Friday, December 24, 2010

More tipping points have tipped as we tip a glass to 2010

Online advertising to eclipse newspapers ads with video a key driver. Display closing in on paid search. Sneaky contextual ads not fooling DVR owners and liberal arts still matter for fostering entrepreneurship.

When the year-end ad spending totals come in early next month, many forecasters expect to see more dollars under the online advertising column than the newspaper advertising column in 2010 -- including advertising in newspaper online editions. Assuming these projections hold true, it would mark another major milestone for online advertising.

"It's something we've seen coming for a long time, but this is a tipping point," said eMarketer CEO Geoff Ramsey, in a statement. "Marketers are devoting bigger shares of their budgets to digital media as they see more customers shifting time toward the Web."

Ramsey’s widely cited research expects online ad spending to grow 13.9 percent to $25.8 billion, while advertisers are expected to spend just $22.8 billion on print newspaper ads -- down 8.2 percent year-over-year. Ramsey told Online Media Daily Tuesday that increased consumer use of the Web isn't the only reason marketers are putting more dollars online. "The bad economy has actually accelerated the shift to digital advertising," Ramsey said. "Online ads -- especially search ads -- are increasingly seen by many marketers as a more reliable bet than print ads, which are often difficult to tie to a measurable financial result."

By 2014, eMarketer predicts that growth in spending on online display ads will outstrip that for paid search -- although search will continue to take a greater share of dollars. This year, both search and display are on track to outpace overall U.S. online ad spending, estimated by eMarketer at just under 14 percent. The increase in display advertising will be driven partly by the dramatic rise predicted in online video advertising, set to grow by at least 34 percent every year through 2014. Banner ads will experience more moderate gains of between 7 percent and 16 percent annually, while rich media spending will stagnate.

Do Timeshifting Viewers Pay Attention to commercials in playback?

If you missed our post last week, we shared our take on the new research showing internet viewership has caught up TV. On Tuesday Nielsen trumpteted new findings trying to debunk the myth that time-shifting DVR viewers are NOT skipping through the ads. The DVR is now in nearly 40 percent of U.S. homes. As Nielsen noted, it’s a double-edged sword for advertisers. On one hand, DVRs enable TV networks to hold on to viewers who use time-shifting to watch their favorite shows when it is convenient for them and who might otherwise seek alternate ways to watch programming – or not watch at all. On the other hand, DVRs allow viewers to skip content that doesn’t interest them, including commercials, potentially undermining TV’s longtime ad-supported business model. In its latest report on DVR usage, The Nielsen Company highlighted a number of key findings, including:
• Viewers do watch commercials on their DVRs. Among DVR homes, playback lifts commercial ratings by 44 percent among 18-49s after three days. Among all 18-49 year-old viewers DVR playback adds 16% to commercial ratings after three days
• More than 38% of DVR users are over age 45.
• When DVR playback is included, DVR households watch more primetime programming than non-DVR households.
• Overall, 49% of time-shifted primetime broadcast programming is played back the same day it was recorded, and 88% is played back within 3 days.
• DVR playback peaks at 9pm and 10pm.
Download the full report DVR Use in the U.S.

Here’s our take: While it’s true about 40 percent of US homes have DVRs, and we agree with Nielsen that DVR owners watch more TV and commercials overall than they would otherwise, and the contextual ads within popular shows are getting better and more seamless. However, Nielsen found the most popular time for playback mode is 8-9pm prime time. And as Don Seaman, director of communications analysis for the media agency MPG [] told the New York Times earlier this week, even if DVR users are theoretically watching commercials in playback mode, they’re not doing so with their undivided attention – they’re the ones most likely to be milti-taksing he said, -- texting, Facbooking etc during the commercials, using that as “down time” to do other things until the commercial is over.”

Why liberal arts still matter….entrepreneurship

If you think innovation is the province of those trained in engineering, computer science and high finance, we’d like to remind you that great ideas can come from anyone, anywhere any time, and we suggest your organization makes a full on effort in 2011 to expand its horizons beyond the Product Development Group. Peter Katopes, Interim President, of LaGuardia Community College in Queens, NY had a great Letter to the Editor in Tuesday’s New York Times that caught our attention.

Here’s the gist of it: “If it is true that the ‘jobs of the future’ will be different from those of the present and that we need the ‘best and the brightest minds’ to confront future challenges, then what could we better offer our young people than to train their minds through the liberal arts? To confront problems that have not been encountered before requires both a grounding in the past and the skills and understanding to make sense of today’s world.

As for the question of jobs, we hear much about the need for entrepreneurs in business and technology, but what we also need for future prosperity will be an entrepreneurship of the imagination, encouraged by a rigorous immersion in the liberal arts, which might lead to currently unthought-of solutions to currently unimagined problems.“
Amen Peter.

Have a safe, happy Holiday and let’s hit the ground running together in 2011.


Friday, December 17, 2010

Internet Viewership Catches Up to TV

Income still a factor in digital divide. Twitter use overstated?

While many have predicted that the Internet would inevitably become the most-watched communications medium some day, a new Forrester Research study confirms that day may be already here. The average U.S. household watches 13 hours weekly of traditional broadcast TV, equaling the same amount of hours spent online, according to Forrester. The report, released Monday, bases the findings on Forrester's survey of more than 30,000 consumers.

As you might expect, Gen Yers, ages 18 to 30, spent equal or more time with the Internet, and for the first time, Gen Xers ages 31 to 44 followed suit. Younger Boomers, ages 45 to 54, also now spend an equal amount of time with both media. Researchers said the amount of time spent watching TV has remained constant in the past five years, but Internet use has risen 121 percent since 2005.

Our take? It’s not so much the device, it’s the convenience factor of the web and the feeling of control. Consumers (and business decision makers) aren’t going to be told what to watch and when. They’ll consume it on their own terms--if you're relevant.

Look at mobile for instance. The percentage of mobile users who report texting on a monthly basis jumped from 61 percent from 54 percent, with an increasing amount of older users communicating beyond phone calls. In fact, one in four online mobile owners now log on to the mobile Internet. More than one-third of Gen Yers online mobile consumers connect at least monthly. About 200 million consumers now access their Facebook pages through a mobile device globally, according to Forrester.

The Forrester study found nearly one-quarter of U.S. interactive marketers plan to pilot mobile search programs in the next 12 months. Meanwhile, as Online Media Daily reported yesterday, the convenience of “search anywhere, anytime” has become a major attraction for mobile users. About 16 percent of online mobile users now use their mobile phone to check news, sports, or weather, and 13 percent look up directions or maps. When Forrester analyzed individuals who access the mobile Internet at least weekly, the numbers skyrocketed to 60 percent and 52 percent, respectively. Researchers indicate news, stocks and sports scores are what they’re seeking most although we suggest they’re not looking at music, event tickets and adult entertainment. Most telling for us is that the heaviest mobile users are most likely male and college-educated, and their average household income is more than $92,000.

So the web, for all its open access, democratization of the world’s information remains tilted toward the more affluent and better educated members of the populace. Internet usage still tilts toward the affluent and the well-educated.

Household income remains the greatest predictor of Internet use for Americans, according to a recent study by the Pew Research Center. In both their access to and use of the Internet and a suite of other technological devices and applications, households earning more than $75,000 a year significantly outpace lower-earning households, particularly those making less than $30,000 a year.

While 95 percent of high-income households use the Internet at home in some fashion, just 57 percent of the poorest do. The well-off are also more likely to own cellphones, computers, e-readers and other entertainment devices.

Unsurprisingly, the wealthy engage in online commerce and search for health information more often. However, while there is relatively little disparity across income brackets for consumption of television and print news sources, the richest households are more than twice as likely as the poorest to read online news.

“The correlation between income and participation in many Internet activities might be expected,” said Jim Jansen, a senior fellow at Pew. “What is surprising is the scale. It really shows the impact that income has on leveraging the advantages of the Internet.”

OMG! Who uses twitter?

A new study released this week by the Pew Research Center found that only 8 percent of Americans who were active on the Internet are enthusiastic users of twitter and only about 2 percent were extremely active/daily users. This compares to 74 percent of adult Americans who actively use the Internet. Among the highly active, they check in several times a day to see primarily what new content has been posted. As expected, the heaviest users were techies, marketers and young urbanites, but surprisingly, Latinos and African Americans were twice as likely as whites to use it – Pew did not have an explanation for that and that would sure balance the research pointing to the affluent hogging their share of the world’s bandwidth.

So, what’s all this mean for B2B marketers? It means your customers (and their bosses) need a compelling story about what makes your product/service so great. You need a story that works as well in words and pictures as it does in video form and on a mobile device. You need a story that’s stays fresh and relevant, but at the same time, can be told as well next Thursday or three weeks from today as it can right now.

Next time we’ll talk about thought leadership content that’s dynamic and real-time yet has sustainable shelf life. It ain’t easy, but what really is these days?


Tuesday, December 07, 2010

Ad spending to end 2010 on uptick. Modest growth projected for 2011

More ways to reach consumers. Harder to connect with them.

Up, down and sideways. How’s that for clarity? Forecasters speaking at yesterday’s UBS global media and communications conference in NYC predicted that 2010 would end with an increase ranging from 5 to 7 percent in worldwide ad spending over last year. For example, ad revenue for Time Warner's publishing unit was up 5 percent through September after declines of 10 percent and 22 percent in 2008 and 2009, respectively. The total number of ad pages industry-wide declined 1.6 percent through September after declines of 11.7 percent in 2008 and 25.6 percent in 2009, according to the Publishers Information Bureau.

Time Warner announced Monday a reorganization of its sales and marketing units to make it easier for marketers to buy across media properties and platforms. Industry wide U.S. media companies and ad companies have been benefiting from an uptick in spending on TV and Internet ads. Spending on TV ads in the U.S. is expected to climb 7.7 percent to $56.5 billion in 2010, while outlays on Internet ads are expected to grow 13.8 percent to $23.1 billion, according to Zenith Optimedia.

Spending on digital ads remains one of the bright spots in the business, ad executives say. GroupM said it expects global ad spending on Internet ads to overtake spending on newspaper ads at some point in 2012.

As for 2011, most forecasters at yesterday’s UBS media conference expected muted growth in 2011—something in the 4 to 5 percent range as there will not be a plethora of biannual or quadrennial sports/political events to give the ad economy a boost.

As Danielle Sacks noted in Fast Company recently, the explosion of search, geotargeting, the iPad, mobile apps and other platforms give marketers an unprecedented number of tools to work with to pinpoint messaging to target customers. But all those options—which we feel are still in the “experimental phase” for many media decision makers—mean more fragmented media budgets and fragmented consumer attention. Ironically, there have never been more ways to reach consumers, but it’s never been harder to connect with them.

Whether you’re a media owner, B2B marketer or analyst, here’s our take for 2011. The opportunities and dollars are out there—and so are your customers--but we’re in a very opportunistic short-term buying cycle. Customers are armed with more ammunition than ever before. They’re going to be extremely choosy before committing to “sweaty palms” purchasing decisions. As a result, we expect media buyers will be constantly tweaking and revising their budgets.

The days of the 12-month or 24-month “schedule” are fading fast in the rearview mirror. You can still get that business over the same time horizon, but you’re going to have to keep winning that business every couple of months.

If you’re in B2B then we advise you to follow the 4 Bs: Be fast. Be smart. Be agile. Be adaptable.