Media Updates July 2009

AOL targeting big marketers but could steal smaller ones
When AOL CEO Tim Armstrong unveils a strategy Friday that focuses on combining specialized content and display advertising, he plans to make AOL appealing to large consumer products companies with big marketing budgets like Procter & Gamble.
But he also is looking to gather the smaller local markets as well. I asked Guy Schuller, who oversees media strategy for Chrysler and other clients of interactive ad agency Organic Inc, what he sees for smaller marketers.
Schuller said that online display marketplace has traditionally not been easily accessible to small marketers. Launching a local campaign required specific media expertise, appropriate creative and the implementation of tracking. Local newspaper and television sites had some success with a packaged media + creative approach but ultimately targeting was a challenge and these buys tended to be inefficient, quantifying ROI was difficult. On the flip side, search was naturally set up to be extremely targeted and performance driven which made it an easy sell for local businesses.
“This has improved over the last few years with the resurgence of the Ad Networks and their targeting capabilities. The adoption of these advance targeting features and different buying models (Cost Per Acquisition) have helped to reduce waste and have provided ROI focused small marketers with an efficient way to use display. The only issue is that while these buys are geographically targeted (IP Address) they may not be contextually relevant from a local perspective which can affect the impact.
AOL seems to be trying to address this local display opportunity by investigating an auction based display sales approach, similar to search, and by acquiring content (Patch) and tools (Going) that can reach local audiences and deliver on relevancy. If they can be the leaders of the local space by making it as accessible and contextually relevant as possible, they can tap into a sizable, and potentially lucrative, marketplace.”
I also asked him about concerns that while there are billions of advertising moving from traditional advertising to online that companies will spend the money, or a smaller portion than they used to, on their own sites and marketing rather than on display, banner, etc. of third-parties.
“The continued shift in consumer behavior requires all marketers to communicate, at some level, within the digital environment. In turn marketers, large and small, are recognizing this change and investing in their own offerings and sites to keep up. Ultimately they still need to drive awareness and traffic to prove out that investment which results in more online marketing.
“This shift in turn puts pressure on publishers to figure out a way to service and monetize thousands of small buys in addition to catering to large national advertisers. The search vendors, especially Google, have adapted well and have reaped the benefits of selling to both national and local marketers.”

Publisher collusion fraud rises
Click Forensics says that the overall industry average click fraud rate was 12.7 percent. That’s down from 13.8 percent for Q1 2009 and from the 16.2 percent rate reported for Q2 2008.
According to the company’s industry pay-per-click fraud figures though, click fraud traffic from sophisticated sources and scripted programs rose again in Q2 2009. This included a rise in the incidents of publisher collusion fraud on ad networks. Publisher collusion fraud occurs when online publishers use rotating IP-addresses or botnets to click ads on their own sites in order to generate inflated commissions from unprotected ad networks. Ad networks have difficultly differentiating such attacks from valid clicks.
“The increased diligence of online ad networks to detect and block invalid traffic sources has contributed to the decline in the overall click fraud rate this quarter,” Tom Cuthbert, president of Click Forensics, said in a statement. “However, increasingly sophisticated attacks, such as publisher collusion fraud, continue to be a concern. Ad networks should pay close attention to such threats in the coming months.”
Now in its fourth year, the Click Fraud Index provides statistically significant industry PPC data collected from online advertising campaigns for both large and small advertisers across all leading search engines. Traffic across more than 300 ad networks is also reflected in the data.

News Corp.’s digital future
Less than six months into his new role as head of News Corp. (NWSA), digital chief Jon Miller has no acquisitions planned. Instead, he said Thursday, he’s going to seed innovation from inside the company and spoke of “putting the house in order” first.
While he didn’t comment on News Corp.’s rumored plans to release a kindle-like digital device (News Corp. has denied that it will) he also talked at length about coming platform shifts and how industries will be experimenting with business models into the fall and figuring out how to adapt them.
Miller expressed faith in the potential for “third screens” like e-readers, to monetize content. He admitted to paying for content on his Kindle that he would be reluctant to pay for online.
But, he said, content producers have to act quickly to leverage their assets. “While you have that market position you need to move,” he said.
Miller believes that media conglomerates like News Corp. and Viacom (VIA.B) have an advantage because of their ability to both produce and distribute content.
“You have to look at how you get different pieces of the pie,” he said, offering online video site Hulu as an example. The site is a joint venture between News Corp., NBC and Disney.
Miller is becoming “more convinced fundamental changes are taking place” in the advertising industry. As digital media makes marketing more efficient, thanks to behavioral targeting and exploding supply, he said those budgets will shrink. Advertising spending online is lagging behind the time consumers spend with media online.
“You don’t have as much room for everyone to take cuts,” he explained.
Miller sees that pool of digital ad dollars splitting into two categories: premium experiences and commoditized inventory. This second tier can become more valuable, however, through behavioral targeting, which Miller says will provide “a lift out of what otherwise is a big undifferentiated environment.”
Premium content meanwhile will benefit as more brand advertising migrates online, Miller predicts. While 9% of advertising has moved online, brand advertising accounts for only a third. News Corp. is preparing its “processes and environments” for that coming shift.
Another focus for Miller is revitalizing MySpace. In May, the social networking site News Corp. acquired in 2005 for $580 million was eclipsed by rival Facebook in the number of U.S. visitors. Last month the company laid off 30% of its staff after installing new leadership in April.
Profits have fallen short of expectations and in the most recent quarter, News Corp. reported a significant drop in revenue at the unit that includes MySpace. The company reports fourth-quarter earnings on August 5.
Miller has compared his strategy to what Tim Armstrong, his successor as chief of AOL, also faces. It’s about going back to the core of the brand, he said, “and focusing on how to make it relevant today.” That also means concentrating on a few things, he said. “You can’t do everything even though you want to.”
To accomplish this, Miller is committed to building small teams that work on specific product areas. “We have to develop specialized areas and let them win,” he said. “Only then can you broaden out.”
Figuring out which specialized areas to target involves going after new behaviors, rather than trying to play catch-up, he said, mentioning video and games. Awed by the time users spend online playing games, Miller claimed, “Myspace will be an even better gaming platform in the future.”

Microsoft and Yahoo struggle to catch up with Google
Another week, another demonstration of Google’s dominance. While Microsoft and Yahoo have posted poor Q2 results this week, with online ad revenues down by 14% and 16% respectively, last week Google revealed its revenues were up 3% for the quarter.
It’s clear that, despite the economic slowdown, Mountain View’s finest are still doing something right. That something, of course, is search, which these result demonstrate the others are still not making work.
The announcements of Yahoo’s and Microsoft’s online revenue shortfalls has inevitably led to more discussion over whether they’ll join forces – a saga that has been dragging on for almost 18 months now. Clearly, Microsoft will want to see how Bing affects its bottom line first. It will be encouraged by the reaction among the industry which, for the most part, has looked on Bing favourably.
However, any market share increase has so far been minimal. Microsoft hopes new initiatives will help drive this, of course, not least its forthcoming ad-funded online Office Suite. It’s move in this space was inevitable due to the increasing popularity of free offerings such as Open Office and Google Docs, so it’ll be interesting to see how Bing and other online ad services will be integrated.
Perhaps most worrying for Microsoft and Yahoo is Google’s move into the multi-million-pound ad exchange sector. This is an area in which Yahoo, with Right Media, is an established player but will be looking over its shoulder with concern. Google CEO Eric Schmidt has said it’s the big focus for the company, but Microsoft has said its own exchange, currently being tested, is still a couple of years off. It’s a potential goldmine for any company that gets it right.
Microsoft and Yahoo have both undergone significant changes this past year, not least redundancies and launches like Yahoo’s new home page. However, it’s clear that both still have a long way to go before they start worrying Google.

Nielsen: Kids Flock to Web
Nielsen Online has confirmed something that most parents know all too well: kids are going online in droves—at a faster rate than the general Web population—and are spending more entertainment time with digital media.Over the past five years, the kids' Web universe has swelled by 18 percent, compared to a 10 percent growth rate seen in the relatively mature general Web population, per Nielsen. As of May, the kids 2-11 audience had reached 16 million, or 9.5 percent of the active online universe.That growth spurt is particularly noteworthy since it has taken place during a period in which the number of kids under 14 in the U.S. declined by 1 percent—from July 2004 to July 2009, per the U.S. Census Bureau.But even more impressive is this group's heavy surge in usage when compared to the rest of the Web. Kids are all but living online. Time spent among kids has soared by 63 percent over the past five years, while overall time spent across all age groups is up 36 percent, per Nielsen.According to Nielsen, kids 2-11 spent nearly seven hours online per month five years ago vs. 11 hours a month in 2009, with boys spending slightly more time on average than girls. That disparity is perhaps most evident in online video viewing, as boys accounted for 61 percent of video streams among kids on the Web.
However, the kids' online video landscape—once dominated by TV players Nickelodeon, Cartoon Network and Disney—is changing, as options for kids and digital media buyers abound.

EyeWonder's PageMorph 'Manipulates' Site Content
EyeWonder debuted PageMorph, a homepage-takeover ad format that manipulates the page upon which it sites by apparently shrinking, crumpling, stretching or affecting a real-time screenshot of the content with other means.
"Publishers are looking to create premium placements to sell to advertisers while also keeping ad clutter off their home pages," explained VP-Enterprise Solutions Erin Quist of EyeWonder. "Advertisers are seeking online ad space that will give their brands extensive reach and exposure to large audiences."
Via agency PLAN.NET, BMW Germany has experimented with PageMorph ad placements on the homepage of MotorSport-Total.com. View a demo of the effort.
EyeWonder claims such interactive takeover ads, which appear to interact with the content a user is actually interested in, enjoy higher-than-average interaction times — with some seeing up to a minute of engagement.
A study by the Interactive Advertising Bureau and PricewaterhouseCoopers found rich media ads, such as those vaunted by EyeWonder, accounted for 7% of online ad spend in the first half of '08.
EyeWonder hosts an open-source Universal In-Stream Framework, which works agnostically across most ad-serving providers and supports players built in Adobe Flash, Microsoft Silverlight and Akamai's Media Framework, according to MediaPost.
The Framework also supports the IAB's Video Ad Serving Template guidelines.
Ads that "interact" with content pages grew popular in late 2008, when in September an ad for Wario Land: Shake It! appeared on YouTube as an ordinary video. When played, it wreaked havoc on the entire page.
Last November and with the assistance of Eyeblaster, 20th Century Fox ran promotions for feature film Marley & Me on MySpace.com. In them, Marley — the canine protagonist — interacts with both banner ads and the MySpace homepage.
Finally, December saw an iPod touch ad in which Yahoo Games' homepage danced when the iPod started playing music.

Two Tribal DDB Vets Join Digitas
Digitas is bringing former Tribal DDB exec Liz Ross aboard as chief growth officer. It has also hired current Tribal global chief strategic officer and president of Europe, Middle East and Africa regions Stephan Beringer as president of Digitas Global. In her new role, Ross is tasked with growing Digitas' U.S. business with existing and new clients, as well as fostering collaboration with fellow Publicis Groupe agencies. Beringer will oversee Digitas' non-U.S. operations from London. The hires are part of a management restructuring at Digitas that expands chief marketing officer Seth Solomons' portfolio to include oversight of new business, strategy and analytics, media, technology and public relations. He also leads the Samsung and Delta relationships. Global creative chief Mark Beeching will oversee creative, planning and branded entertainment unit The Third Act.Ross will report to Solomons and plans to begin work next month. "Everybody says they're changing or they're the new model and I don't know if anybody's cracked it," said Ross, who will remain based in Chicago. "What I loved about Digitas is the base is there, the fundamentals around media and analytics. That stuff is so hard to build." Digitas has needed to deal with a dreadful year for two of its largest clients, American Express and General Motors. Solomons said changes in the media landscape give Digitas opportunities to expand its role with clients at a time of flux. "She's led an organization that's proven to win," he said. "She's very focused on helping clients build business and she's a big conceptual creative thinker." In March, Ross left Tribal DDB, where she was U.S. CEO. Global CEO Paul Gunning took her place, saying the Omnicom Group shop needed more focus on structural efficiencies.