Jason Calacanis predicted in his last night’s newsletter that online advertising spending would go up. After a rather depressing forecast, which included terms like “the Death Spiral of the American Economy” and “The Group Belt Tightening”, Calacanis comes up with the good news. This consists of four parts. Firstly, experience becomes more important than expenses. Good news for Digg, StumbleUpon, and other discovery services. Moreover, there’s no competition (2) for bootstrapping start-ups (3). Lastly, a measurable advertising boom will occur:
Advertisers will start cutting print, outdoor, TV, and radio (probably in that order) in favor of the internet’s action-based offerings such as CPA (cost per acquisition), CPL (cost per lead), and CPC (cost per click).
Jason Calacanis
Although Calacanis is talking about the US, his prediction can be projected on different parts of the world. It won’t be surprising to see it happen in Europe as well – as it makes sense to cut marketing costs and look for attractive alternatives. In Russia this trend is already visible.
Online advertising boom in Russia
Sfnblog reports that online marketing communications in Russia have experienced a surge in financial backing since the beginning of this year. Total marketing numbers for 2008 will average between $1.04 billion and $1.48 billion, says market analysis firm Tagline at the annual Russian Internet Week. They based their findings on a study of 600 companies.
In the UK they’re still waiting
However, in others parts of Europe, the online marketing industry has been noticing a decline in advertising spending. Patrick Smith from Paidcontent UK reports:
IPA’s recent Bellwether report showed that online ad spend in Britain was flat in Q308 and Enders cut its 2008 forecast from £3.56 billion [€4.44 billion] to £3.33 billion [€4.16 billion], despite most in the industry predicting – or at least hoping – that online ad spend would weather a downturn and continue to grow.
Of course I hope we can look back in a few months and say Calacanis was right – that most online markets did follow the Russian pattern. It would further professionalize the blogosphere, including this blog.
For some of us it’s a no brainer what kind of advertising has a better ROI (Return on Investment). We all know it’s online advertising, right? But there are enough people – especially marketing executives in big corporations – who are not that convinced yet. To say it with the words of Mick Jagger, “old habits die hard“.
Now, I am not saying anything to try to convince them. I’ll let Gary Vaynerchuk do this. He’s way better at explaining it and he does it in an entertaining manner too. Definitely worth watching.
Its not a question whether newspapers are depended of their online services anymore. It seems that newspapers are making the switch to digital, and that income can be found in advertisements rather then subscription based income. An example is English business paper Financial Times, that recently reached an important tipping point – The newspaper currently have more online then printed readers.
According to Financial Times owner Pearson the daily circulation of the business newspaper has been 350.000 readers for a long time now, but the site ’s online visitors have tripled to half-a-million in just one year.
The increase in online users is the result of a successful digital strategy of the media company; the news company introduced a policy that enforces the frequent readers, that read more then five articles to subscribe to the site. Income from online visitors is generated with advertisements. The digital subscriptions and online advertisement counted for 20% eight years ago but increased to 63% of turnover this year.
I read the Financial Times almost everyday, and I really like to read the paper on my way to work, like many others I actually like to read from paper. But I guess that the Kindle, iPhone and other E-paper gizmo’s will be making digital newspaper reading more convenient in the future. You’ll never know, soon you might be asked: “Mommy/Daddy, can you tell me again about the time when you were reading printed newspapers?”
A few weeks ago I wrote a sarcastic article about Google’s efforts to gain popularity in Russia. Native search engines like Yandex and Rambler dominate this market, and Google obviously has been feeling threatened by that. So in the first week of June, the search giant started a billboard campaign in Moscow. This move looked like it was made out of desperation. Today Google made a more serious effort by acquiring Russian contextual advertising service Begun for 140 million dollars from Rambler.
Probably to conquer some market share – as it grants them access to 40,000 advertisers and 143,000 partner sites – but could there be a second – more important – reason? Maybe this acquisition has something to do with Project Spaghetti – Google’s plan to generate more advertising revenue from YouTube.
Begun introduced contextual video advertising just last month
As I reported on June 30th, Begun integrated contextual advertising for video content on Rambler’s video sharing community, Rambler Vision. From that day on, 1.3 million visitors per month (and counting) would see the ads. Advertisments are based on the tags and are sold on a CPC bases.
This ad-introducing experience might come in handy when Google integrates video advertisement on YouTube.
YouTube only generates $200 million a year
Because YouTube badly needs a advertising strategy. Last week, the Wall Street Journal got two anonymous sources talking about YouTube’s failing advertisement strategy. The video giant generates 10 billion video views a day, but ‘only’ manages to make $200 million a year from advertising. Thus the Google-owned company might introduce pre and post-roll ads, said the sources to WSJ.
Welcome to the Valley, now let’s make money
You see the connection? Not only will Google gain more popularity in Russia, it has also acquired a company that knows how to make money from ads. Google will gladly welcome these fellas in Silicon Valley to turn YouTube in a profitable business.
Today was a hefty day for the online ad industry, as two important announcements were made. Technorati has launched an ad network and the utterly successful women-focused ad network Glam Media has acquired Monetise, a London-based digital-ad sales start-up.
Technorati CEO Richard Jalichandra (by Brian Solis)
Let’s start with the most exciting one: Technorati has launched an ad network for blogs called Technorati Media. They’ve been privately testing the service the last couple of weeks with several advertisers – including T-Mobile, Toyota, and Verizon – and some core sites who reach an audience of 17 million people. CEO Richard Jalichandra wrote in the announcing blog post that “over the next several months, we’ll be adding blogs from the mid and long tail within those verticals.” If he keeps his promise, this might become an interesting network. As for smaller blogs, there isn’t really an alternative for Google Adwords yet. Let’s just hope that at the same time, Technorati will keep improving it’s blog search engine – since it has been pretty slow lately. The recently raised $10 million will probably help.
Speaking of raising money, Glam Media has used its latest staggering round of funding – $85 million dollar – for an acquisition that must help them to “speed the entry into the important U.K. display ad market” – Glam Chairman and CEO Samir Arora said in a release. “Monetise has strong relationships with London advertising agencies and enables Glam to immediately increase its reach in the U.K. market.” All the employees, member sites, and division will be integrated into Glam. Valleywag editor Nicholas Carlson speaks of a “Glam scam” and raises the question whether Glam is still really focused on women sites.
I don’t think Glam minds though, as they’re now operating in a country where the online ad spending is about to take over TV this year.
So you have just launched your fancy new Web2.0 site, you are sitting on a brand new domain, you have no history to speak off, no links to your site, no one talking about you on blogs, and you have absolutely no traffic. That’s when you figure it out! You need to be at the top of Google when people search for ‘red widgets’.
But you have a little problem see, a couple hundred thousand other people also had the exact same idea, only they had it years ago. So now you’re at the back of that cue and there are no prizes for last place in this game.
Never fear, while Google penalize new domains for important search terms for two years, in the mean time they offer a solution called Adwords. You can pay them a few bucks a click to get featured at the top next to others who also bid for a spot in the paid listings. If you have enough cash you’re laughing. You can simply pay to get your advert in the search results AND on all related sites where others can share the profits with Google.
This system is almost perfect but there has been one little thorn annoying Google for a few years, it’s these people calling themselves SEO’s. They claim they can game the SERP’s (results) thus getting companies to the top. Google have been fighting a war on this front for years and with this latest update it looks like they have finally cracked it.
In the previous to last update we saw the Google hammer come down on paid links, Google reduced the Page Rank and trust of sites offering paid links which were skewing the organic results. In this update we have seen the effectiveness of normal SEO ‘tricks’ officially scuppered. There are no secrets anymore, even Google know how the tricks were done and they are not laughing!
Written on 28th October 2008
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