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Posts Tagged ‘Ad Spending’

Crisis? What Crisis?

Posted by Mort Greenberg on September 20, 2008

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Article Author: Fred Aun, June 2nd 2008

“According to a summary of IDC’s new “U.S. Internet Advertising 2008-2012 Forecast and Analysis: Defining Economic Crisis,” Internet advertising will boom during the coming years despite a general “contraction in ad spending overall.” IDC believes overall Internet advertising revenue will double from $25.5 billion in 2007 to $51.1 billion in 2012, reflecting a compound annual growth rate of 14.9 percent.

The company predicts the Internet’s share of the overall U.S. advertising market will increase from 8.6 percent to 15.6 percent during the period and will be second only to direct marketing by 2012, blowing past broadcast television and newspapers along the way.

“Even though spending on advertising overall will contract this year, spending on Internet advertising still increases,” said IDC Program Director, Digital Media and Entertainment Karsten Weide, who authored the new report. “What that means is that advertisers are accelerating moving budgets out of the old media and into the new.”

IDC believes search ads will remain at the top of the Internet ad hierarchy with revenue, pegged at $10.4 billion last year, to reach almost $18 billion in 2012. But search will lose a bit of its market share as other formats, primarily video, gain ground. IDC believes search, now having almost 41 percent of the market share, will have just above 34 percent by 2012. ”




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Why Marketers Love Small Social Networks

Posted by Mort Greenberg on April 28, 2008

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April 27, 2008

By Betsy Cummings

Marketers who think bigger is better may want to reconsider, at least when it comes to social media. Ad spending on those sites is predicted to top $1.6 billion this year, according to eMarketer. However, much of it will be plunked into smaller, emerging social networks.

While My Space and Facebook get all the attention, social media focused on topics as remote as knitting or bird watching can be a strong branding target these days, said Anthony Acquisti, strategy supervisor with emerging media at OMD, New York. His running tally of emerging social networks, now up-wards of 7,000, is evidence of an explosive market.

These more focused audiences should be popular with brands because “relevance,” he said, “trumps size.”

By 2011, eMarketer estimates, half of all adults in the U.S., and 84% of online teens will use social networks. That’s both a golden opportunity and a colossal headache for brands trying to nail down the best new network for their campaigns.

Sites like imeem, an emerging market leader, are carving out their niche now, making their case for advertising dollars. The site, dedicated to music, videos and photos, works with Burger King, Scion, Nokia and T-Mobile, which sponsored a “content capture” in the fourth quarter of 2007. This involved artist Jay Holiday texting his thoughts on tour to imeem members through his T-Mobile sidekick. “We tend to skew younger and edgier,” with a demographic of 13-24, said Steve Jang, imeem CMO.

That these sites are so segmented means they can offer unique campaign opportunities to brands. But how brands execute social media campaigns is as important as where they do it. And keeping new sites hip and unencumbered by advertising is a balancing act for both the brands and the networks.

At Twitter, a site that integrates text messages with social networking, companies like shoeseller are jumping on board. The footwear e-tailer is sending its own text messages to the site about products and “tweepstakes,” giveaways the company offers to Twitter members.

“The real way of getting into social media is you don’t advertise, you participate in the community,” said Pawel Szymczykowsky, Zappos’ software engineer.

Up and coming networking sites are also forming alliances through programs like OpenSocial, Google’s common API program that allows brands to build applications, like games, to engage users. Currently more than a dozen emerging sites belong.

Hi5, an OpenSocial affiliate with 25 million unique users a month, is heavy on international members, particularly the Hispanic market, which is 40% of its demographic, said Ramu Yalamanchi, Hi5’s CEO. “The benefit of OpenSocial is to get your application on other networks as well,” he said. “If you want to repurpose it for MySpace, you can do that easily.”

New sites also tout the viral spread of information from one site to the next. But skeptics say users on niche networks keen on that site’s focus aren’t likely to jump around. “I think ‘viralability’ gets spun a bit,” Acquisti said. In fact, a 2007 InVision study of emerging media by Initiative found that 47% of those who visit social networks visit only one site actively.

Plus, going viral isn’t always of value. “Social networks offer consumers the unfettered ability to write what they want,” said Debra Aho Williamson, senior analyst at eMarketer. “Sometimes [they write] about the brand, and sometimes it’s not very good.”

Instead, “a lot of social networks have been embracing letting companies and brands become users of the site where users can choose to be friends with them,” said Leah Culver, founder of Pownce, a social network created in June 2007.

That’s true at Last quarter, the Renton, Wash.-based company worked with Applebee’s to create a profile for the “talking apple” seen in TV spots. Through the profile, users could engage with videos, photos and a link to Applebee’s site, said Jeremy Helfand, executive vice president and chief sales officer for

With creative messaging on “profile pages, we see significant increases in response rates.” Helfand said in certain cases the response was ten-fold.

Subtle branding messages are key and a big part of what emerging sites are offering to brands, said Kelly Twohig, senior vice president and digital activation director at StarCom USA.

“Especially in a community environment where the bulk [of content] is provided by users,” Twohig said, “people want it to remain pure.”

Posted in Ad Products, Ad Spending, Social Media, UGC, Widgets/Distributed Content | Tagged: , , , | Leave a Comment »

Staples Keep Ad Market Afloat

Posted by Mort Greenberg on April 9, 2008


April 9, 2008

Yogurt, cheese and Froot Loops may provide a much-needed life raft to the advertising market.

While overall advertising spending is threatened by the battered economy, makers of household staples, such as General Mills Inc. and Kraft Foods Inc., are holding the line or increasing their ad and marketing budgets, partly to try to make sure penny-pinching shoppers don’t switch their favorite shampoo or macaroni for a cheaper off-brand substitute.

“As they’re battling for shelf space for their brands and products, one of the things to back that up is advertising and marketing support,” said Jon Swallen of market-research concern TNS Media Intelligence.

In 2007, companies making consumer products such as food and drugstore salves increased their ad spending by 8% or better, even as the overall ad market was nearly flat, according to TNS. That’s significant because makers of such household staples are big spenders, responsible for roughly one in 10 ad dollars spent in the U.S.

While continued strong spending by such companies is unlikely to lift the whole ad market, especially if advertisers move to nonconventional pitches, it at least offers a spot of good news to media companies hurt by overall slower ad growth.

Hearst Corp., publisher of Good Housekeeping and Cosmopolitan magazines, reported its most profitable year in 2007. Nearly a dozen top accounts each juiced spending by $30 million more in Hearst magazines last year, led by an 80% jump from Campbell Soup Co., according to Jeff Hamill, senior vice president of Hearst’s corporate advertising unit.

Consumer-product companies say increasing marketing costs translate into higher sales.

General Mills, which makes Cheerios cereal, Hamburger Helper and other pantry favorites, raised consumer-marketing spending by 13% for the third quarter ended in February. The company posted a 12% sales increase for three months ended in February, a jump General Mills credited to its ad spending uptick.

“We believe this investment is and will continue to fuel sales growth,” Chief Financial Officer Don Mulligan told investors last month.

Last year, Kellogg’s ad spending rose 16% to $1 billion, and the cereal maker isn’t backing off. “We believe that continued investment in our brands increases our dependability as a company,” Kellogg Chief Executive David Mackay said at a conference in February, when he discussed his company’s increases in ad spending.

Overall Market

The pickup in some categories, however, may not be enough to salvage the overall advertising market. Forecasts are calling for U.S. ad spending to grow at an anemic pace of 4% or slower this year, even with the significant lift expected from the U.S. presidential election and the Summer Olympics. In 2004, the last presidential and Olympic year, the pace of growth was about 10%.

The ad pain results from a storm of factors. Many financial-services firms, battered by the housing-lending crisis, are paring marketing. General Motors Corp. and other top advertisers in auto, media and telecom are cautious, too, spurring ad watchers to retreat from their spending forecasts in recent months.

Robert Coen, the closely watched ad-spending maven at Interpublic Group of Cos.’s Universal McCann, expects ad spending to be 3.7% higher this year than in 2007, down from a 5% increase he initially expected. Others also are wary.

“No question this is going to be a challenging year,” said Richard Beckman, chief marketing officer of Conde Nast Publications. “As the economy goes, so goes the advertising market.”

However, media companies and ad-agency giants say they haven’t felt any advertising pullback, for the most part. But pessimistic observers say ad budgets, set months in advance, have not caught up with the cooling economy yet. The second quarter or later could start reflecting the ad weakness in media companies’ bottom lines.

Madison Avenue acknowledges the weakness but says advertising and media will weather the economic storm.

“The truth of the matter is there are too many people saying the sky is falling,” Mr. Beckman said.

Media companies say they’re benefiting as companies focus less on winning low prices for ad pages or TV air time. Instead, media outlets and advertisers are working more closely together to develop elaborate and potentially pricey full-service ad campaigns.

Hearst worked with Unilever NV’s Dove on a campaign for hair-care products. Ads ran in the magazine, and Hearst created a Web site called “Love Your Hair,” packed with content and video touting the benefits of Dove’s wares.

Non-Traditional Spending

Consumer-staples companies can afford to boost ad spending because their sales hold steady even in a weaker economy. But even as they pitch their wares, not all of their dollars may go toward traditional advertising.

“You could see shifting of some marketing dollars into the store,” said Jason Gere, a household-products analyst at Wachovia Capital Markets.

In-store merchandising can refer to anything from the way products are displayed to signs. About 70% of consumers’ purchasing decisions are believed to be made while in the store.

“It’s important the message inside the store is just as sharp, particularly in a weaker economy,” Mr. Gere said.

Other deep-pocketed companies are spending in different ways, homing their marketing on a few important brands or key consumer groups.

“We are spending more, but not in ways we always have,” says Doug Moore, vice president for advertising at General Mills. The company, for instance, is spending more on digital marketing and targeting Hispanic consumers with ads in Spanish for Yoplait and Honey Nut Cheerios.

Anheuser-Busch Cos. plans to allocate 10% more for media spending this year compared with 2007 spending, but the leading U.S. brewer has shifted its budget to focus on a few key brands such as Budweiser and Bud Light beers.

Marketers continue to shift ad money to the Internet, where overall ad costs are lower. Online advertising also produces measurable results, arming strapped marketing executives with spreadsheets to prove that their ad campaigns rang digital cash registers.

Consumer-products companies spend about 3% of their ad budgets on online advertising, less than half of what auto makers and other major advertisers spend in that area. The slipping economy may, however, push more advertising dollars toward the Internet.

Write to Shira Ovide at and Anjali Cordeiro at



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