GigaOM » online ads

Social fourth-quarter 2012 analysis

Mon, 21 Jan 2013 15:49:29 +0000

Interest may be weakening in consumer social media businesses. But social technologies are working their way deeper and deeper into enterprise computing, and social media is playing a bigger role across advertising and marketing sectors. In the fourth quarter social business software went both vertical and horizontal, Adobe and Behance built in community, and Facebook tested new revenue streams.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Online ad spending up 18 percent from a year ago, hits $9.26B in Q3

Jeff John Roberts — Wed, 19 Dec 2012 15:52:38 +0000

In 2012, publishers worried about how to make money from the growing tide of audiences who are consuming media on mobile devices. No clear answers have emerged to the mobile morass but the good news is that the overall online ad pie is growing rapidly.

According to the to Interactive Advertising Bureau, total online ad revenue reached $9.26 billion in the third quarter of 2012, which is up six percent from the previous quarter and 18 percent from Q3 figure of $7.8 billion a year ago.

The CEO of IAB, Randall Rothenberg, said the growth is due to marketers recognizing digital media’s capacity for engagement and interaction. He cited social media and mobile on-the-go marketing as examples.

Here’s the IAB’s chart of online ad growth in recent years:

The upshot for publishers is that, while the mobile monetization riddle has not been solved, the growing amount of dollars flowing into the digital space is likely to produce solutions soon.

IAB compiles the numbers based on a revenue survey of web sites, commercial online services, free email providers and all other companies selling online advertising.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Takeaways from connected consumer’s second quarter

Thu, 19 Jul 2012 06:55:44 +0000

Tablets featured prominently in the connected consumer space during the second quarter of 2012, both as a product category in their own right and as a component of broader platform strategies by the major OS providers. Meanwhile Apple added AirPlay streaming to Mac OS, and Microsoft made an aggressive bid to dominate the second screen by introducing SmartGlass apps. The period also saw important moves by Facebook to broaden its monetization strategy and an investigation by federal antitrust authorities into pay-TV licensing practices and their impact on the emerging online-video business. This quarterly wrap-up discusses these developments as well as offers trends and topics to watch in the second half of 2012 and beyond.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Online advertising: Brave new world or more of the same?

Rags Gupta, RollUp Media — Sat, 16 Jun 2012 16:16:28 +0000

I recently returned to online publishing after leaving the industry in 2004. It’s been fun getting back in the game at RollUp Media, a new media publishing startup. But what a brave new world it is in online advertising.

Sure, I followed developments from the sidelines, religiously reading paidContent, GigaOM and following Jason Hirschhorn’s curated feed, Media ReDEFined. But there have been many Rip van Winkle moments when I can hardly recognize the landscape. Agency trading desks, RTB, DSPs, SSPs, last-click attribution, third-party data, DMPs, retargeting … there is a pea soup of acronyms and lingo to learn, not to mention entire new categories of technologies and players in the new value chain of online advertising, and then there’s mobile, video and social, too! (This video from the Internet Advertising Bureau, U.K. gives a good summary of what happened, as does this one from MediaMath and Improve Digital.)

The ability to precisely target users and immediately measure response rates has resulted in the programmatic buying and selling of online display inventory, not unlike that of financial commodities. This commoditization of online advertising would seem to be a sea change in the way things were.

And yet, and yet. Despite all the changes, a lot has stayed the same:

The industry is still debating the value and effectiveness of banner ads. This was a debate in 2004, and it continues today. Banner ads are reviled in many quarters, but they’ve shown remarkable resilience.
Nielsen and comScore are still the two main measurement agencies providing the currency on which display is bought and sold. Publishers continue to be dissatisfied with both, but new players, such as Quantcast, haven’t made much of a dent. This isn’t a big surprise. The market for third-party media measurement tends towards a duopoly or winner-take-all (Nielsen, Arbitron, ABCe).
There are still discrepancies between agency and publisher ad servers. There are less discrepancies today than in 2004, but they’re still there. Low discrepancy is actually used as a selling point by ad servers now.
Mobile is still the next big thing. To be fair, mobile went from nominal to $1.6 billion in 2011. But it can grow much, much bigger if a company can figure out the best way to monetize mobile attention. Banner ads on mobile sites aren’t it.
The industry is still concentrated. The top 50 online ad sellers accounted for 94 percent of total revenues in 2004 compared to 90 percent last year. Many of the players are different this time around, but it continues to be about scale.
Publishers and agencies are still doing dodgy things, whether it’s running fake pre-rolls or stealing publishers’ user data. The surprise here is that there hasn’t been more of an outcry against these practices.

I recently dug up Geoff Ramsey’s November 2004 eMarketer report, “The State of the Online Advertising Industry.” At that time, eMarketer was forecasting the U.S. online market to be $9.4 billion that year, up from $7.3 billion the previous year, and predicting torrid growth in the years ahead, reaching $17.5 billion in 2008. The factors driving such growth? The report listed the following reasons:

1. The consumer is in control

2. The Internet delivers on the corporate mandate for marketers to be more accountable

3. The economy continues to plug along with reasonable growth

4. Broadband is changing the consumer Internet landscape

5. The crack in the foundation of the $60 billion television industry is widening

6. Search continues to evolve and draw more dollars

7. With increasing numbers of Americans shopping and buying online, marketers have greater opportunities to reach consumers who are interested in a given category

Sound familiar? Those factors wouldn’t look out of place in any year in the past decade. I’ll highlight the most promising trends of the moment in a future post. For now, it’s no surprise that, notwithstanding the new tools and technologies at our disposal, publishers are still trying to maximize the value of their audiences while advertisers and agencies are trying to reach the right people with the right message in the most cost-effective way. The formats, tools and technologies may be different, as might the players involved, but clearly there are truisms that continue to hold, and we would be well-advised to remember them.

Oh, and the actual value of the U.S. online ad market in 2008? $23.4 billion, with last year clocking in at $31.7 billion. That’s torrid growth for sure. Actually, online advertising as a category is starting to become meaningless. It’s like measuring a paper-based advertising category made up of yellow pages, newspapers, magazines and other pulp-driven formats. But somehow, I suspect we’ll still be measuring the growth of online ads in 2020.

Rags Gupta is managing director at RollUp Media, a publishing startup based in London. He is also on the board of Videoplaza. Previously, Gupta was part of the founding executive team at Brightcove. He started his career in digital media at Live365.

Image courtesy of Flickr user Abode of Chaos.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Gold below the fold: new metrics promise end of unseen ads

Jeff John Roberts — Tue, 17 Apr 2012 16:57:19 +0000

According to estimates, 30 percent of online ads are seen by no one at all. This happens when ads are stuffed on part of a Web page that no one sees or when an ad doesn’t finish loading until after a reader has scrolled past it.

In either case, the phantom ads amount to a frightful waste for ad buyers and a problem for publishers who still face skepticism about the efficacy of online ads.

A New Era of Online Ads

Now, new ad technology is promising to eliminate ghost ads while also giving publishers new tools to assign premium or bargain prices to ads on different parts of a webpage.

Both comScore and SAY Media say they’ve solved the phantom ad menace with kits that let advertisers use dashboards to confirm the ads they buy are seen and not just served.

“Advertisers will know what’s rendered and what’s not,” says Matt Sanchez of SAY Media, whose partner sites include popular tech destinations like TechDirt and ReadWriteWeb. He says the technology produces click through rates three to four times higher than the industry standard.

The upshot of the new ad metrics should be a drop in overall ad inventory and an increase in CPM (cost per thousand impressions) because advertisers can now have more confidence about about what they’re buying.

The new tools, which both companies have unveiled in the last few weeks, may also juice the market for ads based on views alone.

According to Forbes’ Chief Insight Officer, Bruce Rogers, many brands responded to the financial crisis by retrenching to ads based on “transactional activities” — in other words, they’ll pay for ads that are clicked but not having their ads simply appear on a site.

Rogers hopes that Forbes’ decision to use comScore’s new tool, called “Validated Campaign Essentials,” will lead more ad buyers to build brand awareness by paying for pure impressions.

‘Gold below the Fold’

New ad verification techniques are likely to change not only ad buyers’ calculations but those of publishers as well.

According to Andrew Lipsman of comScore, content companies may be undervaluing some of their “below the fold” inventory. In practice, this means they’re selling down-the-page ads at a clearance even when those ads may be getting some of the best exposure on their site.

“There’s gold below the fold,” says Lipsman, who claims the new technology will allow publishers to identify and properly price their best ad space.

SAY Media’s Sanchez argues that the technology will also force publishers to remake their page layouts, and optimize their design to accommodate fewer and more effective ads.

“There’s too many ads on a page. It’s time to pull of the clutter.”

Build it — but will anyone come?

The new tools seem like a win-win for both ad buyers and publishers, and could end much of the black magic that many people associate with online ad buying.

But that doesn’t mean people will use them.

“For advertisers, this should be like ‘sound the flight of the angels.’ Who would say no? But I’ve been somewhat surprised that the impact and uptake wasn’t immediate,” said Forbes’ Bruce Rogers.

Rather than rushing to embrace the product, he says, the industry has so far responded with “inertia.”

Rogers thinks this is understandable given supply chains and entrenched habits. He hopes that the site of the new ad tracking dashboards will soon lead more advertisers to jump on board.

“It’s going to happen.”

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Redefining luxury for a mobile world

Stacey Higginbotham — Mon, 02 Apr 2012 18:01:20 +0000

Rich people have phones, like apps and want to buy things using said phones. The less-than-groundbreaking results of a study from the Luxury Institute offer some facts and figures around affluent people who own smartphones (60 percent), use apps on them (73 percent) and who have or want to buy something (67 percent) using their handsets. But what’s really worth pondering is the call by the Institute to create luxury mobile experiences via apps and in-app advertising to help drive commerce even when affluent shoppers aren’t in the store.

From the release:

“Consumers are becoming so much more mobile and we need to figure out how to translate that mobility into a humanistic experience,” said Milton Pedraza, CEO of the Luxury Institute.

“Apps are becoming ubiquitous, so it’s what we do with them that make the experience more extraordinary that will make the difference,” he said. “How the app is being used by the consumer or to contact someone who represents the brand is now where the real opportunity lies.”

There are many luxury buyers, should there be many luxury brand apps?

So what exactly defines luxury in a mobile setting? In the original web world, sites or luxury brands equated an “experience” with processor-hogging and time-consuming animations, movies and Flash-like experiences (see restaurant web sites), or they scorned the web for years (see Prada). So in bringing luxury to mobile devices and to popular mobile apps such as Words with Friends, Angry Birds or other popular games that the Luxury Institute discovered rich people also play, how do brands and developers indicate their class?

The Institute’s survey respondents had an average net worth of $2.8 million, so I’m not in the demographic, but I do have some experience with luxury brands that might offer some clues for creating an experience that resonates with some shoppers. There is a woman at Nordstroms who picks clothes out for me when I call and tell her I need something (usually before a GigaOM event). That’s luxury for me. Saving time. So perhaps a browser extension across PC and mobile that sent everything I looked at or liked to her would be useful.

But other luxury shoppers (those with more money and time) might have a different definition of luxury and different requirements. If we think of apps as so popular because they create a small individual experience then maybe luxury brands would do well to create apps for their different types of shoppers? Gateway apps, such as the engagement ring app Tiffany’s created to guide people through the purchase of a ring helps get mobile users into the Tiffany fold. Meanwhile, another app could focus on serving established customers with reminders about a spouse’s birthday (go diamonds!) or upcoming baby showers where Tiffany silver might make a lovely gift.

So what about ads?

A larger portion of the survey appeared to focus on the experience of online ads in the current apps that everyone plays. Aside from seeming surprised that wealthy people also play apps, the Institute noted that Nordstroms and Bergdorf Goodman were running ads inside Words with Friends. But for luxury brands, instead of a tacky banner app, could a luxury brand come up with something … well, more luxurious? This might help luxury shoppers choose mobile instead of the in-store experience.

Apple’s iAd was supposed to be something similar to that, allowing a brand to pay big to create an “experience,” but so far it hasn’t been a resounding success. The cost to participate has dropped from a $1 million commitment to a $100,000 commitment, and Apple has made the revenue share on iAd larger, perhaps in hopes of enticing developers to use it. Although, what may be a surprise for Apple lovers, only 28 percent of luxury consumers own an iPhone, according to the survey. Twenty-two percent own an Android, 16 percent own a BlackBerry and 2 percent own another smartphone.

So will better in-app ads drive rich people into stores? Will better apps drive rich people to buy online? In the mobile age, luxury brands have the same problem as every other retailer pondering a mobile strategy. The difference seems to be that this time around luxury brands won’t be as slow to adapt to the new commerce.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Facebook’s IPO filing: ideas and implications

Mon, 06 Feb 2012 19:50:52 +0000

Gentlemen, start your engines. Facebook filed for its initial public offering on Feb. 1. Expectations are that in May it wants to raise $5 billion, which would make it the biggest tech IPO since Google’s in 2004. Valuations and timing may shift, but as Om says, Facebook will be doing the mother of all IPOs, with effects on hiring and acquisitions that will ripple throughout the startup and tech communities and at Facebook itself. This report outlines the myriad issues at play in such a big move, from examining how CEO Mark Zuckerberg wants to rewire the world to understanding the changing implications for the company’s infrastructure dependency. But no matter the angle, one thing is clear: The company’s filing has the potential to change the game for the tech industry. Companies mentioned in this report include Facebook, Zynga and Google. For a full list of companies, and to read the full report, sign up for a free trial.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

NewNet Q4: Platform mania and social commerce shakeout

Thu, 19 Jan 2012 20:39:31 +0000

The fourth quarter may have lacked a dominating big-event product announcement like Q3’s Facebook platform extension or Q2’s unveiling of Google+, but the NewNet world continued to buzz along. In the battle for mind share, everyone wanted to be a platform. Meanwhile, consumer and social technologies continued to gain momentum, and new vehicles for content and service discovery presented both challenges and opportunities for NewNet companies. And it is hard to ignore the overcrowded but growing world of daily deals. This quarterly report analyzes these trends and others, and it also provides a near-term outlook of trends, technologies and companies to watch in 2012. Companies mentioned in the report include Amazon, Facebook and Socialcast. For a full list of companies, and to read the full report, sign up for a free trial.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Online ads are finally making serious cash

Colleen Taylor — Wed, 28 Sep 2011 16:06:15 +0000

With people spending more time than ever online, it would make sense for advertisers to go where the eyeballs are. But the Internet has generally lagged far behind older mediums such as television when it comes to garnering big ad dollars. However, new data out of PricewaterhouseCoopers (PwC) indicates that online ads are beginning to enter the financial big leagues.

In the first half of 2011, Internet ad revenues rose to a record $14.9 billion, according to new data from the Interactive Advertising Bureau and PwC. The rate of growth was 23.2 percent, more than doubling the 11.3 percent growth rate that online ad revenues had in the first half of 2010.

The data also shows that growth is continuing to pick up as 2011 rolls on. Ad revenues for the second quarter of 2011 increased 24.1 percent from the year-ago quarter to $7.7 billion. For comparison, the second quarter of 2010 saw 13.9 percent growth.

And while the Internet is still a ways from attracting Super Bowl ad money, the biggest growth area for online ads is televisionlike content: online video. Digital video ad revenues brought in $891 million during the first half of 2011, representing a growth rate of a whopping 42.1 percent compared to the same period a year ago.

Now that big firms such as Nielsen have directed their full attention to monitoring how people spend time online, advertisers are finally getting comfortable investing more of their budgets in Internet ads. The current growth rates of online ad revenues are certainly impressive, but this could very well be just the beginning.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

It’s official: Facebook is the 21st century Nielsen family

Colleen Taylor — Tue, 16 Aug 2011 00:12:31 +0000

Although it’s widely recognized that people are spending more time and money on the Internet than ever before, the money spent on online advertising is not even close to the stratospheric spending levels poured into TV ads. But thanks to a new product from Nielsen and Facebook, the Internet could become a first-class citizen in the advertising world — for good.

Monday marked the official U.S. launch of a product dubbed “Online Campaign Ratings” (OCR) by Nielsen, the company best known for its television ratings system. The product is aimed at tracking and measuring online ads at the same level given to television ad campaigns, which are currently the gold standard for media ad spending — as evidenced by the dough shelled out for Super Bowl commercials.

Facebook: The new Nielsen family?

By the looks of it, Nielsen’s OCR could soon prove to have even better viewer metrics than its television ratings. That’s because Nielsen has exclusive access to a very powerful tool for collecting data about people’s online activity: Facebook. Via an exclusive partnership inked last year, Nielsen’s OCR metrics are largely powered by information provided by Facebook about its users’ activity.

Nielsen OCR works with Facebook like this: Online ad campaigns being tracked by OCR will have a Nielsen tag attached to them. If a user encounters an ad while logged into Facebook, either on the Facebook website or while surfing the web within the same browser, Facebook recognizes the encoded tag. Facebook anonymizes the ad viewership data it collects — e.g., it won’t tell Nielsen that I specifically viewed the ad, but it will add me to the group of females in my age bracket and location who viewed the ad — and send that grouped data to Nielsen.

“The results are astonishingly accurate,” Steve Hasker, Nielsen’s president of media product leadership, said in a recent interview. “This product will be directly comparable to TV ratings, and we can say that with great confidence because we are the big provider of TV ratings. You can think of Facebook as a new Nielsen family.”

The potential privacy problem

But there’s one problem with that characterization: Nielsen families have deliberately chosen to have their television viewership monitored, and are paid for their participation. Most people did not sign up to Facebook with the explicit knowledge that their online data would be recorded, packaged and sold to market research firms and advertisers. A good chunk of Facebook’s 160 million American users sign into the social network first thing in the morning, and remain signed in all day as they peruse the web. All of that data is now available to Nielsen — and all the advertisers who opt to buy the OCR product.

When asked how Facebook would respond to criticism on its deal with Nielsen, advertising communications manager Elisabeth Diana said that Facebook “worked really closely with Nielsen to make sure that [OCR] was respecting user privacy.” She pointed out that the data transaction is double-blind: Facebook does not know what specific site or even which ad a Facebook user viewed, only that the user came across the attached tag; while Nielsen does not know exactly who the user is. She also said there are ways users can opt out of having their activity incorporated with OCR.

Bringing Super Bowl spending to the web

From Nielsen’s point of view, OCR fills a longstanding void for an accurate and reliable third-party service that allows advertisers to gauge the reach and efficacy of their campaigns online. Until now, if you were an advertiser and wanted to target your ad online to, say, males aged 18 to 34, the data available to you had some serious limitations.

“Unlike TV where you do planning based on Nielsen numbers, online you can’t do that, because the numbers that come out are from the publishers themselves or from an ad platform like DoubleClick,” Hasker said. “There was no third party source for that information.”

Now that there is, we may finally see companies spending Super Bowl dollars online — and for most of us in the tech and new media world, that would be a very good thing indeed.

Picture courtesy of Flickr user brizzlebornandbred.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.