Apple Studies iTunes User Downloads to Hone Mobile Ads

Apple Inc., with a storehouse of billions of music, movie and software downloads, is studying the buying habits of many of its 150 million iTunes users to show more appealing mobile ads and fuel competition with Google Inc.  Through the iAd program that began last week, Apple started placing ads in iPhone applications for the first time. Early iAd clients include Nissan Motor Co., Unilever NV, JC Penney Co., Best Buy Co. and AT&T Inc.  At stake is leadership in mobile ads, forecast by EMarketer Inc. to almost triple to $1.56 billion in 2013. Google, which gained the biggest share of online advertising by placing ads based on PC-Web surfing habits, may use that tack to widen a lead on handheld devices. Examining consumers’ entertainment and software purchases may give Apple an advantage, says Rachel Pasqua, director of mobile at marketing firm ICrossing.  “Apple knows what you’ve downloaded, how much time you spend interacting with applications and knows even what you’ve downloaded, don’t like and deleted,” said Pasqua, whose clients include Toyota Motor Corp. and Mazda Motor Corp. She isn’t currently working with Apple on iAd campaigns.

Read More: Bloomberg.com

Display Advertising Acting More Like Search

While online display advertising has grown tremendously in the last decade, its growth rate and ultimate size have been outstripped by the growth and size of search.  And during a downturn search tends to hold or grow its relative position even more.  As a result, many players in the display world are looking to search to see what aspects of search can be better leveraged in display.  I think there are three key areas where display is working to become more like search.  First, in the area of data.  A tremendous amount of the power of search comes from the fact that the consumer’s intent is largely declared by their act of searching.  Clearly that is of great value to an advertiser.  By gathering data that better approximates current intent – for example, by incorporating an anonymous user’s recent queries from an e-commerce site – display advertisers can come closer to search in this respect.  The rise of data exchanges like BlueKai and Exelate is intended to help address this need.  The second area of historical “search advantage” is creative.  Search “creative” has historically been text, which is easy for even the smallest advertiser to create and change.  This means a broader number of potential advertisers.  Companies like AdReady and Tumri make the real-time assembly of display creative much easier and lower cost.  If companies can generate display creative on the fly inexpensively, the ability to better target display ads is significantly enhanced.  Finally, display advertisers are becoming more like search in the area of real-time bidding.  Search has allowed advertisers to bid for keywords and calculate their return on investment relatively easily.  With the rise of Demand Side Platforms (DSPs) such as MediaMath and Invite to help advertisers interface with ad exchanges, the display advertising world is similarly helping advertisers efficiently access quality inventory at a competitive price.  

Read More: Blog.Searchandise.com

For Online Advertising, Media Consolidation Is a Good Thing

Much has been written about the “long-tail” concept since Wired’s Chris Anderson popularized the idea in 2004. But for all the discussion about how effective long-tail strategies are for search-engine optimization, viral marketing, web retailing and social-media marketing, it seems that many online advertisers — especially display advertisers — are missing the boat.  Media continues to consolidate, and increasingly the vast majority of online ad dollars go to just a handful of web publishers. By ignoring the rest of the web publishing world, online advertisers are avoiding a perfect opportunity to reach much larger audiences at a reduced cost. From an advertiser’s perspective, the universe of websites can be divided into four groups.

Read More: AdAge

MySpace Up For Grabs

News Corp. is in discussions with Google Inc., Microsoft Corp. and Yahoo Inc. about replacing MySpace’s crucial search-advertising partnership with Google, which expires next month, according to people familiar with the matter.  Under the existing deal, Google agreed to make up to $900 million in guaranteed payments for the right to sell small ads as users surf and tap out searches on News Corp.’s My Space.com and on a handful of smaller News Corp. websites.  But recently, MySpace has fallen far short of Web traffic and other milestones laid out in the Google contract, which expires at the end of August.  

In recent weeks, News Corp. has been discussing new, narrower advertising deals with Google and other companies, said the people familiar with the matter.  People close to News Corp. said any new agreement will be for significantly less money. That would be a further financial challenge for MySpace, which has seen ad revenue slip.  Google and Yahoo declined to comment.  Google in 2006 beat out Microsoft and Yahoo for the ad pact, which was regarded at the time as justifying News Corp.’s purchase of MySpace’s parent company for $650 million. News Corp. also owns The Wall Street Journal.  The deal is winding down at a turbulent point. MySpace has seen turnover among several top-level executives, including Co-President Jason Hirschhorn last month.

The website also is in the midst of a remodeling to stand apart from Facebook Inc., which has surpassed MySpace as the dominant online place for people to swap stories, comments and photos with friends and acquaintances.  Reviving MySpace is a high-level project for News Corp., which dispatched Chief Digital Officer Jon Miller to oversee the effort. MySpace also is a test of whether Internet properties can rebuild buzz and revenue growth once they have ebbed. That’s also the task facing AOL Inc. and Yahoo, both of which are in the middle of turnaround efforts.  News Corp. executives say they believe privacy and other concerns about Facebook leave an opening for MySpace to attract new users and business partners, though they also say MySpace doesn’t expect or need to be as big as Facebook.  Instead, MySpace says it is focused on Web surfers younger than 35, and is offering them a place to find new music, videos, games and other diversions, and to locate new people with similar interests. 

MySpace has also touted its initiatives to allow users to easily keep secret their personal information such as photos, birth date and hobbies, a counter to recent privacy worries about Facebook.  MySpace’s new strategy in addition includes ways for musicians, comedians, authors and fashion designers to gather an audience and tools to measure who and where their fans are.  A band, for instance, could use MySpace to share music with fans and get feedback, as well as adjust their touring schedule to add concerts in Texas, for example, if the musicians see their MySpace fan base is heavily from that state. 

MySpace also plans in coming months to roll out new applications for cellphones and to overhaul its site, possibly including a new logo.  Aaron Shapiro, a partner at online-marketing firm Huge, said MySpace can carve out a niche alongside Facebook and Twitter, but he cautioned that MySpace still has a long way to go to make the website easier to use and to incorporate slicker design and technology.  “They’ve been frozen in time for four years in terms of their degree of innovation,” he said.  More than a year into its shift, MySpace attracted 109 million unique world-wide visitors in May, down nearly 13% from the same month last year, according to comScore Inc.  Facebook had more than 548 million global users, up 74%.  MySpace executives say they are focusing on increasing the percentage of the U.S. population of 13- to 34-year-olds who visit the site each month to 75% from 50%.  “My goal is to saturate that specific audience,” said MySpace President Mike Jones.  Mr. Jones became the top MySpace executive after Mr. Hirschhorn stepped down in June, which in turn came just months after Chief Executive Owen Van Natta was pushed out.  MySpace also has cut about 30% of its work force, and News Corp. took a $450 million charge last year to write down the value of MySpace and other digital businesses.

Read More: WSJ.com

At Yahoo, Using Searches to Steer News Coverage

Welcome to the era of the algorithm as editor.  For as long as hot lead has been used to make metal type, the model for generating news has been top-down: editors determined what information was important and then shared it with the masses.  But with the advent of technology that allows media companies to identify what kind of content readers want, that model is becoming inverted.  The latest and perhaps broadest effort yet in democratizing the news is under way at Yahoo, which on Tuesday will introduce a news blog that will rely on search queries to help guide its reporting and writing on national affairs, politics and the media.  Search-generated content has been growing on the Internet, linked to the success of companies like Associated Content, which Yahoo recently bought, and Demand Media, which has used freelance writers to create an online library of more than a million instructional articles.

Read More: NYTimes.com

Google’s Display Advertising Plans Include Gmail and YouTube

For a company that has made a big business of indexing third-party websites, a substantial part of Google’s display success hinges on its ability to milk YouTube and its other owned and operated properties such as Gmail and Google Finance.  In fact, those areas were two of the three big priorities outlined by VP Neal Mohan at a press briefing last week where a parade of Google executives described the company’s plans to expand its ad business beyond search keywords.  “Display is truly at a tipping point,” Mr. Mohan said. “We think it can be substantially larger than the $20 billion it is today, whether [it's] $40 billion, $60 billion, or $80 billion, but there are a lot of challenges that remain.”  Mr. Mohan said there were gross inefficiencies to the display ad buying process. As an example, he said it takes 30 days or more to get a creative advertising unit up and running. “That process should be much more streamlined,” he said.

Read More: AdAge

Can IAC Become A Real Exit Strategy For NYC Tech Startups?

Last month, the idea that Foursquare could exit to Yahoo! for $120+ million had everyone abuzz.  “This means NY tech has come to its own!” people exclaimed. Finally, we had a major player in the social web space. It was a company born here and grown here. Now it was on the brink of being sold for big money. It was a proof point that NYC could breed a serious batch of startups post-Web 1.0.  But if anything, the “Fourhoo episode” was also a scary wake-up call for those of us invested in the future of the NY tech ecosystem. If Foursquare sold — to Yahoo!, to Facebook, or to anyone else in the space — they’d undoubtedly end up in the hands of a Silicon Valley company, and its IP and (probably) leadership would be shipped out of town, taking any future value creation with it. (Sure, they may keep the jobs here, but the profit and reinvestment? Future product integrations?)  As it turns out, this whole exit scenario is a sham for the local environment, and here I thought exits were a good thing. What’s the matter with New York?! Here we are producing a fleet of World Class startups, and an exit for our startup scene means depleting its resources?  This sounds bad. And it is.

Read More: BusinessInsider.com

Futures, Forwards, Contracts Part 2

I was recently talking to someone in the industry I admire and we both started discussing the options, forwards and contracts of dispensable media. Ironically both of us have oil/gas history. He mentioned to me the context of the spot market and how in oil and gas – almost the majority of deals are done in advance and commodities trade in this manner and hedge where needed. The spot market is a residual market where it’s a lot less of the commodities that trade. Take the 80/20 rule – 20% is the spot market in oil/gas and 80% is the futures, forwards contracts market.  Let’s look at the premium and remnant market in digital – is it not the exact opposite? 20% of the market is secured guaranteed premium inventory and the other 80% is the spot market! Incredible – this means that the upside is greater and that digital is only at the start of its bell curve. While 20% has the bulk of the monetisation –we have an 80% pool of potential upside waiting in the wind. Technically, the spot market becoming competitive and working by market forces should only increase the guaranteed market.

Read More: AdSolver

Pay To Play: Is Hulu Plus A Step Away From An Ad-Supported Model Or The New Freemium Norm?

Beginning what some analysts see as the beginning of a slippery slide away from wholly ad-supported models, Hulu on Tuesday debuted Hulu Plus — its premium service that will charge consumers $9.99 a month for carte blanche content access over multiple platforms.  When Hulu debuted in mid-2007, it was viewed as a potential threat to cable and satellite providers that charge a premium for content — and in some cases ad-supported content.  Hulu Plus, which will include some advertising, could therefore be seen as an admission that advertising alone is not enough to support premium content online.  Not so, says senior eMarketer analyst David Hallerman. “It’s an expansion of Hulu’s business rather than a failure,” he says. “What they’re offering here is a deep catalog of content, and studies I’ve seen show that about a quarter of [consumer] respondents are willing to pay for that.”  Meanwhile, Hulu is positioning its subscription service as the perfect vehicle for marketers to target advertising across four screens. Initially, Hulu Plus is partnering with Nissan and Bud Light, and said it expects to include additional advertisers shortly.

Read More: MediaPost