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Mobile Advertising to Reach $8.2 Billion by 2016 As Search Market Share Shrinks

New figures released by Forrester Research project the healthy growth recently seen in U.S. interactive advertising will continue through 2016, with total spending reaching $76.6 billion, or 35 percent of global ad spend.

The figures are particularly encouraging for those in the mobile sector, who have had to deflect criticism about the current state of mobile advertising and its viability using current technology. The report projects mobile interactive advertising will enjoy a compound annual growth rate of 38 percent, reaching $8.2 billion in 2016. This best-in-class growth will be led by a growing mobile commerce market, consolidation of mobile ad networks and the implementation of rich media ad formats as smartphone technology advances.

Consolidation in mobile ad networks has accelerated in the past two years, as Google acquired AdMob for $750 million, Apple acquired Quattro Wireless for $275 million and ValueClick acquired Greystripe for $75 million, placing the full force of some of the most valuable companies in the world behind the mobile ad sector.

Mobile Advertisement Example - Land Rover

While display and search are projected to retain their dominance of most interactive ad budgets as rich media, text listings and online video components become budget staples, search engine advertising is expected to see a significant reduction in both its growth rate and its share of the overall interactive market. Search advertising is projected to experience a compound annual growth rate of 12 percent, nearly doubling from $18.8 billion in 2011 to $33.3 billion in 2016, but will see its share of the overall market decrease from 55 percent to 44 percent over the same period as other formats establish themselves as meaningful components of large scale media buys.

Forrester reports social media marketing will enjoy a healthy 26 percent compound annual growth rate, but will only reach $5 billion in total spend due to the inexpensive nature of many social ad platforms.

With the explosive valuations of literally thousands of VC-funded startups heavily dependent on advertising revenue for survival, let alone growth, these latest figures are encouraging. However, marketers appreciate (and are increasingly demanding) both security and results, which will likely benefit the largest and most established companies in mobile and social, including Google, Apple, Facebook and Twitter. The industry should expect further consolidation as the large, cash and equity-rich players utilize critical acquisitions to expand their arsenal and take advantage of the rapidly accelerating growth in interactive advertising.

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Tim Cook to Employees: “Apple Is Not Going to Change”

Less than 24 hours after the jarring revelation that Apple’s revered leader, Steve Jobs, would be stepping down from his post as CEO, his replacement has set the stage for the beloved company’s continued growth and success.

Tim Cook, who previously served as Apple’s COO and as interim CEO during Jobs’ previous medical leaves of absence, sent a note to all Apple employees today promising them the company they knew under Steve Jobs won’t change under his leadership.

The note, originally obtained by Ars Technica, reaffirms Jobs’ commitment in his resignation letter that Apple will continue to be a successful and innovative leader in the always-competitive tech sector:

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Team:

I am looking forward to the amazing opportunity of serving as CEO of the most innovative company in the world. Joining Apple was the best decision I’ve ever made and it’s been the privilege of a lifetime to work for Apple and Steve for over 13 years. I share Steve’s optimism for Apple’s bright future.

Steve has been an incredible leader and mentor to me, as well as to the entire executive team and our amazing employees. We are really looking forward to Steve’s ongoing guidance and inspiration as our Chairman.

I want you to be confident that Apple is not going to change. I cherish and celebrate Apple’s unique principles and values. Steve built a company and culture that is unlike any other in the world and we are going to stay true to that—it is in our DNA. We are going to continue to make the best products in the world that delight our customers and make our employees incredibly proud of what they do.

I love Apple and I am looking forward to diving into my new role. All of the incredible support from the Board, the executive team and many of you has been inspiring. I am confident our best years lie ahead of us and that together we will continue to make Apple the magical place that it is.

Tim

——

Cook is no stranger to the tech community, often appearing alongside Steve Jobs at Apple events and giving important keynote speeches in Jobs’ absence. Cook has been a part of the Apple team since 1998, joining as Senior Vice President of Global Operations, and rising to his previously-held position of Chief Operating Officer in 2005.

Tim Cook at Apple - CHART

Cook’s execution of supplier contract negotiations has made it virtually impossible for competing firms to deliver comparable products at a competitive price. Cook previously held executive positions at Compaq and IBM.

With Jobs remaining as Chairman, and a suite of Jobs-era products in the pipeline, Apple likely won’t even see a hiccup for the next few years. Jobs created a system of excellence and creativity and instilled these values in every Apple employee, and Tim Cook will continue to execute Apple’s mission of innovation and growth. Investors and insiders are confident in Cook’s ability to lead – Apple stock is down just 1 percent through midday trading Thursday.

Steve Jobs’ Resignation Letter to Apple Board of Directors, Community [UPDATE]

Trading of Apple shares was halted late Wednesday pending the major breaking news that Steve Jobs, the company’s iconoclast leader has resigned from his long-held position as CEO. Below is the note Mr. Jobs sent to the Apple board and to the Apple community:

—–

To the Apple Board of Directors and the Apple Community:

I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come.

I hereby resign as CEO of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director and Apple employee.

As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.

I believe Apple’s brightest and most innovative days are ahead of it. And I look forward to watching and contributing to its success in a new role.

I have made some of the best friends of my life at Apple, and I thank you all for the many years of being able to work alongside you.

Steve

—–

After-hours trading of $AAPL resumed shortly thereafter, sending Apple shares down a relatively modest 5 percent. The move would likely have had much greater impact two years ago, as investors have recently priced Jobs’ impending departure into the stock. Business Insider’s Henry Blodget projected the announcement would have sent Apple shares tumbling 25 percent or more just two years ago.

Art Levinson, Chairman of Genentech, released a statement on behalf of Apple’s board: “Steve’s extraordinary vision and leadership saved Apple and guided it to its position as the world’s most innovative and valuable technology company.”

“Steve has made countless contributions to Apple’s success, and he has attracted and inspired Apple’s immensely creative employees and world class executive team. In his new role as Chairman of the Board, Steve will continue to serve Apple with his unique insights, creativity and inspiration.”

Steve Jobs and Tim Cook

Following the announcement of Steve Jobs’ resignation, Apple promptly named COO Tim Cook as the new CEO. Cook led Apple in 2004 and 2009 during Jobs’ medical leave. Cook is known for his calm demeanor, astonishing work ethic and tendency to challenge subordinates with impossible-to-answer questions.

“The Board has complete confidence that Tim is the right person to be our next CEO,” added Levinson. “Tim’s 13 years of service to Apple have been marked by outstanding performance, and he has demonstrated remarkable talent and sound judgment in everything he does.”

Our thoughts are with Steve Jobs and his family, and we wish him well during these challenging times. As a small token of appreciation, we direct you toward Business Insider’s “The Life and Awesomeness of Steve Jobs.”

Google Launches Google+ iPhone App, Expands Critical Mobile Presence

After weeks of speculation, Google has received approval from Apple to release the Google+ iPhone app. However, the highly anticipated launch did not go off without a hitch. The first release of the Google+ iPhone app was buggy and highly unstable, frequently crashing and logging out users at random. Google quickly identified and rectified the issue, releasing an updated version of the app an astonishing 1 hour and 40 minutes after the initial launch.

Lead Project Manager for Google+ Mobile, Punit Soni, revealed early this morning (on Google+, of course) that the App Store was serving early downloaders a test version of the Google+ iPhone app.

(Some users report the Google+ iPhone app is not showing up in searches within the App Store. Here is the download link for the app, accessible through your iOS device.)

The app allows users to access their Stream, comment on and +1 other user’s posts, but the current version of the app does not allow users to re-share posts in their Stream. Soni, in response to Robert Scoble’s post reviewing the app, announced an in-stream Share feature is in the works. The app provides access to Photos from your Circles, your personal albums and all photos stored on your iPhone, and allows you to upload and geotag photos to Google+. Check out the full Google+ for iPhone review from Mashable, which includes 20 in-app pictures.

Google+ iPhone App - Screenshot

One of the key features driving the Google+ iPhone app’s utility over the browser-based version is the mobile-optimized Huddle feature. The success of Google+ will be largely driven by its seamless integration between mobile and desktop, and the two-way or group chat Huddle feature enables Google+ to become a central hub of mobile activity, replacing text messaging and additional group chat applications if the app gains widespread traction.

The brief and uncharacteristic early hiccup was positively overshadowed by Google’s quick update, and the Google+ iPhone app paves the way for Google+ to further penetrate the mobile environment, a critical battleground in the heavyweight bout between Google+ and Facebook. If Google+ can continue the growth trajectory it has enjoyed during its invitation-only trial phase, and perhaps beat Facebook to the punch with a standout iPad app, the social networking landscape that seemed set in stone just months ago will be poised for significant transformation. This competition between two immeasurably smart and talent-rich companies will only lead to stronger products and a better user experience, and that is something we can all look forward to.

Still searching for an invite to Google+? Click HERE for an invite, courtesy of @LetsChatBiz.

Is Google Offers Too Late to Compete? [Update]

[UPDATE: 4/21/11] In the four months since Google’s failed $6 billion Groupon acquisition bid, the company has faced increasingly vocal criticism on everything from lack of innovation to weak leadership. Today Google launched sign-up pages for its very own Groupon clone, Google Offers.

Following the company’s release of Google +1, this release will do little to calm the fears that Google is resorting to a “copy-cat” strategy as it falls further behind in social and perhaps is even losing its dominance in search. Further hampering Google’s progress is Groupon’s poaching of Google VP of Sales Operations Margo Georgiadis to fill the role of COO. With virtually zero differentiation in the company’s plunge into local deals, what makes Google believe it can compete with established heavyweights like Groupon and LivingSocial?

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More than a month after Groupon spurned a $6 billion acquisition offer from Google, the worldwide search engine leader is preparing to announce its own local deals service, Google Offers. According to Mashable, “Google will pay out 80% of a business’ revenue share three days after its deal runs. Google will hold the remaining 20% for 60 days to cover refunds before sending the rest.”

Groupon holds a dominant share of the local deals market, with LivingSocial trailing in a distant second and dozens of clones controlling minuscule shares. Reports of a similar service from Facebook have surfaced recently, and with Groupon supposedly preparing for a $15 billion IPO, questions are arising whether the market is saturated and if it can sustain another large competitor this late in the cycle.

The local deals market is by no means mature, and traditional marketing laws call for a strong number one versus number two competition over the long run, but the rules of Silicon Valley reward the first market entrants above all else. So with an established leader in Groupon controlling a heavy share and runner-up LivingSocial fresh off their blowout Amazon deal (which garnered over one million downloads), is Google Offers too late?

With little room for differentiation in the basic deals platform, Google’s opportunity to steal share from Groupon lies in its ability to integrate search, social, maps and location, and capitalize on the power of its online reach under the rejiggered executive management team led by some familiar faces. Pre-loaded mobile applications on its Android platforms and packaged search and local deals are likely components of Google’s strategic plan. It will take time to build these features out, but perhaps more than any time in the company’s history since its IPO, this is a critical inflection point for Google.

Google Offers

Google’s official response to a Mashable inquiry reveals the early development efforts of Offers:

“Google is communicating with small businesses to enlist their support and participation in a test of a pre-paid offers/vouchers program. This initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with customers in new ways. We do not have more details to share at this time, but will keep you posted.”

The potential viability of Offers is a snapshot into the current environment at the still highly regarded online behemoth. It is widely known that more than 90% of Google’s revenues come from search engine advertising, and a recent string of disappointing product failures has some industry insiders questioning the company’s ability to create new and sustainable innovations.

After announcing a record-breaking quarter, with profits jumping to $2.5 billion, Google is hardly faltering. Google’s efforts in display advertising and mobile are paying off, and search is as powerful as ever. But with news that Eric Schmidt will step down on April 4th and co-founder Larry Page will take over as CEO, investors and insiders will be keeping a close eye on Google over the next year. As one blogger questioned, will Page’s return to the helm be similar to Steve Jobs’ triumphant reclamation of the Apple throne in 1997, or more like Jerry Yang’s short-lived return to Yahoo! in 2007?

Image Credit: Mashable

As Bing Sees Big Gains, Is Microsoft Cool Again?

Under the tutelage of Bill Gates, Microsoft exploded into one of the world’s largest and most valuable companies, generating billions of dollars in profits annually for shareholders. The dot-com boom made many employees and investors millionaires, and the company appeared unstoppable.

As the company matured, growth stabilized and new tech darlings like Google stole the spotlight. Delayed product launches of centerpiece operating systems, failed products and advertising campaigns, broken acquisition deals and an apparent lack of internal innovation gave Microsoft a reputation as a “has been” that had passed its prime, and current CEO Steve Ballmer lost the confidence of many investors.

Bill Gates and Jerry Seinfeld Microsoft Ad

However, new data is showing that Microsoft may be experiencing a reversal of fortunes, as the company’s investments in search are beginning to pay off. The brutally competitive search engine market has had one dominant player for the last decade – Google – which has held as much as 80 percent of the United States search market.

In October 2010, the U.S. search marketshare breakdown was as follows: Google (72.15%); Yahoo + Bing (23.64%). The most recent Hitwise data shows Bing has made substantial gains at the expense of Google and Yahoo. Bing-powered search now controls 30.01% of the U.S. search market, while Google’s share has fallen to 64.42%. (See below: Image courtesy of Mashable.)

Bing vs. Google

These gains may be the result of a major multi-platform ad push by Microsoft for Bing, but the trend is a positive sign for investors and spectators that have remained loyal to the company.

Strong performance in search, high expectations for tablet and PC versions of the upcoming Windows 8 platform, new developer confidence in the Windows Phone platform following the recent Nokia partnership announcement, the smashing success of Kinect and Xbox 360 and widespread adoption of Microsoft’s iPhone and iPad apps are powerful indicators of a possible Microsoft mindshare and marketshare resurgence.

Bing iPad App

Less than a decade after Wall Street and Silicon Valley critics alike pronounced the death of Apple as a legitimate player in the lucrative personal computer market, the world has witnessed the resurgence of the Cupertino-based company as the dominant force in the rapidly-growing world of consumer electronics. Could we be seeing the beginning of an Apple-esque Microsoft turnaround? Critics will call it wishful thinking, but with Google in the process of a massive leadership change, Yahoo! undergoing a drawn-out transition phase and the tenure of Apple CEO Steve Jobs uncertain, the competitive landscape is changing and Microsoft has substantial opportunities in search, PCs and mobile.

Twitter Microsites Offer Networks Real-Time Engagement

In a television era dominated by DVRs and Netflix, network executives are facing incessant pressure from advertising partners to increase the number of eyeballs that are watching programs in real-time. Traditional media has often been lambasted for fighting change, but the recent trend toward connected television and the ubiquitous popularity of social media has forced many media giants to embrace these technologies.

Twitter, the micro-blogging site that easily connects users across the globes with one-click follows and hashtags, has become a valuable real-time thermometer for networks to gauge viewer feedback during programs. What began as networks monitoring chatter on the main site feeds has evolved into the launch of enhanced microsites developed and powered by Twitter, and several major brands have already come on board. Visa and the NFL partnered with Twitter to launch a microsite covering the Super Bowl XLV. Women’s Wear Daily, Bobbi Brown and Bergdorfs sponsored a microsite for New York Fashion Week. HBO created a Twitter microsite for True Blood fanatics.

NYFW MicrositeThese microsites provide encompassing coverage of live events with real-time tweets, pictures and aggregated news. Brands can deliver real-time updates and become a destination for consumers to share knowledge and engage in active conversations on a particular topic with like-minded individuals. Most importantly, these microsites are a platform for branded content alongside user-generated content, integrating two incredibly powerful forces in Web 2.0 marketing. Brands can subsidize the costs of developing these sites by partnering with sponsors (i.e. “New York Fashion Week: Presented by American Express”) that obtain prime real estate alongside highly relevant content and engaged audiences.

For networks, these microsites encourage and facilitate real-time conversations that cannot occur on a comparable scale outside of the live program time slots. Networks can use these microsites to provide advertisers with more in-depth viewer metrics (i.e. 250,000 unique tweets, 50,000 hashtag mentions, etc.) that can command premium ad rates.

These microsites have significant potential beyond enhancing live, lean forward television viewing experiences. Imagine brands like Apple and conventions like CES implementing these sites for major product launches and events. It’s more important than ever to go where your customers and users are, and microsites offer networks and brands the opportunity to drive engagement and become a central online conversation destination.

Will more Twitter microsites pop up in 2011 and beyond? Would you use a microsite to tweet on your connected TV?

One Final Push

[UPDATE 1/7/2011: It is official – we are proud to announce Let’s Chat Business has been named the Top Business & IT Blog of 2010 by SoftCity. Thank you for your support – we could not have done this without you!

For the past month, Let’s Chat Business has been competing in the SoftCity 2010 Battle of the Blogs. The daily votes and “Likes” from hundreds of our passionate readers have propelled us into first place in the Business & IT category. The competition concludes tonight at 10pm PST/1am EST.

1st Place Close Up

With just hours left in the competition, we need every single vote we can get to hold on and win. Each vote and “Like” for Let’s Chat Business enters voters in a daily sweepstakes to win Amazon gift cards, and at the end of the competition, users who voted for the winning blog are entered into a drawing to win an Apple iPod. Several of our readers have already won Amazon gift cards, and there are still more to be given away.

If you have already registered, don’t forget to cast your final vote today before 10pm PST. If you have not yet registered, it is a simple process that takes less than a minute. See graphic below for explanation:

Vote Login

Your support has driven Let’s Chat Business to new heights, and with your final effort, we can finish in first place and take home the honors of “Best Business & IT Blog of 2010.” Vote and “Like” here.

Battle of the Blogs

[UPDATE 2: We’re proud to announce Let’s Chat Business has been voted the “Top Business & IT Blog of 2010” by SoftCity! Thank you for your support – we couldn’t have done it without you.

Social commerce and tech community website, SoftCity, is hosting Battle of the Blogs, highlighting the best blogs across the web in six categories. Users can nominate and vote for their favorite blogs for an opportunity to win daily prizes, including Amazon gift cards and one of six Apple iPods.

(Check out this MSNBC article showcasing the contest and the SoftCity mission.)

Let’s Chat Business is proud to be featured in the “Business and IT” category alongside web heavyweights Seth Godin and Xconomy.

Vote for Let’s Chat Business HERE for a chance to win some great prizes!

Vote for @LetsChatBiz in the SoftCity Battle of the Blogs

LCB is approaching its first anniversary, and I’d like thank you for your amazing support thus far. Your continued readership has been phenomenal, and I truly appreciate you taking the time to visit the site, share your thoughts, and push the conversation forward.

Follow @LetsChatBiz on Twitter and “Like” us on Facebook.

Bowing Out with Grace, Microsoft Retires Kin and Moves On

Earlier this year, after two short months on the market, Microsoft decided to retire its “Kin”, a social media-centered mobile phone. In spite of strong reviews, the phone sold poorly, and Microsoft faced a key decision for its future in a market they had experienced relatively little success. On Thursday, a key executive in Microsoft’s mobile business revealed that the company will no longer pursue development of a new smartphone device.

The statement from Tivanka Ellawala, Microsoft’s CFO of mobile communications, comes at a critical juncture for the company’s efforts to become a true player in the mobile industry. Microsoft has developed Windows Phone 7 software, which has been promised to be a drastic improvement upon earlier versions of Windows’ mobile OS. Microsoft has thus far refused to reveal the manufacturers of the phones that will utilize the Windows Phone 7 software, but the company included hardware specifications, which Ellawala allows for “more predictability in what it takes to make the hardware work with the software.”

Microsoft Kin 1 & 2One of the crucial elements that the success of Windows Phone 7 hinges on is the adoption by the developer community. In an effort to stimulate development of mobile applications for WP7, Microsoft released a software development kit intended to help developers maximize revenue earned from advertisements.

To many investors, the shuttering of the failed Kin line was indicative of Steve Ballmer’s willingness to move on from products and projects that are losing money. In the past, Ballmer has been criticized for holding on too long to projects that were outside of Microsoft’s areas of expertise and were bleeding money. As Ellawala noted, Microsoft is in the software business, and that is where they need to maintain their focus. When one explores Microsoft’s efforts in mobile, the slang term “diworseification” comes to mind.

MSFT Chart 2005-1010

In spite of record cash flows and revenues, Microsoft’s stock price has remained relatively flat over a five-year period, getting lapped by competitors like Apple and Google. With the booming success of Halo: Reach, growing anticipation for Windows Phone 7, and the enticing prospects of an enterprise PC refresh cycle, Microsoft is in a healthy position moving forward.