The influential Wall Street equity research team at J.P. Morgan released a 2012 outlook for the online industry saying it “remains positive on the Internet sector,” and expects the medium to “be driven by strong secular growth, increased online accessibility through smartphones and tablets, and strengthening trends around social, local and video.” That said, the securities firm said its favorite picks for the year are not the Internet’s ad-supported biggies, but major e-commerce players Amazon and Priceline.

“Amazon and Priceline are our top picks for the year,” opined lead Internet analyst Doug Anmuth in a note to investors, adding: “We continue to like Google at current levels, but believe the risk/reward is now more favorable in these other large-cap names.”

While J.P. Morgan did not tout any specific online advertising players, it is positive on the overall sector, noting that online ad spending will continue to be driven by display and is expected to rise about 16% in 2012.

“We expect online advertising to continue to see strong growth, driven by increasing consumer consumption of digital media and increasing allocations of branded ad budgets online,” the report reads, adding: “Consumers have greater touchpoints to digital media through the rapid adoption of mobile devices and tablets, supported with higher engagement trends through the use of social media and networks. We believe consumer time spent online will continue to increase, and the online advertising dollars to follow.

Read More: MediaPost

Brands Will Choose Online Video Over Display Ads in 2012: Adap.tv
Study shows that advertisers will increase online video spending this year, and that brands want viewer engagement.

Adap.tv completed a research report on the digital video industry shortly before the recent Streaming Media West conference in Los Angeles, and company co-founder and vice president of product Teg Grenager sat down at a red carpet interview to share some of its findings.

This is a good time to be in the online video advertising space, as nearly all the advertisers surveyed said they were sure they would increase their online video spending this year. In previous years, advertisers were more hesitant to jump in.

“This year there were some very interesting findings. The industry is changing and maturing a little bit,” said Grenager, noting that the market was due for significant growth.

That extra spending has to come from somewhere, and the loser in advertising budgets looks to be display advertising.

“Digital video actually is, in some ways, a replacement for some of what display was trying to achieve. It’s trying to achieve branding on the Web, and digital video’s just much better at that,” Grenager noted.

Advertisers’ goals are also changing this year. In previous years, they looked to online video ads to build awareness. Now they want brand engagement with their ads. Noting that engagement is more a tactic than a goal, Grenager explained that viewers who engage with an ad in some way are more likely to think about that brand and see it favorably.

Read More: Streaming Media

DataXu Thinks Global, Acts Hyper-Local: Acquires Europe’s Mexad

In a move it says gives it the biggest global footprint of local manpower of any demand-side platform (DSP), DataXu has acquired London-based Mexad, a leading European DSP with offices in Western Europe and Brazil. Both companies are privately-held and terms were not disclosed, but DataXu Co-Founder and CEO Mike Baker says the acquisition gives DataXu a competitive advantage in a sector that increasingly is about local service and market knowledge.

With 36 employees, Mexad manages real-time bidding campaigns and inventory in about 60 countries in Europe and Latin America, complementing DataXu’s local market knowledge in North America, he says.

“They have an on-the-ground presence in all the major markets in Europe right now,” Baker tells Online Media Daily, adding that “feet-on-the-street” is becoming a key differentiator for the DSP business, because it’s not just about having the best software, algorithms and access to RTB inventory that determines success in local markets, but understanding local cultures, ways of doing business in specific markets, and the ability to advise and service local marketers and agencies in those markets.

Read More: MediaPost

When Sprint Nextel this month moved its $1.1 billion account from San Francisco-based Goodby, Silverstein & Partners to Digitas Chicago and Leo Burnett, it was one of the biggest wins in Chicago advertising history.

Beyond the 300 or so new jobs the account will bring to the city, with online-focused Digitas named lead agency, it also represents what may be the tipping point for digital advertising, which has rapidly transformed from a fringe buy to an integral part of the media mix.

“I think it’s a validation of the next evolution of this industry,” said Tony Weisman, president of Digitas Chicago.

Once the insular domain of direct marketers and tech-savvy programmers, online advertising accounted for just a fraction of total media spending in the U.S. at the start of the new millennium. Since then, the medium has leapfrogged every traditional advertising vehicle except television, and it is closing ground fast.

“The Internet has become as important as television to advertisers,” said David Hallerman, principal analyst at eMarketer, a New York-based research firm. “This is where people spend a large share of their time. Marketers chase the audience.”

Read More: Chicago Tribune

Akamai is acquiring Cotendo for $286M

App delivery company Akamai is acquiring app delivery network Contendo, the companies jointly announced today.

Akamai will purchase all of Cotendo’s outstanding equity for a net cash payment of $268 million.

Pending regulatory approval and other typical acquisition conditions, the deal is expected to close sometime over the next six months.

In a release today, the companies stated that they expect their combined technologies, which each have a lot to do with safely and securely delivering content and application packages in the cloud, to accelerate innovation in cloud and mobile services.

“As we look to accelerate growth across the dynamic landscapes of cloud and mobile optimization, we are excited to be joining forces with Cotendo,” said Akamai president and CEO Paul Sagan in a statement.

“Cotendo’s technology, partnerships and people are a strong complement to Akamai. Together, we believe there is tremendous opportunity for our combined technologies as enterprises embrace the move to the cloud and seek solutions for an increasingly mobile world.”

Read More: VentureBeat

One year after its acquisition of online video company BBE, Specific Media surpasses past video leaders to draw the second-largest video audience in the world

IRVINE, Calif.–(BUSINESS WIRE)–Specific Media, a digital media company, today announced that it has surpassed historical video network leaders as well as portal and broadcast network behemoths to draw an audience second only to YouTube in size, according to the latest comScore Video Metrix data. The news coincides with the one-year anniversary of Specific Media’s entry into the video market through its acquisition of online video company BBE. Since then, Specific Media has been on an upward trajectory, growing its audience 242 percent to now reach over 80 million viewers each month.

Noting Specific Media’s continued video momentum, brands are partnering with Specific Media on their video campaigns more than ever. Nearly 25 percent of Specific Media’s clients now take advantage of the company’s ability to run integrated display and video campaigns — garnering compelling results in return.

For example, a leading telecom provider recently worked with Specific Media to run an integrated campaign that leveraged Specific Media’s ability to augment standard video campaigns. For incremental impact, display ads were used to reinforce core messages from the video creative. The smart approach paid off with a 75 percent view-through-rate for the client.

Read More: Businesswire

Enhanced advertiser-level controls and insights in DoubleClick Ad Exchange

Today, we’re happy to announce the roll-out of a new advertiser classification system that automatically scans and classifies each creative using sophisticated machine learning technologies to determine the associated advertiser or advertisers. This means that publishers can more easily and reliably block specific advertisers across all campaigns and buyers.

We focused on an algorithmic solution to this complex challenge, versus a more manual “self-declared” approach for buyers, which can often lead to inaccuracies such as misspellings or misclassifications. This quarter we are introducing this feature with coverage for the top 50 advertisers with a large expansion in advertiser coverage planned soon.

Further taking advantage of this new advertiser-level data, we’re now also able to give our publishers better insights into individual advertiser spending, CPMs and performance to help inform their overall sales efforts. Ad Exchange’s existing multi-dimensional reporting tool now includes an “advertiser” field dimension. This new field will allow publishers to slice and dice their data and see which advertisers are driving the most revenue by geography, domain, channel and a variety of other criteria.

Read More: DoubleClick

When the Ad:tech advertising technology conference hits New York next week, marketers, advertising agencies and recruiters may spend less time listening to the panelists and more time working the floor to find new employees.

A talent gap is growing between the skills that many new advertising jobs require and the number of people who have those skills. The dilemma, one familiar to many industries across the country, is particularly acute for jobs that require hard-core quantitative, mathematical and technical skills.

The talent pool, advertising technology company executives say, is not a deep one. And those who have the skills are in high demand, often fetching annual salaries that can reach $100,000.

“There is pain for hiring in digital at all levels,” said John Ebbert, managing editor of AdExchanger.com, a Web site dedicated to advertising technology.

“The marketers, the publishers, the ad tech companies, the agencies, data management companies — they’re all going for the same type of employee.”

Read More: NY Times

64% of Digital Ad Spend Controlled by 5 Companies

I was doing some calculations for my own purposes and wanted to find out what percentage of the digital media ad spend (search, display, mobile, etc) is controlled by Google, Yahoo, AOL, Facebook, and Microsoft.  Well, after searching through their 10K’s, it’s about $40.1B, or roughly 64% of the worlds digital media ad spend.

According to a ZenithOptimedia press release on October 3, 2011, worldwide digital advertising accounted for about $64.03B.

Google generates approximately 364% more revenue from advertising than it’s next closest rival, Yahoo!.

With Facebook at $1.86B in advertising revenue (excluding virtual currencies/goods) for 2010, it puts them at right behind Microsoft but ahead of AOL.  With Facebook only now starting to monetize their platform, you can start to see how big an impact they could have on the dominance of the digital advertising landscape.

And of course, you can really see how dominant Google is.

Read More: Darren Herman

I was reminded of this recently while speaking with a brand marketer for one of the world’s top financial services companies. Her company has been slow to embrace digital, only her hesitation had nothing to do with the technology that powered digital advertising and everything to do with the fundamentals of brand marketing. Can digital tell a story? Can it connect the right content with the right audience? And most consequentially, can it be measured?

All good questions, though perhaps not the ones I typically hear from brand marketers. But my gut tells me these are precisely the questions all digital advertising bystanders want answered. They deserve close attention.

The Most Interesting Ad in the World

So what makes a successful brand campaign? In a word: stories. Viewers are presented with protagonists with whom they can identify, and journey with them as they work through a conflict to achieve resolution. On TV, this needs to happen in 15, 30, or 60 seconds. But on the web, you’re restricted only by the enthusiasm of your fans. Consider the wildly popular Dos Equis “Most Interesting Man in the World” ads. While brief on TV, an impressive eight-minute web-based version geared toward the brand’s super fans has gone viral.

What drives brands like Dos Equis to seek out digital distribution outlets? It’s simple: customers. If brands need to take customers on a journey, then they must pick them up where they are, not where they want them to be.

Read More: ClickZ

Jumptap MobileSTAT Report: Rich Media Gooses ROI
Ad Network Releases September Network Findings

CAMBRIDGE, Mass.–(BUSINESS WIRE)–Jumptap, the leader in targeted mobile advertising, released its MobileSTAT Report covering network data for the month of September which revealed, among other things, that rich media ad units provide significant lift in click-through rates.

In an experiment, Jumptap reviewed more than 300 million campaign impressions, across several major Fortune 1000 advertisers that ran both rich and standard media with similar creative and messaging. The results were striking; campaigns run with rich media ad units showed prominent lift over those with standard media.

• One major retailer saw a 337 percent lift in CTR over their standard mobile banner campaign.
• A popular luxury auto manufacturer saw a 357 percent lift in CTR.
• An advertiser for a new theatrical release picked-up a 340 percent lift in CTR.
• A quick service restaurant acquired a 455 percent lift in CTR.
• A major athletics manufacturer saw lift of 214 percent in CTR.
• A consumer electronics company experienced a lift of 362 percent in CTR.

“The demand for relevant, dynamic content is growing. Advertisers want targeting combined with ad units that engage consumers and promote brand awareness,” said Paran Johar, CMO, Jumptap. “With ad units that facilitate user interaction including video and audio, rich media offers higher performance levels and greater measurement. These units, paired with Jumptap’s superior targeting capabilities, result in higher CTR and create powerful brand impact.”

Read More: Businesswire

Advertising on social networks soared during the first half of the year, jumping 20% in the U.S. and 12% in the U.K., according to PwC. Those rates were above what the firm projected and are “fueling” the collective Internet advertising market, which is in one sense benefiting from the struggling economy.

Search remains strong as does mobile, with the spread of tablets and smartphones. “It appears that the weakening economy is accelerating the shift of advertising from traditional media to the Internet,” PwC wrote in an update of its sprawling media outlook for 2011-15.

Social networking is also playing a role in a buoyed TV market, with it “stimulating interest, and live viewing, in shows.”

PwC said its projections across the ad market for 2011 remain on the “conservative side” and below others. Agency Zenith, for example, now forecasts a 2.5% increase in North America overall, while PwC projects 2.2% growth.

Globally, the figures are 3.6% and 3.1%, respectively.

There are three regions, however, where the two firms diverge considerably. In Asia-Pacific, Zenith calls for 5.5% growth, while PwC is at 2.4%. PwC says strength in China and India is being dragged down by a slower Japan.

Read More: MediaPost

Google, Private-Equity Firms Mull Bid For Yahoo

Google Inc. has talked to at least two private-equity firms about potentially helping them finance a deal to buy Yahoo Inc.’s core business, according to a person familiar with the matter.

Google and prospective partners have held early-stage discussions but haven’t put together a formal proposal and Google may end up not pursuing a bid, this person said. It is unclear which private-equity firms Google has talked to.

Any deal tying two of the biggest Internet companies would be sure to attract antitrust scrutiny.

Federal antitrust lawyers in 2008 thwarted a Web-search advertising partnership between the companies.

Read More: WSJ

“Change is good.” So goes the tagline of arguably the first viral commercial – a Doritos ad featuring recently defeated governors Ann Richards of Texas and Mario Cuomo of New York talking about “change” as they munched Doritos from the newly changed and re-branded packaging.

Change has come to the $30 billion digital advertising industry. The “Mad Men” days are over (well, the suits and secretaries are gone, but you could argue drinking, ennui, and client resentment are still fixtures of Madison Avenue). In the old days, agencies used to place an ad in relatively few places. “Give me the back cover of Life magazine and a TV spot at the beginning of Mutual of Omaha’s Wild Kingdom,” a media director could say, and then the agency and client could just buy the magazine and turn on the TV to see that the ad was correctly placed.

If you could teleport “Mad Men”’s media buyer Harry Crane directly from 1968 to 2011 and ask him to plan a campaign, he wouldn’t believe we now talk in terms like online ad networks, real-time bidding, inventory exchanges, data exchanges, and offline metrics studies.

Read More: Forbes

Yang eyes Yahoo buyout with private equity

(Reuters) – For the last few years, a widely circulated joke about Jerry Yang was that he had the best tan in Silicon Valley from all the time he spent on Stanford University’s golf course.

But the jests stopped about six months ago, when the Yahoo Inc co-founder and former CEO put away his golf clubs and began showing up on a daily basis at the Internet company’s headquarters in Sunnyvale, California, according to a high-ranking Yahoo executive.

Now, Yang is interested in a deal with private equity firms that would take the $20 billion company off public markets, according to people familiar with the situation.

Such a deal would involve rolling over Yang’s stake in Yahoo, which stood at 3.63 percent as of April 2. Yahoo’s other co-founder, David Filo, would likely follow Yang’s lead and roll over his stake, said other sources close to Yahoo. Filo held 5.90 percent of Yahoo’s shares as of May 11.

Shortly after firing Carol Bartz as CEO in September, Yahoo and its longtime advisers at Allen & Co and Goldman Sachs began working on a strategic review, which could include a sale of the Internet pioneer, after receiving unsolicited expressions of interest.

Read More: Reuters

The following interview was conducted with Ken Allen, a Vice President in Blackstone’s Advisory Practice, who leads Blackstone’s coverage of the Digital Media sector.

What are some of the macro trends you are seeing in the advertising industry today?

The advertising landscape is undergoing a dramatic transformation that began over a decade ago and that continues today.  We have gone from a world in which advertising was once broadcast to large, homogeneous audiences to one where highly tailored messages are targeted to specific individuals through multiple digital channels, often simultaneously.

The chart below shows the broad transformation that has taken place in the U.S. market.  As the online marketing channel has become more prevalent, increasing from only 5% of the total market in 2000 to 16% today, print has similarly experienced a dramatic decline, decreasing from a 38% share in 2000 to 22% today.  Underpinning these share shifts is the rise of online advertising technologies, in particular, Paid Search and Display advertising.

Read More: Blackstone

HomeAway Looks for Reset After Last Year’s Super Bowl Gaffe
Vacation Rental Firm Looking for a New Agency

Smarting from its Super Bowl controversy earlier this year, HomeAway, the online vacation rental marketplace, is looking for a new creative agency.

The search for a new shop comes months after HomeAway attracted criticism for a 30-second Super Bowl spot, which was officially called “Test Baby” but earned the nickname “Smush” for depicting a baby doll thrown up against a window, with its face being smushed. The ad, created by Austin-based agency Vendor, was yanked shortly after its big debut after consumers accused HomeAway of trivializing child abuse and in showing a likeness of an infant being injured. Consumers also took issue with an online component of the campaign, where website visitors were told they could customize the ad by uploading pictures, and if they so chose, decapitating the baby.

Matt Cohen, senior director of global brand marketing at HomeAway, in an email told Ad Age that the company expects to select a new shop in the next month, and noted that the new agency will not be working on a Super Bowl commercial. “Our approach starting in 2012 will be to build our brand over the long term. A key component of our review process is to learn how different agency partners might attack this marketing challenge.”

Read More: AdAge

Internet ad revenue rose 24.1% to $7.7 billion in Q2 2011, contributing a 23% uptick to $14.9 billion in the first half of the year, according to the Interactive Advertising Bureau and PricewaterhouseCoopers U.S. stats.

Display-related advertising-banner, rich media, digital video and sponsorships rose 27.1% to more than $5.5 billion in the first six months of 2011.

Breaking it down for the first six months, display-related advertising revenue totaled $5.5 billion or 37% revenue, up 27% from the $4.4 billion reported in 2010. Banners took 23%, or $3.4 billion; rich media, 5%, or $763 million; digital video, 6%, or $891 million; and sponsorship, 3%, or $467 million.

Aside from display ads, paid search ads continue to take the majority of the media buy. Search — which remains the leading format since 2006 — accounted for 49% of Q2 2011 revenue, up 47% to $3.8 billion. Search revenue for the first six months of 2011 totaled $7.3 billion, up 27% from $5.7 billion in 2010.

Brands also spent more on video and lead generation. Digital video rose 42.1% to $891 million. Lead generation grew 25.4%, compared with the first six months in 2010, accounting for 5% during the first six months of 2011, or $805 million.

Read More: MediaPost

Casale Partners With Turn To Enhance Publisher Reach

Casale Media on Thursday is expected to announce a partnership with demand-side platform Turn. The union combines Turn’s roster of Fortune 200 brands with Casale’s network of nearly 3,000 publishers.

Amid a wave of interest (or what critics call hype) around demand-side platforms, Turn is quite popular these days. Just weeks ago, it partnered with Nexage to power real-time bidding for mobile advertising inventory through its media-buying platform.

Last month, Turn struck a similar deal with Web video ad company TubeMogul to power real-time buying of mobile video ad space for TubeMogul’s PlayTime DSP.

Such partnerships help Turn expand the scope of the inventory it provides. “Having scale and access to quality inventory from partners like Casale is critical for our clients,” said Bill Demas, president and CEO of Turn.

Take Snagajob, a provider of talent management solutions for hourly employers, which currently uses Casale’s CasaleX exchange to help sell its ad inventory of some 250 million monthly impressions.

Read More: MediaPost

Brand messages and incentives make consumers pay attention to ads, according to a recent study. In fact, combining the two strategies increases interaction by 91% and brand perception by 38%, as well as improved recall and purchase intent, according to findings from KN Dimestore and SocialVibe released Monday.

While 48% of survey participants reported they may initially opt-in to engage with a brand for the incentive, they stay and pay attention to the brand message.

SocialVibe calls the strategy “value-exchange brand advertising” and defines it as ads that ask for a consumer’s attention in exchange for something they want, such as virtual currency for social games or making a donation to charity. It differs from offer-based, cost-per-action (CPA) advertising, which requires a sign-up or purchase of something.

The study, which gathers data from more than 30,000 survey respondents, set out to determine if and why incentives prompt people to engage with the advertisements, how they affect consumer perception of the brands, and whether they influence people to visit the company’s Web site or tell a friend about the offer. Participants interacted with ads from U.S. brands across financial services, CPG, entertainment, e-commerce and technology categories between June and July of 2011.

Read More: MediaPost

Media’s Mobile Presence Doubles, Ad Presence Still Low

The rapid acceleration of mobile Internet use is not restricted to consumers. Media companies are responding just as quickly, if not comprehensively, according to new research from Company Data Trees that shows a near doubling in the share of publishers that have mobile-ready presence.

In January, the researchers found 14.67% of publishers among the top 10,000 sites to have mobile-friendly sites, measured by Alexa. By early September, that share had escalated to 25.67%.

According to Company Data Trees CEO David Engel, the company used its proprietary technology called Mobile+Positive. “It loads each Web site on five different mobile OSes and on 10 devices,” he says. In this context, “publishers” were defined as any mobile site that sells ad impressions, and it netted about 66% of the total universe of top 10,000 sites as measured by Alexa.

The jump in the number of publisher sites with mobile destinations rose 75% between January and September. The rate at which publishers are adopting mobile outpaced the full range of Web site providers, which rose 66% in the same period. According to Engel, once you move outside of Alexa’s top 10,000, the rate of mobile adoption descends.

Read More: MediaPost