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My, my … the ups and downs that giants may have to endure when they buy a smaller entity.

If you ever wanted to feel sorry for Larry Page and Sergey Brin, owners of Google, be prepared to feel so now. They hare finding life after buying youTube for $1.65 billion a lot more difficult than they expected, and certainly more so than they are publicy admitting now. The search engine goliath has gone to CBS, Viacom, Time Warner, NBC Universal, News Corp. and others offering tens of millions of dollars in upfront money for the right to broadcast their video content legally on YouTube.

Google CEO Eric Schmidt maintains, with great professional calm, that:

“so far people like [our] message; they are now trying to figure out what to do about it – should they, should they not, under what terms, and those sort of things.”

The fact is, though, that Google needs to agree terms with these particular “people”, as desperately as a fish needs water – or else its expensive video-carrying acquisition will turn out to be as attractive a piece of property as Napster after it was crushed by Big Music litigation.

Traditional Big Media companies are feeling their position of power here. But they’re also being canny – YouTube’s size and loyal user base still strikes them as awesome, and a bit frightening. The industry is reeling over the impact of just one piece of video in particular posted on YouTube. It’s just an ad, designed as such, by ad agency Ogilvy and Mather’s Toronto shop for Unilever’s Dove soap product, but it’s taken off virally with all the energy of a runaway train (or an influenza epidemic, if you object to mixed metaphors).

The 75-second video is pure fantasy, showing a young woman “evolving” – but VERY fast, – into a gorgeous supermodel after using Dove – and it has driven so much traffic to Dove’s site CampaignforRealBeauty.com, that the traffic measurement firm Alexa.com assesses it as three times more effective than the expensive television ad for Dove that aired during last year’s Super Bowl last year,

So YouTube repeatedly demonstrates its reach, but content-providers feel they remain king, and one executive has described to the Financial Times the blackmail-type weapons they are prepared to use, saying:

“The fact is that in three to six months every media company’s going to decide that their stuff gets taken down or that they get paid for it.” It’s like “a big chessboard,” he added.

Oh, the ups and downs, steps forward and back in this kind of e-deal. They’re maybe proving too much for some. Buyers’ remorse sounds like it has set in at NBC Universal, who made a similar acquisition, though not quite as massive as googles’, In march this year they bought iVillage, the women’s networking site pioneered by the doyenne of New York’s Silicone Alley, Candice Carpenter. They paid the then big-sounding number, $600 million – this after having put money into iVillage once before and then withdrawing. This time around they are wondering all over again if it’s worth it.

Jeffrey Immelt, CEO of NBC’s owners, candidly told employees earlier this week:

“You know, we probably overpaid for iVillage,”

I can be a bit glib, and even flip, sometimes. I admit it.

My confessional mode is brought on by Microsoft’s ad campaign starting today (Friday Oct 27, 2006) trying once again to boost their search engine capacity. And what I have to confess is that in a recent article. I dismissively referred to MSN Search as appearing really low on the totem pole of engines, especially when it comes to directing traffic toward internet shopping sites. My fine editors here at E-Commerce Partners rightly answered my own cheap rhetorical question “does anyone remember MSN as a search engine? – at all?” with a resounding “Yes. We do”.

The editors expanded by saying:

“Since we are partly a search marketing company we are well aware that MSN is part of the big 3 of search, though a very small part”

Quite right. And now Microsoft is trying hard to increase that “very small part” at the expense of the other big Two, Google and Yahoo.

Its ad, created by the advertising agency McCann WorldGroup, is promoting Windows Live, which formally launched in September and is intended to eventually replace MSN Search — itself less than two years old — as Microsoft’s flagship in the search business.

They have a ways to go. Despite a massive, expensive campaign last year – said at the time to be the company’s biggest media-buying effort since the launch of the MSN “Butterfly” branding in 2000 – MSN Search just hasn’t been able to gain any real traction with consumers. Last month, Microsoft sites garnered 11.9% of searches — down from 15.6% the year before, according to the digital ratings-measurement company comScore. Google, meanwhile, was satisfyingly growing its market share to 45.1% last month — up from 37.6% one year ago.

Microsoft and McCann have decided to place the ad, in full-page form, in influential opinion-shaping print venues such as The New York Times, The Wall Street Journal, USA Today, the San Francisco Chronicle, The Seattle Times, the Seattle Post-Intelligencer and the San Jose Mercury News.

They take pains to emphasize features like Windows Live’s image search, local search, and mapping tools. Frankly, these don’t add up to too innovative a package to me.

But the confessional mode is what caught my eye most – and prompted my wanting to report on it. The ad says openly:

“Before we begin, let us state the obvious. We’re late to the game. We admit it. But instead of shrugging our shoulders and becoming a footnote in search history, we’ve decided to write a few new chapters.”

I guess it could work. Avis car-rental has made a fairly successful fetish out of being No 2. Can Bill Gates win out by admitting to being No 3?

Well of course it’s a sign of the times that NBC Universal decided to cut back on its expensive early primetime scripted comedies – and free resources up, not just for more, cheaper so-called reality programming and the like, but also for a whole new drive in web-based material. The more digitally aware observers of “old media” have simply been surprised it took so long to start happening at the national TV network level.

I guess the clearest expression of the huge turnaround upon which the General Electric-owned network is now embarked, like a slow-moving oil tanker, came from the News president at NBC, Steve Capus:

“We’ve been a TV business that dabbles in digital. Now, we’re positioning as a news content-production center going forward that happens to do television.”

But in a way this is all old news – it’s been incontrovertibly obvious for quite a while that the TV-as-family-hearth has gone the way of the fire-in-the-cave, and society’s new flickering writing on the wall is actually on the desk-top, or the video iPod, or the video-capable cell-phone.

But one other device needs to be mentioned, plus one associated media development (announced the same day as NBC’s massive cuts, as it happens) stands out as a bellwether of enormous change – even though it may not yet be generally recognized as such.

Neilsen Media Research, the company previously best known for traditional TV audience measurement, now plans track consumer use, for video games.

They are launching an electronic rating service to track who is playing what game. The data will be collected from 10,000 sample households, just as for Nielsen’s famous television ratings.

Subscribers to their service, mainly advertisers and video game makers, will get a weekly ratings reports, and charts showing the most popular games, as well as information about the type of console and the genre of the game.

Their system, set for launch by the middle of next year, is designed to work on the current and next-generation line of consoles from Microsoft., Sony Corp. and Nintendo.

Reaching the lucrative demographic of video game players has been something of a holy grail in the industry, and ads have of course been appearing within games for some time. But now, according to Nielsen, advertisers will get a precise way to measure their reach.

Jeff Herrmann, vice president of Nielsen’s wireless and interactive services division, said he expects the system will drive advertising investment and help to convert video game advertising “from discretionary, to essential”.

The ad you might have seen in a break between 8 and 9pm on NBC, you may well see popping up any time of the day or night when you’re intent on a battle or race on your new PS3 from Sony.

Google’s extraordinarily costly acquisition of YouTube.com has disturbed many communications industry observers.

“Just a vast collection of three-minute-and-under amateur videos”

was how the expensive purchase was decried to me by one professional cynic

The not-quite-one-year-old site’s video-sharing platform is undoubtedly impressive. It’s clean, fast and easy to use, just like its new parent’s search engine. But is it worth $1.65 billion? Merrill Lynch, who we might expect to know the value of everything, have estimated that Google wouldn’t have paid more than $100 million for the technology alone. It’s the vast audience, about 34 million, that Google was clearly coughing up for.

To many, Rupert Murdoch’s News International seemed profligate when last year it paid $580 million (now a rather paltry sum, don’t you think?) for MySpace.com. I recall an oddly slow-witted British reporter asking Murdoch how he possibly intended to make money out of a web venue where young people simply hung out virtually and shared their interests. There was a memorable pause before the down-to-earth magnate said simply: “Selling advertising”. (emphasis added by Admin)

So look out for Google placing 15- and 30-second pre-roll commercials onto those otherwise commercially innocent videos at YouTube. And for the largely youthful audience deciding whether it’s riled or entertained by this intrusion.

But meanwhile, another dimension to YouTube, less appealing than its vast user-base, continues to stimulate skepticism. “Remember Napster” is the negative cry being heard. That turn-of the-century music-sharing site was of course beaten into retreat – only to be copied later by the corporate music giants, in an insincere, and naturally fee-charging, form of flattery). And the beating came in the shape of aggressive copyright suits.

Now Google is being similarly threatened, and by no less a figure than the gargantuan Time Warner’s boss, Dick Parsons. He told the British newspaper The Guardian that his group of traditional media companies would pursue its copyright complaints against the video- sharing that YouTube practices.

The Google acquisition has not altered TW’s stance, previously expressed to You Tube before the purchase, according to Mr Parsons.

“We were going to pursue it anyway,” he said. “If you let one thing ignore your rights as an owner it makes it much more difficult to defend those rights when the next guy comes along.”

But Parsons expressed a rather more moderate tone than we heard last month from Doug Morris, the chief executive of Universal Music, who attacked YouTube (and also MySpace) as “copyright infringers” during an investors’ conference. Time Warner’s man said:

“We’d like to have our content displayed on these platforms, but on a basis that it respects our rights as the owner of that content.”

Incidentally, Warner Music, which is no longer part of Time Warner, agreed to make its music video library available to YouTube this month in one of the site’s earliest commercial agreements. The deal was followed by agreements with Sony BMG and CBS television.

And all the while, naturally enough, YouTube founder Chad Hurley is seeking to downplay people’s copyright fears.

“We’re committed to developing tools to identify the content and monetize it so they [that is, content owners] can have a new outlet for their content.”

If you want to assess the health of any commercial media mode, then it’s obviously wise to start with that most handy yardstick – advertising revenue. Worldwide, the current growth in advertisers’ spending on the internet, rather than any other mode, continues to speak of the web’s capacity for altering the known universe.

The online marketing consultants Zenith Optimedia produce quarterly tracking studies of advertising spending on a global scale. Their latest survey indicates that the market share of advertising spending that goes to internet sites will, in the next year, break the double-digit barrier in at least two countries – the UK (at 12.9%) and Sweden (at 10.5%).

By 2008 some other leading national markets that will break the double-digit barrier in online ad spending, according to the study, include Australia, Israel, Japan, Norway, South Korea and Taiwan.

The global picture of rapid increase is clear. The report says:

“The internet’s share of global ad expenditure was 4.7 percent in 2005. We predict it will be 5.7 percent in 2006 and 7.3 percent in 2008. At this rate the internet’s ad share should reach double-digits worldwide by 2011.”

Interestingly, Zenith Optimedia say that it’s smaller advertisers that account for much of the growth. They are “embracing the affordability and targeting capabilities” of online advertising.

It turns out that big companies are among the ones who are slowest to change.

“Advertisers in the top ten categories have been cautious about moving into Internet advertising,”

according to the survey. It finds that between 2001 and 2005 the proportion of the biggest firms’ budgets allocated to the Internet increased from 2.2 percent to 3.2 percent. This was at a time when the Internet’s share of total ad expenditure rose from 2.5 percent to 4.7 percent.

“This of course means that advertisers from smaller categories have been spending more than average on internet advertising, which is relatively cheap and can be targeted very effectively,” the agency notes. “This makes it suitable for smaller advertisers, for some of which mass-media campaigns would be too expensive and have too much wastage. The Internet therefore encourages these advertisers to spend more than they would otherwise have done, and is not just cannibalizing ad expenditure that would have gone elsewhere.”

In terms of overall media, the agency now expects global ad spending will grow 6.0 percent this year, 5.4 percent next year and 5.9 percent in 2008. The U.S. is poised to expand at even more moderate rates: 5.2 percent this year; 4.2 percent in 2007; and 4.3 percent in 2008.

In relative terms toward other media, it all means that the internet – already poised to overtake the ad revenue share of outdoor (billboard) advertising worldwide – will soon be outranking radio.

That just leaves newspapers, magazines, and television to beat.

It’s pessimistic enough for Yahoo! that Chief Executive Terry Semel had to disclose to a recent Goldman Sachs conference that his company’s advertising revenue was tapering off compared with expectations. But now, just as gloomily, has come some previously unheard-of news – unheard of across only 11 years of the portal’s existence, admittedly – that Yahoo will be shutting down its US offices over the Christmas holidays. Most of the 10,500 staff will have to use up their vacations to get paid time-off.

What lies behind Yahoo’s new cost-cutting cautiousness is a trend that’s getting more evident by the day in the internet’s financial life.

Closely-focused search advertising is making ever-increasing inroads against the older and still more familiar-looking, generic, display advertising.

Inevitably (since its big rival, Google now rules the roost so unbeatably in internet searching) Yahoo gets to suffer. A new survey from the originally Australian, now New York-based web commerce analysts Hitwise shows that ads on Google send visitors to internet shopping sites at three times the rate that Yahoo achieves – that is at 4.69% of the shopping sites sector’s traffic, compared with Google’s share, which is 14.93%

Near the bottom of the pile, incidentally, is Microsoft’s MSN (- Do you remember MSN as a search engine? At all? -)*. MSN manages to influence only about half the number of shoppers that Yahoo does.

Indeed, very significantly, MSN’s placing (at 2.33%) is below the leader in an important rising category to watch. That category is of course that of social networking sites, and in the lead here for directing visitors to sites where they can shop is, unsurprisingly … MySpace.com. Although still rather new on the scene, MySpace sends to shopping sites approximately 2.5% of their visitors, almost double the proportion it was sending only six months ago. It is sending people to, in descending order of frequency, eBay, Amazon, Gateway, Walmart and Craigslist..

This all fits with the picture of MySpace as a web-marketing resource of rampaging growth. Hitwise calculates the overall market share of visits to MySpace has increased by a remarkable 67% in those same six months.

Oh – and away from numbers, but maybe still indicating some significant market expansion – guess who’s now got herself a MySpace page? None other than Senator Hillary Rodham Clinton

*admin note – yes we do.  since we are partly a search marketing company we are well aware that MSN is part of the big 3 of search, though a very small part)

technorati tags: yahoo | yahoo earnings

In this space I’ve repeatedly gone on (added by admin: here & here are good examples) about how any self-respecting website seems to need video these days – and that applies to e-commerce sites perhaps even more than many others.

I’m a little surprised at myself but it turns out I was one of the first people to use the word “vlog” in public. I was writing about the onward rush of tsunami images captured by “citizen” video cameras and shared instantly and internationally on the web – and taken up by the world’s TV news networks. Since then, of course we’ve seem the veritable tsunami of YouTube, that combines the social networking of MySpace with the visual stimulation of video, of all kinds, being posted for all to share.

So viewer expectations are growing, taking the accessible presence of moving pictures for granted at many a website, and being frustrated by slow loading times and the other irritations all too commonly associated with video.

Inevitably, big outfits with an institutional flavor are crowding into the game – which has previously looked somewhat amateur, often deliberately and defiantly so.

Current TV, the cable network founded by former Vice President Al Gore is now starting a joint venture with Yahoo! – to be called (with stunning originality) the Yahoo Current Network.

It will have four channels, one of them named (again with an extraordinarily imaginativeness) “Current Buzz”. This will showcase the most popular vlogging items, and will be run by Jon Stewart’s one-time The Daily Show producer Madeleine Smithberg. Her unenviable task is to ensure both quality and a high click-rate, in videos submitted by her target demographic audience themselves, aged 18-24, while at the same time screening out the inevitable offensive stuff.

The other three other channels will offer material favoring sports, cars and travel. A total of eight channels are expected to be offered by the end of 2007. Each channel will carry one segment produced in-house and 8 to 10 user-created pieces each day.

As for raisin revenue, Yahoo Current is offering (in addition to 15- and 30-second video pre-roll ads) standard banners and sponsorship opportunities on the Yahoo Current Network. They are currently in talks with existing, separate Yahoo and Current TV advertisers and they expect to announce advertisers for the new network soon.

Some prospective advertisers are obviously interested in creating their own viral video campaigns designed specifically for the attractively youthful audience that’s being targeted, while others favor more traditional branding spots. Sponsorship will initially be offered across all the site’s channels as a package, but it may later resolve into channel-specific buying opportunities.

Until now Yahoo has seemed to watch like deer-in-headlamps as YouTube has built its young, twenty million-strong audience by using video. The veteran web company must be green with envy now that Wall Street reports are putting YouTube’s value, even while revenue-earning has been the last thing on its social-networking mind, at over one billion dollars if it were snapped up by the kind of corporate interests that now have their eye on it.

technorati tags: current tv | currentv | yahoo current network

Every year about now the Online Publishers Association does something really useful – for itself and for the rest of us. It commissions a major survey of its market (and often of its potential markets too, sensibly enough).

This year, an observational study conducted for them by Ball State University’s Center For Media Design based in Indiana got the Association thinking – mostly about crossing the boundaries between different media, boundaries that are getting ever more permeable anyway.

Surprising nobody, I guess, the survey (in an overall collection called Middletown Media Studies, and specifically entitled in this instance “A Day in The Life”) shows that reaching consumers in their homes and workplaces is best done, concertedly, through more than one medium.

(Available in full as a PDF)

Take television for instance. The Center’s researchers confirmed the tried and trusted notion that while TV can at its most successful (and at the most-viewed points of the day, in the evening) achieve a reach of up to 91 percent of the available audience, much more frequently it obviously sits in the lower reach percentages. But say you’re a communicator reaching just 41 percent through TV, you can increase that reach by up to an additional 23 percentage points – if you combine your message with linked material on the web.

If you’re a magazine publisher, employing the web for a joint thrust into the marketplace pays off even more, at least doubling, or in some cases even quadrupling the reach. The “A Day in the Life” respondents who read a magazine in the evening leapt from 31 percent to 72 percent if they had seen associated web material.

OPA members like the glossy magazine producers Conde Nast – one of the early leaders in blending the on-line with offline – are already acting on the behavioral information this survey lays out. They are providing successful cross-media purchasing programs for their advertisers, and so leveraging their magazine properties in virtual lockstep with their websites. TV companies like CBS are also building their online platform as a venue that advertisers can buy space on in combination with on-air spot-buying, and reach more viewers/visitors accordingly.

Some of the wrinkly little detail of the survey is very revealing. Along with an increasing number of audience measurement sources, it counteracts that hard-to-crumble stereotype of web-users as mainly young men. The increasingly homogeneous nature of the audience is well demonstrated – what OPA President Pam Horan calls “the mark of a true mass medium”.

And every bit as important as WHO makes up the audience is the question of WHERE it is.

Television may inevitably rank No. 1 in home reach for all age and/gender groups. But the survey shows the web to be the only medium to rank No. 1 or No. 2 at both home and work. And of course it’s the undisputed No. 1 whenever the consumer is at work – whether employers like it or not.

technorati tags: online publishers association | a day in the life | opa

The advertising industry is getting more and more excited – when does it get anything else? – about prospects for a big new venue to place ads and get revenue. That’s something to get excited about, of course, if your life is inventing or placing ads.

Among many futurist movies, the Stephen Spielberg / Tom Cruise collaboration “Minority Report” conjured up an entire environment filled with screens of one kind or another – any flat or even curved surface will do – for the purpose of bringing us messages, usually commercial in nature. And sure enough that vision is coming true.

The venue that’s currently enthusing ad-people is what’s being called in the business “place-based television” or “out-of-home networks”. It’s essentially a subdivision of the perennial form of advertising, older than Madison Avenue itself – the “outdoor media” business (billboards and placards, to you and me) – but one which uses all the bells and whistles, not to mention light-emitting diodes where possible, of the digital age. And incidentally, it happens to find itself technically indoors, most of the time.

Ten new ventures in this field are reckoned to be starting every month, with a total of 700 having gotten established since 2002. According to a new report from a Westport, Connecticut-based marketing consultants Profitable Channels these viewing opportunities are fast appearing in stores, in atriums, lobbies, health clubs, coffee shops and the like, and they now account for $1.2 billion of the nation’s advertising expenditure. That puts them, in aggregate, in the same league as a major TV network daypart.

New opportunities for the almost literally captive audience that they can command keep occurring to entrepreneurs. Why not have a screen in the rest-room of a transit station, or in a high-rise elevator, or by the pumps at a gas-station?

Big stores are still the most obvious, and for now the most rewarding site-choices. Outfits like the In-Store Broadcasting Network, Premiere Retail Networks (PRN), and SignStorey represent the fastest growth and greatest potential reach. In-store networks may currently be available only in the country’s top 25 advertising markets, but Profitable Channels estimates they have the potential to reach a massive 93 percent of the U.S. population. This is of course huge – and for advertising analysts it makes the sector that much more attractive than my own frequently voiced enthusiasm – video marketing to mobile devices, which I’ll readily admit will take a long time to be in the hands of 93 per cent of Americans!

Profitable Channels partner, and author of the report, Stephen Diorio also teaches marketing at the George Washington University. He says that his assessments of the size of the out-of-home sector are deliberately pitched conservatively, and that growth may be even faster than he formally estimates:

“It’s a lot like when all the dot.coms were coming out. Anyone with a venue and a good audience is launching something and calling it media.”

But the seriousness of the sector is being attested to elsewhere. Not far from Profitable Channels, another set of analysts PQ Media operating out of Stamford, CT are soon to bring out their own report. So far, says Leo Kivijarv, vice president for research,

“Anecdotally, what we’ve heard is there is a difficulty selling this stuff to advertisers the first time, but once people try digital out-of-home, they are re-upping at a very high rate because they are seeing a stronger ROI.”

And maybe a sure sign of a communications trend that’s unstoppable, the sector now has its own trade association, the Out-of-Home Video Advertising Bureau, or OHVAB.

technorati tags: out of home video advertising | ohvab

By turns the ruling giant Google appears disappointing or downright traitorous – at least to believers in the internet as a tool for democracy.

Not content with appearing to kow-tow to Chinese authorities in return for operating within their Communist/Capitalist totalitarianism, and in the US kow-towing also to the FBI in its efforts to track users’ searches (in the interests allegedly of hunting child pornographers) Google this weekend decided to turn over records to the Brazilian government about users of its idiosyncratic service Orkut. This social-networking set of sites in Portuguese quickly found a huge user-base in Brazil. And it’s now, in light of its corporate owners’ collaboration with government, looking very much at risk of losing that valuable base.

Web groups that allegedly encourage racism and homophobia, and other distasteful though not always illegal positions, are known to often use Orkut, as they would since they want to reach a lot of young Brazilians. And The Brazilian government is investigating them. To do so they obviously want records and Google evidently believes, hewing more to local laws and conventions than to anything as business-threatening as its own home-country’s constitutional First Amendment, believes it’s just fine to cooperate.

It does seem, incidentally, that the nasty groups are limited at least to nasty opinions and not acts. But because even their views open them up to possible prosecution under Brazilian law, the government wants their Internet Protocol addresses, e-mail addresses and other personally identifying information that is given whenever anyone signs up for Orkut. Under the not-terribly-onerous throat of being fined up to $23,000 a day, Google agreed to comply.

And in trying to excuse this compliance, Google has opted for some mealymouthed sophistry that’s simply not worthy of the “do no evil” image the service once tried to cultivate.

“What they [the Brazilian authorities] are asking for is not billions of pages”, said Nicole Wong, Google’s associate general counsel. “In most cases, it’s relatively discrete – small and narrow.”

If you’re a Brazilian who’s thrown in the slammer because of posting something offensive on a discussion site, you might just acknowledge that it could be a narrow matter, but not that its small one.

Internet technology being what it is, users are fighting back. New services are mushrooming aimed at foiling official efforts to attach individuals’ identities to their supposedly anonymous Web activities. There have been “anonymizers” for a while now who provide fake IP addresses, and there is one new piece of software called “Track Me Not” that sends search engines nonsensical queries at random, just to confuse any organized probe trying to attempts to analyze users’ data.

“Track Me Not” was developed by New York University associate professor Helen Nissembaum and Daniel Howe, of the NYU Media Research Lab, as a Firefox extension.

“We are disturbed by the idea that search inquiries are systematically monitored and stored by corporations like AOL, Yahoo!, Google, etc. and may even be available to third parties,” they write on a site explaining their software.

The mechanisms may be very high-tech and of the moment – but the principles involved, and the back-and-forth struggle over them, go right back to 1644 and poet John Milton’s robust defense of a free press in “Areopagitica”. For the original true believers in the Web as a democratic engine, the latest Google betrayal may seem more like Milton’s “Paradise Lost”.