I just posted my latest article on The Industry Standard - What The New York Times, The Wall Street Journal and CNN are doing wrong.

It has already been well-documented that online media is eating away at print revenue. Take The New York Times for example. According to Scott Karp, from “May 2006 to May 2007, print ad revenue for the News Media Group decline $19.2 million or 14.4%, dwarfing the $2.8 million increase in online ad revenue.”

Broadcast revenue is also on the decline. According to Nielsen Media Research, although National Cable TV and Spanish-Language TV were up slightly, Network TV and Spot TV Markets were down significantly in 2007.

The good news for print and TV is that they’ve moved to the Web. Now they just have to figure out how to do it right.

Print and television brands are some of the most well-known in the world. Just think of the names – The New York Times. CNN. The Washington Post. NBC. It would be difficult to find someone who doesn’t recognize at least one of those companies. And the audiences have followed the brands online. According to the data (see chart, below), many mainstream print and TV outlets have huge - and growing - online audiences.

In my opinion, building an audience is the biggest challenge to overcome online. The second is producing content that anyone cares about. So these companies are more than half-way there. If they can just get their business models figured out, they just might have a shot at not only surviving, but thriving.

Just saw a story this morning about Carat’s advertising outlook for 2009. Even though they are revising their forecast down to reflect the weak economy, they are raising their forecast for online advertising from 23.3% to 23.7% in 2008. For 2009, they are predicting that online advertising will grow 18.6%, vs. earlier estimates of 17.8% growth.

The most interesting bit in the article, however, is this:

[Jerry Buhlmann, CEO of Aegis Media] said the growth in online’s ad spending share has less to do with the growth of consumer use of online media, and more to do with a secular shift within the advertising industry that is driving marketers and agencies toward media that deliver measurable returns on advertising investments.

“With search now central to the planning and execution of any campaign, online media brings a greater level of accountability not just to itself but to TV, print and other forms of advertising,” he said. “This is why we are predicting further strong growth for internet, even when advertisers are cautious in many of the other sectors.” (bold and italics mine)

This shift to performance-based media, sometimes called ROI advertising, is going to continue until most (if not all) advertising is based on performance metrics. Not only is search advertising going to continue its phenomenal growth in leading this sector, but lead generation is going to continue to grow quickly. Joining them will be other media that traditionally have not been measured but will move in that direction, including video and even print.

Marketers have always headed in the direction of measurable media programs. Just think of the 1-800 numbers that can be traced back to specific ads. With money tight, even more dollars will be adjusted to go to these programs that can prove they are worth the money they cost to run.

Photo by aussiegall

My latest article for The Industry Standard is now up online: Three online video formats for the future. In the article, I take a look at the current state of online video advertising, and make some suggestions about where video advertising might be able to head in order to stay relevant to the medium and to move beyond traditional ad formats.

In the course of researching for the article, I came across a lot of great online video stats. These are in addition to some earlier articles about online video that I posted to this blog. Those articles are here:

Online video stats for September 07
Video is not going to kill the Internet in 2010
Some more YouTube stats

The new data covers a wide variety of information, from online video usage to online video advertising metrics. I just am going to include it here because it’s great information for anyone who is following online video. I’ll also include links to all the sources so that you can explore the information in context.

Online Publishers Association - Online Video Advertising, Content and Consumer Behavior (PDF)

This report contained a great deal of useful data, particularly about audience reception to online video advertising, including the following statistics:

• Over 40% of U.S. online video users watch online video on at least a weekly basis; over 70% at least monthly.
• 80% of U.S. online video users have watched an advertisement in an online video. Of those people, 52% took action after watching that video; 28% looked for more information; 19% clicked a banner ad that accompanied the video; and 16% bought something as a result of the ad.
• 56% prefer that the advertisement is related to the video content.
• Both 15- and 30-second pre-roll ads are effective at lifting brand awareness; 30-second ads outpace 15-second ads in “likeability.”

Advertising.com - Bi-Annual Online Video Study: First-Half 2007 vs. Second-Half 2006 (PDF)
This study bills itself as the “who, what, when and what works of online video consumption and advertising.” The most surprising data from this study is the age range of online video consumers.

• 31% of 18 to 34 year olds watch streaming video; 69% stream video more than once per week
• 69% of consumers 35 and over watch streaming video; 47% stream video more than once per week
• 95% of those surveyed are streaming video at home (vs. 4% at the office and 1% at school); 45% of streaming takes place in the evening.
• 42% of consumers have forwarded a video clip to a friend
• 94% of consumers would prefer to view ads than pay to watch a video
• 63% of consumers would prefer ads that are shorter than television ads
• Consumers are 8% more likely to view a 15-second advertisement through to completion (vs. a 30-second advertisement)
• The 30-second pre-roll slightly outperforms the 15- and 5-second ads when measured in terms of click-through rate

BtoB - Interactive Marketing Guide

comScore - More than 10 billion videos viewed online in the U.S. in February (08)
This is the most recent data that I could find - the highlights:

• U.S. Internet users viewed more than 10 billion videos in February; this is a 3% gain vs. January, and a 66% gain from February 2007
• 135 million U.S. Internet users spent an average of 204 minutes watching online video in February
• 72.8% of U.S. Internet audience viewed an online video
• The average online video duration was 2.7 minutes
• The average online video viewer consumed 75 videos

Online video is already huge and getting bigger all the time. At least 75% of Internet users watch videos online and 8 hours of video content being uploaded to YouTube EVERY MINUTE. But there is a problem with online video because no one has (yet) figured out a long-term viable advertising model that will work with video. Google (which owns YouTube) is certainly working on it, but all the models that have debuted so far - pre-roll, post-roll, sponsorship - have fallen short because none of the formats have taken advantage of the inherent interactivity of the Internet. That is, until now.

I just took a look at what Revision3 and VideoClix have teamed up to put together and it’s great. Not only is the ad format interesting and cool, it’s also fairly unobtrusive and seems tailor-made for the Internet’s interactive format.

The first video to debut with the new technology is Diggnation (although all of Revision3’s videos will have the technology shortly). Watchers are able to interact with the video as it’s playing. When a viewer clicks on an item in the video that has additional information included, an area is displayed to the right of the video that has the details about the item, as well as room for advertising or additional vendor information.

This is clever. For one thing, the information that was provided was fun and interesting. (For example, I found out that the Lloyd Hotel in Amsterdam has rooms that range from 1 to 5 stars and one of the rooms has a shower in the middle of the room.) I wanted to click every link in the video to find out more about the video that I was watching, the clothes that the hosts were wearing, and even to see what computers they were using. Since my clicks didn’t stop the video, I was able to click around when something was happening that I was less interested in watching and I didn’t have to miss anything that I didn’t want to miss.

My prediction - this online advertising format will be viable and long-lasting, particularly in the consumer market. Clickable video is here to stay.

My most recent article for The Industry Standard is up on the site now: What the ValueClick settlement means for the future of lead generation. Why don’t you go read it? And hey! Why don’t you leave a comment if you have something to say.

For those of you who don’t know the background to the story, ValueClick just recently agreed to pay $2.9 million to settle the FTC allegations that they were doing bad things with their business, including:

1) Lying to consumers, advertising free offers, but then requiring consumers to pay or purchase to qualify for those “free” offers.

2) Violating federal law, specifically, the CAN-SPAM act.

3) Not securing customers’ financial data, even though they promised to secure it.

The press release from the FTC with the complete list of charges is here.

ValueClick will admit to no wrong-doing. Here’s what ValueClick says about the charges:

“The FTC alleged that the Company utilized deceptive marketing practices that violated the CAN-SPAM Act and FTC Act. In an effort to resolve this matter, ValueClick agreed to a settlement payment of $2.9 million without an admission of liability or conceding that the Company violated any laws.”

Having worked in the lead generation industry for years, I know that this is not the norm in lead generation and that most lead gen companies follow solid business practices; but yet, these types of scams do happen fairly frequently. Lead generation is a big business in the U.S. (see images below) and gettng bigger as companies realize the value of generating data that can provide specific metrics and ROI. So companies will use many different tactics - not all of them aboveboard - to generate leads for their clients.

If you’re doing lead generation through a third-party provider, make sure that you get them to explain in detail the following things:

1) What the environment looks like in which they will be generating leads. If they are creating a registration form, make sure that they show you what it looks like.

2) How they are generating the traffic that drives the leads.

3) If they are doing “co-registration” to generate their leads. Co-registration is the practice of including a check box at the end of another registration form so as consumers register for one thing, they also can “opt-in” for your thing, too. If they are doing co-registration, find out if the box is pre-checked, and if it is, run the other way.

4) Ask for a client reference - they should be willing to let you talk to someone else who has used the service and found it reputable and helpful.

Here are those lead generation numbers that I promised. This image is taken from the BtoB Magazine’s Interactive Marketing Guide for 2008, which has a lot of great online advertising data.

BtoB Magazine just released its Interactive Marketing Guide for 2008. (PDF here) The 36 page guide features a lot of great data about the state of online advertising, including the following gems:

- In 2007, U.S. marketers’ best performing advertising tactic was search engine optimization (SEO) at 57%, followed by behavioral targeting (44%) and email house list (42%). Rich media ads, which rated at 28% last year, trailed the list at 7% in 2007.

- In 2008, U.S. ad spending will break out like this:
         - Search: 40%
         - Display ads: 21.5%
         - Classified: 17%
         - Rich media/video: 9.5%
         - Lead generation: 8.3%
         - Sponsorship: 2%
         - E-mail: 1.8%

- 82.4% of marketers plan to increase their email marketing this year, compared to 2007.

- In the U.S. spending on online social networking advertising by marketers is on the rise with the following growth:
         - 2006: $350 million
         - 2007: $920 million
         - 2008: $1.56 billion
         - 2009: $2.02 billion
          -2010: $2.4 billion
         - 2011: $2.7 billion

There’s lots of other interesting data in the report, as well, so check it out.

Earlier this week, Comscore released some data on Google paid click numbers that caused Google stock to take a nosedive, based on reports from a variety of news sources that this was a sure indicator that Google was vulnerable to a recession.

Today, in a blog post, Comscore gave its take on the data - “Why Google’s surprising paid click data are less surprising.” The main point? That the data that Comscore released may have been incorrectly analyzed by almost everyone who read it:

“The information triggered a flurry of reactions in the media and the financial community that centered on two concerns: 1) a potentially weak first quarter outlook for Google, and 2) an indication that a soft U.S. economy is beginning to drag down the online advertising market.

“While we do not claim that these concerns are unwarranted, we believe a careful analysis of our search data does not lend them direct support. More specifically, the evidence suggests that the softness in Google’s paid click metrics is primarily a result of Google’s own quality initiatives that result in a reduction in the number of paid listings and, therefore, the opportunity for paid clicks to occur.”

I continue to be of the opinion that the drop in click-through rates isn’t a negative thing and is primarily the result of Google’s ongoing efforts to combat click-fraud and accidental clicks to its ads. 

I also think that Google is likely going to have slower growth if the entire economy goes into a recession. Afterall, what media company isn’t vulnerable in a recession?

Google’s stock price is dropping, and people are freaking out. Yesterday’s stock price drop was in response to a recent report from Comscore indicating that January 2008 showed only flat growth year-over-year versus a 25% increase in Q4. This apparently is the result of lower click-through rates on paid search ads, and people are worried that this means that Google is exposed to a slowdown if there is a recession in the U.S.

The near-panic is somewhat understandable considering that the overall U.S. economy isn’t doing all that great, the tech folks are scared of another bubble, Microsoft is talking about taking over Google, Apple’s stock is dipping, and everyone is looking for someone - anyone - to believe in. Google has been the obvious choice for a long time, and no one wants the tech darling to falter.

But the thing that I take issue with is the notion that this decrease in clicks is a result of consumers clicking less because of a coming recession. These numbers from Hitwise show that there has been no decrease in overall search traffic to shopping sites - meaning that consumers are still clicking.

And if consumers are still clicking on search links, why would they suddenly not be clicking on paid search ads? Could this be because consumers suddenly have become more discerning about what is a “paid” result vs. what is a “organic” result? No way.

My question for Google would be about how much of this decline comes from the dip in clicks on AdSense partner sites. My bet is that the clickthrough rates have dipped significantly on partner pages. Why? Primarily because of the click fraud prevention that Google has been implementing, as well as the “accidental clicking” measures that Google took back in November.

Remember, this was the second change that Google made to its ads; the company first changed the paid results on its main search pages in April, a move that many advertisers said led to a decline in the number of clicks, but not in the amount of revenue that they were earning.

And this might just be the bottom line. If there is no growth in the number of clicks, but revenue is growing, Google may have figured out a way to increase ROI for advertisers. Like this Businessweek article says, we’ll have to wait for earnings in April to find out for sure.

In October, I posted the Internet Advertising Bureau’s estimates for U.S. online ad revenue for 2007; at the time, they were predicting $20 billion to $21 billion.

According to the numbers released today (which I saw first in TechCrunch), the IAB’s preliminary estimate for 2007 is that Internet advertising hit $21.1 billion in the U.S. - just slightly higher than they initially predicted.

TechCrunch also reports on the estimated numbers from a couple other sources:

Kelsey Group: $22.5 billion
IDC: $25.5 billion

This is happening in Sweden, not the U.S., but still. This is just the beginning.

And this article from PaidContent U.K. says that Britian and Denmark will be next.

“Sweden will this year become the first country where internet ad spending will surpass that given over to TV ads, according to the This Year, Next Year 2008 forecast from WPP’s heavyweight Group M ad buying agency, released quietly last month. The UK will fall just short of the same watershed this year, finishing 2008 with online accounting for 24.8 percent of ad spend, just shy of the 26 gobbled up by TV (in Sweden, it will be 19.5 percent to the web, 19.2 percent to TV). But online will overtake telly in Britain and Denmark early in ‘09, the group predicts.”