Media Update - April 2010

Online Ads Show Signs of Pickup

Signs of life are returning to the Internet-ad business after the harshest year since 2002, with a new report on Wednesday showing that U.S. online-ad spending started to pick up again during the second half of 2009.

U.S. online-ad spending reached $6.3 billion during the fourth quarter of 2009—the largest quarter on record for Internet advertising, according to a report released by PricewaterhouseCoopers and the Interactive Advertising Bureau, a trade group of media and technology companies. Spending during the fourth quarter increased 2.6% from the same period in 2008.

"The worst of the economic impact on Internet advertising is over and the seeds of growth have been planted," said David Silverman, partner at PricewaterhouseCoopers.

Fourth-quarter growth in 2009 capped a bleak year in the digital-media business, where total online-ad spending dropped 3.4% to $22.7 billion, according to the report. That yearly decline marked the first drop in the online-ad market since 2002, when online-ad spending fell 16% following the burst of the dot-com bubble.

Some online-ad formats fared better than others. Search remains the largest online-ad format and continues to take share of the U.S. online-ad market, making up 47 % of 2009 ad revenue, up from 45% in 2008. Search-ad spending increased 1% in 2009 to $10.7 billion compared with 2008.

Spending on display ads, the graphical ads that border Web sites, increased 4% to $8 billion in 2009. Spending on online video grew 38% in 2009 to $1 billion.

But some ad formats experienced sharp declines. Ad spending on classifieds dropped 29% in 2009 to $2.3 billion. Ad spending on lead generation dropped 14% to $1.5 billion, and email-ad revenue dropped 28% to $292 million.

Compared with the broader media business, the Internet escaped the economic downturn relatively unscathed. Total ad spending declined 12.3% in 2009 to $125.3 billion compared to 2008,, according to WPP's ad-tracker Kantar Media.
Several forecasters predict that online ad spending will experience double-digit growth this year and continue to take share from traditional media, like print and TV. Online ad spending will grow 5.5% this year to $23.6 billion, according to research firm eMarketer.
While online advertising is a growing piece of the total advertising business, several impediments remain before the amount of dollars marketers spend online matches the amount of time consumers spend on the Internet, industry experts say. Internet advertising lacks strong measurement standards and remains too complicated to buy, says Terence Kawaja, managing director of investment bank GCA Savvian Advisors. "What is needed in the interactive industry is some revolutionary thinking," Mr. Kawaja says.



Burst Acquires U.K. Network OTP Media
Burst Media is set to grow in Britain thanks to its acquisition of OTP media, an ad network based in the U.K.
OTP boasts a strong presence in verticals like parenting, automotive, sport, food and entertainment, making it an attractive acquisition for Burlington, Mass.-based Burst, which was already the 16th largest ad network in the U.K. Terms of the deal were not disclosed. "OTP Media shares our core value of championing online vertical content and the Web publishers that produce it," said Jarvis Coffin, CEO of Burst Media, in a written statement. "This acquisition adds to the value of what both companies can bring to U.K. publishers and the resources they can put to work for U.K. advertisers trying to reach engaged audiences online."

Publishers in the OTP stable include RobbieWilliams.com, Carpages.co.uk, Streetmap.co.uk and i92.com, and advertisers include Marriot Hotels, Mercedes, Paramount and Pepsi.
Like other online media companies, Burst has lately been pouring resources into developing a presence in niche verticals. Burst's most recent acquisition came in October when it purchased Giant Realm, a network that focuses on 18-34 year old men by targeting gaming, comic and gadget sites.

YuMe Includes Silverlight
Video ad network YuMe on Tuesday is expected to announce that its ACE ad platform now supports Microsoft's Silverlight plug-in media player. As such, publishers who equip their Silverlight players with ACE technology will now be able to monetize their video content through YuMe's video ad network, and will have the option to take control of their video ad operations with the ACE Ad Management System.

The deal represents a big win for Microsoft in its ongoing battle against Adobe's omnipresent Flash player. According to Jayant Kadambi, co-founder and president of YuMe: "A growing number of publishers are choosing to use Silverlight."

In September 2007, Microsoft selected YuMe as its ad-serving platform and sales partner for the launch of its Windows Media Center Internet TV offering. Then in June 2008, the companies announced that Microsoft had selected YuMe to help monetize unsold video inventory across its online properties.

"Products like ACE ... help developers use their existing skills," said Brian Goldfarb, director of the developer platform group at Microsoft.

YuMe ranked as the third-largest U.S. video ad network last November, with 73.4 million unique viewers and a potential reach of 43% of online video viewers, according to comScore. YuMe said it served more than 2.5 billion in-stream ads in the fourth quarter of 2009 -- its highest quarterly total to date.

In February, the company closed a $25 million round of funding, led by new investor Menlo Ventures. Existing investors Accel Partners, BV Capital, DAG Ventures and Khosla Ventures also participated in the round. YuMe's publisher clients include Microsoft's MSN, Msnbc Digital Network, IDG Entertainment and Glam Media, among others. YuMe presently offers about 20 different ad units spanning different types of pre-, mid- and post-rolls, overlays and page takeovers that advertisers can customize further by choosing different features. The company's broader efforts include encouraging marketers to experiment with different formats and features in video advertising.

Microsoft debuted Silverlight in early 2007. The plug-in for playing media files and displaying interactive Web applications was introduced as part of a full suite of cross-platform Web development tools for both Windows and Mac operating systems.

Today, 71% of the U.S. online audience watches video online, while Forrester expects the number of streams consumed to more than double by 2013. Driving this growth is an explosion of video content from users, professional studios, and marketers. +

YuMe Expands Office Into Redwood City Landmark

REDWOOD CITY, Calif., April 16 /PRNewswire/ -- YuMe, the leading video advertising technology company, today announced it will be moving its corporate headquarters to Foresters Hall, a newly-renovated historical landmark in downtown Redwood City, California. The new office will give the rapidly growing company more room to expand, and let employees take advantage of Redwood City's excellent access to public transportation and the shops and restaurants in its vibrant downtown.

"Our move to Redwood City will help support YuMe's aggressive expansion," said YuMe CEO Michael Mathieu. "Having a beautiful new headquarters just a few blocks from Caltrain will allow us to continue to attract and retain top talent from across the Bay Area. This move culminates a strong first quarter for YuMe, during which we have achieved profitability, closed a new round of funding, and made key additions to our executive team."

"It's a pleasure to welcome YuMe and its employees to our Downtown," noted Redwood City Mayor Jeff Ira. "They represent a new influx of businesses deciding to locate here, and be part of the renaissance of our Downtown.  It's clear that the best and the brightest – like YuMe – recognize that Redwood City is the right place to put down roots and find opportunity."

Located at 1204 Middlefield Road, the building, originally named "American Foresters Hall," was built in 1913 to serve as the headquarters of the Redwood City chapter of the Foresters of America. From the beginning, Foresters Hall served as a civic center and gathering place for the entire community.  The second floor, designed as a meeting place for the many fraternal organizations and secret societies popular at the turn of the century, featured heavy doors with peepholes for observing anyone seeking entrance to the main meeting room. Starting in March, that room will be the new home for YuMe employees' fierce table tennis battles.

During World War I, Foresters Hall functioned as a meeting place and uplifting environment for soldiers back from the front. Throughout the Great Depression, the location served meals to those in need. From the 1940s to the 1960s, Foresters Hall hosted concerts and performances, becoming one of the most popular locations in the Redwood City area for live music.