is no longer just about click-through. Although industry and financial analysts have relied on click-through rates to gauge the effectiveness of online ad campaigns, the market has finally realized that click-through is not an appropriate metric for brand-oriented ads," said Charlie Buchwalter, VP of media research for AdRelevance. "Leading advertisers have already drifted away from the click-through mentality of pure direct response marketing, as AdRelevance data show that a full 63 percent of the ads are brand-oriented. As streaming and rich media comer more into play, the Internet will increasingly function more like a traditional branding medium -- making advertising on the Web more appealing to all, especially traditional companies who have mastered offline brand management strategies."

2004-06-27T14:02:00.000+05:00

EBay to buy Indian online auctioneer Baazee.com

EBay will buy privately held Baazee.com, India's biggest online auctioneer, for about $50 million, extending its international expansion to another burgeoning market, eBay said on Wednesday.

San Jose, California-based eBay has been building its international business, which the company hopes will eventually become larger than its U.S. operations. Last year, eBay completed an $180 million purchase of China's EachNet, the most popular online auction site in China. (Related: Tiffany sues eBay.)

Baazee.com, like eBay, allows people to buy and sell wares in an array of categories such as consumer electronics, home decor and jewelry. The Bombay-based company was founded in January 2000 and says it now has more than 1 million registered users.

Internet usage in India is still relatively low. The companies cited data from IDC showing that there are currently 17 million Internet users in India, a number expected to rise to more than 30 million in two years.

"Although it's early days for e-commerce in India, we believe there is great opportunity over the long term," eBay Chief Executive Meg Whitman said in a statement.

The deal is expected to close in the third calendar quarter of 2004. It is not expected to materially affect eBay's 2004 revenue and earnings per share results, the company said.

Explode your TV

2004-06-11T09:22:00.000+05:00

TV is about to explode, just as publishing is exploding thanks to the web and weblogs.

Many elements are coming together that will mean the barrier to entry to TV is dropped to the ground. Anybody can produce TV. Anybody can distribute TV. And TV will thus be able to serve any interest. Just as you no longer need a printing press to publish, you no longer need a tower (or cable or satellite) to broadcast.

Of course, that's hardly a new prognostication. Many smart folks, like Adam Curry and Ernie Miller, have been writing about this for a long time (more links shortly). But now all the things that will make this happen are coming together quickly -- why, as fast as global climate change in The Day After Tomorrow. more...

Internet ad revenue at record $2.3 bln in quarter

2004-05-25T13:53:00.000+05:00

U.S. Internet ad revenue surged an estimated 39 percent to $2.3 billion in the first quarter from a year ago as advertisers moved more aggressively online to reach consumers, a study released Monday said.

The Interactive Advertising Bureau, which compiled the study with PriceWaterhouseCoopers, said first-quarter revenue was the highest quarterly sum recorded since it began measuring online ad revenue in 1996.

The results are extrapolated from data provided by the top 15 online advertising sellers. Final results will be reported in July.

"The last two years have offered marketers the opportunity to collect research and data that proves ... Internet advertising accomplishes key marketing goals as well, if not better, than any other ad medium," said Greg Stuart, chief executive at the IAB.

Internet advertising rebounded in 2003 after a multiyear slump triggered by the dotcom bust. Media analysts expect Internet advertising to grow as much as 20 percent this year.

Blue-chip advertisers still spend only a fraction of their budgets online, but they have steadily increased those ad dollars as consumers spend more time on the Web and new technologies make it easier to track the effect of those ads.

Let the Google IPO Games begin....

2004-04-29T10:21:00.000+05:00

Search engine Google finally ended mountains of speculation by filing their initial public offering today, April 29, 2004. This means that Google's stock will now be available to the public, although the stock isn't expected to be available for a few months.

Google hopes to raise $2.7 billion with one of the most anticipated IPOs in high tech industry. The AP reports that "Thursday's filing represents a significant milestone in the 5 1/2-year-old company's evolution from a fun-loving startup to a corporate adolescent that will be held more accountable for how it manages its money."

Also, the filing gives competitors their first opportunity to take a look at Google's finances. Last year, the search engine earned $105.6 million on $962 million worth of revenue.

This year, Google is off to an even faster start. The recently passed first quarter saw the company earn $64 million, more than double last year's $25.8 million first quarter earnings.

The newest online marketing tactic: Tell a friend...

2004-04-10T12:15:00.000+05:00

Search engine marketing is in full flower – but forward-looking retailers casting about for something to augment search marketing might consider keeping an eye on the fast-growing phenomenon of online social networking. Technology consulting firm Molecular Inc. vice-president Darryl Gehly says the Watertown, MA-based company has seen an increase in the number of clients inquiring about online social networking in the past three months.

"It's something that could be a powerful medium that gives retailers another avenue besides search engine marketing. It's a concept that leverages many of the technologies that are already out there, and it's growing quickly," he says.

Offline networking is nothing new, and social networking online works in much the same way. The concept is that a participant in a social network is a member of an online community to which he or she discloses personal information of potential interest to others in the network: job, interests, activities, background. Other community members can view the profiles and contact each other over data points of mutual interest--for instance, seeking a resort recommendation from someone in the network whose profile indicates he`s a frequent traveler to Hawaii.

Typically, participants are invited into the network by someone they know and they, in turn, invite others in. That means participants seeking recommendations or information from anyone in the network are in theory only a connection or two away from actually knowing that person personally.

"The idea is that if I know you and you know someone who could provide a service or a recommendation, I'm more likely to trust your judgment than that of a compete stranger," says Gehly. Move that into the realm of shopping--and the idea that one also may be more likely to make a purchase based on the recommendation of a friend of a friend than a stranger or an impersonal marketing approach--and the commercial potential becomes apparent.

Gehly's own company has an internal message board on which employee users can seek or post information and recommendations. "People are turning to their friends or their social network before they turn to the yellow pages or the traditional marketing that organizations use," he says. "So our feeling is this is a powerful mechanism that retailers and consumer goods manufacturers could use to help accelerate adoption of their products."

Just how online social networks could be leveraged for that purpose is still in the conceptual stage. One Molecular client is considering aligning its classified ad program within a social network. What's clear is that any solution would have to strike the right balance between commercial positioning and the unedited information exchange at the core of online social networks.

"Think of the reviews on eBay," says Gehly. "If you ever use unfair selling practices, it doesn't take long for you to be discounted and no longer a trusted seller. You've got to have real offers, good products, and be willing to accept the bad reviews along with the good."

The Banner's Comeback?

2004-03-26T12:03:00.000+05:00

Rich media companies battle endlessly to increase their share of the interactive market. Nearly a year ago, Eyeblaster unveiled a new ad unit cleverly dubbed the 100k Polite Banner. It may seem bizarre for a rich media firm known for eye-catching ads to christen one of its formats "polite." But, no question, it was genius. With so much contempt directed at invasive ad units, a polite alternative is a breath of fresh air.

How can a 100k banner supporting audio and video be considered polite? Unlike standard banner units, the Polite Banner loads in stages. This appears seamless to onlookers, but in reality it loads a frame or two, pauses for page content to catch up, then loads to completion.

Banner file size is usually limited to 20k. That limits creative. The Polite Banner accommodates file sizes about 300 percent larger. Visitors get a rich online ad experience without slowed load times, an improvement over larger file sizes that leave consumers fuming at advertisers and publishers.

Countless publishers, including AOL, ABC, Boston.com, and Disney, have offered this unit for some time. To date, knowledge of the Polite Banner was limited. It wasn't until Yahoo! agreed to accept the technology and Eyeblaster launched an associated promotional ad campaign, the industry's ears perked up.

Yahoo hopes Eyeblaster's format will attract media buyers who pass on more standard banner placements. It's also banking on higher CPM rates it can justify charging (though word is the publisher is waiving the usual technology fee associated with rich media buys). According to Eyeblaster, Yahoo is prepared to serve Polite Banners in the place of any standard banner units, including the good old 468 x 60.

With publicity like this and Eyeblaster's efforts to improve its structure, the banner ad is poised for a comeback. Could the Polite Banner improve the online landscape in the process?

We know banners haven't produced satisfactory results. Plenty of banner ads are still served, but smart buyers only invest in them on a CPC basis to guarantee results. It's significantly larger formats: free-form rich media ads and performance-oriented units, such as paid search ads and pop-ups, that advertisers have been relying on lately.

Despite the many available inventive and effective online formats, the Internet is rife with lurid and pushy ads that slow load times and block content from frustrated users. Many advertisers who employ these ads do so to get the eyeballs, leads, and conversions they feel banners, with their limited file sizes, can no longer supply.

By combining coveted rich media technology with existing standard banner sizes, Eyeblaster is breathing new life into a format currently considered little more than a bonus placement, no expectations attached. With the Polite Banner on the table, advertisers can opt for a less intrusive unit without relinquishing needed interactive features and creative freedom. Publishers can appease clients by offering larger file sizes, and not irritate their users in the process.

Finally, media buyers can kiss goodbye those arguments with sales reps over maximum file sizes. Never again must we negotiate functionality and creative styling with clients in an impossible effort to conserve space.

Eyeblaster's Polite Banner has the potential to be as flashy, noisy, and distracting as most any other ad. But its value lies in its ability to draw deserters back to the stationary banner, and maybe to turn the Web into a slightly better place.

Beyond Pop-Ups

2004-03-24T12:12:00.000+05:00

The once-ubiquitous pop-up may have all but vanished from the news over the past year, but hardly a day goes by when I don't hear from a marketer desperate to incorporate the format into his campaign. Consumer usage of pop-up blocking software is increasing. So are the number of ISPs and browsers offering the feature. Yet that's not enough to dissuade marketers from gravitating to the format.

Many advertisers cite other marketers' success as providing the impetus for their resolve. We can't criticize them for that. Countless brands have been plucked from obscurity and transformed into household names solely via pop-up advertising. Once advertisers couldn't afford not to engage the annoying but successful format. Just a year ago, Advertising.com released a study that showed pop-up ads produce a CTR 13 times higher than a standard banner. The average conversion rate was over 14 times better than that of a 468 x 60 banner.

Pop-ups are the obvious choice when increasing brand exposure is a concern, too. Not only are they noticeable, they're usually cheap. Some say buyers are astute to employ the format when they're responsible for accounts pitted against competitors with hefty online budgets (in light of statistical evidence, perhaps they really are astute).

Several new studies on consumer perception of the format may reveal all this praise as premature. It could result in a rude awakening for residual pop-up fans. Forrester Research released a report indicating 64 percent of Internet users still find pop-ups "irritating." Sound reminiscent of the avalanche of studies we saw in 2002?

There's more.

According to a similar report commissioned by Web behavior firm Bunnyfoot Universality, annoying consumers isn't pop-ups' only potential consequence. The ads renowned for capturing eyeballs aren't even being viewed. The Bunnyfoot report states the average time it takes for a pop-up to display a company's logo (never mind the call to action) is 8.2 seconds. The average user shuts the window in 2.5 seconds.

Worse, the study reveals 60 percent of Web users mistrust "any company that uses -- or even hosts -- pop-ups." "Brands undoubtedly committing commercial suicide by insisting on using pop-ups," the company's director of business behavior said in a statement. "Pop-ups are therefore not just a huge waste of money; they are also extremely negative for a brand."

If that isn't a kick in the pants to pop-up buyers, I don't know what is. We all know the importance of trust to a brand in establishing a consumer base, driving sales, and increasing brand loyalty over time. Once your target market loses trust in your brand, no amount of damage control is likely to save it from a quick and quiet death.

If you think the data I've cited so far is contradictory (how could consumers loathe pop-ups, yet continue to click?), you're right. But pop-ups aren't the only form of advertising that comes saddled with inconsistent research results.

Consider telemarketing and spam, the most reviled forms of marketing of them all. Ask a consumer her opinion of these, and she'll launch into a diatribe about how they disrupt her life. Ask the "marketers" who call and spam consumers about their results. They'll say they make money hand over fist. If these marketing techniques didn't work, they'd disappear. The fact is, someone out there is responding.

That doesn't make it right... or smart. Pop-up ads work. They get consumers' attention. They deliver results. But if you wouldn't consider spamming your customers or calling them at home ad nauseam for fear of what it might do to your brand, pop-ups are not your format. These marketing techniques simply aren't known for building consumer confidence in the products they peddle. If you value the public's perception of your brand, consider seeking new ad formats.

An obstinate few will continue to use pop-ups, despite the warnings. Maybe some will even get the results they seek. But when you've got the option of going with another form of advertising that's proven to work without besmirching your brand, I can't imagine why you'd take the risk.

Pop-Up Alternatives

2004-03-21T11:53:00.000+05:00

Last week's piece cited recent news pop-ups cause consumers to mistrust associated brands. A number of marketers says they don't see a way around using the format in their campaigns. "Our clients demand the format," they insist. "It's cheap, proven to generate leads, and produces solid ROI repeatedly."

Their case is a simple one: Pop-ups outperform every other online ad format. They realize associating their clients with pop-ups could damage the brands. But when a format works, you'd be surprised how many marketers and advertisers are willing to take that risk.

Listening, one realizes there are two types of media buyers. There are those who represent Fortune 500 firms. Their duty is to promote trusted brand names online. Some may say these marketers have it easy. On the one hand, failure to meet the elevated standards of these clients (whose business single-handedly supports a good many agencies) could result in being blacklisted from this elite community. On the other, working with familiar and trusted brands vastly increases the likelihood of marketing success.

Then there are those who represent the hundreds of independent advertisers promoting products online. The majority of online media buyers fall into this category. These marketers can attract big budgets, too. They plan and buy for online travel services, casinos, office supply companies, and the like. But unlike their counterparts, they don't have the luxury of promoting established brands. These planners and buyers aren't often asked to develop branding campaigns. Their decisions and actions are entirely driven by sales, and their clients can't easily absorb campaign blunders.

It's the latter group that continues to be drawn to pop-ups, a format heavily relied on to buttress campaigns and used to fall back on should they somehow hit the skids. When representing clients less concerned with brand image, these individuals are more inclined to blanket the Web with millions of untargeted, uncapped ads -- a bad habit that's loathed by all.

To these media buyers and marketers, pop-ups are an addiction. What advocates need is an alternative that produces results without the inherent risks (and without irritating the rest of the online community in the process). These marketers have fruitfully used pop-ups for so long, few believe such an option exists. Here's what some of the top ad networks recommend to these die-hards.

Skyscrapers
In the infamous Advertising.com study that named pop-ups 14 times more effective at generating conversions than standard banners, one format was found to produce even more stellar results: skyscraper ads. According to the study, skyscrapers boasted a CTR 60 percent higher than banners and a 20 percent better conversion rate. Part of the Interactive Advertising Bureau's (IAB's) Universal Ad Package, skyscrapers are carried by virtually all major sites and ad networks. Many publishers offer them on a cost-per-action basis, making them a cost-effective option for marketers with limited budgets.

Pop-Unders
The less-intrusive cousin of the pop-up, the pop-under is still touted as an "incredibly effective format" when used responsibly. It's one of the eight formats offered by Fastclick (pop-ups didn't make the cut). According to Jeff Hirsch, the network's chief revenue officer and IAB Task Force member, it's experiencing "unprecedented demand."

The price at which Fastclick offers pop-unders -- rate card cost of $7 CPM -- is higher than the average pop-up. Hirsch says it's known to produce good return on investment (ROI). The secret is strict quality control. Fastclick only delivers one pop-under per user per browser session. They try to introduce new creative to users every week. This effort to avoid inundating consumers with ads is what Hirsch believes makes the format work. "There is some association between pop-ups and pop-unders, and some concern about negative brand association," he says. "Then again, some of the largest brands became that way by using pop-under ads."

Word is the IAB plans to release a new set of standards for both pop-under and pop-up ads in upcoming months.

Customized Combination
When asked about replacing pop-ups, Colin Petrie-Norris, director of product with Advertising.com, admits "there's no silver bullet that can replace pop-ups that we know about." His network has come up with the next best thing. When approached by a client who wants results without pop-ups, Advertising.com recommends a combination of formats customized to each advertiser's needs.

Without the pop-up option, Petrie-Norris says he must "be more thoughtful in the design of creatives to reach each objective." Incorporating interactivity, interstitials, and rich media into campaigns is an oft-used approach. Knowing larger formats work well, large skyscrapers are used, too. As a network almost exclusively composed of cost-per-action (CPA) advertising, Advertising.com can practically guarantee results regardless of format, even without pop-ups to fall back on.

Pop-ups may be matchlessly effective, but not everything that tastes good is good for you. Consider expanding beyond the pop-up. You may just find something that works.

Consumers KNOW the VALUE of Ads!

2004-03-19T13:04:00.000+05:00

Consumers will tolerate some pop-ups in exchange for free content, survey says.

Despite all the hoopla over the intrusiveness of over-content ads, and the fear that consumers hate them, new research finds that consumers will accept some -- two per hour, in fact. That's from a new study by Dynamic Logic.

Only 32 percent of respondents said they never consider this type of advertising appropriate, even to support free Web content. But the other 68 percent understands the necessity of advertising in order to receive free content. Their responses as to how many ads they?ll tolerate average two per hour (a calculation based on median number).

The same research also highlighted the top three concerns of consumers about intrusive ads:
1) Too many of them (70 percent)
2) Requires me to close them (58 percent)
3) Blocks content (56%)

The top concern suggests that frequency, perhaps more than format, is the major challenge. The other aspect is that some require closing. Intrusive ads that have frequency caps of two and do not require closing may lessen these concerns.

While it is a safe bet to assume that consumers want less advertising rather than more, many consumers understand advertising's role in supporting content they like, says Dynamic Logic. It is important for the online publishing industry to find a line between assertive advertising and what consumers feel is a fair and appropriate exchange for valuable content. This research highlights an aspect of consumers' sensitivity towards publishers' costs and the need to subsidize content. In return, publishers could show sensitivity to consumers by limiting the usage of these highly powerful ad units.

While many publishers have moved to block pop-ups altogether, there may still be an opportunity for the Web publishing community to reach a middle-ground where a controlled level can be established and enforced through frequency capping and more sophisticated ad serving.

The Science of Targeting

2004-03-18T12:40:00.000+05:00

What exactly is "behavior," and what's driving the growth of behavioral marketing?

Revenue Science, Inc. is among a group of service providers -- including Claria and TACODA Systems -- that offer publishers the technology to deliver behavioral targeting to their advertisers. iMediaConnection talked with Revenue Sciences' Bill Gossman, CEO; Omar Tawakol, SVP marketing; and Nick Johnson, SVP of business development.

iMediaConnection: Describe how your company defines behavioral marketing.

Tawakol: We use the term "behavioral targeting." The basic goal of advertising has remained unchanged over the years, and that's to communicate your message to the right audience. Behavioral targeting is the truest way for marketers to understand the interests of consumers and to target them based on those interests. It's all about relevancy. Search marketing works because it is relevant. When someone enters a search term, that's a behavior. We apply the same thinking throughout the whole advertising funnel, leveraging people's behaviors to sort them into audiences and ultimately deliver more relevant advertising.

iMediaConnection: What exactly are you referring to when you use the term "behavior?"

Tawakol: What consumers explicitly say when they register, what they actually do online -- where they click and how often, and how they do it, for example. If they're logging on at work at a Fortune 500 company or from home via dial-up. All three of these factors are part of the behaviors that are looked at to configure an audience.

iMediaConnection: So, say I'm a company that sells a consumer packaged food product. How would I use behavioral marketing?

Tawakol: That's a good question. In the past, a CPG advertiser targeting women would probably go to the lifestyle section of a site as a way to target women. In reality, however, probably 45 percent of the people reading that section are men. Now the same advertiser could look specifically for, say, new Internet moms by tracking the activities of someone doing product searches for baby materials, accessing information about baby care and so on.

Gossman: By IDing actions, marketers can get their messages to a broader base of like-minded people.

iMediaConnection: Could you provide me an example of a marketer that has used behavioral targeting and what type of results they received?

Tawakol: Computer Associates was interested in finding technology decision makers. We were able to determine that these people were more likely to read technology content on Wall Street Journal's site than the average reader. So Computer Associates bought access to these people, served its ads only to them, and cut back tremendously on waste.

iMediaConnection: How do you convince a marketer that ordinarily defines its target by demographics that this might be a better way to go or a supplemental tactic?

Tawakol: Our publishing clients use us for both. It's about building up reach to the right people rather than filtering down. Demographics gives you one group of people, and then behavioral targeting provides more clues, resulting in more value. Take the airlines. They want to reach people who travel a lot. One way to reach these people is by targeting by age and income. But a greater indicator that someone tends to travel a lot is if they read a lot about travel.

iMediaConnection: Way back when, at the beginning of online advertising, the promise was of more precise targeting using cookies, customer profiling, etc. The industry had to move away from this because of privacy fears. How is today's behavioral marketing different than those beginning efforts?

Tawakol: It's different on many fronts. You mentioned privacy. What's being done now is looking deeply within one publisher at a time, not watching activity across the Net. Plus, it's all anonymous. It's not tied to any personal information. Me knowing your name isn't relevant. Knowing your interests is. Behavioral targeting started when advertising was crashing, when reach was too small and price was too high.

Gossman: Another factor: $2.2 billion was spent in Q4 2003 (according to the IAB) for online advertising. There's a resurgence and that has everything to do with keyword search. Google and Overture have successfully regenerated the market. Behavioral targeting and keyword search are complements. Search is one form of behavioral marketing. It captures intent, representing a small sliver of what people do on the Internet. Behavioral targeting compliments keyword search because then you can interface with consumers at every level of the purchasing funnel. It's a valuable tool to a market that's growing rapidly. With keyword search, you have individuals looking for a group of marketers; with behavioral targeting, you have marketers looking for an audience with a specific composition.

iMediaConnection: A large part of behavioral targeting is determining what site data are useable. How do you distinguish actionable data from information that isn't as valuable?

Tawakol: You're getting at the heart of what we do. We determine relevance -- relevance to a person rather than a place. That's complicated for someone in a publishing environment to do, so we provide the technology that simplifies the process. It's about composition. That's a metric used offline a lot, for magazines for example, that we've translated online. We work with our publishers to show what behaviors get the highest composition. We have compiled best practices on how to design high composition segments and how to use third party survey capabilities to benchmark the composition of segments. For example, we may know that a reader of a car classified section is more likely to be in-market for a car, but a survey would validate that the composition of such a segment is several hundred percent better than the composition of ROS.

iMediaConnection: What are many publishers and/or marketers not doing correctly in terms of behavioral targeting?

Tawakol: This is a new skill set for publishers, so we're involved with leveraging the experience we have with partners, sharing best practices and creating standardization. That's one of the biggest challenges -- delivering consistency. We expect a publisher to have a learning curve. By fully aligning our pay with the publisher's success we are incented to accelerate that learning process.

Gossman: In fact, that's one of our primary tasks, to work with the agency side to make them aware of the capabilities provided and help create a demand for publishers.

iMediaConnection: Is the use of behavioral targeting growing?

Gossman: It may be self-serving of me to say it but, yes, it's growing.

Johnson: Behavioral targeting was ahead of its time, but we're now delivering a technology and service that make it actionable. In watching what happens, we see an interesting ripple effect. As new publishers sign on, we see more demand from advertisers.

iMediaConnection: So who is driving the growth of this? Publishers or agencies and clients asking for it?

Johnson: In every RFP that is written, there's a request for an audience, advertisers say, "We want this type of buyer." Agencies are begging for an audience and publishers have learned to respond with things like categories and keywords. Now they also have behavioral targeting. As more advertisers realize this is a better, more direct way, we see them driving demand.

That being said, publishers have lots of inventory that is undervalued using the "place" model. That's why there's such a thing as run-of-site. This model makes some of that inventory high-value, so the demand is being pushed from both sides.

iMediaConnection: Is there something beyond behavioral marketing? Does online advertising have another level?

Tawakol: If you tie this all together, both advertisers and publishers want to maximize their yield. Publishers are now selling by place, audience, calendar -- whatever can make them the most money. At some point the publisher is going to want a solution that maximizes the yield of every impression regardless of how the campaign was sold. The advertiser, on the other hand, wants the highest ROI. They may buy a bundle which includes place, demographics, and behavior but it all has to work together to drive the best ROI.

It's Official -- Online Advertising Is Back

2004-03-03T19:56:00.000+05:00

Rich media and search help pave the way as traditional media take a back seat.

After a two-year slump, online advertising succeeded in coming back last year, says a report released by DoubleClick and Nielsen//NetRatings.

AdRelevance reported that online advertising rose to its highest levels of the year with 280 billion impressions in the fourth quarter. From the first quarter to the fourth quarter, DoubleClick volume was up 49 percent. The Internet Advertising Bureau also reported that ad spending grew 20 percent year over year to $7.2 billion.

'We are absolutely in an online advertising recovery," says Doug Knopper, senior vice president and general manager, Advertiser & Publisher Solutions at DoubleClick. "The market has turned around.

"Last year marked the first time that large traditional advertisers began to spend more online," says Charles Buchwalter, vice president of client analytics, Nielsen//NetRatings. "While the online medium is still relatively young," the growth of broadband paints a promising picture for online ads, as advertisers recognize that people are spending more time online and consuming more online media."

Online spending growth (+11.3 percent) beat spot TV (+3 percent), outdoor ( +5.2 percent) and network TV in the first quarter 2003 vs. first quarter 2002. Online growth tapered in the third quarter 2003 to 5.9 percent over the third quarter 2002, but still outpaced TV growth 3.5 percent.

Automotive had the largest growth on an impression basis year-over-year, at 74.9 percent, and should continue to increase, the report says. Telecommunications also proved big for online advertising thanks to the FCC portability ruling, coming in third at 31.2 percent growth. Almost 9 percent of total spending was devoted to retail, which showed a decrease in impressions.

Nielsen//NetRatings AdRelevance projects rich media to grow 223 percent in the first quarter to the fourth quarter to 17.4 percent of all ads. Rich media increased to 39.7 percent of all ads served by the fourth quarter. While rich media has soared, there's still much room for growth as new marketers and advertisers enter the interactive world.

Pop-ups and pop-unders, the most controversial type of online advertising, remained steady, accounting for less than 2 percent of all ads served, while AdRelevance showed them as owning between 5 and 7 percent of the total market. Big brand advertisers continue to stay away from them.

The effect of Search, a hot spot with online advertisers, is category relevant. A survey found that of more than 2,000 consumers who bought certain types of products in the last six months, their usage of search varied by product type. Of the visitors on Web sites to find about products and services, 58 percent of those searching for consumer electronics used a search engine as well as 53 percent for those seeking prescription drugs.

"I think you will see it growing organically," Knopper says, with existing marketers continuing online advertising and new ones coming in. "A lot of marketers don't have a presence online, you will see a shift from other forms of media."

2004-02-27T19:53:00.000+05:00

More Online Ad Spending: Blessing or Curse?

You may have noticed a change among your coworkers lately. Suddenly, they seem lighter on their feet. They're more optimistic about the future of the company and their own success. The transformation is due to Internet advertising finally receiving a major boost: Online ad revenues are way up. We're back in the game.

The Interactive Advertising Bureau (IAB) recently issued a press release to this effect, declaring Q4 2003 a record quarter for U.S. online revenue growth. Revenues (based on sales from the top 15 ad sellers) topped out at an estimated $2.2 billion, a growth of 38 percent from the same quarter a year earlier. These numbers surpassed the $2.1 billion registered in the last biggest quarter this industry ever saw (Q4 2000).

IAB President Greg Stuart said of the increase, "Our medium continues to lead where others have fallen off, and smart marketers know it and are shifting dollars and gaining share."

Welcome news to everyone in interactive advertising, particularly those who've been struggling to regain ground. But it raises a question that should give us pause: Will the latest influx of online ads change the way we buy media?

Consider the potential ramifications. Increased ad spending -- a sure sign of success -- is likely to attract more offline advertisers, especially those who have been cautiously awaiting a green light to buy. This includes your clients' competitors. Those tech-savvy buys are no longer enough to maintain an industry lead.

Record ad revenues also mean every advertiser on the block will try to attract their share of the market with superior, eye-catching ads. The quality of the creative appearing next to your own will rise, too.

Finally, there's obtaining your client's desired ad space. Increased ad spending routinely leads to sold-out inventory on top sites. That could leave a good number of buyers in the lurch. It can also lead to increased ad clutter. Smaller sites may increase their ad offerings in an attempt to get a bigger piece of the advertising pie. If you're a buyer with a soft spot for network buys or small independent sites, this could reduce effectiveness of your ads and lower consumer response rate.

Who would've thought such a boost would leave one pondering the potential negatives? While we certainly don't intend to bite the hand that feeds us, we'd be remiss if we didn't have a battle plan. The solution to most any challenge we face in this industry is to come up with ways to stand out from the crowd. My recommendations for spending all those ad dollars rolling in -- wisely:

Surround sessions. NYTimes.com and Boston.com have been offering this feature with considerable success for over a year. The model allows the advertiser to dominate the inventory a targeted user is exposed to during a site visit. Wherever the visitor goes, he's completely immersed in only your client's advertising. According to New York Times Digital, the sites' parent company, the model generated $1.7 million in 2003.

Full-page ads. This category includes Unicast's Video Commercial and Eyeblaster's Full Page Overlay. These ads are intrusive. That's the point. Full-page ads get top marks for commanding attention. They can easily be closed or skipped by the viewer. They put full emphasis on the advertiser by literally eclipsing the competition. Even if a site is littered with clutter, a full-page ad obliterates the problem.

Exclusive sponsorships. Whenever possible, buyers should negotiate exclusive sponsorship of their client's desired site section or e-newsletter. Like surround sessions, this allows the advertiser to monopolize available ad inventory and eliminate competition.

Most sites are willing to offer reduced ad rates in exchange for a guaranteed sale of a large chunk of inventory. Don't hesitate to ask. Keep ads subtle; visually bombarding users with rich media ads could have a negative effect. You'll be the only advertiser around for those surfers to blame.
A surge in online ad spending is a blessing we sorely need. With a solid media buying plan, we may just survive it.

Record-shattering quarter for online ads

2004-02-18T09:10:00.000+05:00

Online advertising sales hit a new high last quarter, in what could be further evidence that advertisers are turning their attention back to the Web.

Online ad revenue hit $2.2 billion for the fourth quarter of 2003 and $7.2 billion for the year, according to data released Thursday by industry group Interactive Advertising Bureau (IAB) and independent audit firm PricewaterhouseCoopers. That's a 38 percent gain from the fourth quarter of 2002 and a 20 percent increase for the year.

The quarterly gain broke the previous record of $2.12 billion reached in the fourth quarter of 2000 at the height of the dot-com boom, according to the IAB.

"Our medium is such that we should expect this positive performance," IAB President Greg Stuart said in a statement. "Based on sound business principles, the industry has grown up and become a great competitive advantage for those marketers who have been paying attention."

The study marks the fifth consecutive quarter of gains for the online advertising sector, according to the IAB. Much of this growth has come from commercial search, which has fueled the strength of Internet giants such as Yahoo and Microsoft's MSN, while turning Google into a cash cow. Google and Yahoo's Overture Services subsidiary are industry leaders in selling advertising placement on Web search results pages.

Other forms of search engine advertising, such as targeted results and selling keywords, also have attracted advertisers.

A representative from the IAB said the group will release more specific data in April that will show search as a major growth area.

2004-02-06T18:43:00.000+05:00

Radicals for Responsibility

Social responsibility has captured the attention of a new generation of MBA students. At a time when trust and benevolence are scarce, these students aim higher. Here's how;

As Wall Street pored over a fresh batch of lackluster earnings statements last month, another group in Berkeley, California scrutinized some important bottom-line figures of its own: social return on investment.

Snicker if you must, but judging from trends at top B-schools, and even in many high-octane boardrooms, corporate responsibility is emerging as an increasingly important variable in the traditional profit-loss calculation.

"There is a dual bottom line," says Jerry Engel, a professor at the Haas School of Business at UC Berkeley. "Businesses not only have to look for a financial return on investment but also for a social return."

So how exactly does a CEO quantify a social return, or SROI? That, says Engel, is a question that Berkeley's National Social Venture Competition (NSVC) is helping to answer. It was that same question of measuring social impact that held the attention of high-profile judges as they evaluated entrants' business plans in Berkeley last month.

"The notion of corporate responsibility isn't new," says Engel, who also serves as director of the school's Lester Center for Entrepreneurship and Innovation, which sponsors the NSVC. "What's new is that we're asking applicants to quantify the social return."

Social-impact columns may not appear on corporate ledgers any time soon, but the idea of quantifying business responsibility is starting to take hold. Why? Partially because companies now face more pressure than ever -- from shareholders, employees, and beyond -- to come clean about the results they deliver and the impact of those results on society. (Enron anyone?)

Trade-Off? What Trade-Off?
The NSVC started in 1999 as a contest for student entrepreneurs who were seeking strong results along two bottom lines: the financial and the social. During three of the most tumultuous years in business history, the pool of contest applicants has soared 140%, while Columbia Business School and the Goldman Sachs Foundation have thrown their weight -- and money -- behind the competition as well.

Programs focused on social responsibility have cropped up at other top schools too. Harvard Business School, for example, offers the Initiative on Social Enterprise , which prepares students for leadership roles in nonprofit organizations. Stanford has launched its own Public Management Program , and Boston College hosts an annual contest called The Best MBA Paper on Corporate Citizenship .

When asked what challenges his company faces in balancing financial interests with social concerns, Bruce Anderson, CEO of Wilson TurboPower Inc. -- this year's $25,000 prize winner in the NSVC's high-growth category -- is quick to answer: "Huh?"

It's not that Anderson doesn't understand the question. It's just that his business sees a wide-open market opportunity, making a question about trade-offs largely unanswerable. No zero-sum game here. It turns out that profit and social responsibility are mutually inclusive after all.

Wilson TurboPower emerged from the labs of MIT -- specifically, from the shelf of long-time mechanical-engineering professor and environmental activist Peter Wilson. The company's first product, the regenerator, works with microturbines, units that resemble backup generators, except that they provide a source of primary, not secondary, power for a limited area like a small group of office buildings, alleviating many of the headaches associated with centralized utility grids. The Wilson TurboPower regenerator takes waste heat from microturbines and puts it to other uses, such as heating water, boosting efficiency from about 30% to 80%.

During the colossal California energy crisis of 2000, the dangers of utility grids became obvious. (The phrase "rolling blackout" still sends shivers down the spines of many Californians.) What makes Wilson TurboPower's business plan so intriguing is that it offers an energy-efficient product at little extra cost to consumers -- at least when compared to an expensive, arduous endeavor like solar energy.

The fact that Wilson TurboPower faces essentially no trade-off between its bottom line and its benefit to society hits upon a fundamental point about corporate responsibility: It doesn't have to be an either-or choice, like picking decaf over regular. And it's not just about philanthropy. Social responsibility is a principle that gets infused into a company's DNA, oftentimes manifesting itself in a series of seemingly trivial business decisions.

And that's where today's B-school students come in. "Big" and "powerful" may describe an MBA's ideal employer today, but "bad" is not sexy anymore. While the threat of consumer unhappiness carries its own weight, the prospect of losing top MBA talent can strike terror into the heart of any red-blooded CEO, even in lean times.

The Mercury Is Rising
"When I was looking for a job after business school, part of the appeal of Deloitte was that it played up its women and minority initiatives as well as its commitment to work-life balance," says Ben Klasky, a 1998 graduate of Stanford Business School. Today, Klasky serves as the executive director of Net Impact , a San Francisco-based organization that helps B-schools promote corporate responsibility.

This year, Net Impact began running ads for MBA summer internships at socially responsible companies. So far, 2,500 applicants have applied to fill 75 slots, Klasky says.

Of course, the characteristics that mark a socially responsible company vary wildly depending upon whom you ask. But David Eichberg, a spokesperson for Business for Social Responsibility , says it's difficult to apply a single metric, but he sees the "mercury rising" -- mainstream business is paying more attention to corporate social responsibility.

For example, Eichberg cites results from a global survey conducted by Environics International in cooperation with several other organizations, including The Conference Board . The study found that half the people surveyed in 23 countries pay attention to the social behavior of companies, while one consumer in five has punished or rewarded a company based on its social practices.

In fact, Eichberg says globalization plays a surprisingly large role in keeping companies on their best behavior. "There is certainly a role that globalization plays in getting businesses to adjust their practices," he says.

If you need proof, look no further than Nike, which cut off suppliers that exploited child labor after weathering a maelstrom of bad press and boycotted sales. Granted, Nike has a long way to go to catch up with Tom's of Maine or Ben & Jerry's. Eichberg says businesses that don't factor in the societal impact of their operations carry the potential of huge costs in the long term.

The Haas School's Jerry Engel agrees, saying some statements of corporate responsibility surely constitute little more than "window dressing." At some point, companies will have to make good on the promises they're making to the public.

"In the end, the cost they pay for violating their public statements may be their brand equity," Engel says. "And that's something no company can afford to squander."

2004-02-06T18:37:00.000+05:00

Corporations, Social Venture Capitalists, and Incubators

Pure commercial entities have an important role to play and it is important to understand it in regard to projects with a socially responsible component. Companies and individuals that have created the new breed of foundations have different relationships with these institutions than most of their older East Coast foundation counterparts. In some cases the founding company and the foundation are closely linked in order to leverage the resources of both to achieve the social mission. A good example is AOL's helping.org site. Some of the new foundations are managed entirely by for-profit holding companies. In some there is a clear divide between the founder/founding company and the foundation. This may even go so far as mandating not focusing on technology issues at all. The older East Coast foundations do not, for the most part, have living donors to contend with, and in many cases, do not even have the donor's family still on the board.

The new foundations and their relationships with corporate entities have caused some concern and discussion in the foundation community. But does it obfuscate the real issue, which is, are the new entities sticking to the principles of social responsibility in their funding paradigms? If they are not, there is an issue, if they are then there is no issue. The Internet has spawned a whole new breed of projects, collaborations, and entities, and this needs to be accepted. If a foundation entity meets the IRS litmus tests and is doing socially responsible work, than how it structures itself to meet a socially responsible mission should not be the focus of concern.

There is one real concern: When approached by a socially responsible project with profit-making potential, does a foundation support the socially responsible elements by providing a grant or making a program related investment? Or is it kicked up to the investment folks at corporate who strip away its socially responsible elements to make it a purely profitable venture? Or do both things occur? Because of their mission-based orientation, Foundations must do what they can to preserve the socially responsible elements of a project even while investing in those projects with revenue generating and thus sustainable potential. Maintaining this critical balance is the real challenge facing foundations. It is where the conflict of interest potential is strongest for foundations with close links to their corporate parents or to living donors with both foundations and an eye towards investment. There are a number of solid, socially responsible projects with revenue generating potential circulating now. Many have been turned away by the public sector because their focus and the revenue potential is not well understood or does not fit neatly into this or that funding portfolio.

My organization, OSI, is still grappling with effectively dealing with these proposals in the appropriate strategic manner. Meanwhile, these "social ventures" are wooed by investors that recognize their income generating potential. They wish to buy into the project as long as some core socially responsible elements considered unprofitable are dropped. This is a terrible catch-22 causing many civil sector projects to either languish or abandon their civil society mission to go ".com The Internet has created a new class of ventures that must be evaluated for their social as well as their profit potential at the outset. If treated purely as business ventures by the foundation and business communities, a real opportunity will be lost to create and nurture sustainable, socially responsible projects. If you pull the wings off a butterfly it is still technically a butterfly but it looses a heck of a lot in the transformation. The difference between looking at these projects as pure business versus social ventures with sustainable development components lies in the project's successfully meeting a social mission in order to become profitable.

As pure business ventures defined by traditional business school metrics, many of these projects do not meet the appropriate criteria unless the clients they are trying to satisfy or their mission is refocused. As soon as that refocusing occurs, the social element is lost. However many initiatives that at first glance would not be considered commercially viable become so once they are successful at meeting their original mission. This is true because there is a natural tendency to coalesce around entrepreneurial success stories whether they be financially or socially focused. The Grameen micro-lending bank and cell phone project is a good example. Children's Television Workshop/Sesame Street, The Newshour/Macneil Lehrer Productions, National Geographic Magazine/National Geographic productions are all examples of traditional socially responsible projects with successful profit making components.

Many socially responsible Internet sites have unique content to offer and loyal communities around them -- the basic ingredients for success on the Internet. If they are marketed correctly after fulfilling their core missions, leveraging their online presence to promote sustainability is possible. Because these organizations are used to doing more with less, often times their Internet presence is developed at a fraction of the cost of creating a pure ".com" site. While they may not end up generating as much money as an Ebay.com, they also have far less downside risk attached to them. If they are mission oriented, there are always people who volunteer time and energy to maintain the mission. A ".com" that fails goes bankrupt, while a ".corg" that fails most probably becomes a ".org" continuing to fulfill a socially responsible mission. Occasionally, one can score a Sesame Street type success story.

There is a unique opportunity to nurture a sector of the Internet that isn't strategically developed to satisfy both commercial and public sector interests. To deal with social sector projects that have revenue generating potential, the project should be analyzed with two different sets of metrics. Ideally, a third party incubator with unique characteristics is employed with business, legal, technology and development expertise attached to it. The socially responsible core of the project (that which offers the unique content that draws a community) is analyzed for its ability to meet its core social mission. This analysis is provided to a partnership of foundation funders giving them the level of comfort they need from a third party that due diligence on the viability of sustainable social mission has been done. The revenue generating aspects of the project are analyzed with the appropriate business metrics and then marketed to the business community, assuming as a prerequisite, that the project meets its social objectives. The resulting enterprise would be run like a news organization. The business division manages the entire operation, focusing on profitability, while the editorial staff (or program staff in this case) controls the socially responsible content and communities they develop to make the site unique, attractive and credible to people in the first place. Such an enterprise would generate revenue while at the same time meeting its social mission, or it might start out as a not-for-profit venture with a clear for-profit mandate once that mission was met. Or it might be a for-profit venture (like World2market) that had a socially responsible component clearly managed as such. Each project must be evaluated on its own merits.

As a real example, OSI funded a project called Probono.net. It is an online resource for lawyers who wish to do free legal work. This is a specialized area of law and if lawyers have to root around to find resources in addition to doing work for free, they are less likely to volunteer. No ".com" law site would have thought of doing this nor would they have had access to the legal aid community resources that the OSI Fellow who designed this project for the foundation did. After all, what potential profit is there in offering free legal resources to lawyers? However, once the resource was designed it became a rather large success with other states and sectors of pro bono law requesting it. The ".com" legal sites came to call as well, as they saw it as a very useful add-on to their offerings. The resources on the site were, unique, accessible and had real commercial value - once they were designed and successfully meeting their constituent's needs.

In another example, OSI created many ISP's in Central and Eastern Europe in the mid-90's when little infrastructure existed to connect civil society to the Internet. In many cases it was the first high speed connection the country. In other cases, it reduced exorbitant competitor pricing for the services thus spurring further development and creating competition. These ISP's were created to serve a social need, and Internet was provided free. However, when competition was spurred and a market developed, users began to be charged to lower funding subsidies. The ISP's became viable businesses in their own right, and are now being sold off to interested buyers. Some multi-laterals doing development work use a similar model for sustainable development. They fund projects for the first three years as not-for-profits and assume they will become profitable after that period.

For those skill skeptical that a social and business venture can ever be combined, the Cambridge Incubator provides another model. The incubator is a for-profit venture that decided to run a socially responsible competition and provide incubator funding and resources to the ".org" winner that had the most innovative project. If every incubator had a similar competition for just one ".org" winner, it would do much to spur a vibrant social sector on the Internet. Foundations might take that stamp of approval as a sign the .org in question was a viable bet. The onus in this scenario would be on the ".org" to find sustainable revenue over the long term. However it would be more adequately funded at the outset and in a better position to do so.

Regarding pure corporate contributions to the digital divide; AOL was already mentioned as an example of a corporation lending resources to its foundation to meet a social good. A different example is the Cisco corporation which is successfully engaged in an initiative throughout the world to stem local "brain drain" by providing network expertise to young technical professionals in-country. It is working with local trusted institutions to develop partnerships. If a corporation is not ready to assist to this degree by creating its own programs or working in partnership, one very important thing that it can still do is provide regional discount arrangements to grantees of funding consortiums working together to bridge the digital divide. On the local or International front, companies or individuals willing to share their technical expertise with local NGO's, foundations and multi-laterals, provide an exceptional benefit.

2004-01-26T10:40:00.000+05:00

Kid Marketing Army Grows Quietly

Procter and Gamble, the supposedly staid, old school marketer, has since 2001 been using a 280,000-strong army of kids to stealth market products using good ol' word of mouth. The group, called Tremor, enlists kids ages 13-19 via the web, offers them a chance to win a free product, such as a DVD player, and asks them to complete an application to become part of the group. Once in the group, they are sent coupons and sample products and delicately asked to share them with their friends.

Tremor also does work for non-P&G clients, such as Shamrock Farms, which tapped Tremor to promote a new chocolate malt flavored drink. Shamrock test marketed the product in Tucson and Phoenix. Tucson received the usual marketing efforts, but Phoenix was laced with 2,100 Tremor members who received product info, coupons and stickers. Following a 23 week test, Phoenix achieved 18 percent higher sales and 21 percent coupon redemption. Sandy K. Kelly, marketing chief at Shamrock, says those are the best results the dairy has ever seen.

Raining on the parade is George Silverman, author of The Secrets of Word-of-Mouth Marketing and an Orangeburg, N.Y. consultant, who advises caution: "It's like playing with fire: It can be a positive force when harnessed for the good, but fires are very destructive when they are out of control. If word-of-mouth goes against you, you're sunk."

2004-01-26T10:00:00.000+05:00

E-Commerce Growth Spurred by Maturation

As consumers' level of comfort with online functions such as e-mail and research continues to increase, so too will their level of participation in e-commerce. The next five years will see large growth in e-commerce — growth that could positively impact small businesses that have established themselves as legitimate, trustworthy merchants.

U.S. online retail sales are expected to reach $65 billion in 2004, and will continue to grow by a compound annual growth rate of 17 percent through 2008 to top $117 billion, according to a report issued from Jupiter Research (a unit of this site's corporate parent)

According to the report, "Market Forecast: U.S. Retail 2004-2008," the growth in online retail will be due in part to new online buyers, not just veterans, who have come to embrace the medium. Jupiter expects that the online buying population will grow by 14 percent in 2004, representing 30 percent of the U.S. population. By 2008, one-half of the population will make purchases online.

As more and more new online users convert to online shoppers, small e-commerce businesses ultimately will benefit, said Jupiter Research analyst Patti Freeman Evans. "SMB's benefit, as all businesses do, with greater adoption of online purchase and reduced fear. [However] Small retailers need to ensure that consumers have every reason to trust them," Evans said.

According to the report, during this time of new user growth, businesses should continue to target first-time online buyers as part of their new customer-acquisition efforts, as well as focus on retention marketing efforts in order to gain increased wallet share after a consumer's initial purchase. For small businesses, attracting these new buyers means getting the message across loud and clear that you are legitimate.

How do you convince potential customers that you are legitimate and trustworthy? "Be clear about security on all fronts, be sure to execute immaculately," said Evans. "Because [businesses] are small, their brand name may not be known to the breadth of consumers they may reach through online. So, they need to be sure they manage their messaging well."

Average Spending to Rise

Online retail growth will be fueled by another factor: increased average spending per buyer. In 2004, online buyers are expected to spend an average of $585 person, up from $540 per buyer in 2003. That trend in higher spending is expected to increase over the next five years: Through 2008, average spending per buyer will be close to $780 per buyer.

According to Jupiter Research, the increase in average spending is a reflection of the maturation of the online shopping market. Contributing factors that add to the likelihood that consumers will spend more online include more offline merchants adding online components to their businesses, which gives consumers more reasons to shop online, and improved product comparison features.

In this realm, small businesses will face different challenges from their big business counterparts.

"What is unique to small businesses is that though consumers do look for items not readily available in their local market, they also want to trust the retailer from whom they purchase. So, small businesses need to be sure that they have legitimate and very strong vendor ratings in every place consumers may find their products, like comparison-shopping sites," said Evans. "Also, adding consumer feedback sections to their own site could help the credibility factor."

Evans said she also feels that acquisition marketing and awareness-building tactics are critical for small businesses. "Search engine marketing, along with comparison-shopping site listings and well-managed affiliate programs are ideal tactics and generate real ROI," Evans said. "It is important that small businesses allocate staff to manage these programs as that will pay off immediately."

Growth by Category

In the next five years, small business merchants should realize that not all retail categories will grow at the same rate. Jupiter Research's forecast groups retail categories in three growth modes: Plateau, Steep and Steady:

Categories in the Plateau group will experience compound annual growth rates of below 10 percent and include areas such as PCs, books and software.
Areas of steep growth (above 30 percent) are found primarily in the home and personal care categories such as home improvement, grocery and over the counter drugs.

According to the report, the remaining categories comprise half of total online retail sales and include heavy volume players such as apparel and consumer electronics.

Ultimately, small businesses should understand that there is still double-digit growth coming from online sales, and that more and more people are choosing the Internet to make purchases. As such, online buyers will be adding more and more product categories to their online purchases. And by ensuring a solid position as a trusted merchant, small businesses will be able to reap the benefits of the coming growth in e-commerce.

2004-01-20T11:49:00.000+05:00

TV and the web, better together

Study: Internet component boosts awareness

Consumers don't experience media in a vacuum, a fact more and more research is establishing. At any one time, half the people watching TV will be opening their mail, surfing the web, or listening to the radio.

Yet media planners for the most part continue to plan in isolation, considering each medium as a separate element of a campaign, rather than binding them together.

While synergy certainly makes sense, there hasn't been much data to argue that it produced measurably better results.
Now there is, and it relates to synergies between television and the internet.
A recent study from Dynamic Logic finds that supporting a television schedule with an online effort often leads to big gains in advertising effectiveness.
"The most interesting fact is that we are actually able to conduct these types of cross-media studies,” says Bill Havlena, Dynamic Logic’s vice president of research analytics.

“It means that the metrics – both brand and persuasion metrics, such as purchase intent and brand awareness – are comparable for both TV and online, as opposed to online-only measurements such as click-through.”
In an evaluation of 10 cross-media campaigns over the past two years, Dynamic Logic evaluated five criteria: aided brand awareness, message association, sponsorship association, brand favorability and purchase intent/consideration.

The study found that sponsorship and message association are most affected by television advertising, compared to the baseline of individuals who are not exposed to any advertising.

Television advertising increases sponsorship association 12.7 percent over the baseline and improves message association by 12.5 percent. Both measurements were also the most affected by the addition of an online campaign. Sponsorship association increased to 28.4 percent over the baseline with online activity, and message association grew to 19.9 percent.

The only criterion that did not improve significantly with the addition of online efforts is purchase intent/consideration, which showed 5.0 percent improvement with television but only an additional 0.4 percent improvement with incremental online efforts.

While the results of the analysis of the 10 campaigns aren’t conclusive, Havlena says they give directional insight into the value of television and the internet working together.

“Advertisers are interested in becoming more synergistic,” he says. “They are producing ads that complement each other across various media, and they want to be able to look at the performance of their ads across various media types in a comparable way.”

Sean Carton, chief experience officer at Carton Donofrio Partners, says multimedia efforts aren’t just a futuristic trend but integral to current strategies.
“Synergy isn’t the way things are going. It’s the way things are right now,” he says. ”Being at every point where a customer can touch your company is vital and obvious for anyone who wants to have the most effective strategy. It makes basic media sense. More people who see the message in whatever medium means more awareness.” Carton says part of the reason the internet is not being better utilized by advertisers has to do with media planners, measurements and standards.

He says the cultural differences between traditional media planners and online media planners have yet to be bridged in many agencies. In addition, measurement tools for serving and tracking buys tend to be cost-prohibitive for many small and mid-sized shops.

“Also,” he says, “online suffers from lack of standards. At this point, the IAB [Interactive Advertising Bureau], AAAA [American Association of Advertising Agencies] and MRC [Media Rating Council] still haven’t arrived at a standard for what counts as an impression – pretty basic stuff. They’re working on it, but until the standard is agreed to by all the players, adoption of online is still going to lag.”

2004-01-15T23:05:00.000+05:00

Two Steps Forward for Online Brand Measurement

Last week two announcements brought renewed industry attention to the long-suffering field of online brand measurement. Eyeblaster and Dynamic Logic partnered to measure the impact of rich media ads, and InsightExpress introduced a change to its survey recruitment methodology. Each of these announcements promises to bring brand measurement ever closer to becoming a staple of online ad reporting.

When advertisers measure brand impact, they can actually test any or all of the following factors:

Unaided brand awareness measures how many users remember an advertiser's name without being prompted (e.g., Name five software companies).

Aided brand awareness measures how many users recognize an advertiser's name when it is presented to them (e.g., Which of the following software companies have you heard of? Microsoft, Adobe, Nate's Software).

Ad recall measures how many users remember seeing an ad for a specific advertiser (e.g., Have you seen an online ad for Nate's Software?).

Message association measures how many users remember the key messages that are included in an ad campaign (e.g., Which of the following best describe Nate's Software? Easy to use, inexpensive, stable).

Brand favorability measures how many consumers view an advertiser's brand favorably (e.g., Is Nate's Software a cutting-edge brand?).

Intent to purchase measures how many consumers are likely to purchase an advertiser's product (e.g., Do you plan to purchase products from Nate's Software?).

One reason I doubt ad display time is an effective proxy for brand impact is it can't measure any of these factors individually. Instead, ad display time tries to paint a picture of brand impact with a single, broad brush. To paint an accurate picture of brand impact, you must survey consumers.

Control/Exposed Method Vs. Pre/Post Method
Online brand impact is most commonly measured using control/exposed surveys. This methodology compares an exposed group of users who have seen an ad with a control group of users who haven't. The exposed group is surveyed immediately after the ad has appeared on their screens -- they are typically notified by pop-up windows that they could win a small cash reward for participating in the survey. The control group is recruited on the same sites in the same way during the same period of time.

Less common is pre/post measurement. In this methodology, a sample of users on a site is surveyed before and after an advertiser's campaign runs. If the campaign is successful, the brand impact numbers will be higher in the post-campaign survey than in the pre-campaign survey.

Each methodology has advantages and disadvantages. Control/exposed surveys can provide statistically significant results with only several hundred respondents. Advertisers can also gauge the impact of their campaign by frequency, helping them determine how many times their ads should be shown to each user for maximum brand impact.

A control/exposed methodology doesn't measure the effect of an entire campaign, though it typically measures the impact of a particular ad within a campaign. In addition, running a control/exposed survey on each creative would be cost-prohibitive for advertisers and would overwhelm sites and users.

Pre/post surveys more closely resemble how offline advertisers measure the campaign effectiveness. This methodology tells advertisers how the entire campaign impacted an entire group, not just how a few creatives impacted a few exposed users. Pre/post measurement typically requires a larger number of respondents, however, and therefore often costs more than control/exposed measurement.

Eyeblaster and InsightExpress Drive Ahead
The new partnership between Eyeblaster and Dynamic Logic makes control/exposed brand surveys cheaper and more accessible. Advertisers running an Eyeblaster ad will now be able to add basic Dynamic Logic brand impact studies to their campaigns.

Advertisers can set up the preformatted Eyeblaster Brand Test within the Eyeblaster trafficking tool. No need to call in experts to run the survey. The $5,000 per-test price shaves several thousand dollars off Dynamic Logic's next-cheapest offering, making brand testing accessible to a greater number of advertisers.

When the Brand Test formally launches in January 2004, it will be the only private-label offering from Dynamic Logic. It's not a perfect solution. For instance, the price tag is still a bit too high to encourage regular usage. But it will certainly offer more accurate brand measurement than the current crop of ad display metrics. If the program proves successful, it will only be a matter of time before other rich media firms and online ad servers offer similar products to their clients.

Meanwhile, one of Dynamic Logic's competitors decided to use floating ads in a different way. InsightExpress announced it will start recruiting survey participants with floating ads rather than pop-up windows.

The firm believes this change will create a better user experience and obtain a more representative sample for its surveys. In the face of the constantly growing crop of pop-up blocking software, it'll also ensure InsightExpress' ability to recruit panels as pop-ups become less viable.

Both announcements will push online brand measurement ahead and get more advertisers to measure their campaigns in this way. The objective, of course, is to make online brand impact as easy to measure as click-throughs. Hopefully these developments have brought us one step closer to that goal.

2004-01-12T21:18:00.000+05:00

MCDONALD'S SPINS BILLION-SONG ITUNES GIVEAWAY

Less than a month after Pepsi announced a blockbuster deal to give away 100 million downloads from Apple's iTunes music service to its customers, McDonald's is close to a announcing a much bigger deal, The Post has learned.

In a dramatic move that gives a thumbs up to the music industry's efforts at creating legal alternatives to file sharing, McDonald's plans to give away up to 1 billion songs in a marketing campaign, according to sources familiar with the matter.

A spokesperson for Apple declined comment, and a representative of McDonald's was unavailable for comment.

Both Pepsi and McDonald's are paying Apple's retail price of 99 cents per song, sources say. And McDonald's has arranged to buy up to a billion songs to meet customer demand.

But because not all customers will take advantage of the offer, McDonald's actual spending on the campaign will probably be in the hundreds of millions of dollars.

The plans by two of the largest consumer goods companies to spend a significant amount of promotional money on music sharing is a validation of Apple's revolutionary iTunes service - and a ringing endorsement for the beleaguered music industry.

It is unclear how McDonalds will use the free downloads in a promotional campaign. Pepsi will place special redeemable codes in the caps of bottles of Pepsi, Diet Pepsi and Sierra Mist. (Although it will place iTunes wrapping on 300 million bottles, only 100 million will contain the codes.)

The Pepsi iTunes promotion will kick off with a Super Bowl ad on Feb. 1, 2004 and run until March 31.

Pepsi and iTunes made their announcement last month to coincide with the launch of iTunes' service for Windows users. "This historic promotion to legally give away 100 million free songs will go down in history as igniting the legal download market," Apple CEO Steve Jobs said at the time.

2004-01-09T12:26:00.000+05:00

Big Brands Go Online for Customer Data

According to the Internet Advertising Bureau, online advertising is on pace for 14 percent growth this year. Big brands play a large part in that growth. Take a look a little deeper however, and you'll find that big brands also use this advertising to collect customer information based on their needs and interests.

In September 2003, telecom giant Sprint unveiled a three-year plan to align its resources based on customer needs and preferences. Its long-term vision is to become a customer-centric business and to reduce total operating expenses by 5 to 7 percent, totaling more than $1 billion in savings. As part of the plan Sprint is realigning internal operations to differentiate customers into groups based on purchase habits. The initiative "enables Sprint to improve and expand its customer service efforts, focused specifically on the unique demands of business and consumer customers," says Gary D. Forsee, Sprint chairman and CEO.

The company's Web site is a critical touchpoint in the initiative. David Dickey, director of marketing and communications, direct and new initiatives, says the company now groups its customers two ways: those who come to the Web site, and those who contact Sprint by e-mail. Dickey says Sprint next wants to understand value and behavior. "We want to look at these customers and test how the groups respond based on the information shown," he says.

Luxury carmaker Lexus also targets customers using behavioral methods. When customers visit Lexus.com, the company captures visitor information by asking them either to register, or by prompting them to contact a local dealer, who will collect their information. "It's a pull approach," says Arthur Chan, associate communications director at Team One Advertising for Lexus. "We don't push them." The site also offers a "design your own Lexus" feature and hosts an owner's lounge where users can build a personal homepage and access maintenance and individual car information. Lexus uses all this data to build customer portfolios.

Health and beauty retailer Reflect.com significantly improved its online system within the past year, enabling the company to measure "not just page views, but a person's path through the site, so we can understand what's working for customers and what's not," explains Matt Doyel, senior director of marketing. This also helps Reflect understand the needs of individuals who visit but are not yet buyers.

Doyel says the company will continue to take a closer look at customer information online. "We see a huge benefit in speaking with relevance to our customers," he says. "We've increased our scale from a year ago...and we're looking to increase it even more."

Interactions are all about value

Customer registration is the most common way of capturing customers' personal information. But collecting information can be difficult, according to Paul Buta, COO and founder of direct-to-consumer marketing software firm Optas. "We're in an abysmal situation in not getting information from consumers that is reliable and truthful," Buta says. He suggests incentives, such as newsletters or discounts when customers register information. This practice will build value and enable companies to collect customer data over a customer's lifetime. "Those are the things that will drive long-term revenue and opportunity," he says.

At Lexus, for example, users enter the Web site and are asked to submit their zip codes. Then after being offered features such as "design your own Lexus," they are asked to fully register their information and visit the local dealer, which automatically pops up on the screen. The "design your own Lexus" feature deepens the level of involvement in the site, and is used as the incentive to get consumers to give more information.

Organizations need to consider the value exchange, says Peppers & Rogers Group Senior Consultant James Vila. "The customer's needs must be considered when designing an incentive," he says. "The better the carrot, the more likely the customer is to provide accurate information, especially if the delivery of that incentive depends on a clean address or e-mail response."

The capture of information is often the first stage of contact, the first opportunity an organization may have to demonstrate what it is like to be a customer with them, the first impression of the customer or brand experience. "For too many organizations that first impression is likely to be the last," Vila adds.

2004-01-07T20:12:00.000+05:00

Developing Nations Begin to Embrace Internet Commerce

E-COMMERCE is starting to find a place in some of the world's emerging economies. Governments and businesses in a growing number of developing nations have begun building the infrastructure needed for online commerce, according to a report released Thursday by the United Nations Conference on Trade and Development, or Unctad.

"Governments are more and more aware that this can be a tremendous boon to their economy," said Angel Gonzalez-Sanz, an Unctad economist who spoke by phone from Geneva. "They're starting to recognize that policy choices matter; the attitude of the government, the business community. When you tackle issues like infrastructure and lack of awareness, results come."

Mr. Gonzalez-Sanz said that Thailand, for example, is starting to see results from a government strategy that began in 1996 and was updated in 2002. Under that plan, the nation has moved aggressively to improve computer and Internet literacy by, among many other things, selling $250 personal computers and $500 notebook computers to its citizens and wiring thousands of schools for the Internet in the last two years.

The government has also set up two national Internet switching points and created a plan to offer Internet services throughout the country.

The early results for online commerce are modest but promising. From 2000 to 2001, the latest period for which data is available, the share of Thailand's Web sites selling goods or services online doubled, to 12 percent. The proportion of Thailand's Internet users who live outside Bangkok, the capital, has steadily improved, reaching 50 percent last year.

Mr. Gonzalez-Sanz said that in Southeast Asia, among other regions, "companies have been feeling pressure from the market to get on the Internet." That is particularly true, he said, with companies that export goods to countries where a significant amount of business is conducted through the Internet, like the United States.

But, Mr. Gonzalez-Sanz said, not all developing countries have followed that path. "Some countries have still had trouble identifying the benefits" of online commerce development, he said. "In places where most of the economy is exporting agricultural commodities, or where you're less integrated in the global economy as a whole, you don't have that pressure."

Indeed, in countries like El Salvador, the development and use of online commerce has been haphazard.

Earlier this year, Everest S.A., a family-run business in San Salvador, sold a 69-kilogram lot (152 pounds) of coffee beans in an Internet auction from one of its five farms for a record price of $14.06 a pound.

According to Aida Batlle, who helps manage the farms, the family had no grand e-commerce plan. Rather, she had heard about a coffee competition, Cup of Excellence, held in El Salvador by a coffee industry trade group based in the United States. Ms. Batlle entered the competition, which included 335 of the country's roughly 23,000 farms, and in early May received first prize for beans from the family's Kilimanjaro farm.

Cup of Excellence then arranged an online auction featuring lots from the competition's finalists. Ms. Batlle sat in a hotel room in San Salvador with 31 other farmers, watching a big screen TV that displayed the auction's Web site, where price increases were updated every 90 seconds.

That was exciting, Ms. Batlle said, but an equally important part of the auction was that it put her company in direct contact with buyers. In the past, she said, local mills would buy the farms' beans and sell them to distributors. "We've now taken the middleman out, which is huge," she said.

Ms. Batlle said she had maintained a relationship with the Norwegian coffee distributor that bought her beans as well as a Japanese distributor that bid $3.20 a pound for coffee from another of the family's farms in a July auction. That change, she said, will help the farm lift average prices above the 30 cents a pound it received last year.

2003-12-09T11:50:00.000+05:00

Video Gaming Companies IGN, GameSpy to Merge

Two of the Internet's leading video game companies, IGN Entertainment and GameSpy Industries, on Thursday said they will merge to create a company offering gaming news, information, downloads, data services and community features.

San Francisco-based IGN and Irvine, California-based GameSpy, both of which are privately held, said the deal is expected to close in the first half of 2004. IGN Chief Executive Mark Jung will be CEO of the combined company, and GameSpy Chairman Mark Surfas will be chief strategy officer.

IGN was publicly traded until August, when it went private in a buyout lead by Great Hill Partners and the IGN management team. It is best known for both free and subscription content on games and gaming hardware.

GameSpy provides both gaming content and also gaming technology, allowing publishers to put their games online and manage communities of players.

The combined company will have 194,000 paying subscribers to content and technology services, with more than 26 million registered users.

Both the IGN.com and GameSpy.com brands are expected to be retained after the deal closes, the two sides said in a statement.

2003-12-09T10:55:00.000+05:00

Make Room for Portals

On November 14, among the editorial offerings MSN visitors was "Start: Technology That Works for You." Created by the Microsoft (Quote, Chart) portal's writers and editors, the special section reviewed personal technology in five categories, Playing, Connecting, Saving, Seeing and Driving. The latter category featured the Toyota Prius, the gas/electric hybrid car with high-tech features including an information display console and Bluetooth cell phone connectivity.

The editorial package itself was a hybrid of content and advertisement: a sophisticated multi-media advertorial created by MSN for Toyota. The target audience was tech enthusiasts, especially men, between 25 and 40. The Prius campaign is one example of the lengths portals are going to in their efforts to meet the needs of their biggest clients. They're combining their own editorial strengths with the marketing strategy services usually employed by agencies.

At MSN, such duties are handled by the custom solutions group, a division that looks and acts a lot like an internal interactive agency, with its own crew of strategists, developers and designers.

It's a lot like custom publishing, says Gayle Troberman, director of custom solutions for MSN and a former agency-side exec. "We're seeing advertisers come to publishers and say, 'Help us create a brand experience.' We built the experience, they built the advertising."

MSN's custom solutions group creates marketing packages for the mega-advertisers like Dell, Honda and Toyota. While these advertisers may have done a fair amount of online advertising before, these complex campaigns focus not on lead generation but on building interest and preference, the realm of brand advertising. Troberman's sales pitch to them is, "We'll experiment and innovate together to figure out a new approach to branding online."

Even eBay is getting into the act, creating branded showrooms for companies like BMW, devising auction promotions for Dr Pepper/7Up and consulting with advertisers on creative and media.

It's not a new pitch. Yahoo! , AOL and MSN have been trying to dig their hands into the deep pockets of brand advertisers since online advertising was invented. Now, the advertisers are willing and eager to take a shot. Broadband adoption is finally reaching critical mass, and the Interactive Advertising Bureau (IAB) and others have built up a body of research showing that online branding can work, Troberman says.

Prius' agency, Saatchi & Saatchi, is having it both ways, experimenting alongside MSN without undue risk to its budget. Priya Verma, Saatchi's interactive media director, is thrilled with the creative and editorial ideas from MSN, and, she says, "We know it's going to be a winner because the way it's been negotiated is based on cost per traffic." She says MSN is guaranteeing "huge" traffic on the advertorial piece.

Saatchi also has worked with Yahoo! and AOL. In the case of Toyota Forerunner's sponsorship of the extreme racing challenge cable TV show "Race to the Top," Saatchi put out a "pre-RFP," inviting portals to take the agency's initial ideas and "bring it alive for their audience." Yahoo! created special content on its site to become the online hub for fans of the show.

"Those flagship brands of the world are always looking for new insightful creative approaches to inspire consumers and customers to try their products and brands," says Eliot Phillips, a partner and managing director of the Interactive Communications Practice of Lippincott Mercer, a design and brand strategy consultancy. "If it's perceived that portals have the technical expertise or a unique insight around customer knowledge, then why not see what the portal can come up with creatively?" He says the advertiser has nothing to lose. "They don't have to run the campaign if they don't like it."

Portals do pitch clients directly, and agencies, while they don't like it, have learned to take it. But they maintain that such a relationship may not be in their clients' best interests. "Any kind of direct relationship that a publisher or portal has with a client is never an ideal situation," says Stacey Flynn, media director for interactive agency Zentropy Partners. "There can be a lot of marketing information that gets left out, either because the client may not know it, or because the portal won't take the bigger picture into consideration because it doesn't serve its best interests."

For example, while agencies know what the going rates for advertising are, the client might not, according to David Burk, CEO of interactive shop Clear Ink: "Clients are a less-informed market. Not every client has someone who knows media really well." Such direct relationships between advertisers and portals often get the blame for the mega-bucks long-term portal deals that everyone was doing during the dot-com boom -- to their later regret.

Cutting out the agency also lets portals push rich-media, flashy agendas, says Clear Ink executive vice president Steve Nelson. "Agencies, through experience, see that interruptive multi-media presentations don't work," he said. "The portals see that agencies know better, so they'll go directly to the clients who may not have had the experience."

"This is the era of disintermediation," Burk says, "but a lot of times there are a lot of people who fight back pretty hard. So sometimes facilitating intermediaries is a better idea." That seems to be the trend.

Yahoo! has been holding "creative summits" around the country, invitation-only events where advertisers and traditional and interactive agency types mingle and ponder topics like "The New Creative Revolution." And AOL is going out of its way to woo agencies.

Zentropy's Flynn says that her agency is happy to consult with the client when it is working directly with a portal, and, "We've been fortunate to always be informed at some level when that's happening."

Agencies also are ready to admit that the portals bring some unique value. "They have unique transactional knowledge of user behavior patterns," says Phillips of Lippincott Mercer. "AOL knows how many 10- to 16-year-olds are in its channel and they can measure fairly accurately."

"We bring knowledge of our users, what they do, where they are, how to capture their attention on MSN," says Troberman. MSN typically partners with traditional and interactive agencies rather than approaching the clients alone. The MSN team will sit down with client and agency and discuss the nuances of the brand, then come back with a range of concepts. These are later refined in a process similar to what agencies and clients do in the traditional world.

"We have great partnerships with [MSN and Yahoo!]," says Saatchi's Verma, and the agency is beginning to regain trust in AOL. "They sometimes do go to the client directly, but they always give us a heads-up," she says.

One odd thing about these portal-driven campaigns is that, unlike typical ad campaigns both online and off, they are media-specific. That's why Saatchi uses the "pre-RFP" approach, picking one portal partner that comes up with the best idea. "It's definitely a limitation that the campaign can run on only one portal," Flynn says. But she's heard on the street that, as portals bulk up their in-house creative teams, they might offer their creative to other media outlets as a new source of revenue.

After the drama and destruction of the last few years, agencies are taking a live-and-let-live attitude. "It's the online space just trying to figure out what works best," says Flynn. And, just as agencies are willing to make room for the portals, she says, "The portals won't do anything to really anger the agencies. Getting along goes both ways."

2003-12-09T09:59:00.000+05:00

Tech Firms Plan More Online Marketing

Spending next year for online lead generation will grow to nearly 45 percent of the total IT marketing budget, up from 40 percent in 2003, according to a trends study measuring the plans of 350 technology advertisers.

Online advertising's share of the budget will increase from 14 percent to 16 percent. Similarly, online lead generation will expand its share of spending to 28 percent next year from 26 percent in 2003.

The findings were part of the 2004 IT Marketing Trends Study released Friday by Boston-based IT content provider Bitpipe Inc. and Sam Whitmore's Media Survey. InsightExpress conducted the survey.

Seventy-three percent of respondents intend to use Webcasts in 2004, up from 55 percent this year. Sixty percent plan to use e-mail promotions, up from 44 percent this year who advertised in online newsletters.

The survey found e-mail promotion ranked as the best lead generation tool. It is expected to grow in use from 83 percent this year to 85 percent in 2004. Also, 82 percent will rely on white papers next year, up from 75 percent in 2003.

"IT buyers increasingly turn to white papers, especially in the early stages of the purchasing process," Sam Whitmore, editor of his self-named survey from Beverly, MA, said in a statement.

Confidence with the medium is encouraging marketers to allocate more money to online marketing. Technology advertisers earmarked 43 percent to direct mail or telemarketing and 16 percent to print advertising, a total of 59 percent. Offline marketing's share is now expected to shrink to 56 percent, the survey said.

2003-12-04T17:59:00.000+05:00

MCDONALD'S CONSOLIDATES GLOBAL MEDIA WITH OMD

McDonald's Corp. is moving to consolidate to its global media buying and planning business with Omnicom Group's OMD, according to executives close to the business.

A spokeswoman for OMD referred calls to the fast-food restaurant company.

In a statement, McDonald's said: "You can expect to hear more from us on our new marketing leadership initiatives in the future. Until then, anything else is pure speculation."

McDonald's spent around $1.6 billion in measured media globally in 2002, according to TNS Media Intelligence/CMR.

The decision has been rumored since earlier this year, when Larry Light, McDonald's global chief marketing officer, hinted that media consolidation was a definite option. He was speaking to agencies participating in a global creative shootout.

2003-11-28T20:59:00.000+05:00

Apple and Pepsi to Give Away 100 Million Free Songs

Apple® and Pepsi-Cola North America today announced a historic promotion to legally give away 100 million free songs to Mac® and Windows PC users from Apple's iTunes® Music Store. Beginning February 1, 100 million winning codes will be randomly seeded in 20 ounce and 1 liter bottles of Pepsi, Diet Pepsi and Sierra Mist, and the winning codes will be redeemable for a free song from the iTunes Music Store. Winners will simply go to Apple's iTunes Music Store (www.iTunes.com), enter the code found under the bottle cap and choose any 99 cent song from the online store's vast catalog of over 400,000 songs. The Pepsi iTunes promotion will kick-off with a Super Bowl ad on February 1, 2004, and will run until March 31, 2004.

"iTunes has revolutionized the way we buy music," said Dawn Hudson, president of Pepsi-Cola North America. "iTunes provides music fans with a fast, reliable and easy way to get the music they want, when they want it. During the Pepsi iTunes promotion, they will be able to get more of their favorite music for free."

"This historic promotion to legally give away 100 million free songs will go down in history as igniting the legal download market," said Steve Jobs, Apple's CEO. "Pepsi has marketed their products through music for generations, and this is going to be another one that is remembered for decades."

Apple's iTunes Music Store revolutionized the online music industry with its groundbreaking personal use rights and one-click download directly into iTunes, Apple's integrated digital jukebox software -- all for just 99 cents per song. Since its launch six months ago, music fans have purchased and downloaded more than 13 million songs from the iTunes Music Store, making it the number one download music service. Apple today launched its second generation iTunes Music Store for both Mac and Windows PC users. With music from all five major music companies and over 200 independent music labels, the iTunes Music Store is growing every day and will offer more than 400,000 songs.

The Pepsi iTunes promotion complements Pepsi's music initiatives. Pepsi has a long history of integrating music as a core platform in their marketing programs. From Michael Jackson and Madonna to Shakira and Beyonce, Pepsi has featured the biggest recording artists and a diverse range of chart-topping music in marketing campaigns for decades. PEPSI SMASH, a one-hour wall-to-wall music television show that debuted last summer on the WB TV network and featured live musical performances, is one of Pepsi's ongoing music initiatives.

Purchase, N.Y.-based Pepsi-Cola North America (www.pepsi.com) is the $4 billion refreshment beverage unit of PepsiCo Inc. in the United States and Canada. Its U.S. brands include Pepsi, Diet Pepsi, Pepsi ONE, Wild Cherry Pepsi, Pepsi Twist, Pepsi Blue, Pepsi Vanilla, Mountain Dew, Mountain Dew Code Red, Mountain Dew LiveWire, Sierra Mist, Mug, Slice, Aquafina, FruitWorks, Dole single-serve juices and SoBe. The company also makes and markets North America's best-selling ready-to-drink iced teas and coffees, respectively, via joint ventures with Lipton and Starbucks.

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings

2003-11-25T20:36:00.000+05:00

Online Retail Sales Build, Poised For Record Holiday Season

Online retail sales continued to climb in the third quarter, setting up for a potential record-breaking holiday season and finish to the year.

There were $13.29 billion in online retail sales in the three months ending Sept. 30, up 27 percent from the same period in 2002. Every three months, the U.S. Department of Commerce releases a measure of online retail sales, which includes goods and services where a retail order but not necessarily a payment is placed over the Internet. But the Commerce Department’s data doesn’t include travel, a major category in online transactions, nor financial services.

The $13.29 billion represented 1.5 percent of total retail sales, compared to the third quarter of 2002 when it was 1.3 percent ($10.46 billion). Total retail sales in the third quarter were estimated at $872.5 billion, up 6.1 percent from the same period a year ago.

Independent analysts had predicted growth between 20 percent and 30 percent.

Ross Rubin, senior analyst at eMarketer, said Friday afternoon that there’s been pretty healthy double-digit year-over-year growth in online retail sales. It’s dominated by a lot of traditional retailers, who are becoming adept in sales and returns not only in the traditional brick-and-mortar stores but also online. An exception would be Amazon.com, which recently passed the $100 million mark in online sales, but it’s also become a more generalized retailer and not just the books and CDs that it started offering back in the 1990s.

Rubin and other analysts think there’s plenty of room for growth but he doesn’t think that online will ever replace traditional retail sales. There are several large retail categories, such as groceries, that will never be sold well online.

“The percentage [of retail sales] is relatively low but I think most retailers these days are not looking at the online channel strictly as a standalone business,” Rubin said. “They’re looking at it partly as a tool that can drive in-store traffic. They’ve been developing better integration between those two channels with in-store pickup and in-store returns.”

Rubin said traditional retailers have been working hard to build integrated systems that make it easier for them to return products offline if they don’t like them. He said that customers are driven by price but that’s not the whole story.

“They’re also very driven by convenience. The notion that you’re going to have to ship something back if it’s unsatisfactory could be a big barrier,” Rubin said. He said that a couple of years ago, it was rare to find stores that accepted in-store returns of items purchased online. Today, it’s hard to find stores that don’t, including Sears, Wal-Mart, the Sharper Image, Staples, Bed, Bath and Beyond and others.

“You want to be where your customer is,” Rubin said.

Doug Schwegman, director of customer and market intelligence of CyberSource Corp., said there’s a chance that online retail sales could see year-over-year growth of 30 percent between 2002 and 2003.

“It is still a small percentage of total retail sales at 1.5 percent, so there is plenty of room for continued strong growth in online sales over the next few years as consumers get more comfortable with shopping online and as merchants get better at online selling,” Schwegman said.

2003-11-25T20:29:00.000+05:00

WEB ACCESS A CENTRAL UTILITY OF DAILY AMERICAN LIFE

Study Finds Even Pets Gravitate to Home Computer MonitorThe Internet has become such an integral part of American consumers' daily lives that families now routinely treat their home computer monitors as they once treated their TV sets -- as the central fixtures of their lives, according to a new study released by the Online Publishers Association.

Multi-computer households
"People are bringing the Web into their lives," said media researcher John Carey of Greystone Communications, one of three organizations involved in the survey. He said consumers are networking computers in multi-computer households, decorating monitors with photographs much the same way TVs in the 1950s were treated as living room mantels, and that even pets routinely gravitate to computers, whether they're in the kitchen, bedroom or basement.

Mr. Carey said the household life portion of the overall study, conducted with the OPA and Frank N. Magid Associates, was an ethnographic project that looked at 23 households with a total of 44 people ranging in age from 14 to their late 50s. Roughly half of the households had broadband Internet access. Ethnography is the branch of anthropology that scientifically analyzes the common daily habits of a human culture.

Not a fringe medium
Mr. Carey said the findings indicate that the Web is no longer a fringe medium and that multitasking is common in households with broadband service.

A second portion of the project surveyed more than 25,852 people ages 18 to 54 about their use of the Web and their attitudes toward related online and offline brands.

That quantitative research was conducted online over a seven-day period on 41 individual Web sites via branded pop-up boxes. For example, readers on New York Times Co.'s NYTimes.com saw a pop-up box that invited them to participate in the survey. The 41 participating Web publications fell into two content categories -- national and local news. Participants included CondeNet's Epicurious.com; Walt Disney Co.'s ESPN.com; Microsoft Corp. and NBC's MSNBC.com; and Washington Post Co.'s WashingtonPost.com.

Among the findings:
*         12% of consumers surveyed said they use a brand name media site as their home page.

*         64% of those surveyed frequently use the offline counterpart of an online brand.

*         60% frequently visit TV brand Web sites; 28% for newspaper sites and 29% for magazine sites.

*         36% of people surveyed said they rarely or never use a Web media brand's offline complement or sibling, indicating fairly strong loyalty to stand-alone Web brands.

*         44% of those surveyed said they frequently visited national news out of habit, while 23% said they visit just for fun and relaxation.

*         35% of those surveyed said they occasionally go to national news Web sites out of habit and 41% said they go occasionally just for fun and relaxation.

*         38% of respondents said their visits to local news Web sites are a frequent habit, and 38% also said it was an occasional habit, while 41% said they occasionally went to local news sites just for fun.
'Trusted sources'

The research found that a lot of people are relating Web sites to their offline brands. "They're looking for trusted sources," Mr. Carey said.

The finding suggests that offline and online sibling properties could do a better job of cross-promoting their properties and links, and that advertisers could efficiently seize on the opportunity to create relevant cross-media messages.

2003-11-24T18:32:00.000+05:00

Online Content Spend to Grow 10.4 Percent

By 2005, one-fifth of US Internet users will be content buyers. The growth rate is one-quarter of that seen in 2002 (43.4%). This year marks the first time since eMarketer began tracking such revenues that online advertising spending, with 14.8% year-over-year growth, is outpacing online content spending.

Nonetheless, eMarketer forecasts the percentage of online content buyers in the US will continue to rise steadily through 2005, reaching 35.8 million that year.

"eMarketer has identified three catalysts for the emergence of the online paid content market in the US," says eMarketer Senior Analyst Ben Macklin. "The dot-com bubble bursting reduced the number of free alternatives available. This was accompanied by online advertising revenues drying up in 2001 and 2002, forcing sites to look for other revenue streams. Lastly, despite the economic downturn, Internet users grew in both numbers and experience, and a critical mass of Internet users became comfortable transacting online."

The report also points to the growth in broadband adoption in the US -- the always-on connection, in combination with extra bandwidth, opens up greater possibilities for live and multimedia content

2003-11-23T20:30:00.000+05:00

Web Publishers' Ad Dollars Soar

Third-quarter ad revenue for Web publishers grew an average of 46 percent over the year-ago period, according to a recent poll conducted by the Online Publishers Association.

The poll, which surveyed 26 OPA member companies including CBS MarketWatch, CondeNet and The Wall Street Journal Online, found that year-to-date ad revenue among the group was up 38 percent over the same time last year.

Total revenue for the group increased an average of 44 percent in Q3 versus the year-earlier period, while total revenue for the first three quarters of 2003 rose 35 percent.

Recently, two OPA member companies posted Q3 revenue numbers. The New York Times Digital, which includes NYTimes.com and Boston.com, reported that third-quarter revenue grew nearly 20 percent to $21.8 million from the same time a year ago. Meanwhile, Knight Ridder Digital, which develops and manages newspaper Web sites including the Akron Beacon Journal's Ohio.com and the Lexington Herald-Leader's Kentucky.com, recorded Q3 revenue of $21.5 million, up 51 percent from the year-earlier period

2003-11-22T19:17:00.000+05:00

Advantage over traditional media: Accountability

Like a couple wedded for decades who don't necessarily still love each other, staying in the marriage out of habit (or until the kids leave), the media and service bureaus who measure their audiences continue to carp at one another.

Tom Ryder, chairman and chief executive officer of Reader's Digest Association and the newly elected chairman of Magazine Publishers of America, is upset with the Audit Bureau of Circulations.

"We are being asked to provide more and more information, and adhere to standards that cost us more and more money, and we're getting the feeling we are being asked that so we can be asked to charge less for the advertising we sell," Ryder complained to one reporter.

Meanwhile, the broadcast networks are complaining because Nielsen, a unit of VNU, a Netherlands media company, has confirmed that men age 18 to 34, a demographic group coveted by advertisers, are watching between 8 percent and 12 percent less primetime TV than they did last year.

Just like the embattled married couple, the feuding has been going on for years.

"When ratings are up, it's the programs. When they're down, it's Nielsen," Jack Loftus, a Nielsen spokesman, told The Wall Street Journal.

To further exhaust the squabbling-couple analogy, the warring factions are throwing only glancing blows, and this is for two reasons. One, they are interdependent, so the public assaults over time hurt both. The other reason is that neither side wants to address the real underlying issue: advertising ROI.

Their discomfort could only increase by looking at the internet.

After a booming start, the medium was, like Obleo, banished to the Pointless Forest for over-promising on the never-practical-to-begin-with idea of one-to-one marketing.

But the internet has since emerged, armed with new behavioral targeting technology that can convincingly prove that online ads are actually seen, really prompt audiences to act, and can produce actual sales for advertisers.

While this may sound kind of basic to successful advertising, no other medium (with the possible exception of lowly regarded direct mail) can show this kind of accountability.

Audience guarantees in print and broadcast are projections, guesstimates if you will, of how many people will see your commercial or print ad. They are often wrong, resulting in make-goods, free ads provided by the network or the publisher to make up for audience shortfalls.

Moreover, unless the ads have some sort of call to action like an 800 number, coupon or a reader response card, neither magazine publishers nor broadcasters can prove anybody saw your ad.

Sure, huge bucks are spent on studies to determine the likelihood of viewers and readers seeing your ad, but they too are only guesstimates, and they still can't prove the ad prompted anyone to get up and go out and buy your product.

Imagine you're the publisher of a monthly magazine. Twice yearly you report your subscription and newsstand sales for the preceding six months. By the time your unaudited circulation statements are printed and distributed, your advertisers are looking at data that might be nine months old. It'll be another year or more before those numbers are audited, printed and distributed. Your reps are knocking on media buyers' doors trying to get insertion orders for campaigns that won't appear until eight weeks from now, using data that is 18 months old.

By contrast, the internet can give advertisers an exact moment-by-moment audience body count, can show how many people might have seen your ad, how many people actually played the ad or clicked on it, how many of those took action as a result, how many phone calls the retailer got and how many product units moved off the shelves as a result.

The missing ingredient in internet advertising was publisher data on who comprised their audiences, but that is being quickly resolved by widespread user registration so that web publishers now know who is on their sites broken out by age, sex, location and often more granular information such as income and kids in the home.

Unlike any other medium, the internet can now cross-reference demographic data with behavioral data, which gives further clues into the profiles of the users.

Visit the recipe pages a lot? Fair chance you are a woman who likes to cook.

Look up your online portfolio three times a day? Good bet you are an active investor.

Booked a high-end hotel room online? You're probably a business traveler.

True that magazine publishers and broadcasters periodically survey their audiences to get this same kind of information, but they hit only a small sample and once again, guesstimate the real numbers.

Online the numbers are actual and in real time. There is no gap between promise and delivery.

The real reason traditional media are groaning about their service bureaus is that when they do uncover downward trends, it comes well after the promises were made that sold the advertising. Advertisers, having bought on those promises, are then prompted to ask if they are getting a fair return on their investments.

With TV and magazines, they only really find out when it's too late

2003-11-21T18:53:00.000+05:00

2004: We're Back... Now Let's Not Mess It Up

Across the industry, I've been hearing planners and buyers singing a different tune than they might have been last year. It seems that for 2004, marketers are seriously ramping up their online efforts. Perhaps it's the realization on the client side that folks are becoming tougher to reach with traditional media. Maybe it's because the IAB has done some great things to prove that online is a necessary component of many media plans. Then again, it might be frustration with the lack of accountability on the traditional side.

Whatever the reasons, it appears that we're poised for an upswing. Since I'm a firm believer that goal-setting is half the battle when running online media, I think we should be careful to avoid the mistakes we've made in the past and make sure that we set goals very carefully. After all, we don't want to be in the same boat we were in a few years back, when many clients declared that "online doesn't work."

Many online campaigns that fail were set up to do so from the very beginning. In many cases, clients get excited about measuring the effects of their online campaigns, but they judge success against the wrong metrics. To avoid this, do a careful assessment of objectives and make sure that the data that is being provided back to clients is aligned with those objectives.

For instance, if a client wants to increase awareness of their brand, don't send them performance reports that focus on click through rates (CTR). If CTR is presented as a valid metric, clients might see low CTRs and get upset about it. If brand awareness is the objective, a brand survey should be the yardstick, not CTR. Ensure that all your clients are keeping their "eyes on the prize," so to speak.

In setting objectives, be sure that you're not overpromising. Leverage any data you have on hand to predict things like response, brand impact and other success measures. If things seem out of whack, like if a client wants to deliver a million leads per quarter at 10 cents a lead with an offer like "Enter to win a bag of 10,000 marbles" you're in trouble. Adjust expectations before the campaign begins, otherwise you'll set yourself up to fail.

As if you needed an additional incentive to keep clients away from unrealistic expectations, remember that such clients are likely to walk away from the medium entirely if they don't achieve their objectives. This happened when the dot com bubble burst, and it can happen again. I don't know about you, but I'd rather not live through another period of widespread abandonment of our medium. We're fortunate enough to have a second chance, let's be thankful for it and ensure that we hit a home run this time around.

2003-11-21T17:43:00.000+05:00

Nielsen//NetRatings Questions Panel Members

Internet metrics firm Nielsen//NetRatings (Quote, Chart) jumped into the online survey game Tuesday with WebIntercept, a tool that queries panel members based on their behavior online. Nielsen//NetRatings says it's been conducting such surveys for about a month and a half.

"This was really driven by customer demand," said Sean Kaldor, VP of corporate marketing and business development at Nielsen//NetRatings. "Our customers have continued to come to us asking us to survey our [ratings] panel, but we won't let them do that because it affects [the panel's] behavior."

WebIntercept uses a panel of Internet users recruited by Nielsen//NetRatings, but it's separate from the panel it uses to compute ratings and rankings for Web sites. Initially, the global survey panel will consist of two million respondents, but that will be expanded to three million next month.

Because it has software installed on these users' machines, Nielsen//NetRatings can initiate surveys based on their behavior online. For example, the company recently surveyed people when they logged on to a search engine, asking them the purpose of the search. The survey could also be triggered by the completion of an activity, such as an online purchase -- either on the client's site or on a competitor's. With some members of its panel, the company can initiate research based on what items they are buying online or how much they are spending.

The announcement follows competitor comScore Networks' formal launch last week of a similar service, Survey Solutions, which it hired former NFO WorldGroup president and COO Randy Smith to head. ComScore said it had been doing survey work for the past two years, but hired Smith to focus more resources on the space.

Online research has been a skyrocketing segment of the overall research market, and some expect the Federal Do-Not-Call list to only speed the growth of the online segment.

"It's pretty clear that the problems with telephone-based surveys were opening up a big opportunity for us," said comScore's Smith.

The two services seem to be quite similar, although Kaldor notes his company's panelists aren't given any incentive to participate. ComScore has typically given its panelists software that speeds their connections to the Internet.

ComScore, for its part, trumpets its two years of experience in offering the service -- although it only formally launched last week -- and says the historical attitudinal data it's built up makes its product superior.

2003-11-21T17:40:00.000+05:00

Shopping.com Educates Offline Shoppers

In a bid to win customers, and, through them, advertisers, during the important holiday season, comparison shopping site Shopping.com has launched its first TV ad campaign.

The ads, developed by San Francisco-based Publicis & Hal Riney, aim to educate consumers about online price comparison services and to inspire them to try Shopping.com.

The campaign's initial 30-second broadcast spot began airing today in New York, San Francisco and Portland, Oregon. Shopping.com said it is part of a test it is conducting to gauge the effectiveness of offline media in driving consumer behavior online. The company hopes to use TV advertising to reach a group of consumers who may not have heard of price comparison on the Web.

"Our market research revealed that the vast majority of consumers are simply unaware of comparison shopping sites," said Nirav Tolia, Shopping.com's chief operating officer.

The initial spot, which targets consumers aged 25 to 49, will air on local evening and morning broadcasts as well as news and primetime cable channels throughout the holiday season. The company declined to name specific channels or programming, nor did it divulge its media spend.

The creative depicts two scenarios in which a shopper learns too late the Internet offered a better value on a product he just bought. The spot then provides a demonstration of Shopping.com's interface.

Kirk Souder, president and executive creative director at Publicis & Hal Riney, said the agency tried to advance the notion that shoppers need never again feel buyer's remorse.

"That's a very powerful idea," he said.

Shopping.com was formed this year after established shopping search site DealTime merged with customer review platform Epinions and took a new name. It has faced an increasingly crowded field of online price comparison sites, including NexTag, BizRate, Pricegrabber, and most recently, a company called Priceflo, which launched last week. Additionally, Yahoo! recently integrated its shopping area with product search. Google also offers a version of the service, though its Froogle.com site.

2003-11-12T17:45:00.000+05:00

Best Buy, Music Now launch digital music store

MusicNow Inc., a developer of digital music services, and Best Buy Co. Inc. have launched the MusicNow Download Store on BestBuy.com, they said today. The store will be available only on BestBuy this month before it’s made available to other web sites.

The MusicNow store, unlike other digital music offerings, lets users download songs directly to more than 40 portable digital music players in addition to personal computers. Prices are similar to what’s available through Apple Computer Inc.’s iTunes, Roxio Inc.’s Napster 2 and other services: 99 cents per downloaded song, or $9.95 for a complete album. Like Napster, MusicNow also provides the option of subscribing for an unlimited number of tracks for $9.95 per month.

"Best Buy is committed to offering our customers leading services that make buying entertainment digitally a great experience. With the launch of the MusicNow Download Store in the Windows format, we believe consumers now have a great choice to purchase digital music that will work on many devices," said Scott Young, vice president of digital entertainment for Best Buy. "We want music to be available to people how and when they want it, and that means letting them take their music with them on the road, in the car, or wherever they want to enjoy it."

"Our Windows-based service and unprecedented ease of use with multiple portable devices will further accelerate the mainstream consumer adoption of digital music services," said Scott Kauffman, president and chief executive officer of MusicNow.

2003-11-11T18:26:00.000+05:00

Global marketers hiked spending in 2002

The world's Top 100 global marketers "weathered" slow growth and uncertain global economic and political conditions in 2002 by stimulating their global media spending by 7.1% to $74.2 billion, reversing a decline of 2.6% charted by the group in 2001, according to Advertising Age's 17th annual Global Marketing report.

P&G: $4.48 billion

Procter & Gamble Co. once again paced the megaspenders at $4.48 billion in media, up 21.9%. Acquisition-minded P&G boosted its volume with the inclusion of Wella A.G., based Darmstadt, Germany, purchased by P&G this September and included in its media totals on a pro forma basis. This is P&G's sixth beauty-care brand to generate $1 billion in annual sales and its 14th global brand at such a level.

Unilever unseated General Motors Corp. as the No. 2 global marketer, at $3.32 billion, up 19.2%, to GM's $3.22 billion, up 9%. The Anglo-Dutch combine had 14 brands that each generated sales of 1 billion euros in 2002, a year that saw the euro rise to the level of the U.S. dollar by yearend. No other marketers reached $3 billion in media spending. Twenty-two were above $1 billion.

U.S. component

The U.S. media component of this report hit $37.31 billion, up 7%, or 50.2% of the Top 100 total. U.S. marketers claim 49 of the Top 100 spots, although Tokyo is the lead headquarters city with 10 vs. eight for New York. Europe amassed media of $23.06 billion from the Top 100, up 12.2%, followed by Asia at $9.87 billion, up 0.5%. The Top 100's category media stimulants were personal care, up 17.3%; telecommunications, 10.6%; and media/entertainment, 9.2%.

Four main regions

To be "global," a marketer must advertise in three of four regions -- North America, Europe, Asia and Latin America. This eliminated 30 regional-only marketers (19 in the U.S.) whose media volumes were higher than No. 100 Intel Corp. at $191 million.

Unilever spending came from 72 of the 78 countries from which Ad Age obtained media, the most of any marketer. That globalism is further illustrated in a companion study that illustrates the account play by the world's 23 major multinational agency networks in 61 countries plus eight subregions. Much of Unilever's growth in markets came from full-integration of its Bestfoods acquisition into the agency networks, and rapid global growth of Slim-Fast, Axe and Dove brands.

Download Full 54-page, 2003 Global Marketing Report here

2003-11-11T18:21:00.000+05:00

Gates trots out Longhorn

Microsoft Chairman Bill Gates tried to win over developers here Monday as he offered the first look at Longhorn, the next version of Windows. Longhorn is built around three major advances--a new graphics and presentation engine known as Avalon, a new communications architecture known as Indigo, and a new file system known as WinFS that borrows from Microsoft's relational database technology.

Bottom line

Even with all the work that's been done so far, Gates is still looking for developer feedback to make sure that Microsoft is headed in the right direction with Longhorn, which he calls the company's biggest effort since Windows 95.

Gates did not offer a time frame for delivery of the new operating system, but he said it still represents "years of work." Analysts have said they expect it could be 2006 before the new software is released.

Instead of providing an estimate of when the final release will ship, Microsoft said only that a beta, or test version, of the software is slated for next summer.

It was Longhorn's desktop that got the most thorough preview during Gates' keynote address at the company's Professional Developers Conference, taking place at the Los Angeles Convention Center.

Among the features shown off were transparent windows, animated windows that pop open and a new taskbar on the righthand side of the screen that displayed a clock, buddy list, and news and other information streamed onto the desktop via an RSS feed.

Using the relational database built into the file system, information can be viewed in new ways, such as in "stacks" based on a single common attribute. Although the concept is similar to that of folders, it is more ad hoc than the folder design and is meant to facilitate having one piece of information in several stacks.

The graphics are powered by a new XML-based graphics and presentation engine known as Avalon that builds into the operating system and expands some of Microsoft's existing technologies like DirectX and ClearType.

The graphical look of Longhorn--particularly its transparency and animated windows--are reminiscent of Apple's Mac OS X. Other features, such as the thumbnail image that pops up while users are scrolling through a long document, appear to be all-new ideas.

The file system has already been well described, but Gates said it will fulfill a long-held vision of his that will pave the way for better searching as well as ways of grouping together e-mail, Web pages and documents that have previously been held in separate "silos."

"That's been a holy grail for me for some time," Gates told developers Monday.

Although the event was miles away from the fires that have been ravaging much of Southern California, the morning's crowd was somewhat smaller than the sell-out numbers still expected here. Some people were still having trouble getting into Los Angeles, with many flights cancelled or delayed for hours.

Back to the future

Trying to show off both Longhorn's backward compatibility and its possibilities for the future, Microsoft product unit manager Hillel Cooperman presented the operating system running VisiCalc, the 20-year-old spreadsheet program, as well as a demo application that drew on all of the operating system's new features to grab and display content from the Internet and video, drawing on the operating system's search, graphics and Web services engines.

Gates also tried to stress that Microsoft is still looking for developer feedback to make sure that the company is headed in the right direction with Longhorn, which he reiterated is the company's biggest effort since Windows 95.

Advances in hardware will make the features of Longhorn both possible and necessary, Gates said, predicting that PCs by 2006 will have a processor of between 4GHz and 6GHz, more than 2GB of memory, a terabyte or more of storage, and graphics chips three times as powerful as today's.

"None of these things are the constraints," Gates said. "It's software."

In addition to the major advances that Microsoft is planning with Longhorn, Gates and Microsoft Group Vice President Jim Allchin underscored the effort that Microsoft is placing on the fundamentals--increasing both the security and reliability of Windows.

Following Gates on stage, Allchin showed off more of Longhorn's technical features, including a reporting feature that he said offers developers the equivalent of a "flight data recorder" to track the operation of their applications.

Gates said the new technologies inside Longhorn should be used to make applications that are at once both more powerful and more simple to run--another longtime goal. He expressed hope that future programs might have "less commands despite the new richness that's there."

With that goal in mind, Microsoft highlighted some new tools for developers, most notably WinFX, which the company described as a new application programming model and an evolution of its .Net Framework, as well as "XAML" (pronounced "zamel"), a new language that Allchin said would allow developers to create Longhorn applications in a "declarative" way.

The company also wanted to show that some developers are already committed to its efforts, tapping representatives from Adobe Systems, Amazon.com and elsewhere to show some of the possibilites for Longhorn applications.

2003-11-06T10:05:00.000+05:00

Reach & Frequency - Back in the Spotlight

Although people in the online ad industry aren't talking about R&F much anymore, they remain important metrics, albeit for different reasons than for offline media.

It seems like not so long ago, everywhere you looked in this industry you found people gathered together and talking about reach and frequency. They were THE topics du jour.

In offline media, reach and frequency are a given -- criteria by which plan options are measured against one another. They are representative of communications' delivery goals, which marketers use to determine how much the "needle" is moved as a result of their advertising efforts.

It seemed that for a while there, these important measures were going to be just as significant for online advertising as they have been for offline. Every major research and technology company was going to get involved, from NetRatings to Atlas DMT. Even the ARF issued guidelines by which reach/frequency on the Web was to be determined.

But now, silence. No one seems to be talking about it anymore.

Just what is going on with the reach and frequency issue online?

Reach & Frequency Take a New Focus Online

Reach and frequency are still important as they relate to online advertising media planning, but the angle taken – and therefore, the emphasis – has shifted somewhat.

The silence on the topic isn't that reach and frequency has become less important: "The problem is that it was never finished," says David Smith, president of Mediasmith in San Francisco and chair of the Advertising Research Federation's Online Media Council. He points out that reach and frequency as a consideration has a different focus within the agency community.

"It is not so much an issue for online people who are more buyer-oriented," continues Smith. "It is an issue in the bigger agencies where the planning is done where it has always been done."

What this means is that shops with cross-media responsibilities that might include online are in greater need of being able to express that online media component in terms that articulates its contribution comparable to that of the other media under consideration.

"Reach/frequency continues to be important to online advertising as a predictive/planning tool to predetermine the contribution online media could have to an overall marketing effort," says Alan Schanzer, managing partner at The Digital Edge. "Like a CPM, reach/frequency allows us to compare varying types of media with some degree -- or accepted -- level of comfort."

Something to understand about reach/frequency, if you don't already, is that in terms of its use for online, it can allow for the medium's communication delivery to be represented in terms that can be expressed within the context of the overall media package.

There are tools out there that media planners and buyers can use for predictive purposes that enable them to look at what kind of reach an online campaign might be able to accomplish. But these tools aren't yet providing the kind of combined reach and frequency that would let planners and buyers know in what way the communication delivery of a media plan is effected by online's presence. That is being worked on, however.

"Currently, the Digital Edge is in a 'beta' phase with various R&F tools. We are able to use info from Web RF in combination with other media types, which is very useful," says Schanzer. "In general, this is very effective at showing -- at least directionally -- the contribution online could make to an overall campaign. The bottom line is that to the extent we'll still accept reach/frequency in general, it is being accepted as an online measurement tool."

According to Smith -- the industry's resident expert on the topic -- the real reason why reach and frequency matter to online – and this might be true for reach and frequency in all contexts – is in the execution. "Given that you can execute a plan successfully, you want to be able to replicate it," he says. "If the sites vary wildly in execution AND we do not have a good post-analysis tool, you can get a lot of reach one time and a lot of frequency another, etc."

So, the use of reach and frequency for online goes beyond the metric as a predictive measure. It is its ability to quantify the best of all possible media worlds and allow advertisers to yield the same or similar effects repeatedly.

But what online reach and frequency tools one day may be capable of that isn't possible for offline media is monitoring and adjusting media plans while they are live to ensure the post-delivery of the initial communication delivery goal. At the end of the day, what an advertiser really wants is the satisfaction of a communication delivery goal. That is because whatever objective has been set is what a communication delivery goal is based on. The number of impressions, TRPs, inserts, what have you, is all based on what level of communication the campaign has to achieve to accomplish those goals.

How loud do I have to shout my message and how often do I have to shout it in order to move the needle whatever amount I'm being asked to move it?

Online, there is the potential for watching this take place and manipulating your media accordingly to optimize its effects.

"We've got to prove that what we laid out as a goal is achieved (post buy)," says Smith. He says we also need to have the ability to track what is going on while the buy is live so we can adjust and optimize the plan based on R/F goals.

Online's Adoption of R/F Still Coming

Whatever may be said about reach/frequency's importance to media, however, there still seems to be little adoption by the online advertising community. But this isn't necessarily because the metric isn't meaningful.

Relevance is what is questionable; relevance and client demand. Clients might like to have reach and frequency available for their online plans, but they aren't asking for it in ways that make agencies feel any urgency.

Agencies don't "understand the relevance as much as the traditional folks who are planning and allocating their budgets," says Smith. That is due in large part to a lack of pressure from the client.

But it may be due to larger issues.

"Reach/frequency as a standard may be a dying measure," posits Schanzer. "As with the Internet, the conversations around on-demand [and] iTV technology are more about user interaction than users reached. This will continue to trend as digital media formats become more prevalent in the common household. What we are seeing are the standards for offline media being raised to the higher standard of online media." He says this is a bit ironic, seeing as many online practitioners now spend so much time trying to be like general media planners and buyers.

Indeed, as more technology enables advertisers to hold media more accountable by allowing the read on a specific individual's proclivities and engagements with a brand, reach and frequency will come to matter less.

There are sites that survey their users regularly and require registration. There are behavioral marketing platforms that can inform the way ads are delivered. There are technologies that collect audience data from pre-existing sources such as ad servers, content servers and email databases. Being able to merge them with other data sources such as subscription or registration databases to not only extract greater understanding of value of an audience, but also identify that audience as saleable ad inventory, could make discernable interactions from individuals more valuable than reach and frequency.

That said, if we believe the medium CAN actually be used for the purposes of branding, then the only way to carry on the rhetorical discourse that branding in part consists for the purposes of selling is to surrogate the appropriate number of people who must be touched by the message. That surrogate is the communication delivery goal that reach and frequency represent. This will in turn yield some variable of widgets that will be sold. That's essentially why it is used in traditional media, and the same would hold true for online.

Ultimately, the Internet as a marketing tool has to be based in some measure on its ability to use database systems that allow for unique identification of individuals in an audience as prospective consumers. But this view is slow to manifest, at least until a new generation of brand managers and media directors for whom technology is neither scary and for whom data-driven marketing is taken for granted are working together.

Until then, reach and frequency are the best methods at our disposal for determining communication delivery value for a client that would use the medium as a tool for branding and not just to elicit impulse sale.

2003-11-05T11:00:00.000+05:00

Online Advertising Dramatically Boosts Power of Traditional Media

Study shows Substantial Gains in Audience Reach, Branding Effectiveness and Purchase Intent

Online advertising generates a dramatic boost for big-brand advertising campaigns according to innovative new Pan-European research released today by the European Interactive Advertising Association (EIAA). This unique study, the first to be conducted across four media simultaneously in three different countries, tracked 15 major brand campaigns in the UK, France and Germany, was conducted by the independent research firm NFO Infratest. The study demonstrated that:

Online advertising substantially increased the overall reach of a multimedia (TV, radio, print) campaign
§ The aggregate reach of 41% delivered by TV campaigns rose to 63% with the inclusion of people exposed only to online advertising

Online advertising substantially increased the effectiveness of TV, print and radio advertising
§ Aggregate results across all 15 campaigns showed that ad recall increased by 27% after exposure to the TV campaigns, however using TV and online together almost doubled the increase to 45%

§ Using online plus another media substantially increased positive perceptions of the brands such as “trendy”, “innovative” and “unique” thereby helping to extend brand image

§ Online advertising was found to work very effectively with Radio and Print. In particular, more targeted campaigns benefited substantially from the use of Internet together with Radio/Print in the media mix. For example, in the case of a youth orientated campaign Online and Radio demonstrated that they best worked together to reach this target and in fact this combination [1] resulted in the highest increase in purchase/usage intent than any other combination of media.

Using online and another media also helped to improve recollection of details of the advertisements and purchase intent
§ Recall of ad details increased by 14% amongst people exposed to TV ads only, recall amongst those exposed to TV and online ads increased 44%

§ Intent to buy the product or become a client increased by 2% amongst people who saw TV ads only, yet increased a massive 12% amongst those exposed to TV and online ads

The study was commissioned by the EIAA to quantify the dynamics of how online, TV, radio and print advertising interact in order to help marketers plan more effective cross-media campaigns.

Michael Kleindl, EIAA Chairman and CEO of AdLINK Internet Media AG, commented "The data shows that by adding the online medium to their media mix major brands can strongly improve results in terms of reach and effectiveness. We believe that this great step forward in our understanding of the value of online advertising will contribute to an increased share of overall advertising spend."

Jupiter Media Metrix forecasts the European Online Advertising market to be worth €1,186m in 2002 rising to €3,595m in 2007. [2]

2003-11-05T10:53:00.000+05:00

EIAA launches Standardised Online Ad Formats

Industry responds to advertiser demand for standardisation, impact and consistency across Europe

The European Interactive Advertising Association (EIAA) and the Interactive Advertising Bureau Europe (IAB Europe) today announced the launch of the first European online ad format standardisation. The EIAA and IAB Europe see this European consolidation as an important step towards global consistency.

This move demonstrates the industry’s commitment to making online as easy to plan, buy and create as offline campaigns and comes in response to demands from the planning, buying and advertiser communities for a simplified, cost effective and creative ad offering.

The package of European Online Ad Formats is a series of recommended ad sizes which will be implemented across EIAA and IAB Europe member networks to facilitate the implementation and growth of pan-European online advertising campaigns.

This standardisation will increase the efficiency of planning and executing an online advertising campaign and is expected to remove the confusion created by sites having disparate format specifications and reduce the number of ads per page. The larger ad sizes in the package, such as the 728x90 Super Banner and 160x600 Wide Skyscraper, will give greater impact and encourage creativity.

To create consistency, transparency and comparability, EIAA and IAB member organisations have agreed to move towards a standard suite of six ad formats. These include the four formats contained in the Universal Ad Package (UAP) announced by the IAB US in April 2003 as well as two of the most currently used ad formats across Europe, the 468 x 60 Traditional Banner and 120 x 600 Skyscraper.

The European Online Standard Ad Package includes:
         * 468 x 60 Traditional Banner
         * 120 x 600 Skyscraper
         * 160 x 600 UAP Wide Skyscraper
         * 180 x 150 UAP Rectangle
         * 300 x 250 UAP Medium Rectangle
         * 728 x 90 UAP Super Banner

Historically many web sites have defined the formats for online advertising according to individual site layout which has resulted in many formats being offered to advertisers. Few standard formats have been established to date and the EIAA and IAB members have decided to create this European standard whilst gradually retiring other formats in order to simplify online media planning, reduce production costs and give greater scope to online creativity. The multitude of formats in use currently leads to increased production costs for agencies and clients as well as making online media planning complex and time consuming.

Michael Kleindl, EIAA Chairman, commented, "This initiative is a response to continued feedback from the advertiser, planning and buying communities regarding the need for simplified formats as a means to executing more effective campaigns. We want to generate more scope for creativity and facilitate the growth of truly pan-European ad campaigns."

"This is another watershed in the internet's commercial development.” said Danny Meadows-Klue, president, IAB Europe. “These core sizes will become available across thousands of European websites giving advertisers the chance to run pan-European campaigns on a scale never before possible."

According to Nielsen//NetRatings, EIAA members AOL, Lycos Europe, MSN, Tiscali, T-Online and Yahoo! have a combined reach of 64.7 million (78% of total) active home users across Europe (UK, France, Germany, Spain, Italy, Sweden, Netherlands, Switzerland).

Jupiter Media Metrix forecasts the European Online Advertising market to be worth €4,014 million by 2008.

European Interactive Advertising Association

The European Interactive Advertising Association (www.eiaa.net) is a unique pan-European trade organisation for sellers of interactive media. The primary objectives of the EIAA are to champion and to improve the understanding of the value of online advertising as a medium, to grow the European interactive advertising market by proving its effectiveness, thus increasing its share of total advertising investment. Its members are currently AdLINK Internet Media AG, AOL Europe, IP-WEB.NET (part of the RTL Group), Lycos Europe, MSN International, Tiscali, T-Online International, Yahoo! Europe. It is chaired by Michael Kleindl, Managing Partner of Valkiria Network

2003-11-05T10:45:00.000+05:00

Measuring Online Ad Effectiveness

MARKETERS have long said they would increase their online advertising budgets if Internet sites would do what they promised to do years ago: quantify the effects of an ad campaign on sales, brand awareness and other factors like the consumer's intent to buy.

With each passing month, online companies are increasingly able to do just that. The question is, will marketers actually respond?

Google is the latest Internet company to make good on the promise. A new feature allows advertisers to copy a string of software code from Google's Web site onto pages of their own sites. When users click on the advertiser's link from Google's Web site, Google follows the user's progress. Like other companies, Google does not collect personally identifiable information on the user.

Advertisers can log on to Google to view graphs showing how many visitors bought an item, signed up for an e-mail message or sought other information deemed significant. Armed with that information, marketers can determine if their ads are worth the expense.

"We think it's critical to help advertisers keep track of what's going on," Salar Kamangar, Google's director for product marketing, said. "We didn't want them to either overbid or underbid," he said, referring to the process by which advertisers pay for Google ads. "If they overbid, we could possibly lose them as a customer. If they underbid, they're competing less effectively than the competition."

In the three weeks since Google announced the feature, Mr. Kamangar said, the site has received stronger than expected interest from advertisers. While declining to be specific about usage, Mr. Kamangar said clients using the new service had "generally increased their bids, rather than decreased them."

The feature also helps Google avoid temporary advertising suspensions by marketers, who often test the effectiveness of their ads by simply stopping their advertising campaigns for a few days and tracking the effects on sales.

Industry analysts say the Google feature, and similar services from companies like DoubleClick, LinkShare and CentrPort, are helping a generation of marketing executives to quantify the benefits of their advertising investments.

"This isn't something most traditional marketers are used to thinking about," said Charlene Li, an analyst with Forrester Research, a technology consulting firm. "Most of these ad executives got to where they are because they ran great branding campaigns," and not by showing statistical acumen, she said.

Indeed, before the Web, the only advertising medium that made such calculations was direct mail, which many marketing executives regard as being filled with junk mailers and number-crunching catalog mavens.

"But in the last couple years, C.E.O.'s in traditional companies have been looking at budgets for all these different areas of the business and calculating the return on investment for all that spending," Ms. Li said. "Now they're finally looking at marketing budgets, too, and saying, 'You're spending $1 million on this campaign, and what exactly is it going to do for sales?' "

But even though online tools are now available to measure return on advertising, traditional marketers know little about them.

A new Forrester survey of 95 marketers, released Friday, found that 81 percent said their online ad spending would increase if they saw research proving that such ads would increase sales. Yet most of the survey's respondents were unaware of the numerous studies "that show the impact of increased online spending - and those who were aware discounted the results as inapplicable," the report said. "Only firsthand, positive experiences with online media will give marketers the confidence to increase spending."

Google's service is one that could provide marketers such assurances, Ms. Li said. CNET Networks Inc., the online technology publisher of Web sites including News.com, Builder.com, GameSpot and others, is offering similar services. Earlier this year, GameSpot, an informational Web site for video game enthusiasts, rolled out a program for its advertisers called GameSpot Trax, a free online service that can track various statistical results of ad campaigns.

GameSpot Trax is unusual among online advertising analysis services, CNET's chief operating officer, Barry Briggs, said, because it charts elements other than sales, like online consumer trial rates and consumer awareness via Internet inquiries.

GameSpot Trax provides statistics tracking each category for the 8,500 video game products covered by GameSpot and CNET's other game sites. For instance, for the Electronic Arts football video game Madden '04, GameSpot Trax gauges how consumer awareness has changed since its release in early August by tracking, among other things, the number of players who have visited the Madden '04 section of the GameSpot Web site, in contrast to the number who have visited the GameSpot Web pages of competing game titles.

"One marketer looked at this data and went to his C.E.O. and said 'I got tremendous awareness and consideration and trial for this game, but you know what? They hated it,' " Mr. Briggs said. "So we're giving people insight into not only their marketing but how good their product is."

One CNET advertising client, Erik Johnson, president of Ignited Minds, an advertising firm in Marina Del Rey, Calif., said such tracking services have impressed him. "If I can see what's happening, it encourages me to do even more spending," he said.

Mr. Johnson said his clients, who include major consumer electronics and video game companies like Sony, Electronic Arts and Activision, have made "meaningful changes" in their online ad spending, partly in response to better tracking of results. "In the past, they might've done $20,000 in an online campaign," he said. "Now it might be $200,000 or $300,000."

Mr. Briggs said that since Trax appeared this spring, the number of ad campaigns on GameSpot and CNET's other video game Web sites had grown by threefold, and that average spending per campaign had increased 25 percent, with the biggest marketers increasing spending by 50 percent.

In coming months, GameSpot will integrate its buying cycle data with sales statistics from the research firm NPD to help predict game sales, Mr. Briggs said. He said that next year CNET would offer advertisers on its other Web sites a similar service and start charging Trax clients a fee. "The amount you can learn is so compelling, in so many cases, that it's like the holy grail." he said.

2003-11-05T10:33:00.000+05:00

Point-of-Purchase (POP) Display Programs

Premium Network Launches Full Service Point-of-Purchase (POP) Display Programs that Integrate Into Online Advertising and Web-to-Retail Promotions

Premium Network, Inc. (www.premiumnetwork.com), the leading online advertising and promotions firm, today announced it will offer full service creation of Point-of-Purchase (POP) Displays that will tie into online advertising and web-to-retail promotions.

The Premium Network Point-of-Purchase (POP) Display program provides creative and promotional services to marketers by linking in-store POP displays to online advertising programs. With the POP program, marketers will have the opportunity to expand their consumer base by utilizing Premium Network's ad network audience of over 50 million unique visitors. Online consumers would be informed about exciting in-store promotions and sweepstakes at brick-and-mortar retailers. Special coupons and premiums picked up by consumers from the retailer would then tie-in to an online component, for example, matching a coupon to an object online in order to win a prize.

Premium Network's turnkey approach integrating online and off-line promotions offers a closed loop and integrated marketing program with full accountability, as well as offering a greater ability to sell to core customers both off-line and online.

Advertisers may purchase the POP services of this program as a suite or individually. The basic services include:

Engineering and Production
Premium Network's team of POP experts will provide complete engineering and design services from basic counter card displays to elaborate motorized, die-cut, corrugated molded plastic and permanent-in store display installations.

POP Deployment
Premium Network's team will deploy POP displays direct to individual retailers and fulfillment centers to insure the display reaches destination on schedule.

POP Promotion and Sweepstakes Integration
Premium Network offers integration of its online audience of 50 million U.S. consumers to advertise product launches and direct consumers to the retail location nearest them to participate in an in-store POP promotion.

Unique Web-to-Retail Program
Premium Network creates and distributes a stand-alone custom designed POP display that holds a sweepstakes entry at retail stores. The entry form provides instant discount coupons to buy the product retail or online. Sweepstakes entries send consumers back to a mini-website to register for the promotion with a unique PIN number. Sweepstakes entries are placed in a custom designed display and can take up no more counter space than a stack of traditional trading cards or consist of an elaborate motorized floor standing display with the product on view. Sweepstakes entries can also be attached directly to product, placed inside a product box, or designed as a collectable card.

Premium Network also manages a back-end database of registrations on the promotional mini-site. Winner selections and sweepstakes prize fulfillments are managed and provided to the marketer with the name and address of each user who participates in the promotion for future marketing programs.

The more than 100 million unique monthly visitors to Premium Network's family of online sites provide far greater potential in advertising than conventional approaches used to target specific audience segments. With over 150 sites and Premium Network's core products of site-specific advertising, ad networks, and database targeting, advertisers can deliver their messages to any one of a dozen targeted categories and audience segments. Products and services available also include Strategic Ad Banners, Contest Promotions, Content Integration, Rich Media, Targeted E-Mail, Opt-in Programs, and Web-to-Retail Merchandising POP Programs.

Exceptional services, promotions, and sweepstakes are what make Premium Network the consummate one-stop advertising value.

2003-11-04T09:37:00.000+05:00

Eleven Things That Will Happen

Lately, I've had a lot of time to ponder the state of the Internet. It's great to step back, take a big-picture look at what's been going on in the world, and try to imagine where we're going next.

I'm not interested in far-future prognosticating or Fast Company/Wired-type techno-boosterism. But many identifiable trend lines can be followed through to their logical conclusion, especially now that we have seven years' perspective of e-biz. My predictions are based on those trend lines. I truly believe they will happen... eventually. I'm not saying any of this stuff is going to come true next month, or even next year, but it's hard to imagine (barring major catastrophes) these things won't be part of our lives at some time in the future. Besides, we're already halfway through the year. No better time to beat the end-of-the-year prediction rush . So without further ado, my list of 11 things that will happen in the foreseeable future.

1. Wireless everywhere

Given the choice between a wired tether and wireless freedom, which would you chose? Right now, those who have the opportunity and the resources to get their data wirelessly, are. With an explosion of Wi-Fi access points everywhere, soon anyone with a Wi-Fi card in her laptop will be able to hang out outside the office as long as the batteries hold out. Add to this the rapid development in small fuel cells that allow computers to run for days without a charge, and you've got a recipe for a major revolution in the way we live with computers. Beyond the laptop, phone access is getting better, palmtops and PDAs have wireless access built in, and people (early adopters, at least ) are starting to expect access.

Will this happen next year?
Doubtful, but there's no conceivable scenario I can think of in which people, given the choice and the hardware, won't chose to cut Ethernet (and eventually power) cords. What will this mean to marketers? Ubiquitous data access will allow people to be smarter, make more informed decisions, and be all-around tougher customers. Will wireless advertising take off? Maybe some day, in some fashion we haven't thought of yet. For the next two to five years, we'd better expect our customers to have access to our sites, and our competitors', everywhere they go.

2. E-mail: death of a marketing tool

OK, start the hate mail now. Unless something's done to stop spam, e-mail as a marketing tool will continue to erode in effectiveness until it's untenable as a legitimate tool. Several recent reports say this summer is when spam will outpace legitimate e-mail. Regardless of present or pending legislation, it's only going to get worse. Even if customers want to receive your e-mail, they'll have an increasingly difficult time finding it in the clutter.

For now, the best marketing strategy is to educate customers on setting up filters so your e-mail lands in the folder that gets read. Legitimate marketers who create desired content will continue to reach some of their audiences. Unless spam goes away, no scenario exists for e-mail to get any easier.

3. Blogout

Blogs have gotten a lot of attention in the past six months. Many of my ClickZ colleagues have written some pretty compelling pieces about blogs' power as a marketing tool, perhaps even replacing the e-mail newsletters. Outside of its utility for marketing, blogging has taken on a life of its own. Millions of registered users blogging away. It's a new publishing medium that wouldn't have been possible without the Internet, and one that's given a meaningful outlet to many folks.

But (you knew there'd be a "but"), it's not going to last forever. As bloggers know, maintaining a blog is a lot of work. Paying people to keep on blogging can cost lots of money. Eventually, many private bloggers will move on to other things. Corporate bloggers will become too busy (or bored) to blog. As someone who ran a proto-blog for six years, 364 days a year, I know first-hand that at some point, you just run out of steam. Blogs are wonderful innovations. They emphasize the powers of the Net, personality, and instant publishing. Just don't count on them remaining the phenomenon they've been over the past year or so.

4. Search engine regulation

Search engines are really the main portals (more cynically, chokepoints) of the Web. The power wielded by Google, Yahoo!, Overture, and MSN is astounding. If you don't show up on search engines, you might as well not exist. In a world increasingly dependent on the Web, that's a lot of power. One that won't go unnoticed by government types (or lawyers) forever. At some point, someone's going to file a class action suit, or some legislator whose business got lousy rankings is going to say, "Hey! This isn't fair!" I don't know how attempts at regulation will pan out, but it's inevitable the government will try to get involved.

5. Convergence... sort of

In media convergence, one plus one won't equal two. Successful convergence media will not take the form of TV over the Web, or the Web on TV. With digital cable in increasingly more homes and multifunctional devices such as cell phone/PDA combos, the trend is to "smush" more functionality into fewer devices. We aren't even close yet, but soon Web features will be combined with TV features to create a medium that acts a little like the Web and TV but looks like neither. Ditto with the cell phone/PDA/camera/GPS combos in our future.

6. Religious conversion of media folks

No, I don't mean salvation. Most media folks I know are far beyond that. But in the not-so-distant future, when old-school media directors retire and those raised with the Web take their place, we'll see a religious conversion in attitudes toward digital media. Not that many haven't already discovered the Web's power -- just look at increased online spending. But someday, clients and agencies will realize the true implications of the fact the Net is the primary daytime medium. Then, all heck will break loose. This also means mass conversion to the fact ads needn't be banners.

7. Death of the focus group as primary qualitative test

The world's going digital and becoming a lot more measurable. Real-time measurement comes with real-time knowledge about what customers are doing, watching, and interested in. As data is used (not "collected"), knowing will be much easier. The idea of vetting TV pilots, new products, and new information using groups of 10 people will actually seem as ridiculous as it is. Qualitative data will continue to be vitally important, but as an adjunct to a constant data stream from Web sites, video on demand, and log files from a variety of devices.

8. Universal broadband

Many argue AOL's troubles hinge on the company's dial-up dependence. That's probably true. But as cable expands to more homes and pricing for DSL continues to drop, dial-up will disappear for those who have a choice. It'll still be used into the foreseeable future. It's too cheap and ubiquitous to disappear entirely. But as with wireless, we must realize that, given a choice, people always choose faster. In the high-speed environment, rich media is vital, and access to more forms of data is possible for everyone.

9. Death of the music industry as we know it

The music industry's litigious activities are merely one symptom of a dying industry. The Recording Industry Association of America (RIAA) is exhibiting classic signs of a person diagnosed with a terminal illness. First it was in denial ("Napster is just a minor problem"). Now it's in the anger stage ("Sue the students!"). Soon, it'll move on to bargaining ("We can't stop it. Maybe we can compromise"). Finally, it'll reach acceptance and realize the need for another way of making money outside of controlling distribution of digital media on plastic discs. I'm not arguing the morality of file sharing; we're well beyond that. What I'm saying, based on the millions of users, the pace of technology, and worldwide access to the Web, is there's no way to stop it. Time to move on and come up with new business models.

10. The connected consumer as a major force

Several major industries have been transformed by the power of information in the hands of consumers. Travel, auto, and health have been radically altered. That's just the beginning. As the next generation of consumers comes of age, people who never knew a time before the Web, cell phones, or IM, a lot more change will occur. Teens today expect all companies have Web sites, think e-mail is a slow communications medium (IM is, like, way faster), and are used to being able to contact anyone they want, whenever they want. They won't have a lot of patience for companies that don't open themselves up or respond quickly. This doesn't mean voice mail or IVR systems will go away. These kids are very comfortable with technology. They expect to get what they want, when they want it. If they don't, news will spread -- fast. Count on it.

11. The rise of the creatives

Creativity as a business strategy is going to be the driving factor of success. The Internet tends to turn everything into a commodity. Consumers are accustomed to performing price and product comparisons at will. Geography is less important. The Internet provides access to pretty much anything we want, whenever we want it. Differentiation is increasingly difficult and can only occur through innovation, creativity, and all those "soft" skills that in the past were considered important, but not vital.

Creativity will be the most important strategic weapon for differentiation in the future, no matter the industry. This doesn't only mean packaging, product design, and marketing. The bar will continuously rise in terms of consumer expectations. Quality, performance, and reliability will always be givens. What will set companies apart will be the creativity applied to making products or services more delightful and exciting to buyers. Will price matter? Of course. But the intangibles make the final decision to purchase happen -- or not.

2003-11-02T18:28:00.000+05:00

The Real Decision Makers

I have some figures at my fingertips that I think will astound you.

Did you know a full 67 percent of families buying a new car base their purchasing decision on advice given by their children -- who are too young to drive? That 62 percent of mobile phones and 65 percent of clothing brands are bought by parents under the influence of their kids' opinions?

We're not talking only about American kids, but kids across the globe, in countries as diverse as India, Japan, Brazil, Spain, Turkey, Germany, Thailand and Denmark. The power this young generation wields over their parents has been shown to be nothing less than mind blowing.

The data comes from the world's largest study on kids and their relationship with brands. It was conducted for BRANDchild, the book I co-authored with Patricia Seybold. I call this emerging generation the tweens. They fall, roughly, between the ages of 8 and 14.

Research institute Millward Brown interviewed thousands of kids in 14 countries and 70 cities for the study. Among many startling findings that emerged, overwhelming evidence shows brand purchase decisions are increasingly being made by the children of the household. This is true across the board, in almost every product category from snacks and soft drinks to cosmetics and house wares.

In light of these findings, every message targeting the adult market must be reconceived and reframed. Marketers will increasingly have to consider how to capture the attention of two very distinct audiences in one message. They must appeal to the adult purchaser, as well as to the kid who influences them.

What does all this mean for your online strategy? As it's becoming increasingly clear you ignore this young audience at your peril, it's vital you structure your message to appeal to both markets. This will be challenging, but it must be part of your site. Obviously, some features appeal more to parents, others to their kids. The challenge is to determine what appeals to each age group, then let your site reflect this something-for-everyone. At the same time, maintain the integrity of your core message.

One method would be to build in a separate section where kids can explore your products in a more dynamic way. Language would be kid-friendly and graphically appropriate to secure their full attention.

The BRANDchild survey shows that combining a structured product presentation appeals to the adult segment, whereas a product presented in its environment appeals more to tweens. If your brand belongs the 80 percent of all product categories heavily influenced by tweens, your site should combine both product presentations. If you sell cars, you'll need to place the car in its "natural" environment, as well as in a more "clinical" space where you can demonstrate the technical facts and features. The same applies to selling home decorations.

Use of color is critical. The BRANDchild study found some colors are more appealing than others. This is dependent on what product category is offered, as well as the context in which the brand is presented. Colors you select should appeal to both audiences. It would be a mistake to think in greys.

This dual marketing is breaking through. Year after year, Toyota in Australia has maintained a top-selling position using chicks, puppies and kittens in commercials. Strange as it may sound, it works. Remember bunches of balloons waving in front of car dealerships? A small example, but fairly obvious once you're faced with the statistics of how children influence parents' purchase decisions.

Marketing to kids is so much more than simply pestering them (and their parents). It's about achieving balance. Be totally honest. Completely fulfill whatever it is you promise to deliver. This generation can detect "phony" from miles away. Youth deserves the highest ethical standards you can deliver. They're our future -- and your future brand customers!

2003-11-01T21:35:00.000+05:00

The (online) music man

In 1995, RealNetworks CEO Rob Glaser pitched skeptical record labels on using the company's then-new audio-streaming technology to build a "jukebox in the sky."

Eight years later, that dream is reality in Glaser's mind. And its manifestation--monthly subscription music services such as that offered by RealNetworks' Rhapsody--will be the predominant way people access audio online in the years to come, Glaser contends. His evidence: the company's 46 percent rise in subscribers for Rhapsody and RealOne's premium radio from the second to third quarter.

That may also serve to steady concerns that RealNetworks' core subscription service for streaming video, RealOne SuperPass, may be losing steam. Indeed, RealNetworks has a head start on a raft of rival services, including Apple Computer's iTunes pay-per-song service and an overhauled Napster that's emerging to compete with the top-rated Rhapsody.

At the same time, the company faces continuing weakness in sales of system servers for delivering digital audio and video files--a business Microsoft dominates on the PC but Real aims to command in the wireless market. CNET News.com talked to Glaser a day after RealNetworks announced third-quarter revenue that met analysts expectations, based on a rise in music subscriptions.

Q: Revenue was up this quarter, and music subscriber numbers were up. Can you talk about the main driver of this growth?
A: Glaser: Not only is RealNetworks doing extremely well, but the subscription model, which we have long-advocated, is at the core of how consumers are going to experience music. It's not the only way, but we think that it may be the single most important way and certainly the most logical successor to services such as the old pirate Napster and Kazaa.

Why is the subscription model better?
It's simple economics. The average consumer who uses Rhapsody--and we now have a quarter million music subscribers--listens to more than 100 different songs per month. That pattern's pretty consistent. If you go with a purchase model, that costs you over $100 a month as a consumer. If you go with subscription model...we are able to deliver that same experience to consumers and have a good business at selling it at $10 a month. So it's less than a tenth the cost.

That was the great thing about Kazaa and pirate Napster from the consumer standpoint--that you got access to all this stuff, and you didn't have to choose before you listened to a song whether you wanted to buy it or not. We offer the same thing: You can listen to 100 songs a month or 1,000 a month. Listen to five seconds of them or 30 seconds of them. You decide if it's something you want to permanently own.

Is there any support left inside Real or outside for MusicNet (a joint venture between Real, America Online and several record labels)?
MusicNet, interestingly enough, is the second-largest online music subscription service. We own lock, stock and barrel in No. 1, and we're the largest single shareholder in No. 2. MusicNet, near as I can tell, has a very solid relationship with AOL...The reality is there will be a variety of services out there. For us, it's the best possible outcome: We're the 100 percent owner of No. 1 and majority owner of No. 2.

Is Apple's iTunes, which is gaining a lot of exposure, plus QuickTime, a threat to Real's software?
We have had a multidimensional relationship with Apple for some time...The thing Apple has to decide--not for us but for the industry--is whether it wants to be completely vertically integrated, in which only things invented in Cupertino are used and promoted on the Apple platform, or whether it wants to be a broader platform. It's hard when you have a single-digit share of the market, because you have a hard time figuring out how to grow your business. So I understand the lure of going in that vertical direction. But Apple's already lost things like Adobe Premiere on its platform.

Does it want the iPod to only talk to the Apple version of the store, or does Apple want to sell iPods no matter what method (consumers want to use to) connect to iTunes? So there's this Soviet model, or there's the open-market chaotic model, exemplified by the Web and by some aspects of Wintel. And Apple has to choose.

So it's better for you if they stay in that niche market?
Either way, it's fine. Apple makes fine hardware. If Apple opens it up so that other people can support, then that's good. If Apple stays "company down" on everything they do, then the market forces over time will render them into the kind of niche we've seen them in time and time again.

Is there much of a profit margin on digital downloads as opposed to selling subscriptions?
I understand the lure of going in that vertical direction. But Apple's already lost things like Adobe Premiere on its platform.
We think that the services model long term is a better deal for everyone...Our take on it is the business of selling tracks will be a low-margin business, with low barriers to entry and lots of people jumping in. The business model we've focused on with subscriptions as the center will have the best long-term economics.

At what level of subscribers does the business become really lucrative?
One of the delightful things about being a public company is I can say things that go forward one quarter or 10 years. In the middle, it gets a little bit tricky. I'll say this: We are focused on a long-term business. It'll be 10 years in February. And if I look back and ignore this financial bubble in '99 and 2000 and think about where we thought we'd be, we're ahead of schedule. In the 20 years in the information technology and Internet industries, I've never been associated with a legal, legitimate consumer product that had the kind of consumer excitement that Rhapsody has, so that's got to be worth something.

Is Real going to get into the portable business so that people can port their music collection around?
With RealOne, we support a couple dozen significant volume devices.

In terms of the economics (of the subscription model), that's still a model in which you have to pay 99 cents a track. If you look at all the excitement about the iPod, the content on the iPod is (largely) not purchased by either CD or download by the recipient. That business has been living off the afterglow of pirate services.

Yes, that category of product is a great product. The primary action is in support that's based on personal use content, where people ripped their own content. We've got great support for that. In terms of tying it into Rhapsody, it's the early days yet.

Has the RealOne subscription business flattened outside of Rhapsody?
No...we had overall growth. Because we broke out music for the first time we didn't explain to people what the number for music subscribers would have been if you rolled the clock back, other than to say that music was up 46 percent (quarter to quarter).

You cautioned investors, in your conference call, about the Major League Baseball contract--is there heated competition for its hand in streaming ball games? What do you stand to lose, and how will you make up for it if that happens?
As you may know, I'm a tiny percent minority owner of the Seattle Mariners baseball team. I've been associated with them for 10 years and it's been terrific. So I've been around the block a bit with...the economics of baseball. We're trying to tell the folks that follow our business that we're not going to do something uneconomic when it comes time to renew our relationship with MLB.

Long-term, video is going to be more important than audio in aggregate. It's been a terrific relationship from the standpoint of fans. Baseball has been one of the most exciting ways to enjoy the Internet...I was in Berlin for the seventh (playoff) game between the Red Sox and the Yankees, up to the wee hours of the morning watching that amazing game. It's clear that it's a core part of the culture...but we're just telling people, "Don't expect us to do something irrational just for the love of the game."

How will you compensate if you lose it?
It represents less than 2 percent of our revenue. Depending on the circumstances, we could end up more profitable than we are today. Baseball has been a great relationship, and it would be great if it could continue.

Momentum is building for original video programming (such as AOL's new sports show) and movie services online. Where's Real going to get its next wave of subscribers on this front?
(Laughs) I appreciate the question--this is in a context in which we just announced 46 percent quarter on quarter growth in our fast-growing content area, so I don't think that the biggest question I lose sleep about is what wave is going to drive this forward now. We have several waves driving this forward now, music most prominently.

In other words, how committed are you to video streaming?
Long-term, video is going to be more important than audio in aggregate. By working with the industry, we cleared more than 400,000 unique pieces of content in music that we're able to offer consumers a lot of flexibility on. They can stream it; they can purchase it.

The biggest thing that has to happen from the scale that music is at is to get the content flowing--be it old TV archives, be it movies. Folks at services such as Movielink are off to a nice start. But if you look at the number of movies Movielink has, and you compare it to the number of tracks of music, Movielink is sort of where music services were in 1999 or 2000. Maybe a little bit ahead of that.

The big message we put to all these content industries is: "Look, the lesson of the music industry is if you don't get ahead of the curve and make your content available for legitimate services, consumers will find a ways to get it, anyway, to your detriment." As I've discussed with guys such as Jack Valenti, the danger is that they'll move too slowly.

Does Real have any plans in the offline world, such as in digital cinema, as does Microsoft?
The digital cinema initiatives today are mostly stunts. Every once in a while, we'll do a marketing stunt. But long term, digital distribution will impact everything, be it taking HD (high-definition)-quality content and flowing it out to cinemas and not having to make and ship 35mm prints.

I've had a number of fun conversations with my buddy (Dallas Mavericks owner) Mark Cuban, and on that front, he's a big believer--so much so that he bought a theater chain to experiment in that world. That world's going to come, and we'll always be happy to have our platforms and technologies used in that area. But in terms of that being a primary business in the next year or two, I think that it's still the early days yet for that business. We'd rather just let people build technologies and services with our technology rather than get involved with it first-person.

As the market changes, are there pieces Real is missing? Are there other potential acquisitions on the horizon?
We will be active but selective. I look at what we did with Rhapsody--best product in the business--and under-distributed. In that case, we had the opportunity for the perfect fit. When there will be opportunities like that, we will be active. There will be situations in which there will be an ingredient piece, something we can add to other things we're working on that will scale things up. But I don't think we'll be like the old Computer Associates International, for which acquisition is the fundamental growth strategy.

2003-10-31T14:30:00.000+05:00

PointRoll Providing Enhanced Branding Reports

Company Improves Metrics to Demonstrate Branding Capabilities of Panels within PointRoll's FatBoy Page-Based Expandable Ads

For years, marketers have debated whether the Web can be an effective branding tool. While there are those who assert that the Web is primarily a direct response medium, others feel that there is significant branding value in advertising online. However, the main question revolves around an advertiser's ability to quantify that branding value.

PointRoll has answered this question with robust branding metrics that have been available to its clients for years, free of charge. These metrics have included each expandable banner's average interaction rate, as well as other quantifiable data designed to measure a campaign's branding success.

Today, the Company announced that it has begun providing enhanced metrics to clients who use FatBoy(TM) units. The enhanced metrics enable clients to see the average panels per interaction and the average brand interaction time on each creative unit served as part of their campaign.

"The new metrics will allow us to better evaluate each ad's performance, thus allowing us to better assess the value of each FatBoy ad," said Vic Drabicky of Range Online Media. "Television ads can have tremendous reach, but TV metrics can't tell you how long each person watches your ad or how long it takes a viewer to change the channel. With the new Point Roll metrics, we will actually be able to measure how long each user pays attention to our ad, which can help us create more efficient ads for both the consumer and the client."

Improving the Best Data Available

PointRoll provides millions of FatBoy expanding banners that are seen on Yahoo!, AOL, and MSN, as well as hundreds of other Web properties every day. Each PointRoll FatBoy generates valuable data that can be viewed in the Company's Ad Tracker via several canned reports and aggregations. The power behind these reports is the advanced metrics that quantify branding and interaction.

-- Interaction Rate - The percent of ads that users interacted with;

-- Average display time per panel - Average number of seconds that a panel was displayed;

-- Average time spent with brand - Average number of seconds a user viewed a FatBoy when interacting with it.

The aforementioned three metrics are only a sampling of the advanced data metrics available in PointRoll's Ad Tracker. Many other data sets are available and provide excellent analysis of a campaign's effectiveness.

"Time spent with the brand is a vital measurement, one that quantifies the value of the rate paid to put forth a campaign, said Mark Redetzke, Vice President, Online Media for Zentropy Partners. "Using FatBoy instead of a .gif or Flash is becoming a given as advertisers capitalize on publishers' decision to offer at no additional charge. Having hard metrics to back up how we spend our clients' dollars is priceless."

"PointRoll delivered our multiple branding metrics when we launched in August 2000 with our first client, Universal Studios. Since then we have served billions of FatBoy ads for hundreds of clients with various campaign objectives that have required us to constantly offer additional metrics in an effort to substantiate our additional fees," said Chris Saridakis, PointRoll's Chief Operating Officer. "Today, we have Yahoo!, MSN and AOL offering PointRoll FatBoy at no additional charge as added value for their advertisers. So, we believe that we must do our part to standardize and constantly expand rich media quantifiable branding metrics to ensure a growing market with satisfied advertisers. These latest enhancements are part of that, and we expect to drive even more branding empiricism in the interactive marketplace."

About PointRoll

PointRoll (www.PointRoll.com) has changed the way that Internet advertising works to become the leader in Rich Media advertising technology. Founded in April 2000, PointRoll works with more than 300 recognized brands from multiple verticals, including pharmaceutical, automotive, finance, entertainment, CPG and others. The company's proprietary technology platform delivers a suite of rich media page based products, including: FatBoy expanding banners, TowelBoy(TM) snap-back units, and BadBoy(TM) floating ads, dramatically enhancing the impact of any Internet ad campaign. PointRoll's technology performs for ad agencies, advertisers, and publishers, measurably increasing conversion opportunity, brand awareness, creative expression, and message content.

2003-10-31T13:10:00.000+05:00

Online Marketing’s Mass-Market Mentality

Marketers place too much emphasis on demographics because they are uncomfortable or misunderstand how to use behavioral data in evaluating marketing decisions.

The Internet’s emergence changed a fundamental approach to target evaluation – the assumption that demographics and the closely related psychographic methodologies determine how marketing and media plans are shaped.

Within a traditional offline broadcast model, demographics remain relevant. However, in the online marketing world, too much emphasis has been placed on demographics and not nearly enough on behavior. This may be due to a limited mass-marketing mentality and because marketers are still uncomfortable evaluating behavioral data.

Running in the Shadow of Demographics

Why does behavior-driven marketing run in the shadows of demographics in marketing considerations? There are a few reasons – common sense to some, controversial to others:

Weak marketing and media skills in the industry

Organizational inertia

Business orientation to 50-year-old techniques for mass marketing.

I recently met with a client to develop a business and marketing plan. The client discussion focused heavily on defining the demographic for an online audience -- not what they do, but who they are… . This appears a central issue to the state of online marketing, and the problems marketers face in successfully positioning goods and services online.

The client is a new software company, still in the beta phase, with an extremely exciting new online service for peer-to-peer dynamic collaboration that can be made public or private as an email, Website or both.

As with any new offer, the challenge is to determine the market and the possible audience. But for a product such as this, it’s possible to imagine all types of users and uses. While demographics may be a factor, it’s unlikely that any one demo would be more important than another. It became apparent that usage behavior is primary to identifying groups most likely to find a value in such a service.

Evaluating the Behavior Flow

We set out to determine the behavior flow, i.e., set conversion goals from consideration to initial trial, to repeat usage, and identified prospective usage patterns. We then outlined the data metrics to measure and help evaluate the behavior flow.

This helps to address questions, such as, where are users coming from? What registration and related Website service path issues are affecting conversion? And so on.

Once we accomplished this we were in a superior position to determine media considerations and placements based on ‘like’ behaving groups who shared similar interests and activities.

So, for example, if placing real estate, personal or business classifieds is a usage behavior, then the audience is opting in based on the behavior-driven need; the audience demo takes second to usage habits.

The Web, of course, blurs the media and context consideration because unlike offline it’s not apparent who the intended audience is by viewing the magazine cover or television show -- it’s the content and utility to the Web user that matters.

Web users are engaged in all types of activities representing wide-ranging age demographics. Therefore, how do you define the eBay, Amazon, AOL, Yahoo!, or MSN audience?

You don't. It's the usage-based behavior that counts, and one finds that common interest behavior, more often than not, cuts across a lot of demos.

Is it really relevant to buy 18 to 49 demographic banner packages through a portal? This is akin to being everything to everyone and of little value to anyone.

Part of the reason this approach is not more prevalent might be due to the proverbial revenge of the traditional marketers in the wake of the dot-com bust.

A Reactionary Climate

We’re in a reactionary climate for the marketing and communications industry. The Internet was going to change the way we did business. Remember the frictionless economy, how brick-and-mortar businesses were not relevant?

The most significant change the Net brought is accountability for understanding and measuring Web user interaction or behavior. Inherent in Net technology is of course the ability to track data footprints through the Web -- a wonderful marketing byproduct of the Net that is still misunderstood. Why is that?

For starters, the technologists driving the first consumer and commercial wave of the Net in the mid ‘90s didn’t view the marketing benefit as the Net’s purpose. Consequently, the Web logs that buried user path data were pretty arcane.

Second, the early commercial enterprises focused too heavily on defining and shaping the Web as a “new mass medium”. This burdened the Web with an antiquated advertising model that is one part broadcast, one part publishing, confusing the marketplace about the Web’s value as a branding or direct-response medium.

The Web offers both capabilities, but the marketer will come up empty on both if behavior-based marketing is not understood. In other words, the consumer consideration and buy pattern.

For example, a successful marketer identifies and measures various questions, i.e., how to create awareness, consideration, trial, repeat, loyalty conversion, usage segmentation and purchase frequency. This is a classic marketing discipline that applies to any business.

A Mass-Market Mentality

So, yes, the Web is still so new, the dot-com frenzy created a lot of misunderstanding, and we’re still learning. However, this raises other quite significant reasons why online marketing continues to be dominated by a demographic, mass-market mentality:

The industry is not training communication and marketing professionals in the art of marketing and creativity. The result is ignorance about classical methods of understanding the consumer buying process and human behavior. Consequently:

Advertising and marketing professionals default to following a mass-market model of the post World War II economy, and apply broadcast thinking to the Web.

Marketers lack the study and understanding of the importance of consumer usage patterns, and the application of direct and database marketing principles to Internet marketing.

Fewer people understand what business questions to ask as the basis for behavior-driven marketing -- for example, points on positioning, price, promotion, distribution, and packaging -- to be able to create an effective marketing plan that stimulates trial and usage for sustainable businesses.
Industry emphasis on broad-based generalizations about demographic audience profiles relegates online to tactical status, e.g., primary consideration is given to how to execute rich media, email blasts, or the equivalent of television online. Ever decreasing click-through rates indicates a lack of understanding of consumer usage behavior. The consumer is telling us something...

Organizations that drive marketing and communications from the agency and client side continue to be organized around the mass-market model. The principal is to create economies of scale in the offering of goods and services, and then support the volume produced by growing the buying audience; this is a demographic-driven approach.

The Web raises the opportunity and question of accountability or ROI. By contrast, the norm for a general marketing and communications plan is to focus on indirect goals for success. For example, survey measures of attitude and awareness for such points as brand consideration, preference, or purchase intent. None of these gauge or gather data of actual consumer behavior or actions in the buying process.
It’s a good bet that some organizations undercut change efforts because the impact of behavior or performance-driven marketing can be so profound. Unless a company considers organizing itself around behavior-based marketing, then it might be better off not knowing the marketing campaign’s ROI. Therefore, there’s a natural aversion to stepping outside of an organization’s cultural practice to say one is willing to become ROI accountable for a campaign’s marketing performance when it was never required before.

Mass marketing that delivers broad audience demographics continues to pay for media companies and large advertisers. Despite dramatic reductions in audience viewership the television networks continue to command huge price increases. .

The 2003 to 2004 upfront network buy was the largest ever. Big companies continue to invest in broad-based media because of awareness-driven goals. Moreover, their advertising and marketing spending remains a comparatively smaller part of corporate expenditures so the pricing has not yet discouraged spending. However, companies with smaller brands are being priced out of this market.
For now the adage appears to be you can’t go wrong in your marketing organization if you buy NBC. This is what people use to say about buying IBM for all technology-related purchases.

This will all change of course, though not at Internet speed. It is most likely that newer and more entrepreneurial companies will adopt behavior-based marketing as a customer-driven operating principle for their success. The law of supply and demand will eventually erode the value of demographic-driven mass marketing, thereby, enhancing the value and true potential of the Web as a commerce medium.

2003-10-31T12:53:00.000+05:00

Microsoft Realigns MSN Into Two Divisions

Microsoft Corp. (MSFT) is splitting its MSN division into two units, one to take control of Web communications while the other develops its information portal and targets growth in areas such as search technology and music services, executives told Reuters on Wednesday.

MSN, which reached profitability on an operating basis for the first time in the latest quarter, was started in 1995 as Microsoft's answer to the emergence of red-hot Internet businesses such as Yahoo! Inc. and America Online.

But as Microsoft poured billions into the division to tackle emerging threats, MSN evolved into something of a mishmash of software and services managing everything from dial-up access, a Web portal and Hotmail to the MSN Messenger instant messaging service.

At the same time, top Microsoft executives decided earlier this year to invest in developing search services to challenge Google Inc.'s position as the Internet's top search engine.

But executives also determined that MSN's structure was making it harder for Microsoft to ensure that it remained permanently profitable, said David Cole, Microsoft's senior vice president in charge of MSN.

Over the next few weeks, MSN will split into two operating units, Communications and Information, that will be divided based on the customers they serve and the products they offer.

The information unit, which will be headed by Yusuf Mehdi -- a longtime Microsoft executive known for his work on Internet Explorer -- will include the MSN portal, its emerging search service, e-commerce sites, and entertainment and other services.

The communications division, which will be headed by Blake Irving, will focus on growing MSN's communication-focused products, such as its subscription MSN service, Hotmail, MSN Messenger, and its Passport identity service.

Microsoft, which initially marketed broadband access services under the MSN name, but lagged behind other providers, has shifted its focus to selling users a broadband portal, specialized Web browser, enhanced e-mail features, and other features under monthly subscriptions.

Both executives will report to Cole.

``One thing that we want to do is innovate at a more rapid pace,'' Cole told Reuters.

Mehdi, who will oversee a lot more of MSN's research and development in the new structure, said that search technology and music services were also key growth areas for MSN.

``We're moving to reorganize and capitalize on those opportunities,'' Mehdi said.

MSN executives also said that they had hired Paul Ryan, former Chief Technology Officer of online search advertising company Overture Services Inc. (OVER), to head up MSN's nascent search efforts.

Redmond, Washington-based Microsoft has not provided figures detailing MSN's profitability, although those are due when Microsoft files its quarterly report with the Securities and Exchange Commission within the next few weeks.

MSN executives also cautioned that the entire division could slip into the red again, as the company invests in developing new services.

2003-10-30T18:26:00.000+05:00

See Ya' Later Gator

Gator Corp., a name that still carries a certain degree of infamy in some online marketing circles, today will change its name to Claria Corp., MediaDailyNews has learned.

The company, which in the five years since its founding has grown into a leader in ad-supported software and what is known as online behavioral marketing, provides ads that are targeted to consumers based on behavioral research. It’s also become a lightning rod for controversy in the online industry, having been sued over its pop up advertising and suing to distinguish its permission-based marketing from the kind practiced by spyware that creeps into computer systems and displays pop ups and tracks where an Internet goes on the Web. A lawsuit involving major Web publishers was settled earlier this year.

While the identity change had been planned for some time, it took a longer than expected, because it is tied into a broader repositioning strategy that will emphasize the company’s expansion into new areas beyond Gator’s so-called eWallet technology, an application that remembers login IDs and passwords for users without having to keep typing them. The eWallet will still have the Gator name.

“Gator won’t go away. We love the name and the logo behind the wallet,” Scott Eagle, senior vice president and chief marketing officer of Claria tells MediaDailyNews.

That’s just one part of the business, which has evolved into online behavioral marketing. Claria now has more than 900 online advertisers and 38 million subscribers to the company’s ad-supported software, which not only includes the eWallet but other applications as well. The company has three business units, including GAIN Publishing, the GAIN Network and Feedback Research, which provides online research and analytics through an online marketing research panel.

Eagle acknowledges that the name “Gator” has some baggage to it but said that it’s not the reason for the name change. Claria, with its image of clarity and focus, better represents the business today.

“The consumer relationship with 38 million people is not with Gator anyway, it’s with GAIN. That does not change with this name change,” Eagle said. He pointed out that changing the name won’t make a difference to the pending lawsuits, or to consumers or the clients.

“The model isn’t changing. Just the company name,” he said.

2003-10-29T21:30:00.000+05:00

Telecommunications in the Virtual World

Telecommunications advertisers are BIG. They spend a great deal of money on a regular basis making sure we don’t forget who they are or what they have to offer.

Telecommunications businesses depend on as many people as possible knowing what products and services they have to offer and they want to be sure as many people as possible are enticed to use them.

This is no accident, of course. We are a society – a world – that relies on telecommunications products and services on a daily, hourly, and even minute-by-minute basis to maximize the flow of our lives.

Being ubiquitous, however, means you have to always be there. And to always be there means you have to always be where the people you are trying to reach are. Among those places is online.

With the telecommunications industry being a top 10 advertising category, the goings-on in telecommunications marketing affects all of us who work in this business. As an industry, its products are well suited to being promoted on the Web, a place replete with constituents of the wired and wireless nation.

The telecommunications industry has always been one driven by a unique combination of common forces: consumer needs and wants, and technological and scientific discoveries. I mean, the guys who won the Nobel Prize of Physics in 1978 -- Arno Penzias and Robert Wilson – in 1965 were trying to figure out how to eliminate static and ended up finding evidence of the Big Bang. By virtue of this unique combination of forces, they were in a position to make use of the Internet as a marketing tool early on. It should come as no surprise, then, that it has been largely agreed upon that the first true banner to run on a Website was an ad for AT&T on Hotwired back in ’95.

When we look at where telco’s spend their ad dollars, we see that although they spend a significant amount of money online compared with other advertisers, as a percentage of overall dollars, their spend is still within the range of the average (about 3% of total). Whereas the top three telecommunications advertisers spent some $2.5B in 2002 according to TNS/CMR, they spent just $82MM online. Yet only the tech category outspent them.

It seems, then, that telecommunications advertisers are still looking for something specific when they advertise online that they aren’t necessarily looking for when they are advertising in all other media.

Larry Everling, president of Grady Rose Consulting and former director of Web sales/director of online marketing at Nextel, says sales is still the focus for many telecommunications advertisers. Nextel’s online efforts have traditionally been to “drive traffic to the Website for the purpose of selling phones,” he says.

Nextel’s legacy has been mostly selling to the business provider, and getting that audience to buy online hasn’t always been easy. When it comes to trying to use the medium solely as a distribution channel, the results can be disappointing and threaten the medium’s being used for less direct response-driven objectives.

Other audiences have been targeted by telecommunications advertisers, such as the youth segment and the general consumer, but the objective has been the same.

Jeff Lanctot, vice president of Media at Avenue A, agrees that the telecommunications advertisers have primarily been looking at making sales when they make use of online advertising, but they are starting to realize there is more to online advertising than just clicking and buying.

“Branding is certainly a consideration, but ultimately advertisers recognize the ability to use online as both a channel and a medium,” Lanctot points out. “Selling wireless phones and plans online is still in its infancy, as the process is not as easy or elegant as it will be. There is also a recognition (supported by solid data) that consumers are likely to go through the wireless research process online, but purchase in a store.”

Everling thinks that use of online as an advertising vehicle should reach beyond just its use as a distribution channel.

“There are advantages to buying from other channels,” he says, such as lower costs to be found not only through terrestrial retail sources, but other online retailers like Amazon.com or Buy.com.

An advantage of online advertising for an advertiser with a more complicated pitch, like cell phone service and product providers, is that it can accomplish a lot of the heavy lifting that sales personnel have traditionally had to do, freeing them up to do more “closing.” This would be particularly valuable for the business-to-business segment.

“Why not push customers to the field, where many of the bulk sales are taking place?” muses Everling.

It is the uncertainty inherent in the process of evolving marketing methodologies that has continued to keep the online medium a cautious investment. Companies do not like to take risks, particularly with their money. So, for many, it has been a long series of tests and trials. Sometimes it has been one toe into the water and two steps back from the shore.

But significant results ultimately require significant investments, and some advertisers are making them, albeit the significance is relative.

AT&T Wireless is probably the biggest telecommunications advertiser spending money against online advertising, which is approximately 5% of total reported spending. The amount AT&T spent online in 2002 was 2.7 times more than what was spent on Outdoor and 2 1/3 times more than consumer magazines.

Still, television and newspapers dominate.

“While online is becoming a bigger part of the mix, other media such as metro newspapers still receive the bulk of the ad dollars,” says Catherine Weitnauer, the Telecommunications Category Leader at Yahoo!.

Television benefited from about 44% of spending in 2002 from the three biggest advertisers in the space, whereas over 36% of their money was spent in newspapers. This suggests local media plays a significant role and might be a harbinger for things to come for online media and these advertisers.

“[Online] represents a very small percentage of total spending -- even the most aggressive wireless advertisers are well below 10%,” says Lanctot. “However, [use of the Internet] is highly competitive and growing quickly. In terms of efficiency, it represents an opportunity to start anew. Offline, wireless companies are beholden to third-party retailers -- they pay these retailers huge incentives to sell their services. Online represents a way to get back to their customers -- and their margins.”

So, again, the share of ad dollars spent against online media will likely be driven by channel considerations, still a primary driver for a lot of advertisers online. The risk, as ever, is that the other benefits of the media will go overlooked.

But the existing attraction of the medium is what will likely contribute to its continued use by telecommunications advertisers and its wider adoption in the future. As mentioned, that attraction is the medium’s ability to serve as both a distribution channel and a messaging channel.

“Online’s unique ability to be both an advertising medium and a sales channel” is what telecommunications advertisers see as the biggest role online media has to play in contributing to their businesses, says Lanctot.

“Promotional efficiency, precise targeting and message immediacy drives sales,” says Weitnauer of Yahoo!. “It’s what led these advertisers to metro newspapers in the early days of adoption and it’s what’s increasingly bringing them online.”

Says Everling: “The traffic to the Websites is phenomenal. It is going to be a matter of time before some CFO takes a look at this and asks what are we going to get out of this? It will be a matter of time before the blind trust of handing money over to the networks is going to end.”

It’s going to take an advertiser outside of the finance or travel categories to tell us what else an advertiser’s Website does beyond just selling. And telecommunications might be where this comes from.

2003-10-29T19:38:00.000+05:00

HP Joins McDonald's to Spread McInternet in Brazil

McDonald's Corp. said on Tuesday it would team up with computer maker Hewlett-Packard Co. to offer its clients across Brazil the ability to surf the Web while eating their Big Macs and fries.

Already on the menu in 75 stores across the South American country as a pilot program, McDonald's said it would roll out its "McInternet" service to the rest of its 584 outlets in Brazil by the middle of next year.

"We will be synonymous with Internet in the country," Marcel Fleischmann, the head of McDonald's operations in the South American nation, said in a statement.

McDonald's and Hewlett-Packard will join the Brazilian unit of America Online Latin America Inc. and Brazilian bank Itau (ITUA4.SA: Quote, Profile, Research) in the project, in which the four plan to invest $20 million over the next five years.

Under the program, customers will be allowed to navigate the Web as long as they make food purchases at McDonald's. On average, there will be four computers at each McDonald's, which HP will provide.

Because so few people in Brazil own computers with Internet access, Brazilian public Internet stations are expected to increase in popularity.

In the United States, McDonald's is offering fast wireless Internet access to customers at some of its outlets via Wi-Fi, a relatively rare technology in Brazil.

The expansion comes as McDonald's operations in Brazil come under pressure from the sluggish economy, which has crimped consumer spending.

It is also facing lawsuits from some of its franchisees in Brazil, which claim the company has been inflexible during the troubled economic times.

2003-10-29T18:55:00.000+05:00

Omnicom Eyes New Targets

The world's largest agency holding company acknowledged Tuesday that the pace of its acquisitions has slowed in recent months following the June purchase of Agency.com.

"There's an awful lot of opportunities out there to do acquisitions. We've just been very deliberate," said John Wren, president and chief executive officer of Omnicom. "The pace is really dictated by our strategy."

Wren said that Omnicom's strategy hadn't changed but it involved taking the time to find firms that would serve its largest 250 to 300 clients and add to the holding company's portfolio and figure in its future growth. Omnicom is the parent company of OMD Worldwide and PHD.

Earlier Tuesday, Omnicom announced that earnings rose double digits in the third quarter on the strength of higher advertising spending in the United States. Omnicom reported a 14.7 percent increase to $2.02 billion in third- quarter revenues. Advertising, which made up 41 percent of the revenues, grew 12.7 percent to $844 million in the third quarter. CRM, which was 35.4 percent of revenues, grew 19.8 percent to $717.7 million. Specialty communications and public relations, each about 11 percent of revenues, also grew in the quarter. More than half of Omnicom's revenues came from operations in the United States.

New activity continued strong, said Chief Financial Officer Randall J. Weisenburger, citing more than $1 billion in new business in the quarter and $3 billion so far this year.

Wren sounded positive about the advertising economy's prospects in the new year.

"I think that you're seeing a more bullish attitude," Wren said. Wren, like his counterpart at WPP Martin Sorrell, said that clients spent the last several years focused on costs.

"The companies that are going to be successful going forward are going to have to focus on their revenue," Wren said.

2003-10-27T21:04:00.000+05:00

Study Confirms Viewers Tune Out TV Ads

A new survey on simultaneous media usage finds – not surprisingly – that a majority of multi-tasking viewers tune out TV commercials.

The Simultaneous Media Usage Survey (SIMM), released last week by BIGresearch, showed that of those who say they go online while watching television, 94% regularly or occasionally tune out mentally when a commercial comes on. Similarly, 95% of those who read the newspaper while watching television mentally tune out commercials.

In response to the findings, BIGresearch is calling upon the media industry to think differently about consumers, and find new ways to measure its effectiveness in reaching them.

"The power lies with the consumers -- they know how they're going to spend their money," says Gary Drenik, president of BIGresearch. "The industry needs to tap into that before those dollars are spent."

The following chart illustrates the habits of Wal-Mart shoppers who watch TV while using other media:

A program built to reach that consumer, then, must be measured in relational terms rather than in linear ones.

2003-10-27T18:35:00.000+05:00

Blogs Emerge As Hot New Ad Medium

When popular new media formats emerge it usually doesn’t take long for advertising to follow, so it’s not surprising that the rapid proliferation of Web logs – a.k.a blogs – is establishing a new advertising marketplace.

Blogs, online’s niche media format du jour, are chronologically structured logs of text and images published to the Web with easy-to-use software tools. The segmentation and abundance of blog content (think anything from the naval-gazing minutiae of a teenage girl’s life to the practical punditry of a tech firm CEO) is fueling a new form of online advertising.

“Everybody needs to do a bit of guerrilla marketing, and blogs qualify as that,” asserts Henry Copeland, CEO of Blogads, a blog-exclusive ad network launched in August of 2002 by newspaper and magazine website publisher Pressflex.

The American Civil Liberties Union, pop artist Coop and spam blocker Messagefire have placed ads on the network’s blogs. Advertisers buy sponsorships of specifically chosen blogs for blocks of time rather than on a CPM basis, and ads can be updated regularly.

But advertising on blogs isn’t for everyone, cautions Todd Copilevitz, director of Richards Interactive, an agency that’s developed blog marketing strategies for Nokia, Home Depot and, most notorious, Dr Pepper’s flavored milk drink Raging Cow. “If you want the steady drumbeat of sell, sell, sell, buy, buy, buy, this is not the forum for you. You do not control message.”

The agency first began using blogs as ad medium nearly two years ago. Richards now has a blog network that can be used spur viral buzz for its advertisers. One recent effort, for example, helped launch the Nokia 3650 camera phone. The authors of carefully selected photography-focused blogs were given the camera phones in the hopes that they would discuss their opinions of the product on their blogs. The tactic worked.

“We wanted to hear from people what they liked, what they didn’t like and how their friends reacted to it,” notes Copilevitz, “It’s often the little things that click-in with consumers.”

The Holy Grail for many marketers is to get a discussion their brand going among influential consumers but the uncontrolled nature of blog communications may not be for the feint of marketing hearts.

“The problem with blogs is that with some free-form input from users we’re not able to have content control,” contends Jeff Hirsch, chief revenue officer of ad network Fastclick. The company doesn’t include blogs in its network of sites, all of which “undergo a rigorous editorial review process to ensure that the content and demographic of the readership is appropriate.”

When Richards attempted to monitor blog content written in conjunction with the launch of Dr Pepper’s Raging Cow beverage, the tactic inspired hype, but much of it negative. Dr Pepper got six influential blog authors to agree to promote Raging Cow in their blogs without disclosing their affiliation with the company. When they discovered the stealthy nature of the effort, some members of the blog community who consider honesty and integrity to be integral to the blog medium, called for a boycott of the product.

Despite the risk of being affiliated with inappropriate content, numerous advertisers have run ads within Google’s AdSense network, which includes blogs. The contextually driven system places ads on pages based on what it perceives the site’s subject matter to be.

Michael Zimbalist acknowledges that AdSense advertisers, whose ads appear on blogs, are achieving reach. Still, the executive director of the Online Publishers Association contends, “It’s not clear what you’re buying if you’re an advertiser. There’s not a strong identity with where consumers are seeing the ad.”

Texturadesign, Inc., makers of a bag-closing and -resealing contraption called Clip-n-Seal, are willing to risk the possibility of negative portrayals of their brand in blogs. The company was the first to run a campaign through Blogstakes, a sweepstakes service that takes advantage of the fact that blogs frequently link to other blogs. People who linked to the Clip-n-Seal Blogstakes promotion on their blogs automatically won a package of Clip-n-Seals when they referred a winner to the contest.

Within a month, says Texturadesign CEO, D.L. Byron, “thousands” of people had linked to the Blogstakes contest. “The effect that had, is it shot us up to the top of Google’s page ranking,” he adds.

With potential results like these, it’s little wonder blogs have begun to pique advertiser interest.

2003-10-25T15:29:00.000+05:00

Google 'nearly ready' to float

Search engine Google, owner of one of the most powerful brands on the internet, is now close to floating its shares for the first time, according to a swathe of media reports.

The firm has contacted more than a dozen investment banks to help arrange a share sale, and has already drawn up a shortlist, the Wall Street Journal reported.

According to Reuters, a flotation of the privately-owned firm is pencilled in for early next year, a deal that could value Google at up to $25bn (?14.7bn) - slightly more than listed online retailer Amazon.

The Financial Times, meanwhile, reported that Google planned to sell shares by means of an online auction - an unusual method which would aim to avoid the sort of brokerage scandals seen in some share flotations in the 1990s.

Canny timing

Google's intention to sell shares has never been in doubt: such a move would raise capital, and enable the firm to motivate staff with perks such as stock options.

There are a lot of businesses that would have done better if they'd not had so much money flowing into them Sergey Brin, Google co-founder.

In addition, analysts say the time is ripe for a hi-tech flotation, as investors are starting to return to the long-shunned market.
An initial public offering on the sort of scale Google is reportedly contemplating would be by far the biggest share launch since hi-tech markets turned sour three years ago.

The sheer size of the deal makes it likely that Google will choose an investment bank-led transaction, rather than selling shares directly to the public online.

Friday's reports cited unnamed sources within Google; the company itself has refused to comment.

In the black

Google has built up a formidable reputation in the crowded search-engine market, mainly thanks to its uncannily accurate relevance-based search techniques.

Google based on word googol, which refers to the number represented by 1 followed by 100 zeros
At the same time, it has shunned the sort of corporate trappings - notably advertising - that have transformed rivals such as Yahoo.
Google does not publish financial statements, but is believed to be highly profitable, earning money mainly by sponsored searches and by licensing its search technology.

Estimates of its annual revenue range from $500m to $1bn, with profits at least at $100m.

GOOGLE FACTS

200 million searches a day
3.1 billion web pages indexed
More than 1,000 employees

2003-10-23T20:29:00.000+05:00

Auto Industry Has Shifted $ Online

According to a new report from Borrell Associates, the automotive industry is spending tens of millions of dollars online, money once earmarked almost exclusively for television branding campaigns.

On the local level alone, dealers are spending two-thirds of what they spend on local TV advertising on Internet applications.

From a revenue perspective, daily newspapers may be in the lead, taking the most dollars in most local markets and leveraging their traditional relationships with car dealers by offering them online add-ons. In fact, newspapers cumulatively will generate about $150 million in online automotive advertising this year, a quarter of which will be “new” to newspapers rather than shifted from print, according to Borrell Associates’ research.

However, AutoTrader.com is not far behind, with approximately $120 million in revenues, an impressive achievement given that it is a single, concentrated site. It’s clearly the leader from a listings and dealer-relationship perspective, according to the research company.

The major portals (including eBay Motors) lead from a unique visitor or audience size perspective. The portal sites are geared to deliver a national audience to automobile manufacturers, who are primarily seeking “eyeballs” for their increasingly elaborate high-bandwidth ads. By contrast, automotive sites with local audiences are focused on delivering results for car dealers in their markets in the form of showroom traffic and specific leads.

The big losers, to date, have been local TV stations, which have failed to seize the online opportunity inherent in the automotive market, their largest advertiser segment. Borrell Associates estimates that local stations will generate less than $30 million from online automotive applications in 2003. While auto advertisers are besieged with online applications, research has found that nearly two-thirds of local TV stations don’t have even a rudimentary one to offer.

2003-10-23T20:25:00.000+05:00

Net Community is 150 Million Strong

MSN Microsoft Sites headed up the comScore Media Metrix list of Top 50 Internet Properties, viewed by a population of American Internet users, higher than ever before.

When rating the Top 50 U.S. Internet Properties for September, comScore Media Metrix announced that the U.S. Internet population has passed the 150 million mark for the first time. Time spent on the Internet also went up 3% from August, a change driven by university students returning to school.

"That this medium has now crossed a threshold of 150 million users is a reminder that while it continues to mature, the Web also continues to expand its reach among the total U.S. population every day," says Peter Daboll, president of comScore Media Metrix.

Newcomers to the list include Verisign Sites, which moved from a rank of 135 in August to number 11 in September. This was due to the launch of SiteFinder, which redirects mistyped URL addresses to the Verisign Site, driving a 540% increase of unique visitors.

Other big movers in September: The NFL Internet Group moved up 15 places and Emode.com and Columbia House Sites entered the list in the last two spots.

"In September, a number of events impacted Americans' use of the Internet, including Hurricane Isabel, the kickoff of the NFL season and students returning to school," says Daboll.

Hurricane Isabel drove a 10% increase to properties in the online weather category. The Department of Commerce, which oversees the National Oceanic and Atmospheric Administration, brought in 45% more visitors seeking official updates on the storm.

The National Football League season and Major League Baseball sent 4.5 million fans to the sports category, up 9% from August. ESPN drew 17.6 million unique visitors, up 14%. Yahoo! Sports also had an increase in pages viewed and time spent on the site.

The Retail-Food Category had the smallest audience but the biggest increase, up 17%. Promotional activity benefited Cooking.com, OmahaSteaks.com and Schwans.com.

The Online-Trading and Entertainment-Music categories experienced a 5% growth. And with the start of school, properties such as Reference.com, Encyclopedia Britannica and Family Education Network were consulted for educational and other resources.

Find detailed statistics here...

2003-10-23T18:56:00.000+05:00

Taiwanese Market Seen Ripe For Dot-Com Rebound

Many of today's office workers start their day checking e-mail and catching up on the latest news over the Web. For less serious users, online gaming tops their list of things to do on the Internet. Search engines have become indispensable tools for researchers, journalists and anybody who loves information. Clearly, the Internet is weaving itself deeper and deeper into people's lives, and service providers are gradually shedding the bearing of apprehensiveness they adopted following the dot-com crash.

A few short years ago, the future seemed bleak for dot-com businesses. Companies that had been riding the wave of the information revolution went bust overnight. Even those that survived the dot-com bust have had to struggle to get out of the red. Early this year, Taiwan's major Web portals reported significant growth in sales--something industry watchers say could be heralding a better future for dot-coms.

Yahoo!Taiwan--a 2001 merger of Yahoo! Inc.'s Taiwan Web presence and an operation called Kimo--began reporting profits in the third quarter of last year. Currently the largest Internet portal in Taiwan, Yahoo!Taiwan recently reported third-quarter revenues of US$10.5 million, a 28-percent increase over the previous quarter. Revenues from advertising--which also saw a 23-percent surge--accounted for 69 percent of total earnings. According to company sources, the number of unique hits, or non-repeat visitors, on its portal in August reached 9.28 million. Users spent an average of 426 minutes a month on the site. These are strong numbers.

Other companies, though they have a smaller share of the market, have managed to break even. PC Home Online, Taiwan's second-largest Internet portal, saw its revenue reach US$17.9 million in the first half of this year, an increase of 213 percent from the same period last year, according to market manager Vicky Tseng. "We were still in the red last year, but so far this year, we have been able to make profits every month." Equally buoyant is the team at Yam Digital Technology, one of the oldest portals in Taiwan. Ily Wang, assistant manager of public relations, said the company expects to see its after-tax profits hit US$1 million. Advertising revenue is expected to grow by at least 70 percent.

"We indeed have reason to be optimistic about the future of dot-com businesses," said Liu Fang-mei, a project manager at Institute for Information Industry's Focus on Internet News and Data research group. "The industry has been growing continuously despite the darker days of two years ago, when people's enthusiasm for investing in Internet stocks suddenly went cold." With all the recent hype surrounding portal profitability, headlines have announced that the dot-com business is heading for another golden age. Tseng, however, characterized such proclamations as erroneous, saying that the previous dot-com bubble resulted from people's false expectations of the new medium. "Vendors and users expected too much, too fast," she said. People's understanding of the golden days was reflected in the soaring stock prices, rather than the positive interaction made possible between the new technology and humanity, Tseng explained.

"The Internet industry has never really taken off," she stressed. "Dot-com growth is always there. In fact, we are still in preliminary development." The latest report of a boom seems only natural. "As the years have gone by, companies have settled on viable business models and the Internet has become an essential part of most people's lives. All this has led to a dynamic development of the industry," she said.

By the end of June, the number of people with Internet access in Taiwan--meaning those having active registered accounts with service providers--reached 8.76 million. The figure for broadband subscribers stands at 2.45 million.

Analysts believe that the general business community is more willing to invest in Internet stocks than it was after the dot-com crash. Advertisers are indicative of this trend. "More and more business executives began vying for the attention of young people. While there are many types of media through which companies can gain exposure, the Internet is nevertheless the best choice if you want to reach out to the younger demographic," Liu said.

Internet advertising methods have evolved since the days of old-fashioned banner ads. Programming advances allow companies to market their wares with flash animations, pop-up windows and an array of ever more creative schemes to develop what marketing experts call mind share, which is the degree to which their brand is easily remembered by a target consumer group.

Thanks to new technology, advertisers can interact with users more directly and reach their target consumers more easily. The fact that advertisers and Web portals have over the years settled on a payment method that is beneficial to one another is conducive to portal growth as well, Liu suggested.

Some analysts have pointed out that, in the past, most Internet advertisers tended to be Internet operators themselves. Now, traditional businesses like banks, food retailers and manufacturers of daily necessities have begun to budget more of their advertisement dollar for the virtual marketplace and away from brick-and-mortar operations.

Another crucial factor to a prosperous Internet portal is fee-based services. Many have questioned whether regular users of the Internet would be willing to pay for services that are currently free, such as e-mail, newsletters and online chatting. "Consumers will definitely resist in the beginning," Liu opined, "But the more they depend on a particular service, perhaps the more willing they will be to pay for it." While industry stakeholders agree that the attitude of the average user has been changing, no one seems willing to rush into charging money for services that, at this point, are widely available for free. Even online auctions, whose popularity in Taiwan has soared in the past year alone, are unlikely to become subscription-based services anytime soon.

Sites such as eBay and Yahoo!Taiwan, which already make money on each transaction they host, have been hesitant to supplement that income by charging people a fee. "I think the important thing should be to provide better, value-added services to attract consumers--to know what they want and make them willing to pay for what they can get," Tseng said.

PC Home Online offers fee-based services like newsletters and online data storage. It recently added online credit-information requests to the list. Tseng noted that information about a company's credit history is a more advanced service, for which consumers should expect to pay.

"Of course, for more basic services like e-mail, portals should keep them free. This is necessary to maintain the size of our online marketplace," she said. Conversely, there is no reason service providers must shoulder the cost of high-capacity Web storage, she added.

But portals have also sought other means to grab attention. While Yahoo!Taiwan runs a successful auction site, PC Home is known for its online shopping, especially for consumer electronics, communications products and computers. Yam Digital, on the other hand, manages and distributes software-based services and solutions to its customers, and helps local industries establish online networks.

Yam Digital's Wang noted that the company has also devoted much effort to managing specific Web sites for children, women and sports fans, the contents of which are all produced in-house.

Having confidence in the local operator's ability to run thematic Web sites, the National Basketball Association in the United States recently granted Yam Digital exclusive Taiwan distribution rights to its Web content.

Portals in Taiwan have grown from being simple search engines to information pools, Liu said. "You go to a portal and everything is there--it can lead you to updated financial information, entertainment and virtual shopping malls. It is a one-stop shop," she enthused. The project manager added that, for older people who may not be as adept at using computers as the younger generation, such one-stop shopping is an attractive, less intimidating way to connect to the Internet.

However, for researchers and analysts like Liu herself, powerful search engines such as Google are also irreplaceable. "The chances for success are greater if you either specialize in the area you know best or if you diversify. Web portals just need to have a clear idea of what they want to become." When Yahoo!Taiwan celebrated its second anniversary early this month, General Manager Rose Tsou said she hopes to turn the Web site into an "Internet-life essential"--an indispensable virtual destination, whether at work or at home. So far, most of the portal operators seem to be trying to achieve a similar result. As they report more stable growth, they are increasingly confident that they have chosen the right path.

2003-10-23T18:44:00.000+05:00

Navio Content Commerce System Launched

Navio, a new content commerce company based on person-to-person transactions, has been launched (For those of you who have been following the vendor section on this site, the company was tentatively named Aplaud before its launch, which I think is a better name).

The company, out of Cupertino, CA, has been formed by Stefan Roever, co-founder of German company Brokat Technologies. It is venture backed by London-based VC firms Ariadne Capital and Add Partners.

I was given a presentation about the company a couple of months ago, by its marketing head Bill Barhydt, and it is trying out an interesting yet difficult model: trying to enable viral selling of content, at its heart.

The company's technology aims to combine identity management, content packaging and payment functions. It is doing this through what a digital locker it calls "Navio Companion". The first service is aimed mainly at the mobile users.

The company is working with some big name clients in the mobile/entertainment/music space, on a trial basis, and it would be interesting to follow the company's trajectory.

2003-10-22T23:02:00.000+05:00

Online advertising 'to click again'

Online advertising is finally about to climb out of its three-year slump, according to a report by accountants PriceWaterhouseCoopers (PWC).

The report says that internet advertising in Western Europe will see double-digit growth this year, thanks mainly to paid-for-listings placed through search engines and the overall growth in internet use.

High-profile sporting events such as the Athens Olympics in 2004 and the football World Cup in Germany in 2006 should sustain the upturn over the next four years, PWC predicts.

Online advertising went into meltdown after the dotcom bubble burst in 2000.

But this year should see growth of 10.6% in online advertising in the UK, France, Italy, Germany, Spain and Holland, taking income in the six countries to 886m euros ($1.03bn, ?617m).

As broadband develops it will offer different types of online advertising that are not available at present Paul Pilkington, PriceWaterhouseCoopers

According to Paul Pilkington, senior manager at PWC, it is the use by the internet's big search engines of search-result placement fees which is making the difference.

The leading company running this type of advertising is Overture, which auctions to the highest bidder the top position on searches for given words or phrases.

The company has now been bought by search giant Yahoo, whose shares have risen to a 33-month high on the back of improved US online advertising revenues.

Mr Pilkington said: "This has been a huge growth sector, paying for your keywords to appear highest in a search engine listing.

"This has really taken off, with companies paying for their name to be placed in a premium position for search engine results."

Television-style ads

He also said an increase in internet users was helping to boost advertising.

By 2007, advertisers will spend more than 1.25bn euros in Web advertising across the Western Europe region, the PWC study says. It believes strong demand for high-speed internet broadband services will boost the market for online access and internet advertising spending to 18.1bn euros, a 7.4 % gain over the 2003-2007 period.

The spread of broadband will enable advertisers to move towards more TV-style advertising, Mr Pilkington said.

Although a growth in advertising usually indicates better economic times, Mr Pilkington warned the upturn in online advertising could not be used as a gauge of the mainstream advertising market, or wider European economy.

Extending Your Reach

2003-10-22T18:47:00.000+05:00

Fragmentation of media consumption is at an all-time high, so using online in conjunction with traditional media can help reach people who are light users of the other mediums.

If you’ve worked for any spell at all in advertising, you have no doubt encountered a pattern of words, phrases, formulae and not a few platitudes that pertain to the industry. Their use identifies one as an insider, even if those making the utterances have no idea what they are talking about.

The word that stands out most among the fray of cabalistic turns of the phrase is “reach.”

What is nice about ‘reach’ when applied as a technical term in advertising is that is means exactly what it does in layman’s use, with the biggest difference perhaps being that often times there is a percentage associated with it when used as a technical advertising term.

Reach is the big, bad, and most often all-important communication delivery variable when considering different advertising programs. A large reach figure translates into a large number of persons touched by one’s messaging. Somewhere along the marketing chain of analysis, this figure can be converted into some number of widgets sold. Hence the importance of the figure and why advertisers work so hard to make it so big.

In the days of old, the electronic medium best suited to accomplishing the task of creating ‘reach’ was that of television. An advertiser could put a commercial on All In The Family and have talked to some 40% of the total television viewing population.

These days, seven million households can constitute a major success in television programming and draw advertisers like an ice cream truck does children.

But television has a lot more to compete with these days, not only with other media, but with itself al well. Plenty of people still watch television with regularity, but they are found all over the spectrum now. The rich mosaic of cable television and niche programming has made it such that only slivers of audience, albeit still significant overall, can be found at any one time in any one place.

And lest ye forget those who have no regular viewing pattern but are important to a brand successfully impacting its bottom line. What about those who are not regular enough television views to be impacted by television advertising?

How big can an advertiser get its reach in the current environment?

There is a limit to how big the number can be made given a fixed budget and a fractious media landscape.

Consumers have more media choices available to them than they ever did before. Fragmentation of media consumption is at an all-time high, making it tougher for marketers who have traditionally used television to extend reach to their key target audiences. But using online in conjunction with traditional media can help to reach those people who are light consumers of TV and other traditional media.

The evidence is present for all to see who are willing to open their eyes and look. In the last two years, the IAB has done the most to tell the world about what kind of impact online media can have on the communication delivery of an advertising campaign.

With the first XMOS report (Cross-Media Optimization Study) done in cooperation with MSN, Marketing Evolution, The ARF, and Dynamic Logic partnering with Forrester which showed the incremental lift in traditional branding metrics yielded by slight shifts in spending away from television and into online, the IAB has led the way in making the case for the Web deserving a seat at the media mix table. This first study was done for Dove’s Nutrium Bar, and it showed that by taking a very small number of dollars earmarked for television and redistributing it towards online, an advertiser could affect its overall brand metrics in the affirmative by a combined 8% (from both a lift in reach and frequency in online).

This is achievable by taking money out of television that does not negatively impact the medium’s reach, but rather takes the average frequency down from 6.0 to 5.5. This essentially means that by lowering the average number of times a heavy television viewer sees an ad, brand metrics can be raised without changing the overall amount of spend in an advertising budget.

The reason this is important to note is because of the very thing discussed at the beginning. Due to more channels of distribution available for televised content (i.e. more networks, programming, etc.), an advertiser is contending with a more diluted communication vehicle by which to reach a member of the target audience. This is not so important when the entirety of an advertiser’s audience is to be found among the heaviest of television watchers; the advertiser can be assured that at some point its intended will eventually be exposed to the message in one of a multitude of broadcast vehicles.

But what of the less enthusiastic television viewer? How does an advertiser extend its reach to those beyond the pale of primetime TV?

The IAB XMOS reports show time and again that by making a modest adjustment to the advertising budget that is destined for traditional media, and most commonly, television, advertisers can extend their reach to those persons not readily available in the television audience.

The reason for this is because at any given point in time, a segment of a target audience is NOT watching TV or reading a magazine when the advertiser has guessed that they would be. Again, this is due to there being so many other things to do and so many other media to engage on the part of the individuals who make up this audience.

In March of this year, DoubleClick released a study done in concert with Nielsen//NetRatings and IMS that demonstrated this phenomenon.

This study showed that online media can contribute gross reach, in the form of GRPs (gross rating points) to advertising campaigns and is especially efficient at extending reach into audiences that rarely watch television. As each ratings point can potentially translate into more than one million consumers, even slight shifts in reach can greatly impact the effectiveness of a media plan. Something to note, however, is that if an advertiser is interested in a specific audience, and not just any audience, the impact on TRPs (targeted rating points) can even be more significant.

With current media fragmentation, TRPs (targeted audience points) are a better way to assess media. “GRPs do not show the tendency for campaigns that primarily use television to overreach (achieve very high frequencies) those who watch television often, while under-reaching (achieving less than optimal frequency) those who rarely watch television,” states the study. As more rarified members of a target audience—for example professionals, teens or working women—are spending less time watching TV and more time online, they cannot be efficiently reached through television alone.

The XMOS done for Kimberly-Clark’s Kleenex brand early this year demonstrated what is meant here.

The company allocated 75% of its overall advertising dollars to television, 23% to print, and 2% to online. After analyzing each medium’s effectiveness in boosting aided brand awareness, brand image, purchase intent, and bundled trial intent, the company found that online works in tandem with offline advertising to deliver 42% of the audience that is only lightly reached -- or not reached at all -- by television.

What those coming to any of this information should keep in mind, however, is that when all is said and done, it isn’t about the amount of money that is necessary to extend reach. It is what kind of media is necessary and how much of that media is necessary.

Many of the studies that discuss reallocation of spending to online make the mistake of focusing on just that: spending.

"Online should get 15% of a budget," or "the percentage of spending should be based on what percentage of an audience is spending its time with the given medium."

The reason for this is, in large part, because clients often times speak in this way. More times than I care to remember, they pose their query as one of a matter of dollars. I can appreciate that, since brand managers and marketing managers have bosses who frequently refer to their allocations in terms of percentages of a total budget.

But this doesn’t really make sense. It is like the Hindu myth that says the world is upheld by four elephants standing on the back of a tortoise. When asked what the tortoise is standing on, one is forced to answer “it is tortoises all the way down.”

When putting together a media plan, it is the communication delivery goals that dictate which media are to be used and how much each medium should be used. These communication delivery goals are based on historical, or projective, cause-and-effect relationships between the amount of inventory that runs in a given medium and the results that medium can yield. Basically, a certain level of media weight results in some satisfaction of a business goal. The basis for a TRP (targeted rating point) goal is an estimate of some number of TRPs resulting in some quantifiable movement towards the achievement of a predetermined business goal.

But this quantifiable movement is based on how much communication is necessary, or how much “reach” need be extended through which media. The dollars allocated towards a given medium to purchase the necessary amount of inventory to make this happen is what becomes the spending per medium.

If as the media planner on a campaign I've decided that TV, Print, and Online are the media being used, and upon further examination, have found that the weight levels necessary for each medium in order to accomplish my client's goals are 1/3, 1/3, and 1/3, then my media weight distribution -- in this instance, let us call them impressions -- is even among each media. This means TV gets 33% of media weight; Print gets 33%, and Online gets 33%. But if TV costs are twice as great as Print’s, and Print costs are twice as much as Online’s, then my budget allocations are 57% for TV, 29% for Print, and 14% for Online.

What is indisputable is that in many cases, no one medium can get the job done by itself. The use of multiple media is paramount in effectively extending reach to as many potential customers as possible. As peoples in motion, constantly looking for the next media high while engaging our regular favorites only to watch them become media lows, advertisers need to move quickly and in the same environments. Online is one of those environments.

One million iTunes for Windows

2003-10-21T18:43:00.000+05:00

iTunes for Windows has been downloaded over a milion times since its launch on Thursday, Apple announced today.

And in the same period over one million songs have been sold on the iTunes Music Store, double the rate of sales achieved when the service first launched at the end of April.

This brings the total sold to 14 million, an average of more than half a million each week.

'We're off to a great start,' said Apple CEO Steve Jobs, 'and our competition isn't even out of the starting gates yet.'

Let's hope that he now turns his attention to opening the store to Europe and the rest of the world.

Free to be Fee

2003-10-21T18:31:00.000+05:00

Is advertising getting squeezed out by consumers' new willingness to pay for their fun? Veronis Suhler Stevenson caused some tremors last summer when it argued that U.S. eyeballs and eardrums are spending progressively less time with ad-supported media (57.8 percent) and more time with fee-based content, which they define as movies and video rentals, cable TV, and the Internet. As consumers get accustomed to paying more of the freight for their media experiences, so go the nightmare scenarios, advertisers have fewer places to pitch them.

Don't worry. It was only a nightmare. Why VSS included the Internet among its consumer-supported categories is anyone's guess, given Webizens' famous resistance to paying for online content. To be sure, in the post-bubble world where the "free ride" is supposedly over, onliners are expected to pay up to $2 billion for content in 2003, according to Jupiter Research. Some providers like Weatherbug, Salon.com, and Britannica.com promote their fee-based products specifically as ad-free environments. Nevertheless, in the foreseeable future, ad spending will continue to dwarf consumer fees, which have grown at a good but not barn-busting pace of 20 percent to 30 percent annually. "Paid content is probably inching up on 15 percent to 20 percent of the total size of the ad market," says Michael Zimbalist, executive director, Online Publishers Association. "The question really is going to be recognizing the point of equilibrium. We're still in a state where that is sorting itself out." More than equilibrium, important synergies between free and fee-based models are starting to emerge at some of the very sites that enjoy strong subscription growth. Fee-based programs are helping some providers like Weatherbug underwrite new technologies for the ad-supported services. The innovative new ad provider Ultramercial (www.ultra-mercial.com) is helping companies like Salon.com develop a model that trades premium content for consumers' eyeball time. At least one publisher that has spent years behind the subscription wall, WSJ.com, is demonstrating that paying customers may actually be the best audiences for advertisers. Far from mutually exclusive, fee and free may actually work better together on the Web than they do in other media.

User-Funded Advertising

While a hearty 120,000 meteorological nuts pay $19.95 for an enhanced and ad-free version of the famous WeatherBug desktop utility, "that's relatively negligible compared to our 25 million free subscribers," says SVP and general manager Andy Jedynak. The company's revenue jumped 113 percent in the first half of 2003, but less than 10 percent of it is coming from consumer fees, and the roster of advertisers grew from 120 to 167. But since paid subscribers obviously are the most devoted visitors to a site, and perhaps the most interested in the core topic, marketers might worry that an ad-free premium product actually makes a site's most receptive and responsive audience unavailable to advertisers. Jedynak disagrees. "I don't think that we are carving out the most loyal audience at all." With a fully registered user base, WeatherBug segments its free audience for advertisers just as effectively as it could the paying customers. "Almost all of our buys are targeted buys," he says.

More important, having a diversified revenue model actually helped fund more sophisticated ad approaches like WeatherBug's innovative "Select a Sponsor" program, where new users actually pick which ad client appears on their pop-up weather utility for the first week. It all started with a dare from an unwilling client. Jedynak recalls. "He said, ‘I will buy from you if I pay only for the people who say they want to see my ad,' and we took that seriously." The product took five months and more than $100,000 to develop, but he thinks that having reliable subscriber revenue allowed the company the necessary time and resources. "It gave us the revenue stream to develop additional ad solutions," he notes.

The Fair Exchange

The subtlest but most important relationship between fee and free models may be that the steady acceptance of pay-to-play products on the Web also raises the perceived value of all online media and, thus, in turn, the companies that sponsor it. Getting users to appreciate the value and cost of the generally free smorgasbord of information that is the Web has been a tough sell in the medium's first decade. But having an ad-free, paid offering like WeatherBug Pro actually changes the way the non-paying users perceive the free product. "They see that there is true value, and that the sponsor is paying their way," says Jedynak. The proliferation and acceptance of paid content models may be helping all consumers understand that "free media" also requires some fair exchange of value with visitors, namely advertising.

Indeed, once users acknowledge the value of online media, they actually seem willing to give a sponsor even more of their undivided attention. To wit — the new hot thing among major media brands and some ad clients is the "sponsored day pass." First seen at Salon.com and invented by California-based Ultramercial, this model lets non-subscribers access the paid areas in exchange for viewing an extended multimedia ad for a single sponsor. "You can't click away from the ad," says Micheal O'Donnell, CEO and president, Salon. "That is our Pavlovian attitude — if you want the food, you have to watch the ad."

And apparently the puppies are staying and salivating. Ultramercials can run up to 30 seconds and include sequenced pages of creative. Nevertheless, according to the company's metrics, 93.5 percent of Salon visitors who initiate the day pass watch the entire ad and spend on average 52 seconds with it, often including interactions with the brand. The format has attracted top-tier clients such as Absolut, Mercedes-Benz, American Express, and even advocacy ads for the ACLU.

Viewer-Initiated Commercials

"It's a fundamental change in the publisher's business model," says Dana Jones, founder and president, Ultramercial, which invented the format. By clearly giving users valued content in exchange for their attention to a sponsor, "we make explicit what has been implicit for decades — the relationship among the three partners in media — viewer, publisher, and advertiser," says Jones. "This is a viewer-initiated commercial that the viewer chooses to watch as payment to gain access to premium content." In this thinking, putting a dollar value on the content makes it possible for advertisers to act more as visible patrons of the viewer's media experience, and so, demand and get more attention.

The principle here is much the same as offline, says Jonathan Levin, CEO and founder eMeta, which provides the software for paid areas at NYTimes.com, FT.com, and Hoovers.com. In the real world of print, free publications generally command lower ad fees, while paid and controlled circulation books enjoy the better ad rates. "You need to value your content," he says. "If you don't, no one else will." Oddly enough in Salon's case, the fact that users have the day pass alternative to buying a full subscription to the premium site seems to have helped rather than hindered expansion of the paid base. Salon was relatively stagnant at about 45,000 paying customers when the program started nine months ago, but now has ballooned to nearly 75,000. "For a publication, this is like defying gravity," says Jones.

And because the audience is essentially captive during the spot, the advertiser knows precisely how many people truly sat through their ad, a metric virtually no other medium can promise a client. Ultramercial says it started receiving calls from publishers and ad clients on the day the format first appeared on Salon. It has already pushed Virgin Mobile ads at eMode and IGN.com, and is working in stealth mode with a number of "major media conglomerates" to deploy the day pass at some of the Web's most visible content properties later this year.

A Better Class of Eyeball

While day passing represents a cutting-edge approach that makes the relationship between sponsorship and "free media" clearer to consumers than it is in any other medium, much of the online world continues to suffer a regressive either/or formula to its content business models. Publishers and consumers seem to expect that fee-based content areas should be ad-free, even though magazines and newspapers have been advertising to their paid subscribers for over a century. In part, the unique dynamics of the Web force this Manichean view upon publishers, because their traffic and ad reach plummet so radically when they begin to charge for access. "The experience we have seen on the Web is that, once you put down the walled gate, up to 95 percent of your audience goes away," says O'Donnell. "People flee when they have no choice but to pay."

Because of this inevitable user flight at the first glimpse of a sub wall, most publishers have to make a hard choice and do a tough cost/benefit analysis when they move to a paid model. With low-urgency content that is more nice-to-have than must-have, publishers can expect to convert as little as 2 percent of their uniques to paying customers, and virtually gut their advertising reach, says Levin. "There is a trade-off that doesn't exist in print," he says. Accordingly, many publishers start by walling off only a fraction of their content in order to maintain enough raw reach to sell to ad clients.

But keeping ads out of paid areas is not necessarily a long-range plan for content providers, says Zimbalist. "Early on, people were saying ‘free with ads' or ‘pay with no ads,' and I always believed that was a very shortsighted way to market. The either/or model wouldn't be in the best interest of the publishers."

In fact, if advertisers and publishers can change their thinking a bit about online audiences, metrics, and ad effectiveness, they might see that paid subscribers constitute the most receptive and reliable audiences for marketers. One of the oldest and most successful of fee-based publishers, Dow Jones, offers a glimpse of hybrid models to come. Along with FT.com, Janes.com, and SoftwareCEO.com, it is among the only paid sites to place advertising on both sides of the sub wall, at free sites like CareerJournal.com, StartupJournal.com, and OpinionJournal.com, and into the 671,000 paid members at WSJ.com. Dow Jones sells ads across the free/fee network, and doesn't specify WSJ.com as a discrete placement, yet the more highly targeted ad buys generally are going into this area, where the company has much more detailed demo profiles and behavioral data.

"By having the subscription model from the beginning, it's allowed us to command a higher CPM because clearly, people want to know what we know about our user," says Randy Kilgore, VP advertising. Open rates for "run of network" ads go for a CPM of $35.Kilgore's "special sauce" of demographic targeting costs $95 to do tricks like aiming for senior level managers of companies with 100,000 employees, and much of this audience is behind the sub wall. As a result, "we believe we generate a similar amount of advertising revenue as sites that have far greater apparent reach," says Todd Larsen, president, consumer electronics publishing, Dow Jones. The company has also turned around the denser sets of behavioral data that a subscriber base allows into a very hot "Interest-Based Targeting" product. By knowing a user's reading habits, Kilgore and company can sell an auto maker all of the WSJ.com members who recently used the car loan calculator and are therefore, clearly in-market. "We've got a bunch of folks already committed," he says. "It seems to be the topic of every sales call."

A paid model pays off for advertisers in a number of other more subtle ways than sheer targeting. Acknowledging that users are paying their way, WSJ.com is more discriminating in the size, number, and placement of its ads, says Larsen. "But that has turned into a real sales benefit. [Clients] want to be in an environment that is less cluttered."

And a number of others in the industry are arguing now that paying customers simply make better audiences for advertisers. "Subscribers have high loyalty to a content brand," says Zimbalist. An OPA study earlier this year found that familiar ad metrics such as aided brand awareness, message association, and brand favorability ran higher among sites with faithful audiences. "It suggests that content loyalty translates into advertiser effectiveness."

No doubt, publishers will have ample opportunity to prove this case with agencies and clients. According to Levin, eMeta's pipeline of companies that are moving at least some of their material to a subscription model is larger than ever. Nevertheless, in the end, few publishers believe that a subscription business will successfully supplant ad models. O'Donnell expects that the 50 percent of Salon revenue now coming from ads will eventually grow again, and Larsen believes WSJ.com's ad revenues will become much more important to the mix in coming years. Nevertheless, advertisers certainly will be buying into more hybrid networks of fee and free audiences in the near future, which could challenge longstanding conventions about online reach and frequency.

Where the subscription model succeeds, advertisers may also be dealing with a new balance of power. Publishers with a reliable, alternative revenue stream tend to be less desperate and less pliant with clients. In the post-bubble years when many sites were only one lost ad sale away from shutting down, they came to the table with fear in their eyes and a willingness to try just about anything. A healthy subscriber income can change everything, however. "In a candid moment, other site managers and even ad directors would say they have done things they wouldn't have wanted to do," says Kilgore. "We're able to say no."

No. It's been a good three or four years since a media buyer heard that response from a website.

Don't Sell Yourself Short!

2003-10-21T12:30:00.000+05:00

By judging campaigns by only one channel, multi-channel marketers may be short selling their efforts.

Direct response and branding budgets will both continue to grow online – it’s crystal clear. Noting the rise of broadband usage, media consumption patterns online, TV fragmentation, and better ad packages, it all leads to the same conclusion.

Online advertising is working brilliantly, pushing marketers to a critical tipping point for media mix allocations.

Currently, most direct marketers view the success of an online campaign by comparing how many dollars flow into their online store versus how many dollars go out into their online advertising campaign. Historical click-through rates, conversion rates, and view-through metrics are all used when deciding where to place the media budget.

However, if the marketer also has brick-and-mortar stores, catalogs, or call centers, it becomes much more difficult to understand the true impact of its online advertising across all sales channels.

If a marketer does have multiple channels and bases its success only by online sales, it is selling its campaign short against its true impact on the total business.

Some refer to traffic to a Website that is not attributable to any online media efforts as “organic” traffic. When online sales come from organic traffic, most marketers are quick to credit their offline promotions or word-of-mouth for creating that customer.

However, any and all sales that take place offline are automatically attributed to offline promotions, period.

Growth in online direct marketing budgets will occur as a result of two things:

1. An increase in consumer confidence and spending online. Looking at many of the research studies that continue to surface and trends with clients, this is already happening.

2. Smart marketers with multiple sales channels will begin to track offline sales behavior to online advertising and Website behavior.

Most studies indicate that between 70% and 90% of all customers for “high consideration” products begin their research online. They may use search engines, the marketer’s Website, or comparison shopping engines to help with their decision.

Ultimately, a consumer may continue that research process into the retailer’s store to see, touch, feel, or try on the merchandise. If that behavior is not tracked, all the clicks and site traffic leading to that purchase is dismissed and considered wasted.

The concept for making this happen is not complicated. Packaged goods and pharmaceutical companies use coupons to track offline sales and prescription patterns to online efforts. Auto manufacturers are using geographical and registration information to link dealer sales back to online advertising efforts. Travel advertisers use special call-in numbers and rewards programs for their online media and Website to track that activity offline.

Notice that these sectors are among the hottest in the industry, and include some of the Internet’s most sophisticated marketers?

Regarding online retailers of clothing, technology and financial services, the correlation between online efforts and offline sales becomes more difficult, but is not impossible. The impact of offline sales by online advertising has been as high as 20% for Avenue A clients in these verticals.

Customer data is the glue that holds the media mix together. To identify customers online, marketers must first serve and track on a cookie level and gather anonymous information about those customers. Offline, marketers can collect data at the point of purchase. Rewards programs and charge cards help to identify customers. At this point, it is a matter of matching the data while maintaining the cookie’s privacy.

This approach requires more analytical sophistication and clear communication across all sales channels. But when that correlation is made, the picture of online advertising becomes more complete. It is a medium that not only drives online sales, but it drives offline sales as well.

There’s no reason to sell short, both from a branding and a direct response standpoint. The online medium enjoys the luxury of being accountable, even in the offline world.

Emergency fixes for blog-clogged Google

2003-10-20T12:25:00.000+05:00

It's hard to say what needs patching more urgently, right now: Microsoft Windows or Google. But at least Microsoft makes its fixes conspicuously available. Google's notorious culture of secrecy forbids it from offering even the most innocent explanations.

Fortunately, Register readers have come to the rescue.

On Sunday Google admitted to the Washington Post that it was working on a bug it had found which was withholding thousands of legitimate search results from its users. The bug was in response to another bug: Google's susceptibility to being gamed by spammers who set up 'link farms' to tripwire its PageRank? algorithm. "Is Google starting to show signs of strain against spammers and Web scammers?", asked the Post.

And this week yet another bug seemed to illustrate that the patched-up search engine was losing the battle. Google can't weed out its search results for 'blog noise', such as the millions of empty pages created by Movable Type's "Trackback" feature, we reported.

If you compare Google's search results for OS X Panther discussion with AltaVista's, AltaVista scored a clean sweep - providing a Top Ten free of the Trackback virus that Movable Type webloggers have unwittingly dumped on the Internet. Seven out of the top ten results from Google were duds: empty trackback pages.

In the absence of a bug-report from Google, here are some emergency patches, from Register readers.

"Perhaps the answer is to put -trackback into google whenever you search," writes Paul Fleetwood. "It certainly fixed the example you provided. Though maybe google need to make it a default setting."

Stuart Bell agrees.

"Perhaps Google should consider such an innocuous fix? Granted, we'll end up in yet another arms race between the blogger software folks and Google filters, but that's life out on the wild and wooly Internet frontier, eh?"

Paul Tomblin offers the more sophisticated filter -mt-tb.cgi - which seems to do the trick nicely.

"I suppose the simplest way to do this would be putting a new section in the Google preferences page - a noise filter, spam filter, blog filter, whatever - which has either hard-coded or user editable exclusions for searches," Andrew Hodgkinson. "To be much use for the 'average casual searcher' who doesn't know about preferences, advanced search or blogs, it probably ought to be switched on by default - a little risky (as with any spam filter it might block legitimate content), but surely no more so than SafeSearch."

Indeed so.

Perhaps with its executives fixated on an IPO, and aggressively expanding the company's advertising franchise, Google has forgotten that it once had a search engine too, way back when. Perhaps the executives would like to attend to it now. ®

2003-10-18T19:43:00.000+05:00

Consumers Cite Internet and Direct Mail as More Influential

STUDY: TV ADS DON'T SELL CARS

TV advertising has a low impact on consumers' car buying decisions, according to a new market study. The findings are significant because, as a group, automotive marketers are the largest purchasers of advertising and skew heavily toward TV advertising.

Word-of-mouth

Management consultants Cap Gemini Ernst & Young found only 17% of the 700 U.S. consumers it surveyed in the past six months said TV ads influenced their car-buying decisions. Ads on Internet search engines influenced 26% of consumers. Nearly half, or 48%, of the consumers said a direct-mail offer from a car dealer would influence their vehicle purchases, but the most influential measure was word-of-mouth, cited by 71% of consumers. Cap Gemini expects to release its complete findings this week.

"We think manufacturers and their dealers are wasting money on broad-based TV advertising instead of a direct-marketing approach," said Mike Wujciak, a vice president who oversees Cap Gemini's auto practice. While he's not suggesting carmakers entirely ditch their TV ad budgets, he said "maybe they should re-evaluate the media mix, because TV is such a big part of their budgets."

Automakers and their dealers, the top spending advertising category, spent $18.4 billion last year in measured media, according to TNS Media Intelligence/CMR.

Recommends online ads

Mr. Wujciak recommends the industry do more online ad campaigns, which can be put together faster, within 13 weeks, compared to 36 weeks for a TV blitz. Online ads are quicker to analyze for results than other mediums, he said.

Jim Sanfilippo, executive vice president of Omnicom Group's auto consultancy AMCI and former vice president for marketing of Kia Motors America, begs to differ with the results. "TV absolutely produces traffics for dealers," he said, noting that TV gets robust revenue from the auto industry "because it works."

TV quickly extends reach to consumers, said Mike Palmgren, media account director on BMW of North America at Publicis Groupe's Optimedia International, New York. He said BMW uses TV for awareness as part of its media mix. "If you're not aware of a product, how would you know where to research it on the Web?"

Magazine ads

TV auto ads also provide quality shots of vehicles and can show off their performance, something the Internet and two-dimensional ads can't do, he said. "On TV, you can see the light dancing on the sides of the car." Print ads are important too because readers of certain magazines tend to be influential and more details about the car or truck can be provided.

Rob Schwartz, executive creative director in Nissan North America's account at Omnicom's TBWA/Chiat/Day, Playa del Rey, compared TV ads to "a little piece of candy. TV is a thought-starter medium," he said. Then consumers can go online for more details, he added.

2003-10-18T19:06:00.000+05:00

Targeting Good Behavior

To be six again

My son just completed his first 30 days of first grade and came home with a report card and behavior chart, both stellar. (I'm a proud dad.) While his grades were great, I sense that now in his school acclimation process, the behavior chart is a tad more important. What could be more distracting to a six-year-old boy than to be in the same room with 25 other boys and girls? If he's exhibiting good behavior, he must be paying attention to the teacher (we hope). To track his progress, the teacher places a smiley face on each day of the calendar with good behavior. Nothing like a month full of smiles!

Let's dive into behavioral targeting, a topic receiving a lot of press lately in light of announcements from wsj.com and NYTimes.com. Most people think behavioral targeting involves tracking user behavior, then dynamically leveraging the knowledge to serve relevant messaging. I think of it from the customer perspective; how can I reward a potential or current customer with more relevant information, as indicated by their implied or expressed behavior? Or, how can we marketers hand out a few smiley faces? :) (Couldn't resist!)

You're tracking my what?

Before the privacy hairs stand up on the back your neck, relax. We're talking about data collected anonymously and in aggregate, after someone has created a specific, expressed relationship with a site (through a registration process, for example). No Big Brother here.

How does it work?

Say a user cruises through several MSN pages. She checks recent college football scores, then hops over to travel to research hotel specials and flight schedules. Then she clicks to monitor her company's stock and glance at this week's East coast weather. That's your average user session. Perhaps she repeats this a couple days in a row, or over a couple weekends.

If you were a supplier of airline travel, you'd want to ensure your ad shows up in the airline travel section so the message is contextually relevant, right? But since you've enabled behavioral targeting criteria, you can also hit that same user with an airline ad while she's in other MSN content sections because her implied behavior indicates she may be interested in a weekend trip to a college game in sunny Florida (if her brokerage account is looking up, that is).

This might sound far-fetched, but stay with me.

What's old is new again

Many top publishers are getting serious about behavioral targeting, but one property has done it for years: Yahoo! Once called "fusion marketing" (which earned the nickname "con-fusion marketing"), Yahoo! has turned its wealth of user data into a tool to strategically optimize less-requested inventory, maximizing its ability to generate revenue (see the company's recent buff earnings report).

The five ways Yahoo! behaviorally targets users

Keyword Search User types in a specific product, say "roller blades." For the next hour, you can serve creative for the new Aero 9 model skates no matter where the user is within Yahoo's network.

Page View That same person happens to use Yahoo!'s directory to drill down to street sports or related content categories. They check out several pages related to skating. Based on that activity, you create a trigger to serve additional Aero 9 ads as they access other content.

Ad Clicks If our user interacts with ads matching your product's category, you can use the activity to serve your message on a future page view. This isn't Gator-ish. We aren't hijacking anyone's site or page view. We use expressed behavior to trigger the ad server to queue your creative on the next page. Think of it as "sequentially relevant ad serving."

Transactional activity Skater girl decides she'll hop a plane to this weekend's game in Florida. She'd love to cruise the boardwalk on her blades. First, find a cheap airfare. After she books that low fare, your targeting criteria kick in. You serve ads for southern Florida hotel specials, as we know from the transactional activity she booked a Miami flight. More options: Not only can you target her after the transaction, you can use her shopping and comparison activities even before the flight's booked. Her flight schedule look-up activity indicates our user is checking out Miami. Why not offer a package deal for air and hotel at one nifty price?

Category activity Yahoo!'s behavioral targeting includes the ability to buy specific channels for specific behaviors. Skater girl will need a new travel bag to lug those skates. Why not establish a trigger that creates a connection between her travel and shopping behavior?

Take it to the next level

To really get sophisticated, you can create a targeting scorecard for each user using a points system based on a number of the above items. If you're clearing out the remaining '03 Subaru inventory, you can create a scorecard based on specific shopping research activities plus search actions for car research sites, referral traffic to other car sites, referral traffic to dealer sites, and Yellow Page look-ups. You can also specify number of days, frequency within days and consistency of the desired actions.

You may just learn the maximum conversion for driving a buyer to a dealer for a '03 model Impreza is a mix of 25 auto channel page views within two days, plus click-through traffic to at least three auto consideration sites.

Worth it?

This all may sound a bit complicated, but people tend to exhibit similar shopping behavior before they pull the transactional trigger. You must identify that process for your client and map the trigger points for behavioral targeting.

For one airline client, we've found behavioral targeting can deliver between 30 and 40 percent more post-click activities and transactions than ROS (run-of-site) or even some contextual placements. Modeled correctly, it works very well.

Potential pitfalls

Items to bear in mind that can negatively impact results:

Saturation can create overkill Don't create a trigger, then carpet bomb customers with every available impression. As with any frequency model, there's an opportunity to overdo it. Carefully consider frequency caps.

Difficulty of determining delivery and inventory management As with any user-generated data modeling technique, there's no way to measure the exact number of impressions you'll deliver. Run some decent-sized tests and negotiate the assignment priority of your ad serving. Will your ads always be superceded by other marketers' category-wide buys? Ask, or you could wait a long time to get the desired level of impressions.

Use customer research to determine ultimate impact Many online ad efforts require an offline conversion (e.g. a car purchase). So conduct post-session surveys to refine targeting algorithms and maximize success. You can trigger pre- and post-session research to determine if someone is more or less likely to consider a purchase. Benchmark behavioral targeting versus other buys to determine the lift effect.

Reward good behavior

What are we creating here? Behavioral targeting provides an increased opportunity for touch points between your brand and customers. We know users go online for a specific purpose or mission. Reward them with the information they want, via smart advertising.

Put on a happy face! :)

2003-10-18T18:16:00.000+05:00

The Web Offers Involvement Branding

The digital media space brings both the direct-response and the branding concepts together and allows them to be something more than the sum of their parts.

If you work in advertising and marketing and online media is a regular part of your consideration, then you’ve heard the argument many times over: Is online best used as a direct-response vehicle or for branding efforts?

In spite of the variety of different forms of advertising and all matter of media types, in the last few decades advertising itself has been classified as belonging to two general kingdoms: direct response and branding.

We all know the difference between the two and can generally identify a particular advertisement as belonging to one or the other category. On television, for instance, the average viewer can pick them out right away even if they don’t know how to label them. Ads that elicit an emotional response tend to connect with an audience in a way that is qualitatively different from commercials with blue screens, toll-free numbers and Ron Popeil.

Nowadays, most people working in or around interactive marketing shudder when the topic comes up. As the debate has raged for the last few years, it seems as though most reasonable people have concluded that the online medium, like many other media, can be used to accomplish both direct-response goals and branding goals. It is simply a matter of laying out the objective and then executing against it.

As with any dialectic endeavor, however, an either/or proposition rarely suffices and a good synthesis emerges; a synthesis that borrows something from two distinct elements that when placed in opposition with one another result in a third, better idea or experience. It’s like the old Reese’s commercial, “You’ve got your chocolate in my peanut butter!;” “And you’ve got your peanut butter on my chocolate!” In this case, the clash of branding with direct response is “Involvement Branding.”

The outcome of mixing the ethereal components of branding with the interactive and response-driven elements of direct response is a hybridized marketing engagement on the part of the consumer.

Enter Involvement Branding

“Involvement Branding ? as defined by Yahoo! is the concept of tapping into consumers’ urge to interact and involve them in the brand itself,” says David Riemer, VP of Marketing Solutions at Yahoo!

[Yahoo! has a trademark pending on the term, “Involvement Branding.”]

“In interactive media, viewers can literally involve themselves in a piece of communication. The likelihood of someone recalling a product/brand and remembering key message points goes up when people have this kind of involvement,” continues Riemer.

Online media is a different proposition from other more traditional forms of media. As an advertiser, I can put messages before potential consumers that extol the virtues of my particular product or service while associating it with a particular state of mind (branding) that has as a component a call to action, that is fulfilled upon response to the advertisement (direct response).

“We refer to this as ‘brand response,’” says Jason Heller, CEO and co-founder of Mass Transit, an advertising agency in New York that specializes in interactive media.

“Basically you are delivering a brand experience and generating actions that are innate to the medium. Not taking advantage of this part of consumer behavior is underutilizing the medium,” continues Heller.

A New Concept?

So Involvement Branding TM, or as it is often referred to, Engagement Branding, is a new opportunity in advertising, for which elements of branding can be married to response mechanisms within the same advertising event.

It is a kind of advertising that seeks to create a brand experience by manufacturing an experience at all, and then allowing the user who has had that experience to respond to it. Better yet, the user's experience IS the response.

This view that there is something different about “involvement branding” than other forms of advertising before is not shared by all, however.

“[I] don’t think we really need new terms for these things,” says Kathryn Koegel, director of research & Marcom at DoubleClick. “All branding is involvement of the consumer: emotional, visceral, and intellectual.” It is Koegel’s belief that talking about online advertising in this fashion and attributing new terms like this merely confuses the endeavor.

“We need to stop saying it’s different and talk about its capabilities in terms marketers already use,” she says.

To some extent she is right, but there does seem to be something different in the offline realm about a brand-driven campaign versus one that seeks to elicit tangible response.

Broadcast media certainly doesn't seek to elicit feedback from an audience in the form of response to commercial messaging. A quantifiable causal relationship between exposure to an advertising asset and consumer action is not the ready-to-hand goal of broadcast advertising.

As for direct response, it really is specifically used for no other purpose then to move widgets. At the end of a 120-second spot, if a toll-free phone number appears on the screen and there is an address to which you can send your check or money order to purchase, the sole objective of that kind of advertising is to make a sale.

Involvement Branding TM in the context of online advertising does seem to be different.

That isn’t to say that most advertisers take advantage of online’s unique ability to bring two different advertising activities together, but they can, and those who do can learn from their marketing efforts in ways they could not before.

Unique Measurement Opportunities

“Many of the ‘branding’ clients out there today rely on direct-response metrics to gauge the success of their online campaigns simply because they can,” says Michael Jacobson, senior partner at Marketing Consumer, a New York-based online marketing company. “They use these metrics for success because they are available, rather than because of their pre-planned hybrid campaign goals. Often times this is a good thing, but sometimes traditional/branding clients get carried away in the extreme measurability the Internet provides, and stray from their initial branding-oriented goal.”

“The behavioral tracking and analytics that are possible with online certainly can be acted upon like direct-response factors,” says Paul Kadin, EVP of Marketing and Strategy at Eyeblaster. “But the science of using these kinds of measures and correlating them with brand image measures will allow those who see the synthesis to design interactive ads better. By measuring which ad formats, creative, and interactive designs generate the best brand impact, measures that have been ‘owned’ by direct response will be seen as more broadly useful.”

Adds DoubleClick’s Koegel: “It’s one of the great problems of the Internet: While more clients understand the use of the Internet for branding they’re still optimizing and measuring impact based on click through.”

Therein lies the rub. The majority of activity in the online advertising space is still strictly direct response. More than 60% of advertisers say they are using online as an acquisition tool, and more than 50% say they use online for immediate direct sales (DoubleClick Fall '02 Marketing Spending Index), meaning they are still using the medium specifically for accomplishing direct-response objectives. Advertisers in the space are still looking for a causal relationship between the advertising activity they are committing and revenue yielded as a result. Not that all advertisers don't want this to some degree with their advertising, but traditionally, the major advertisers understand advertising to be a more sublime endeavor that works over time.

Be that as it may, the roster of advertisers that many publishers are starting to get these days is reading more like that found in offline media. Traditional advertisers are finding their way to the Web, and it isn't because they are hoping to simply get users to click and buy their wares online. It is because the branding capabilities of the medium are starting to be demonstrated and those advertisers interested in branding are getting involved as a result.

Involvement Branding Can Take Many Forms

The fact that the more traditional general marketers are utilizing the online medium simply as it is is exciting, but some are actually executing against the strengths of the medium as articulated by Involvement Branding TM, whether or not it is understood by this name.

“We have worked with clients on a wide variety of Involvement Branding? efforts,” says Riemer of Yahoo!. “This includes allowing the consumer to communicate by using the brand, such as with branded Yahoo! IMVironments, or allowing consumers to make choices about the brand, such as choosing which ending of the Sierra Mist ad (Pepsi) will run in the Super Bowl. These types of communications bring the consumer several steps closer to the brand and we have seen that they encourage affinity.”

As this example shows, Engagement Branding, or Involvement Branding?, is not just about getting users to respond more enthusiastically or in greater volumes to the ads that run, but rather about getting users to actually become part of the brand or product itself-- something like the M&Ms campaign that asked users to vote on what the new M&M color should be, or conducting surveys and quizzes, or letting users manipulate the product itself, like the old HP ad that let you print from the banner itself.

“A recent campaign for Discover magazine employed Eyeblaster expandable banners and 100K polite banner units to drive greater awareness of the magazine brand with an interactive quiz right in the ad units,” relates Kadin of Eyeblaster. “Orange, a wireless service provider in the UK, let users choose the color of their phone right in the Eyeblaster window ad. Ads for everything from Coca-Cola, Harry Potter and Chupa Chups lollipops let users ‘play’ with the ad by waving the product around or playing a game.”

But right now it appears that the kinds of Involvement Branding? executions that exemplify what is meant by the term are branded units that support some kind of game, otherwise known as “advergaming.”

“Rich media creates an interactive brand experience that can include an advergaming or other interaction aspect,” says Heller of Mass Transit. “Of course this is a creative messaging issue and I’m just a media guy. However, I see a lot of clients offering branded gaming experiences once consumers make it to their sites so that the experience can truly be even richer.”

Cory Treffiletti of FreeStyle Interactive, a full-service interactive advertising agency based in San Francisco, concurs. “Advergaming is widely utilized, as are any ideas that are spread virally as they then receive endorsement from the person who sent them on.”

Why is advergaming coming to the fore as a way to engage potential consumers with a brand and/or product? Because it asks for interaction on the part of a user that will likely provide a positive and fun experience with that particular brand and/or product.

The Best of Both Worlds

As we’ve heard time and again, branding has traditionally been a "lean back" experience, a passive state of being awash in moods and tones tied to sound, motion, and images that all work in concert to elicit an emotional response from an audience that will connect with a given product or service.

Direct response has traditionally been more of a "lean forward" experience, especially in the online space, where an audience is asked to submit actively to a call to action.

Involvement Branding?, or Engagement Branding, brings these two ideas together, allowing for the rhetorical -- or as is often the case, kinetic -- exercise of convincing an individual that by interacting with a given product or service that individual will alter his or her relationship with the world around them in a positive, meaningful way while at the same time allowing that individual to satisfy the constructed need within the confines of the medium in which the advertising was encountered.

This kind of engagement leads to a deeper and potentially more meaningful relationship with a brand or product.

“The likelihood of someone recalling a product/brand and remembering key message points goes up when people have this kind of involvement,” says Yahoo’s Riemer. “David Aakers of the Haas Business School writes, ‘Because greater involvement and active participation make the Web considerably different from more conventional media, any impact is likely to be more intense. Learning is more likely to be remembered and to influence future behavior; active involvement is more likely to create a bond between the brand and the person.’”

Riemer and Aakers are not alone in their view, and it is a view that seems to make sense when looked at in the larger context of how it is that individuals come to understand their world around them. Mihaly Csikszentmihalyi, the former chairman of the Department of Psychology at the University of Chicago who developed the idea of the “flow experience” has seen his ideas become a staple in graduate marketing programs around the world, relatable as they are to marketing through engagement (not to mention his ideas were very popular in the early stages of the Web when site developers were trying to figure out how to create the best user experience in order to keep them coming back time and again). Those on the ground also see things in a similar light.

“If you can encourage interaction with a brand then that builds familiarity and increases the propensity to choose your brand over someone else’s,” states Treffiletti matter-of-factly.

Proceed With Caution

Not everyone in the industry is convinced that Involvement Branding? and the current efforts the idea has spawned are meaningful.

“The Internet enables someone to execute creative that can involve the user and then elicit the direct response, that’s all,” Koegel says, contrary to the popular belief du jour. “I am very cynical about online creative that gets people to play games – it makes sense for some types of companies but I think it’s dumb for others: Does the game really enhance the brand or just make it seem silly?”

This is an important point to make; as I’ve often said, if I were teaching a class on advertising and marketing, I’d urge my students to read Frankenstein, or Prometheus Unbound. The reason: Because one of the morals of the story is that just because you can do something doesn’t mean that you should. However, it does seem that there is something to the notion of getting consumers involved in your brand in an active way while that brand is before them in a narrative or image context.

The problem with just thinking about this idea in terms of being a variation on the theme of direct response is that direct response can only accomplish so much in the way of serving as a sales channel or lead generator. At best, it is an ancillary means of sales and distribution of product. What do you do when you want to expand beyond the market of drunks, insomniacs, unemployed and impulse purchasers that late night TV and banner-ads has to offer? Enter-to-win-type engagement might lure a similar crowd, but there is something qualitatively different about advertising that tells you what it thinks or tells you what to do, and advertising that invites you to do something with it.

The digital media space brings both the direct-response and the branding concepts together and allows them to be something more than the sum of their parts, giving the audience something more than either exercise could by itself. By letting a consumer become part of your brand or product, you make way for that consumer letting your brand or product become part of them. And I don’t care what anyone says, THAT is marketing nirvana.

Bright Future for Rich Media

2003-10-15T10:58:00.001+05:00

A recent study conducted by Jupiter Research showed that rich media ads are projected to grow to 8% of total online spending in 2003, up to 11% in 2004 and up to 25% of online spending by 2008.

The survey was based on responses from 579 online marketers, asking which rich media ad formats advertisers use. Streaming media is set to grow much faster that the rest of rich media, reaching 3% of total online spending in 2003, 4% in 2004 and grow up to 14% by 2008.

Marketers plan to increase their usage of on-page ads, such as banners and skyscrapers using Flash, Java, Pointroll, Enliven and video, from 56% in 2003 to 67% in 2004.

Over-page advertisements, such as Eyeblaster, Shoshkeles, Ad4Ever and DHTML, are projected to reach 22% by 2004.

Marketers also said they will increase usage of Between-page advertisements such as Superstitials, Ultramercial and interstitials and Pre-roll video advertisements.

�These numbers back up what most sites are reporting � that rich media usage is on the rise,� says Nate Elliot, Jupiter research�s associate ad analyst. �But sites and rich media vendors still need to work together to make it easier to implement rich media ads, and to prove the effectiveness of those rich media campaigns.�

Bright Future for Rich Media

2003-10-15T10:58:00.000+05:00

A recent study conducted by Jupiter Research showed that rich media ads are projected to grow to 8% of total online spending in 2003, up to 11% in 2004 and up to 25% of online spending by 2008.

The survey was based on responses from 579 online marketers, asking which rich media ad formats advertisers use. Streaming media is set to grow much faster that the rest of rich media, reaching 3% of total online spending in 2003, 4% in 2004 and grow up to 14% by 2008.

Marketers plan to increase their usage of on-page ads, such as banners and skyscrapers using Flash, Java, Pointroll, Enliven and video, from 56% in 2003 to 67% in 2004.

Over-page advertisements, such as Eyeblaster, Shoshkeles, Ad4Ever and DHTML, are projected to reach 22% by 2004.

Marketers also said they will increase usage of Between-page advertisements such as Superstitials, Ultramercial and interstitials and Pre-roll video advertisements.

“These numbers back up what most sites are reporting – that rich media usage is on the rise,” says Nate Elliot, Jupiter research’s associate ad analyst. “But sites and rich media vendors still need to work together to make it easier to implement rich media ads, and to prove the effectiveness of those rich media campaigns.”

Amid Ad Network Consolidation, A Fast Player Sets The Stage For Expansion

2003-10-14T15:34:00.000+05:00

Just as the field of online advertising networks looked to be contracting, steps being announced today could drive it back into expansion mode. Ironically, the source of those expansion plans, new Fastclick president-CFO Kurt Johnson, was a key player in the development of ValueClick, a leading ad network that has been consolidating the industry.

As CFO of ValueClick from 1999 to 2002, Johnson led the network through its initial public offering, which ultimately put it in a position to acquire a variety of public and private leaders in the online field, including OnResponse, MediaPlex and BeFree. Last week, ValueClick continued its consolidation play, acquiring Commission Junction, a leading affiliate marketing company and a competitor of BeFree’s.

Johnson, how left ValueClick over a year ago, tells MediaDailyNews he plans to follow that playbook at Fastclick, one of the fastest growing online ad networks and a newcomer to the ad serving marketplace. While small by comparison to publicly traded online ad networks like ValueClick and 24/7 Real Media, Johnson says that can be changed through with the help of “external capital,” including a potential public offering.

In fact, he says Fastclick already is beating its peers by one important financial metric: the amount of revenues it derives per employee, which he says is “probably two to six times greater” than its public company peers.

Johnson should know. Besides being intimate with ValueClick’s results, he was part of a team that evaluated Fastclick as a possible ValueClick acquisition before leaving ValueClick. Johnson said he kept in touch with Fastclick’s management team and monitored the company’s progress before opting to come on board.

“They have developed an extremely creative business model by developing best- in-class technology. As a result, they have been able to develop business to a much faster degree and retain business to a much faster degree than their peers,” says Johnson.

Johnson would not disclose the Fastclick’s exact revenue-to-employee ratio, but he did note that Fastclick currently has about 30 employees compared to ValueClick’s 110 employees.

“My objectives for the company is to triple the size of the company in revenues and maintain the kind of profitability the company now experiences,” says Johnson.

Fastclick currently reaches about 62 million unique users through its network and is utilized mainly by direct marketers, though it is beginning to make headway with online brand marketers.

Yahoo Profit Up, Guidance Raised

2003-10-10T14:20:00.000+05:00

Yahoo Inc. on Wednesday posted a profit more than double last year and raised its annual earnings guidance, sparked by a red hot Web advertising market and its recent acquisition of Overture Services.

Shares in Yahoo were up just over 1 percent at $39.31 in after-hours on Instinet, following the financial community's initial enthusiastic reaction.

"I think it was just an awesome result," said Safa Rashtchy, an analyst at U.S. Bancorp Piper Jaffray.

Sunnyvale, California-based Yahoo reported a net profit for the third quarter of $65.3 million, or 10 cents a share, compared with a year-earlier profit of $28.9 million, or 5 cents a share. Revenue rose to $356.8 million from $248.8 million last year.

Financial analysts' average estimates called for earnings per share of 9 cents on revenue of $337.2 million, according to Reuters Research, a unit of Reuters Group Plc.

Revenue in marketing services, the company's widely watched division responsible for advertising and sponsored search services, rose 48 percent from last year to $245.1 million.

"It was a very good quarter and illustrative of the fact that the online advertising business is thriving right now," said Derek Brown, of Pacific Growth Equities. Brown owns no Yahoo shares and his firm does no investment banking with the company.

The company posted a 38 percent rise in fees revenue, due mostly to its Internet access partnership with SBC Communications Inc. (NYSE:SBC - News) and other premium services such as games on demand. It also saw 26 percent growth in listings revenue, mostly from its HotJobs job search service.

Yahoo ended the quarter with 4.2 million unique paying subscribers to its services, and said it expects to add 500,000 to 700,000 subscribers in the current quarter.

INCOME, REVENUE VIEWS UP
For the fourth quarter, Yahoo forecast operating income before depreciation and amortization, or OIBDA, of $130 million to $150 million and revenue of $462 million to $502 million, excluding traffic acquisition costs, or TAC, incurred by its Overture subsidiary. Yahoo did not detail those costs.

Analysts surveyed by Reuters Research had expected OIBDA of $120.1 million on revenue of $372 million before Yahoo gave guidance that included the benefits of the Overture deal.

For the fiscal year, Yahoo raised guidance to OIBDA of $428 million to $448 million on revenue, excluding TAC, of $1.42 billion to $1.46 billion.

Yahoo previously expected OIBDA of $375 million to $400 million on revenue of $1.26 billion to $1.31 billion, and analysts had been expecting OIBDA of $401.8 million and revenue of $1.31 billion, according to Reuters Research. That forecast did not include the Overture contributions outlined by Yahoo.

Yahoo said it was more appropriate to give guidance for revenue that excludes Overture's costs of acquiring traffic to its sponsored search links, which traditionally made up a large part of its revenue.

Yahoo also said Overture has had "positive and productive discussions" with the MSN online unit of Microsoft Corp. (NasdaqNM:MSFT - News) in recent weeks about continuing their sponsored-search deal. LookSmart Ltd. (NasdaqNM:LOOK - News) recently lost half of its market value when it said its search deal with MSN would end.

MSN executives say they want to build their own full-featured search service, one that would give them greater control and a product more competitive against engines like Yahoo and Google (News - Websites) .

"Our expectation on the business side is we'd like very much to continue to work with the affiliates," Chief Operating Officer Dan Rosensweig told Reuters. "We expect to keep our fair share of affiliates and win new business."

Yahoo shares closed off 14 cents at $38.79 on the Nasdaq, before the release of earnings. (With reporting by Lisa Baertlein in Palo Alto)

Are Micropayments Promising or Penny-Ante?

2003-10-10T14:03:00.000+05:00

Online micropayment is an idea that just won't die…nor will it quite come to life. Attractive as it may sound to consumers and some publishers, the idea of spending $2 or $3 here or there for a song, an article, or a day of access to a site remains in a zombie-like state. Despite increased interest in the model and no shortage of firms with payment solutions (see EContent's April issue), users just aren't buying in.

The Online Publishers Association's spring report on the state of the paid content market found that, while content purchases under $5 did increase 707% in 2002, it only represented a seven-fold jump from practically nothing. Micropayments on content in 2002 still only totaled $9.6 million—a mere 1% of the online content revenues altogether.

A lot of people seem not to be getting rich very quickly off of the micropayment dream. Even since we last reported on the model just a few months ago, yet another wave of witch doctors have emerged trying to make this zombie walk and talk like a real live business model. Each solution boasts its own particular brand of voodoo, but in talking to the three services that launched in recent months—Peppercoin, Paystone, and BitPass—they all spout a familiar mantra about how Web audiences have changed substantially enough for micropayments this time…no, really.

With ad revenue trickling in, and some subscription models picking up, "à la carte is the missing third leg of the stool," says Rob Carney, Peppercoin's VP of sales. Both publishers and consumers are seeing that content must be paid for and Peppercoin makes it possible to literally pay pennies. The company has a proprietary technique for aggregating tiny online charges into larger ones that are more efficient to process with the credit card companies. This is supposed to allow publishers to package fee-based downloadable content in novel ways that can be priced down to nickel and dime levels.

Why should publishers sell their wares for pennies rather than the more substantial subscription model? Subscriptions "have met with dismal failure because conversions are so low," claims Kurt Huang, CEO and co-founder of BitPass. His company uses the prepay model that lets the user load money into an online account, which they can debit down to a penny at sites in the network.

Brian Roberts, VP of sales and marketing at Paystone notes that the micropayment model has gotten some good PR boosts recently, like Apple's much-hyped $.99-a-song iTunes launch. Paystone, a Canadian company, also uses a prepay model, but partners with banks so that consumers can send funds that can be debited by micropayments across Paystone sites.

All of these solutions do seem to offer better terms for publishers than credit card or phone bill alternatives. All three pass along more than 80% of purchase price to the partner, which will be wonderful if any of these solutions survives. Carney says that in order for Peppercoin to flourish, it has to present "a compelling value proposition to the seller…and eliminate friction in the market." But making micropayment cheaper and easier for publishers may not be the real problem here. Independent and small music labels (which seem to be the first partners for all of these services) see the sense in micropayments because they weren't making anything online before, so there's little risk in testing this model.

Ultimately, it comes down to consumer behavior and there are no signs that that has substantially changed yet. Sure, millions of people are buying $.99 songs at iTunes, but according to Apple, most are buying them in larger album packages rather than nickel-and-dime purchases. People do not buy content the same way they do candy. Some of these micropayment solutions themselves admit that their early customers are not loading more money into their accounts than they expect to spend on initial buys, which suggests that a significant barrier for this model remains. Without a big enough network of partnered content sites, consumers don't buy into the network and spend across multiple partners. And without this kind of consumer support, no one company can break through to be ubiquitous in the market and attract the major content publishers.

As Peppercoin was about to launch, it boasted about a dozen partners, while BitPass was poised to launch with six. Paystone claims 700 content outlets, but most seem to be small music and news vendors, and the company isn't promoting it as a network. Of course, everyone is "talking to the major players" about their systems, but as of this writing, no big- or even medium-sized content brand has signed on. No doubt the big boys are being sensible by sitting back and waiting for the category to shake out, but unless a major content venue steps up to let itself and its customers experiment with these micropayment networks, the category may not shake-out so much as stay zombie-fied, waiting for the right voodoo.

Subscriptions, online stores vie for music fans

2003-10-10T13:54:00.000+05:00

On the eve of the widely watched relaunch of Napster, the music industry's first casualty in its war against online piracy, another battle is raging in music cybersales and it's between two legal formats: paid subscriptions and a la carte stores, industry sources said on Wednesday.

This new conflict is a far cry from the one that put Napster, the formerly free song swap service that will relaunch as a paid service on Thursday, out of business.

But right now both platforms are vying for the hearts, minds and pocketbooks of Web-savvy music fans. Several analysts believe both will survive but that subscriptions may provide more revenues overall. Others argue a combination of the two is the key to the industry's success.

Since the world's big labels like AOL Time Warner Inc.'s AOL.N Warner Music and Vivendi Universal's V.N EAUG.PA Universal Music first took Napster to court for copyright infringement in 1999, the industry has tried to find ways to lure Web surfers into paying for online music.

Subscriptions, in which users pay a monthly fee to listen to as many songs as they like, were last year's hot business model. A la carte services, paying one price for each download, are this year's hot new trend.

The recent success of Apple Computer Inc.'s AAPL.O iTunes music store has been hailed by the record industry, spawning similar a la carte services like Buy.com and Musicmatch and overshadowing subscription services like MusicNet, Rhapsody and FullAudio.

'FOLLOW THE LEADER'
"Everybody's playing follow the leader. Subscriptions were hyped to death and now the a la cartes are being hyped. It's a false debate as to whether one is mutually exclusive of the other," said Alan McGlade, chief of MusicNet, which runs a subscription service through partners like America Online, a unit of AOL Time Warner.

"They are both valid ways to consume music, and we believe they are most interesting together," said McGlade.

Roxio Inc. ROXI.O , which bought Napster last year, believes it will be the strongest service to date due to its broad brand-name appeal and the fact it will be the first to offer consumers both an a la carte model and a subscription platform.

Rival subscription service Rhapsody, owned by RealNetworks Inc. RNWK.O , said Napster's two-pronged approach shows the subscription model is still strong.

"As the number of a la carte stores proliferates, the news about Napster is a reminder that subscription services continue to attract a wide audience of consumers," said Matt Graves, a spokesman for Rhapsody.

Jupiter Research forecasts online music spending to quadruple to $3.3 billion over the next five years from under $1 billion in 2003, but sees subscriptions as the more viable.

"Although downloads will appeal to a larger customer base, subscription services will realize greater value," Lee Black, a former Jupiter analyst, said in a July report.

John Bernoff, analyst with Forrester Research, echoed that sentiment in a recent report saying that by 2005, music buyers will recognize that acquiring music a la carte makes for costly collections and that as fans get more comfortable with online music, subscriptions will overshadow a la carte services.

Tuning Up for the Online Music Business

2003-10-10T13:48:00.000+05:00

Making a buck selling songs online will be tough, but a raft of sites are at the ready

For years, record companies squelched efforts to sell tunes online, for fear of Napster-style piracy. Now, suddenly, the floodgates are opening. Giants ranging from Dell (DELL ) and Sony (SNE ) to Amazon.com (AMZN ) and Wal-Mart (WMT ) are scrambling to set up Web music stores. So are a number of smaller players including -- yes -- a revived Napster, which is being relaunched by Roxio (ROXI ) Inc. this month. Also within weeks Apple Computer (AAPL ) Inc. will likely go ahead with the much-anticipated launch of its iTunes online store for Windows users. "Within a very short period," says Dell Inc. CEO Michael Dell, "the labels will want to be on as many music stores as they can."

With at least a dozen players likely to enter the market over the next few months, competition will be fierce. Just as the real world has everything from Wal-Mart to the indie record store, the new entrants are looking to carve out niches. Two classes of winners will likely emerge: those with sufficient scale to convert meager per-song margins into meaningful profits and those that use music to sell add-ons, be it hardware, subscriptions to online music magazines, or concert tickets. Says Jonathan Hurd, a vice-president with management consultant Adventis Corp.:"The ones that get the customer experience right will benefit -- but there are many ways to mess up."

To avoid that fate, the new services will largely mimic the business model Apple created for its popular iTunes site. Most will sell songs for 99 cents apiece. Users will be able to burn the songs to as many CDs as they want and play them on up to three PCs or mobile devices. Music execs hope that will provide listeners with the flexibility they crave while preventing mass copying and file-sharing.

TOUGH ECONOMICS. But even at 99 cents a song, making profits selling music online could prove tough. Under existing arrangements, 75 cents or so will go to the label, and credit-card processors will pocket another 5 cents. That leaves just 19 cents for marketing, technology, and all other costs. The rush for market share will almost certainly force services to slash prices -- and to find other ways to make money. Earlier this year, Listen.com experimented by charging 49 cents a song but ultimately retreated to 79 cents -- and only for those with a $9.95 subscription.

So why the rush to jump in? For hardware giants such as Dell, Sony, or Apple, the real money will be made selling music players. Dell is clearly counting on its online music offerings to create demand for its new player, the DJ, set to launch this month. And for Wal-Mart, which accounts for 20% of all music sold in the U.S., it's too big a market to ignore.

Smaller players are counting on selling premium content. For a monthly subscription of $10 or so, customers of Musicmatch Inc. and Napster 2.0 will get a range of perks -- say, exclusive recordings or the ability to easily buy a song heard on a Web radio station.

Whatever the model, getting downloaders to pay for online music will mean giving them sufficient control over their songs. Already, there are signs that the labels will be slightly less flexible with the vast Windows universe than they were with Apple; with 2% of the market, it was less of a piracy concern. Industry insiders say that to discourage users from sharing playlists of, for instance, dance or jazz tunes, EMI (EMI ) Group PLC has forced the services to reduce the number of playlists consumers can burn to a CD to five, for example. That's down from 10 at iTunes.

Other limitations could also give music fans pause. Many new songs won't be available, and acts such as the Beatles still won't be online. Different services, moreover, will use different technologies to ensure customers don't cheat on copying or downloading. Without standards, users will find their portable players won't play songs from every online service.

Still, a year from now, many kinks will be gone. The best services may match the elegance of iTunes, and prices will probably have dropped. That's the best news music fans have heard in a long time.

Consumers open wallets for paid content

2003-10-08T09:27:00.000+05:00

U.S. consumer spending for paid Internet content jumped during the first half of 2003, due partly to more people looking for a mate online, according to a new study.

The Online Publishers Association reported that spending on paid content grew to $748 million in the first half of 2003, an increase of 23 percent over the same period last year. The study, conducted by ComScore Networks for OPA, showed 25 percent growth in the first quarter of 2003 with spending reaching $368 million, compared with $294 million for the first quarter of 2002.

OPA said the top three paid content categories--personals and dating, business and investment, and entertainment and lifestyles--accounted for 65 percent of spending in the first half of 2003, up from 61 percent in 2002. U.S. consumers spent $214.3 million on personals content in the first half of 2003, a 76 percent increase for the segment over the first half of 2002, according to the report.

"This shows us that as the Internet matures, more people are becoming familiar and comfortable with paying for content," said Michael Zimbalist, executive director of OPA. "We know that the more time people spend online, the more open they become to making transactions."

Zimbalist said the results for the first half of the year serve to prove that the market has gotten back on track after a disappointing fourth quarter in 2002, when sales for paid content dipped to $359 million, a 7 percent drop compared with the third quarter of 2002. Zimbalist said it is too early to determine if the fourth-quarter shortfall was related to seasonal consumer spending habits, but he indicated that 2003 performance should help give OPA more clues.

According to Zimbalist, OPA is expecting at least 20 percent growth for the paid content market for 2003.

The OPA study indicated that the overall number of Internet users who paid for content in the second quarter of 2003 grew to 10.9 percent, representing a 15 percent rise compared with the same period last year.

"What you see here is that younger users respond to paid content more favorably," Zimbalist said. "We think this is because many of these users have grown up with the Internet and therefore see paid content as a more reasonable proposition."

Subscriptions continue to be the dominant price model, accounting for 88.5 percent of paid content revenue in the first half of 2003. Web sites that charge users $5 or less have held steady over the past three quarters, comprising roughly 8 percent of all spending, according to the report.

In a related study, OPA found that consumers of paid content tend to be younger and more affluent, and they spend more time online than most Internet users.

Roughly 25 percent of paid content consumers have household incomes of $100,000 or more, compared with only 20.5 percent of the total Internet population, according to OPA. Paid content consumers also tend to visit more than twice the number of Web pages than the average Internet user does, and they spend more than twice as much time online. They are also 14 percent more likely than the average user to have broadband access, according to OPA.

Consumers open wallets for paid content

2003-10-08T03:14:00.000+05:00

Tuning Up for the Online Music Business

2003-10-07T19:37:00.000+05:00

Making a buck selling songs online will be tough, but a raft of sites are at the ready For years, record companies squelched efforts to sell tunes online, for fear of Napster-style piracy. Now, suddenly, the floodgates are opening. Giants ranging from Dell (DELL ) and Sony (SNE ) to Amazon.com (AMZN ) and Wal-Mart (WMT ) are scrambling to set up Web music stores. So are a number of smaller players including -- yes -- a revived Napster, which is being relaunched by Roxio (ROXI ) Inc. this month. Also within weeks Apple Computer (AAPL ) Inc. will likely go ahead with the much-anticipated launch of its iTunes online store for Windows users. "Within a very short period," says Dell Inc. CEO Michael Dell, "the labels will want to be on as many music stores as they can."

With at least a dozen players likely to enter the market over the next few months, competition will be fierce. Just as the real world has everything from Wal-Mart to the indie record store, the new entrants are looking to carve out niches. Two classes of winners will likely emerge: those with sufficient scale to convert meager per-song margins into meaningful profits and those that use music to sell add-ons, be it hardware, subscriptions to online music magazines, or concert tickets. Says Jonathan Hurd, a vice-president with management consultant Adventis Corp.:"The ones that get the customer experience right will benefit -- but there are many ways to mess up."

To avoid that fate, the new services will largely mimic the business model Apple created for its popular iTunes site. Most will sell songs for 99 cents a piece. Users will be able to burn the songs to as many CDs as they want and play them on up to three PCs or mobile devices. Music execs hope that will provide listeners with the flexibility they crave while preventing mass copying and file-sharing.

TOUGH ECONOMICS. But even at 99 cents a song, making profits selling music online could prove tough. Under existing arrangements, 75 cents or so will go to the label, and credit-card processors will pocket another 5 cents. That leaves just 19 cents for marketing, technology, and all other costs. The rush for market share will almost certainly force services to slash prices -- and to find other ways to make money. Earlier this year, Listen.com experimented by charging 49 cents a song but ultimately retreated to 79 cents -- and only for those with a $9.95 subscription.

So why the rush to jump in? For hardware giants such as Dell, Sony, or Apple, the real money will be made selling music players. Dell is clearly counting on its online music offerings to create demand for its new player, the DJ, set to launch this month. And for Wal-Mart, which accounts for 20% of all music sold in the U.S., it's too big a market to ignore.

Smaller players are counting on selling premium content. For a monthly subscription of $10 or so, customers of Musicmatch Inc. and Napster 2.0 will get a range of perks -- say, exclusive recordings or the ability to easily buy a song heard on a Web radio station.

Whatever the model, getting downloaders to pay for online music will mean giving them sufficient control over their songs. Already, there are signs that the labels will be slightly less flexible with the vast Windows universe than they were with Apple; with 2% of the market, it was less of a piracy concern. Industry insiders say that to discourage users from sharing playlists of, for instance, dance or jazz tunes, EMI (EMI ) Group PLC has forced the services to reduce the number of playlists consumers can burn to a CD to five, for example. That's down from 10 at iTunes.

Other limitations could also give music fans pause. Many new songs won't be available, and acts such as the Beatles still won't be online. Different services, moreover, will use different technologies to ensure customers don't cheat on copying or downloading. Without standards, users will find their portable players won't play songs from every online service.

Still, a year from now, many kinks will be gone. The best services may match the elegance of iTunes, and prices will probably have dropped. That's the best news music fans have heard in a long time.

The Kids Are All Right: Gen Y and Media Multi-Tasking

2003-10-06T09:34:00.000+05:00

In the world of entertainment and advertising, youth has always been what is promoted most. More time is spent selling the emblems and ideas of youth than nearly anything else. That's surprising given that what would constitute "youth" makes up less than the average American lifespan. It is even more surprising when you think that those over 30 years of age have substantially more resources and earn more money than those under 30. But the reason for the selling of youth is simple: because those that have it flaunt it and those that don't want it.

But when selling TO youth, what is it that companies should keep in mind about this audience in the era of the Internet?

Young people have always wanted independence and control. Getting one's drivers license has a lot more to do with having the freedom to go where one pleases beyond the spying eyes of our elders than it does with any fascination with motor vehicles.

More than anything else in the modern era, young folk want control over their information. This is possibly the most important thing to note about Generation Y and how they use the Internet. The fact that the Internet is the medium they spend the most time with means that other media do not get used as much, but it does not mean that other media are not still important to them.

Generation Y is among the most adept multi-tasking media consumers alive. When Millennials are online, 50% of them are also watching TV, and 45% of them say they also listen to the radio. They way this generation seizes control of the information that besets them from all sides is to look to the Internet as the place to extend their engagement with what they are receiving from elsewhere. An upcoming event is announced on the radio? They go to the Internet to learn more about it and find out whether or not it is something they want to be a part of. A news item of interest flashes across the TV screen and they cruise the web to confirm, deny, or learn more about what was just shown.

What this means is that the Internet has become the dip around which all of the other chips rotate. The Web is at the center of the media Lazy Susan. The implications of this should not be lost on any marketer or advertiser. This kind of multi-tasking media consumption indicates that perhaps advertisers should start looking to multi-media marketing communications opportunities.

Some marketers have hung on far too long to the notion that they can reach enough of who they need to sustain their business in only one or two media environments, but the reality of media usage among some of us older folks, and the truth of media usage by most of the younger folks suggests that advertisers had better start changing their approach is they wish to be a significant brand in the future.

"I think the fluidity of attention definitely puts the pressure on advertisers and their creative agencies to get the attention of kids," says Roberta McConochie, director of consumer and industry trends at Arbitron, quoted in a story done by MediaLife.

"The smartest thing that you can do is use cross-media synergies to make sure your message gets through and, obviously, do things that get their attention with the message content."

Marketers had better start looking at "surround sound" marketing strategies if they want to be a force with the consumer of the future, and that consumer of the future is Generation Y. Between 1982 and 2002, nearly 100 million persons will belong to this generation, half of them now in their teens an in college. When they enter the age of acquisition (post-college to their mid-50s), they are going to be a spending force to be reckoned with.

To assume that your brand will maintain its relevance if you simply continue to pour your money into television, with annual double-digit CPM increases and declining viewer ship is believing that sending telegrams to your national workforce will keep you competitive with those companies that are communicating with their employees using the telephone. If marketers and advertisers are honest with themselves, they have to realize that to talk to the future they have to be present in it.

Start-up delivers fine art to flat-panel and plasma TV screens

2003-10-03T09:17:00.000+05:00

Bill Gates once dreamed of having high-quality artwork -- from the "Mona Lisa" to Picasso's "Guernica" -- digitally delivered to video screens on the walls of homes, businesses and public spaces.

Although the Microsoft co-founder successfully deployed the revolving art concept at his Medina mansion nearly a decade ago, the idea has not caught on with the general public.

But now a new Seattle start-up called RGB Labs, which has raised $1 million in early-stage financing and signed partnership agreements with Corbis and other art houses, thinks the time is right to pick up on the billionaire's dream.

Founded by former Amazon.com and Avenue A technology executive Scott Lipsky, RGB Labs will introduce its GalleryPlayer delivery service today. About the size of a toaster, the GalleryPlayer allows high-resolution images from world-renowned artists such as Leonardo da Vinci, Georgia O'Keeffe and Andy Warhol to be displayed on plasma and flat-panel television screens. It does that in a secure manner that Lipsky said would befuddle even the most skilled computer hacker.

The idea already has some art and technology lovers salivating.

"The quality of the raw content in terms of resolution is phenomenal," said Enrique Godreau, a Seattle venture capitalist who sits on the start-up's board. "It is pretty darn evocative when you look at the screen and you think of where this could go."

Seattle intellectual-property law firm Black Lowe & Graham installed the GalleryPlayer on a 60-inch plasma screen in its glass-walled conference room last week. So far, the digital artwork, from Renaissance paintings to 20th-century photography, has received rave reviews from lawyers and clients.

"We are loving it," network administrator Chris McKinlay said.

The King County Library, Martin Smith Inc. and an undisclosed Seattle resident also are using the GalleryPlayer, which was released last month.

For now, RGB is only targeting business customers: law firms, hospitals, hotels, retailers and other companies that can afford to dress up a conference room or a lobby with a digital artwork system that costs more $10,000, including the $195 per month service fee for four galleries of images.

But as the price of plasma screens falls (a 50-inch device currently sells for about $6,000) and the numbers increase (the market is expected to double next year, to 1.1 million), Lipsky is hopeful that RGB's technology will make it into consumer's living rooms.

In fact, Lipsky, 39, started on his current entrepreneurial quest after attempting to display digital art work at his residence in Seattle's Mount Baker neighborhood.

"I wanted the 'Mona Lisa' staring me in the face," he said.

A self-described technology geek who was handpicked by Amazon.com founder Jeff Bezos as one of his company's first employees, Lipsky had no problem installing a 50-inch Pioneer Elite plasma screen above his fireplace. But he ran into problems finding museum-quality images from favorite artists such Yamagata, Van Gogh and Picasso.

"I started looking for content and couldn't find it," said Lipsky, who quit high school at 16 to start developing software. "That is when the idea struck me. I said let's research this and find out if no one is really building a box to play art, like there is a box to play movies or a box to play audio."

He couldn't find any direct competitors. So Lipsky formed RGB in January with Paul Brownlow, the former director of technology at Avenue A, and David Gabrieli, a lawyer who formerly served as director of licensing at Amazon.com.

RGB Labs will need plenty of legal assistance as it steps into the complex web of licensing digital content.

Seattle-based Corbis, a strategic partner that is supplying hundreds of high-resolution images to RGB Labs, has filed a number of lawsuits against Web sites for illegally displaying images. And the Recording Industry of America filed 261 lawsuits last month against people who participated in music-sharing services such as KaZaA.

With RGB Labs responsible for delivering artwork from masters such as Leonardo and Claude Monet over the Internet, Lipsky acknowledges that security is of paramount importance. Two of the company's 18 employees are lawyers. And Lipsky said the system was built from the ground up so it would not be "Napster-ized."

Mark Sherman, vice president of emerging markets and products at Corbis, said there are many challenges to delivering high-quality images to a flat screen. That's part of the reason why Corbis, founded by Bill Gates 14 years ago, has no intention of competing with RGB.

"We are sticking to our expertise, which is licensing content to our partners," Sherman said.

Another challenge is the cost. With corporations looking to cut expenses at every corner, a $10,000 digital art system might not be viewed as a must-have.

Lipsky doesn't see it that way. "Call a couple companies and ask them what they spend on corporate art. Call a couple retailers and ask what they spend on merchandising and environmental space," Lipsky said. "This is not a big number for them."

Lipsky -- who is planning on moving into a house that will have multiple flat-panel screens running the GalleryPlayer -- said people have been talking about viewing art in this manner for 10 years. Now, he thinks the timing is right.

"The reception has been tremendous in every direction," he said. "We showed this to hundreds of people and everyone just gets blown away. The challenge is you have to see it in order to understand it."

Sharpen the Arrow with Behavioral Data

2003-10-03T08:42:00.000+05:00

How utilizing behavioral data in conjunction with demographic information increases the chances of reaching a larger and more targeted audience.
By Sandy Kobrin, Columnist

Factors such as gender, age, household income and zip codes have been used for years to successfully match products with appropriate demographics. Behavioral marketing takes traditional demographic data to the next level, adding to the list one more critical factor -- behavior.

Behavioral marketing targets relevant messages to users who have exhibited interest in specific products and services. By identifying where a consumer is in the buying cycles and keeping information up-to-date with a consumer’s current needs, marketers have the edge over their demographic-reliant competitors.

The future of online marketing depends on moving fast, turning on a dime and reacting quickly to behavioral data. Together, demographic and behavioral data add to the big picture, targeting consumers with a more accurate arrow.

Auto sales are an example of how behavioral data can be used to increase the prospect of a sale. While a demographic marketer might have the knowledge that people at a certain age and income level buy a new car every five years, if advertisements are not timed appropriately, messages aimed at the right people may become wasted efforts. Based on the Websites that consumers visit, behavior reveals where consumers are in the buying cycle. A marketer can ascertain if a user is looking to purchase a car (either new or used), has a car to sell or has insurance needs.

NYTimes.com monitors behavior and targets behavioral users after they have been to the same section more than five times in a month. Behavioral marketing data has produced results, especially in the areas of Health Care/Pharmaceuticals, Real Estate and Auto.

“Behavioral marketing has some concrete advantages over demographic marketing,” says Craig Calder, vice president of marketing for NYTimes.com. “We have found that targeting users based on behavior is a more accurate relationship to interest in a product or service than using demographics.”

For example, if an IBM advertising campaign is aimed at business-minded people, NYTimes.com could target registered users who read the business section and send ads to those specific consumers as they visit the business section or any other section on the NYTimes.com Website, Calder says.

“One advantage we have found is that we can offer our advertisers a much larger group to target using behavioral data than using demographic data,” he says. “Demographics give you a smaller slice of what the client is looking for. Our behavioral data allows us to offer very large audiences for targeted campaigns.”

Amplifying the effectiveness of behavioral marketing data, NYTimes.com has also introduced a new concept: Surround Sessions. Once a specific behavior is identified, an advertiser has the option to target users with a single advertising message for five to eight consecutive Website pages without interruption from other advertisers. A single message may be repeated or differing sequential messages may be designed for impact.

“Since we started our targeting campaign in February, we’ve sold over a half million dollars in advertising and we’ve had a number of advertisers come back,” Calder says.

Since NYTimes.com started implementing behavioral marketing, Calder says click-through rates of in section ads have increased from .48 to .63. “Clients have noted success in conversions, sales and lead generation,” he says.

“When it comes to marketing films, demographics aren’t enough to tell the whole story,” says Elias Plishner, vice president of interactive marketing for McCann Universal Interactive. The firm, which markets films online for companies such as Sony Pictures, used to rely on demographic marketing to target the correct users. Behavioral data has brought much more success. Instead of using demographic data such as income, age and opt-in research to identify consumers who see movies on the opening weekend, the company now uses behavioral data to target users who visit preview Websites for opening films or view online trailers for opening films.

“More than using just demographics, we needed to take our marketing to the next level and find people who have been to certain sites and have certain behaviors,” Plishner says. “My experience is that if you take an ad plan you have to take it with a grain of salt. The demographics may say that some person should be a heavy movie goer, but it isn’t always the case. If he or she has been to a movie site, the person almost pre-qualifies him or herself as a person we need to target. Where the person goes tells you directly about his or her preferences.”

Demographics can identify the user, but behavioral marketing makes for an easier sale by getting the message to the right person at the right time, Plishner says.

“Behavioral marketing makes selling easier, it gives you the low hanging fruit,” he adds.

Billion$ and growing!

2003-10-03T08:38:00.000+05:00

Just how much are consumers spending online? Billions. The third quarter of 2003 produced online retail sales of $12.43 billion, a 24% increase over the same period in 2002 when $10.02 billion was spent, according to shopping search and comparison site BizRate.com. For the first nine months of this year, online sales totaled $37.16 billion, up by 24% from last year's $29.90 billion for the same period.

Actual orders grew by 47% to 101.34 million unique transactions in the third quarter. However, the average purchase amount has decreased by 15% to $123 in Q3 2003 compared to $145 in the same period last year.

The lower transaction amounts are being driven by price comparison shopping. In a BizRate.com Online Research Value Panel in September 2003, 78% of online buyers cited they were deal shopping because of tighter budgets. And, ninety-six percent said they comparison shop some, most or all of the time. Nearly half of online buyers (48%) are using aggregators such as comparison shopping sites, shopping portals, search engines and auction sites to start their shopping versus going directly to a merchant site (52%).

Women are also driving most online transactions with September research highlighting that 62% of online buyers were females and only 38% are male.

Online shoppers are also expected to show more loyalty to price than store brand this holiday season as 45% of shoppers say they would not pay any price premium at all. The top categories in terms of sales volume were computer hardware ($3.09 billion), electronics ($1.97 billion), apparel ($1.28 billion) and entertainment ($1.24 billion). The strongest growth in Q3 came from Food & Wine (up 208%), Gifts & Flowers (up 198%), Office Supplies (up 182%) and Entertainment (up 181%) categories.

For Q4, the holiday quarter, BizRate.com forecasts $18.35 billion in online sales which is a 22% increase in spending over last year's $15.04 billion.

the neXt GOLD RUSH !!!

Explode your TV

Internet ad revenue at record $2.3 bln in quarter

Let the Google IPO Games begin....

The newest online marketing tactic: Tell a friend...

The Banner's Comeback?

Beyond Pop-Ups

Pop-Up Alternatives

Consumers KNOW the VALUE of Ads!

The Science of Targeting

It's Official -- Online Advertising Is Back

Record-shattering quarter for online ads

Radicals for Responsibility

Corporations, Social Venture Capitalists, and Incubators

Average Spending to Rise

Growth by Category

Interactions are all about value

P&G: $4.48 billion

U.S. component

Four main regions

Download Full 54-page, 2003 Global Marketing Report here

Gates trots out Longhorn

Bottom line

Back to the future

Reach & Frequency Take a New Focus Online

Online's Adoption of R/F Still Coming

European Interactive Advertising Association

1. Wireless everywhere

2. E-mail: death of a marketing tool

3. Blogout

4. Search engine regulation

5. Convergence... sort of

6. Religious conversion of media folks

7. Death of the focus group as primary qualitative test

8. Universal broadband

9. Death of the music industry as we know it

10. The connected consumer as a major force

11. The rise of the creatives

Improving the Best Data Available

Running in the Shadow of Demographics

Weak marketing and media skills in the industry Organizational inertia Business orientation to 50-year-old techniques for mass marketing.

Evaluating the Behavior Flow

A Reactionary Climate

A Mass-Market Mentality

HP Joins McDonald's to Spread McInternet in Brazil

Canny timing

In the black

GOOGLE FACTS

200 million searches a day 3.1 billion web pages indexed More than 1,000 employees

Television-style ads

The spread of broadband will enable advertisers to move towards more TV-style advertising, Mr Pilkington said.

Extending Your Reach

One million iTunes for Windows

Free to be Fee

User-Funded Advertising

The Fair Exchange

Viewer-Initiated Commercials

A Better Class of Eyeball

Don't Sell Yourself Short!

Emergency fixes for blog-clogged Google

STUDY: TV ADS DON'T SELL CARS

Word-of-mouth

Recommends online ads

Magazine ads

To be six again

You're tracking my what?

How does it work?

What's old is new again

The five ways Yahoo! behaviorally targets users

Take it to the next level

Worth it?

Potential pitfalls

Reward good behavior

Enter Involvement Branding

A New Concept?

Unique Measurement Opportunities

Involvement Branding Can Take Many Forms

The Best of Both Worlds

Proceed With Caution

Bright Future for Rich Media

Weak marketing and media skills in the industry

Organizational inertia

Business orientation to 50-year-old techniques for mass marketing.

200 million searches a day
3.1 billion web pages indexed
More than 1,000 employees