Blog Archives

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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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.

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Rise and Fall of MySpace is A Lesson for Facebook

MySpace was the king of the early social Web, with nearly 76 million monthly unique visitors at its peak in December 2008. It spawned the careers of several music mega-stars, and brought in as much as $470 million a year in advertising revenues. When News Corp. purchased the social network for $580 million from Intermix, MySpace was poised to become the transformative centerpiece of a new media empire. Shortly thereafter, a 21-year-old Mark Zuckerberg turned down a $1.6 billion offer from Yahoo!, and the world balked at his seemingly uncontrollable arrogance and idiocy. My, how time reveals all.

This week, with the backdrop of LinkedIn, Pandora, Groupon and Zynga enjoying multi-billion dollar valuations, MySpace was auctioned off to Specific Media (and Justin Timberlake) for a paltry $35 million, shrinking into the shadows of the new era of online and social media. Facebook, once dwarfed by the size and power of MySpace, is poised to go public in the next 9 months valued at over $100 billion. It seems Mark Zuckerberg, now personally worth over $18 billion thanks to Facebook, isn’t the arrogant fool many perceived him to be.

Instead, Zuckerberg is hailed as a genius, a visionary and has been crowned the King of the Web. His company is expected to pull in $2.19 billion in revenues in 2011 and double- and triple-digit growth in annual display ad revenue has vaulted Facebook past Yahoo! and Google to the forefront of display advertising. Today, Facebook enjoys the company of over 700 million users, while MySpace continues to shed millions of users and traffic has fallen off a cliff.

MySpace v Facebook BloombergBusinessWeek

Facebook is on a tear, and at times appears unstoppable. But if there is one thing Silicon Valley and the online world has learned, things can change in a heartbeat. As Google likes to say, the competitors are always just one click away, and in social networking, any exodus almost exclusively means a total exodus. When your friends flee, you flee. Facebook must learn from the mistakes MySpace made if it wants to avoid the same fate, especially considering how poorly regarded the company’s image is in spite of its massive size and success.

Mismanagement, a total disregard for the user, an onslaught of spam, fake profiles and spammy features and an ill-fated sale to a massive old media overlord are just a few of the missteps that took MySpace from a company that could have been worth billions to a nuisance happily discarded for pennies on the dollar.

Facebook’s first achievement on this path came years ago, when Mark Zuckerberg shocked the world and turned down a $1.6 billion offer for a company with little to no revenues. MySpace co-founder Chris DeWolfe noted to Bloomberg Businessweek that the News Corp. acquisition deprived his company of the start-up culture upon which the company was built and thrived. A relatively slow and simple introduction of advertising features on Facebook, partnered with a voracious focus on the user experience, has kept Facebook users from feeling exploited (at least not by ads, privacy concerns are another issue.) Partnerships with Zynga (which just filed to IPO valued at $20 billion and is hoping to raise up to $1B) and search giants Bing, Yahoo! and Google have made Facebook the core of the modern Web experience.

The potential for Facebook to succeed where MySpace failed is astounding, but rather than celebrating their victories over the fallen competitor, Facebook must treasure the opportunity to explore exactly how MySpace fell short, and how they can deliver mind-blowingly positive experiences to their users every step of the way.

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Img. Credit: Bloomberg Businessweek

Twitter and Facebook Seek Big Ad Dollars with Opposing Strategies

Defying the overall economic trends witnessed across the United States and the rest of the world, Silicon Valley is once again a thriving, dominant ecosystem that some are calling “the last great American frontier.” Spurned by widespread popularity of social pillars including Facebook and Twitter, the seemingly insatiable appetite for tech IPOs and innovations in content and brand integration, the prospects for online advertising are brighter than ever before.

The IAB reported 2010 online ad revenues of $26 billion, a 15 percent increase from 2009 and a new record. While search remains a dominant revenue generator – accounting for 46 percent of total spending with 12 percent YoY growth – relatively newer formats including sponsorships, mobile formats and site takeovers are experiencing massive growth. Many entrepreneurs and venture capitalists, with big valuation dollar signs in their eyes, are literally betting their fortunes on this growth trajectory continuing, hoping advertisers follow the paths of the hundreds of millions of users interacting on Facebook and Twitter every day.

IAB - Online Ad Spend Classification

Facing looming pressure to generate new revenues off their massive engaged user bases and hoping to disprove critics who argue social media advertising is ineffective, Facebook and Twitter have accelerated their monetization programs. However, the two social icons are tackling the same issue with two very different strategies.

Facebook, which enjoys healthy, highly profitable partnerships with gaming companies like Zynga, has exploded past Yahoo! to become the largest seller of online display advertising (in the United States, excluding Yahoo! media network partner sites.) While Facebook is home to the online “Pages” of virtually all of the world’s largest brands, the company’s automated ad-buying system is targeted toward smaller advertisers, allowing them to custom-target based on a wide range of demographic and geographic variables.

Adam Bain - Twitter President of Global Revenue

Twitter, still several years behind Facebook in monetization development, is just beginning to build out its sales force and will not possess an automated ad-buying system until late 2011. Under the direction of Adam Bain, Twitter’s President of Global Revenue, the company has slowly rolled out advertising platforms including Promoted Tweets, Trends and Accounts that have been targeted exclusively toward the largest brand advertisers on the Web. As Twitter’s ad auction infrastructures develop further and the sales team grows in size, and if usage continues to skyrocket with the help of  key platform integrations like Apple’s iOS 5, the company’s $150 million in projected 2010 revenues will likely swell dramatically, helping to justify the reported $8-10 billion valuation.

The two distinct strategies employed by Facebook and Twitter are likely to merge and overlap as each company builds its sales and ad-serving infrastructure, but it appears each company understands how businesses of all kinds use their services and has structured their early monetization platforms accordingly.

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How Demand Media Creates High-Quality Content at Scale [INFOGRAPHIC]

On the heels of a widely successful IPO and a strong first earnings report as a public company, Demand Media has delivered another positive sign for investors seeking continued momentum for 2011 and beyond.

Today, the Santa Monica, CA-based content and social media company announced 48% growth in revenues and a 121% increase in adjusted net income year over year. (A full review of Demand Media’s Q1 2011 financial results can be viewed here.) Well-received redesigns of flagship Demand Media properties like eHow, LIVESTRONG.com and Cracked and high-profile celebrity partnerships with Rachael Ray for eHow Food and Tyra Banks for typeF.com are driving continued growth in content and media revenues (77% increase YoY.)

The increased scrutiny that comes with being a public company has manifested in investor worries about the impact of Google’s “Panda” algorithm tweak, but Demand Media has fought hard to reaffirm its continued commitment to producing high quality content. As a writer for Demand Media Studios and a member of the Demand Media Blog Distribution Network, I can attest to the validity of these assertions, and I am continuously impressed by the quality of content being produced by my fellow freelancers.

My team and I created an infographic that presents the detailed content creation process of Demand Media using text, graphics and images repurposed from OnlineMBA and Demand Media’s Content Matters. (Click on the infographic to view the full-size version.)

Demand Media Content Creation Process

This infographic portrays how Demand Media utilizes a network of proven professional writers and copy editors, with every piece of content run through a rigorous quality control and review process. Articles that do not meet the strict Demand Media content quality standards are rejected and never published.

The continued efforts of Demand Media to improve content quality and focus on the creation of compelling, actionable content on its growing platform of top-rated properties are delivering strong financial results and positive user responses, and are a strong sign for scrutinizing investors.

Related: Learn more about how Demand Media offers advertisers a unique opportunity to reach action-ready consumers through intent targeting.

From Avatar to the iPad 2 – We’re in an Experience Driven Economy

You know the feeling. Being so profoundly overtaken by awe, laughter, incredulity or amazement. Experiences like these tap into the deepest and purest of human emotions, and serve as powerful motivators. We are in a new economic era; an era in which savvy businesses craft their product and service strategies with the specific and overarching goal of creating compelling consumer experiences.

Hollywood was among the first industries to recognize that even the best stories need great packaging to become the mega-hits that bring swarms of people to theaters in costumes and tents, waiting for hours to experience the story. Avatar was not a multi-billion dollar smash hit because the story was particularly exceptional or because audiences were deeply committed to the film’s message of environmentalism. The film attracted an enormous and diverse audience of moviegoers craving to immerse themselves in the engrossing experience James Cameron expertly crafted. The impressive 3D effects, captivating majesty of Pandora and exceptionally-directed audio throughout the film catapulted audiences into a foreign world, allowing them to experience the story in a way that simply was not possible even twenty years ago. James Cameron isn’t just selling movie tickets. He is selling an experience. Entertainment locations like Universal’s Harry Potter theme park and Disneyworld don’t sell roller coaster tickets and concessions. They sell an experience. Starbucks isn’t selling coffee and pastries. It is selling an experience.

Avatar Movie Wallpaper

The entertainment industry was a pioneer, but new players are encouraged by the success they’ve seen and are increasing their efforts to weave the overall consumer or experience into every decision they make.

The resurgence of Apple as a beloved consumer and cultural icon can be directly linked to its insistence on providing unique and powerfully positive experiences to its customers. One only needs to step inside an Apple retail store to understand how well this strategy has caught on. Flocks of current and would-be customers seem suspended in a perpetual state of bliss and fascination as they explore and tinker with the latest iPhones, iPads and MacBooks. Even months after a product is released, Apple stores are bustling with activity and energy. Why? Because Apple created a hands-on experience and instills a sense of ownership in its customers.

But what makes Apple such a unique and powerful example of experience-driven strategy is its array of products designed to wow the users’ senses. The touch, audio and visual interactions that characterize the company’s most successful products have taken a company that was once a quarter or two away from a low-ball acquisition and made it a beloved symbol of quality, innovation and excellence. (Author’s note: I give high praise to Apple, but I’m no ‘fanboy’ – I have happily used a PC for 15 years and will critique Apple if/when necessary.)

Apple iPad 2 Customers in Store

Facebook, Twitter, Foursquare and others are carefully crafting new and addictive user experiences that have led to astounding engagement and interaction metrics. The genuinely positive experience of interacting with your social connections and having the ability to share your own story is an experience we – as humans – crave.

From luxury car dealerships and IMAX theaters to retail stores and theme parks, business are trending toward products and services driven by a foundation of selling experiences. These experiences are powerful, and as technology advances even further, the experiences will become deeper, more interactive and more compelling. An incredible, truly wowing experience with a product or service is rare, but if businesses can deliver one, they are poised for transformative success.

NOTE: Visit www.letschatbusiness.net on your iPad for a unique, Flipboard-esque experience driven by Onswipe and WordPress.

Fighting History – Fragmentation and the Social Web

“History is a relentless master. It has no present, only the past rushing into the future. To try to hold fast is to be swept aside.” -John F. Kennedy

For nearly a century, technology has purportedly brought together the fragments of society. With universal access to common information, previously disconnected groups can unite. History has proven, however, that this initial period of universality eventually trends back toward fragmentation. Can the social Web fight history and survive the seemingly inevitable re-fragmentation?

After Dark Ages, the explosion of printing and publishing in the 15th century led to a significant spread of knowledge and the rebirth of intellectual curiosity. Knowledge was no longer exclusively based on hearsay, and people sought information from trusted academic and historical resources. Outside academic circles, media sources like newspapers and general information magazines boomed in popularity in the 18th and 19th centuries. For the first time in generations, people could discuss common events and share their opinions on similar topics. Previously fragmented societies were unified. The world’s longest running magazine, the general information-focused Saturday Evening Post, lasted 148 years. Over time, however, general interest publications died out as public interest waned, and niche publications that catered to unique, specialized interests became the only sustainable media outlets. (There are nearly 7,000 special interest magazines in publication today.)

FDR

Radio, commercialized by RCA’s David Sarnoff after World War I, removed some of the adoption barriers that characterized print media. The famous voices of Edward R. Murrow and Franklin D. Roosevelt – for the first time in history – were broadcast to millions of people at a time across the airwaves. Radio was a national phenomenon, and the medium had a powerful unifying impact on society. Millions of people shared common listening experiences and had access to the same information. For twenty years, the country was bound together by radio until a new medium came along: television. Television forced radio programming to cater to niche audiences, and the medium that once unified society fragmented it once again. (See also: How the Internet is Transforming Television.)

Mark Zuckerberg at Web 2.0

Starting to notice a pattern? The Internet is a unique medium, allowing virtually anyone, anywhere to become a source of content. More than any other medium, the Internet has created fragmented user experiences. The social Web is, of course, founded on the platform of unifying users based on their social connections to create a more personal Web experience. So can it buck the historical trend that has re-fragmented user bases in previous media?

Absolutely.

Social media is the product of constantly evolving, improving and competing technology, and is heavily integrated in a range of Web content. Social products improve user experiences by taking into account a plethora of data and using this data to provide increasingly relevant content and people to share it with. Social media has exploded in popularity over the last five years, but it is easy to argue the market is still in its relative infancy. Mobile social products like Instagram, Foursquare and Twitter are connecting people across the globe in new ways, and social media has initiated a new Web paradigm. The transformational nature of new media technologies has united societies and re-fragmented them again and again, but social media has the opportunity to transcend the biting force of history and remain a powerful connecting force for many years to come.

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?

Facebook Poised to Reveal Comment Platform

Facebook is preparing to take the next step in its quest to monetize its exponential growth and continued dominance of the social Web. Reports surfaced this week that Facebook will introduce a third-party commenting platform for publishers across the Web.

The incredible success of Facebook Connect has convinced the Palo Alto-based company that significant potential lies in its ability to forge partnerships with media and content producers that integrate social connections into a wide variety of Web experiences. (Facebook has recently taken steps in courting major media publishers like Time Warner in an effort to pursue new platforms of integration and penetration.) More than two million Web properties have taken advantage of Facebook’s “Like” function to drive traffic and increase user engagement, and a Facebook commenting platform will continue to grow that number.

Facebook Like

To date, Disqus has been a fairly ubiquitous presence as the comment tool of choice for top publishers like TechCrunch, Mashable, The Wall Street Journal and many others. Users can give articles a “Thumbs Up” or “Thumbs Down” and can comment via Disqus through their Twitter or Facebook accounts, but Facebook’s new commenting platform threatens to displace Disqus as the king of commenting.

Facebook already has nearly 600 million users; no need to set up a new account, no need to give application permissions, no hassle. Publishers can’t drive engagement if they aren’t connecting with people, and a partnership with Facebook means instant access to hundreds of millions of users and their friends. Readers can “Like” and comment on a piece of content, and the power of social proof produces a snowball effect that increases traffic and extends online reach as those actions permeate onto users’ news feeds, boosting awareness and driving new traffic to the site. Reports indicate users will also be able to vote for and against comments in a stream, and a Facebook-run moderation system may be in the works. People.com is already using a version of Facebook’s commenting platform, and major online publishers like The New York Times, The Huffington Post, and TIME are prime candidates to adopt the service as it is rolled out.

Facebook Comments

As CNET pointed out, Facebook has developed a significant slate of new products in recent months, including Facebook Places, Facebook Deals and Facebook Questions, providing instant competition for companies like Foursquare, Groupon and Quora. While each of these products are still in their infancy, its conceivable that the rising prominence of social media in business and the utter dominance of Facebook within the social realm will force properties and publishers to adopt Facebook tools for fear of missing out on its massive and addicted user base.

The benefits of Facebook integration to publishers are clear, but why would Facebook continue to offer its API to these properties for free? In return for enabling social integration, Facebook often receives extensive data on a publisher’s audience, which can in turn be combined with Facebook’s knowledge of its users’ activities to improve ad targeting on its own network. Understanding user intent and preference is critical, and the ability for Facebook to better understand the behavior of its users away from its own network is a key factor in advancing the company’s efforts to monetize in a period of hyper growth and massive external investment.

Social integration has become a crucial part of the success of online publishers, and given the widespread popularity of early Facebook integrations, the release of a Facebook commenting platform is a significant threat to Disqus, Echo and the other startups that have led the way thus far.

LivingSocial Finds A Rockstar Partner in Amazon

With Groupon leading the way, Google Offers making waves, and Facebook Deals under development, the local coupon market is one of the fastest-growing sectors in tech right now. Dozens of imitators have sprouted up looking to ride the coattails of the market’s recent success, but LivingSocial has emerged as a clear second place stalwart with the help of a rockstar partner.

The month of January marked a significant step in the development of LivingSocial, with the Washington, D.C.-based company receiving a $175 million strategic investment from Amazon. A wildly popular coupon that gave buyers a $20 Amazon gift card for $10 was purchased by more than one million customers, many of them first-time buyers.

On the day of the Amazon deal, mentions of LivingSocial on Twitter and Facebook skyrocketed, and the power of social proof helped the coupon spread across the Web like wildfire. An Experian HitWise report (seen below) indicates US traffic to LivingSocial jumped 80% during the week of the Amazon deal.

LivingSocial

It’s likely that traffic will subdue in the coming weeks without another irresistible deal driving users to the site, but the Amazon deal put LivingSocial on the map as a formidable opponent to Groupon in a highly competitive market. Tens of thousands of new users registered to snag a 50% off Amazon gift card, and even if only 20% of those new users return to the site and purchase other deals, LivingSocial will have gained valuable ground against Groupon.

With the prospect of competing against such a well-established foe, not to mention the powerful forces of Google and Facebook, LivingSocial will benefit immensely from their new partnership with Amazon. The value of this partnership cannot be understated. Aside from the ever-important infusion of capital, LivingSocial now has an incredible resource of technical and logistics knowledge. The increased visibility provided by the Amazon partnership will help LivingSocial penetrate the market and gain all-important mindshare.

The trifecta of Groupon, Google Offers and Facebook Deals will ensure a long and hard-fought battle ahead, but with Amazon in its corner, LivingSocial could be a force to reckon with.