List of Posts

Archive for November, 2008

Online search growing, but less effective Friday, November 28th, 2008

Australian search advertising should total $869.7 million in 2008, making it the fastest growing segment in the local digital media advertising industry, according to the Australia Search Advertising Market 2008-2012 report released today by Frost & Sullivan.

Keyword sponsorships continue to lead demand accounting for 51% of total revenue ($443 million), followed by online directories ($264 million) and contextual searches ($163 million).

The study identifies that 75% of advertisers are now spending more than 10% of their total media budget on search related activities. This compares with 65% 12 months ago.

However, the key benefits of search advertising, including increased leads, conversions/sales and high return on investment, were all down on last year’s results. A total of 59% of brands that used search ads said it resulted in increased leads, down from 66% last year, while 44% said it increased conversions/leads compared to 49% last year. Only 25% of the advertisers surveyed said search advertising achieved a high return on investment, down from 31% last year.

Frost and Sullivan suggests advertisers will turn to search ads in the economic downturn because of its cost effectiveness.


Repeat after me: ROI bad, IOR good Friday, November 28th, 2008

One of my passions has been to ’prove’ the effectiveness of digital media by understanding the ways businesses can measure the impact of their online presence and relate it to the rest of their business (see here, here and here for examples of my academic efforts and blog posts in this area). Lots of pundits have been saying that business needs to move away from trying to relate web activity to traditional performance measures such as return on investment (ROI) and instead look at measures associated with customer engagement.

Well, Kyle Flaherty wrote a post for ZDNet (and re-posted on Social Media Today) last week which I think nails it. He argues against using ROI to measure digital activities such as social media and talks about a new measure called Impact of Relationships (IOR). He writes: “ROI was created by someone who wanted to defend their activities in the scope of the bottom line of their company; they found direct linkage between what they were doing and revenue being brought in and if that number was larger than their salary plus additional costs they were in for a bonus (or at least steady employment). Determining your social media ROI is a means to an end. It allows us to prove a programs worth to our business, which enables you to continue your work with the community, which coincidentally lets you dismantle the importance of ROI internally and start to focus on IOR…Impact of Relationships.

“IOR allows me to detail how a relationship develops with our company, whether they are a customer or not, and how that relationship has impacted the totality of our business. Using many of the same techniques above I also measure the amount of interaction we have with our community. Not to measure against revenue, but to determine what product feature requests this person suggested that made our product better, how many comments they leave on our blog, the number of times they reference us on their Twitter feed and more. We’ve been able to formulate IOR for members of our community, many of them non-customers, based on what they have given back to our company.

“Are each of these elements a pure statistical entity or a dollar value? No. But it is a great additional barometer we have to show the gains made through our social media activities. This IOR data becomes just as valuable to the senior staff of your company, but only because they have already seen some level of ROI data. It is only when we prove the ROI that we can reach towards IOR.”

I’ll be interested to see how this concept works out in practice and how it is monetized.


Slow start for online holiday sales Thursday, November 27th, 2008

ComScore reports that online retail sales in the US for the first three weeks of November (the lead-up to the usually mammoth Thanksgiving-led holiday sales season) were down 4% on last year’s figures - the first time in memory that year-on-year growth has declined for this period.

According to the New York Times: “’We thought that things would solidify in November,’ said Gian Fulgoni, chairman of comScore, who said gut-wrenching declines in the stock market and the auto industry crisis ’spooked people who might have been thinking the worst was behind us.’

“ComScore will also release its annual prediction for the entire holiday season on Tuesday, after some internal wrangling over whether to hold back the number because of too many unknown factors this year. The data firm is predicting that the overall holiday shopping season will improve slightly in December and end up at the same level as last year. In November and December 2007, the e-commerce market grew by 19 percent from the previous year.

“‘We have our fingers crossed that the stock market will not go through another 2,000-point meltdown and that the decline in gas prices will build up some cumulative buying power,’ Mr. Fulgoni said. ‘However, if there is any more significant bad news just over the horizon, all bets are off.’”


Web 3.0 means bringing it all together Wednesday, November 26th, 2008

Confused by all the hype around Web 2.0? Still trying to get you head around the differences between Web 1.0 and 2.0? Totally flummoxed by the prospect of Web 3.0? Well, worry no more - Web 3.0 doesn’t mean a new suite of technologies to come to terms with. It means integration and consolidation of existing technologies into a form that can be used - and understood - by business.

Razorfish CEO Clark Kokich’s view of Web 3.0 is that “It’s not a new technology or a new technique. Rather, its how clients and agencies are using digital to transform how brands deal with customers.”

In a recent interview with iMedia, Kokich said that at the heart of Web 3.0 vision is full integration of all the aspects of interactive.

“Web 3.0 will be much more focused on business solutions and less on marketing communications,” he said. “We’re at a point now where you take all of these tools - websites, search, mobile, targeted ads - and put them together in an integrated fashion.”

Kokich said clients want to work with digital agencies “because they offer the ability to look immediately at the metrics to determine if a campaign is working.”

“There is much more of an appetite on the part of clients for programs that deliver strong short-term ROI,” he said. “Right now, marketers are moving more toward programs that can cut the cost and marginalize costs in the short term.”

A good takeaway from this interview is that companies have to be willing to fail in order to innovate.  Kokich argues that the path to Web 3.0 - and a new level of integrated marketing communications - will be blazed by risk takers. Are you willing to take a risk on digital in the current climate? He reckons the benefits are definitely there.


Simon on DishyMix Monday, November 24th, 2008

Hear Zazoo’s Business Guy Simon van Wyk interview CEO of Personal Life Media and Internet connector Susan Bratton on what she has learned from the Internet gurus she has interviewed for her DishyMix podcast series:  http://personallifemedia.com/podcasts/232-dishymix#ep72


Web analytics - the most important ‘W’ Monday, November 24th, 2008

Last century, when I was back in journalism school, they drummed into our (then long-haired) heads the fundamentals of a good story: the five Ws and one H - who, what, when, where, why and how.

The same basic principles apply to many facets of the Internet, not just writing copy, but also understanding web traffic. British Internet psychologist and writer Graham Jones recently posted the following on LinkedIn that is worth reproducing in full:

“All methods of analytics miss out a vital ingredient - without which the analytics are largely worthless. None of the systems explain the motivation of your web site visitors. WHY did they visit? That’s THE most important piece of information you need, yet all we get from analytics software is WHAT they did - and to some extent - HOW they did it. Although this provides some useful information, it fails to beat in-depth visitor analysis using surveys which can get at the motivation of visitors. Once you know the motivation you can gain a deeper understanding of how to improve your site. Without knowing the reasoning behind a visitor, you can only “tinker” with the site. If an enterprising software engineer were to work out how to track motivation online - that would be a breakthrough that would revolutionise analytics.”

This is what companies need to focus on when looking at web traffic and trying to work out how it benefits their business. It’s not easy, but understanding and acting on the ’soft stuff’ is what will help companies set themselves apart from their competitors in the increasingly complicated marketplace. You shouldn’t ignore the hard numbers, but you need to blend them with a deeper understanding of your customers and their motivation.

Unfortunately, there is no silver bullet answer to this. Each company needs to work out its own framework that meshes with its corporate strategy and the structure will depend on the things that are most important to that company. But the insights that can be gained from this approach are well worth the effort.


Brands OK - as long as they’re relevant Friday, November 21st, 2008

eMarketer declares that Millennials aren’t brand resistant, but “irrelevance resistant”. Reporting on the results of a Synovate study released this week, eMarketer claims 18-24-year-olds ”are not solidly opposed to brands themselves, and are willing to spread the word about the ones they like.”
When asked about their “online brand engagement” in the past month, 28% had talked about a brand on a discussion forum, 23% had put brand-related content on their IM profile, and 19% had added branded content to their homepage or social networking site.
Interestingly, the worldwide figures were similar to those in the US, with slightly higher results for favourite sites and personal start pages:

According to the report, “Respondents were most likely to pass on comedy clips (62%), followed by music clips (40%) and clips featuring friends (27%). Almost one out of 10 passed along viral advertising and marketing clips.
Meanwhile, eMarketer reports that word-of-mouth is an ever-stronger way to market to young people. A recent survey by Alloy Media+Marketing found that uni students thought word-of-mouth was the most useful type of advertising. Samples—always a bonus for students on a budget—ranked second.
Showing that students do still consider traditional media relevant, TV and magazine ads also ranked highly—higher, in fact, than online ads and sponsored Web applications.


TV-online video migration continues apace Wednesday, November 19th, 2008

The evidence is gathering that online video is cannibalizing television consumption and revenue.

An IBM study that polled 2,800 people in six countries has revealed that more than three-quarters of people have viewed video online and nearly half do it regularly. Of those who have watched online video, 15% say that as a result they watch “slightly less” TV, while 36% said they watch “significantly less” TV.

Paying homage to the history of commercial television, 70% of online video viewers prefer the ad-supported model over consumer-paid models. They specify, though, that they prefer watching a commercial before or after an uninterrupted online video, and they don’t like product placement.

Almost 60% of the respondents said they were willing to provide to advertisers some personal information about themselves in exchange for something of value, such as access to high-quality music videos, store discounts or airline frequent-flyer points.

“The industry must find appealing ways to monetize new content sources or risk a similar fate as that of the music industry where value shifted away from core players,” said Saul Berman, the study’s co-author.

Meanwhile, eMarketer reports that while TV revenue growth is slowing, online video revenue growth is soaring - though the overall numbers suggest there is a fair amount of leakage in overall spend.

eMarketer estimates there will be $284.8 billion in total US ad spending in 2008, and TV still garners 25% of those dollars. But in 2009 US TV advertising spending will decline 4.2% to $66.9 billion.

“This precipitous drop reflects not only the poor economic conditions, but fundamental changes in the way television advertising is being bought and sold,” says Carol Krol, eMarketer senior analyst. “Although there will be inevitable stumbling as they find their footing, the broadcast networks are making bold and interesting choices in an effort to follow consumers online,” says Ms. Krol. “They are collaborating with competitors, hooking up with online partners and forging alliances that were unheard of just a few years ago.”

Online video ad spending as a percent of TV ad spending is expected to nearly double over the next two years, however it will still only reach 1.7% in 2010 - and still less than 3.5% of overall online advertising spend.

Krol points out that there is still “no clear winning online business model for broadcasters,” and that online advertising revenue growth is less than offline media decline. Which raises the question: where is that money going?


Digital business model - but who profits? Monday, November 17th, 2008

Vin Crosbie from ClickZ writes that media and digital publishers have been ignoring the obvious  business model for online publishing all these years - aggregating all content and allowing users to choose what they want to read/view. Think iGoogle, on a wider scale.

Traditional publishers toyed around with this concept years ago, but as Crosbie points out they never picked it up and ran with it because it would mean collaborating with their competitors (I wrote about this a couple of weeks ago in a post that was inspired by another piece Crosbie wrote).  He calls it “not mass media, but individuated media on a mass scale.”

I understand what he’s getting at, but, frustratingly, he doesn’t go into details about how people actually make money out of this approach. One reason traditional media companies didn’t go down this route is that they correctly realised that if they just shift their traditional advertising models to the web in a format that shares profits with all the players, none of the players is going to make anywhere near the same revenue as they used to. To me, that’s where the digital business model is still missing - what do you make money out of besides banner ads?


It’s time to get innovative Friday, November 14th, 2008

While most companies are running for the hills as a result of the current economic crisis, the really smart ones will use the tough times to try out new ideas to enhance their chances of surviving unscathed.

A posting on the Knowledge @ Wharton website (http://knowledge.wharton.upenn.edu/article.cfm?articleid=2086) puts the case for engaging in “disruptive innovation” in the current climate. “Paul J.H. Schoemaker, research director for the Mack Center for Technological Innovation, suggests that, for some companies, the economic crisis can actually provide an innovation platform. ‘The crisis has multiple impacts,’ Schoemaker says. ‘Loss of revenue and profit will at first instill a cost cutting mentality, which is not good for innovation. But if the patient is bleeding you need to stop that first. Then, however, a phase starts where leaders ask which parts of their business model are weak (and perhaps unsustainable) and that, in turn, can lead to restructuring and reinvention.’

“He also cautions against too much caution - over-reliance on incremental innovation versus transformative, or ‘disruptive,’ innovation. In innovation circles, the two have come to be differentiated as ‘little i’ and ‘Big I’ innovation. ‘The largest gains in business come from more daring innovations that challenge the paradigm and the organization,’ Schoemaker says.”

Companies who dismiss social media marketing as “too hard” or too “out of the box”, and who use tightening budgets as a reason to put off trying to get started, are missing a big opprtunity. It could lead the the type of “disruptive innovation” that leads companies into new areas and new levels of success.


Sacrificed on the altar of the market Thursday, November 13th, 2008

Like a Molotov cocktail hurled into a crowd, Publishing 2.0 blogger Scott Karp has ignited the already heated debate about the future of journalism and publishing with his most recent post, entitled “The market and the internet don’t care if you make money”.

He’s pinched the title from Seth Godin, the marketing pundit who is peddling his latest book Tribes, but Karp takes the idea and runs with it in a long screed about how the Internet has broken the newspaper industry’s business model, a topic about which plenty of people including myself have written about ad nauseum. But Karp offers a detailed and particularly articulate discussion of this issue, writing that “Nobody has the right to a business model - Ask not what the market can do for you, but what you can do for the market.”

As usual with this sort of thing, the comments are as entertaining and thought-provoking as the blog post, and as a former journalist I can relate to the responses from people in the traditional media. The words of Thomas Jefferson, author of the American Declaration of Independence, still echo in my ears as one of the main reasons I got into the media business: “Given a choice between a government without newspapers and newspapers without government, I would not hesitate to choose the latter.” The media have an important role in informing society and keeping governments honest. But while Jefferson specifically mentioned newspapers, if he was here today I think he would understand and approve of the Internet and blogging. It is the same principle he was talking about back in the 18th century - free speech. Whether it’s Rupert Murdoch or Ariana Huffington or Joe Bloggs exercising that right doesn’t matter.

At the end of the day, say what we will, the market doesn’t care about ‘quality’ journalism and comprehensive local news coverage. We collectively need to find a model that works in this new and changing environment. I agree with Karp that a future business model lies in the power of networks, not the power of monopolies.


Not the death of blogging, but a new phase Monday, November 10th, 2008

Some of the earliest proponents of blogging are moving on to other things. The Economist reports that the founder of Weblogs, Inc., one of the first blogging networks, has announced that he is giving up on blogging and going back to email to distribute his opinions. Meanwhile, the founder of Blogger, arguably the biggest blogging tool, which was bought by Google, now runs Twitter, the mobile-phone-based micro-blogging network with a 140-character limit on messages, and he says Twitter is the future.

But as the Economist report points out, “Blogging has entered the mainstream, which—as with every new medium in history—looks to its pioneers suspiciously like death. To the earliest practitioners, over a decade ago, blogging was the regular posting of text updates, and later photos and videos, about themselves and their thoughts to a few friends and family members. Today lots of internet users do this, only they may not think of it as blogging. Instead, they update their profile pages on Facebook, MySpace or other social networks….traditional blog pages tend increasingly to belong to conventional media organisations. Nearly every newspaper, radio and television channel now runs blogs and updates them faster than any individual blogger ever could.

“….Simultaneously, companies far outside the media industry have embraced blogging as just another business tool. They are using blogs both to get corporate messages to the public and as an internal medium for staff. Companies like Six Apart, which provides Movable Type, TypePad and other blogging tools, see firms as their most promising market.

“Gone, in other words, is any sense that blogging as a technology is revolutionary, subversive or otherwise exalted, and this upsets some of its pioneers. Confirmed, however, is the idea that blogging is useful and versatile. In essence, it is a straightforward content-management system that posts updates in reverse-chronological order and allows comments and other social interactions. Viewed as such, blogging may “die” in much the same way that personal-digital assistants (PDAs) have died. A decade ago, PDAs were the preserve of digerati who liked using electronic address books and calendars. Now they are gone, but they are also ubiquitous, as features of almost every mobile phone.”

In other words, blogging is now acceptable and understood widely enough to be embraced by traditional companies. Roll on the revolution!


Online advertising stays strong in Australia Friday, November 7th, 2008

Online advertising growth in Australia continued to power along in the third quarter, although things are expected to slow down this quarter, according to the IAB’s latest Online Advertising Expenditure Report, released today.

The B&T newsletter reports that online advertising has experienced a 30% growth year-on-year, with advertisers spending a record $450 million in Q3, $100 million ahead of the same period last year.

While growth is expected to soften in Q4 in response to the global economic crisis, the IAB is still anticipating a 20% year-on-year growth.

While all three categories - general display, classifieds, and search and directories - reported strong growth, search and directories dominated, accounting for $212 million of total spend for the quarter, 33% ahead of the same period last year.

The finance, computer and communications, and motor vehicle sectors represented 52% of display ads. Recruitment dominated spend in classifieds, followed by real estate and automotive.


The Internet generation takes office Thursday, November 6th, 2008

The world has breathed a sigh of relief as the US has agreed with the rest of the world that Barack Obama has the best shot at getting America out of the mess it is in and engaging with the global community.

Politics aside, this election marks the triumph of the Internet and Web 2.0. Obama used skills honed as a community action group leader in Chicago in his younger days to build a powerful network of supporters, both financial and physical, through the Internet. His team collected a record amount of donations via the long tail of the Internet - a few dollars from a huge amount of people - and used email, SMS and YouTube to great effect. Nice to see someone of Obama’s advanced age (47) recognised the critical importance of online, particularly in organising youth support. A lot of businesses could learn from this example - I’m sure someone will write a book about it and make a squillion - I’d probably buy a copy.


Social networking a plus for business Tuesday, November 4th, 2008

I had to check the date - was it April Fools Day? Nope, Melbourne Cup Day. So it must be true - a just-published study has recommended that bosses allow their employees to use their Facebook and MySpace accounts at work because it helps them build relationships with customers and colleagues.

According to Reuters, the study’s author said that, “while companies were using specific systems to share information, online social networking sites could also play a role, helping with productivity, innovation and democratic working.”

“In today’s difficult business environment, the instinctive reaction can be to batten down the hatches and return to the traditional ‘command and control’ techniques that enable managers to closely monitor and measure productivity,” he said.

“Allowing workers to have more freedom and flexibility might seem counterintuitive, but it appears to create business more capable of maintaining stability.”

Robert Ainger, Corporate Director of Orange Business which co-produced the report, said it would be wrong of businesses to ignore the importance of networking in the current economic climate.

“The report points out that the value of networking within an economic downturn is perhaps more important than ever and I believe it could mean the difference between a business collapsing or capitalizing on the tricky conditions,” he said.


« Older Entries