Komodo Online Marketing

Professional Web Development and Online Marketing

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Komodo Links: AdWords Demographic Bidding, Limiting Consumer Tracking on the Internet, Phorm Knows Everything About You

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Today we have a short but very sweet edition of Komodo Links. This week’s edition is all about online consumer data, those who track and sell it, those who use it to target ads, and those who want to stop it. Read on and let us know what you think.

In January, Google invited AdWords advertisers to join a beta test of a new demographic bidding feature. Today demographic bidding is available for all AdWords advertisers. Demographic bidding is a feature that helps advertisers target ads to users of certain age groups, gender or a combination of both. Advertisers can use demographic bidding for both contextual and placement targeting and with CPC and CPM bidding. You can also use demographic bidding to refine your ad’s reach on certain sites in Google’s content network. Advertisers can also access demographic reports in the AdWords Report Center to see how well their ads are performing across different demographics.

Here is a perfect follow up to the AdWords demographic bidding announcement. The New York Times reported yesterday that New York Assemblyman Richard Brodsky has drafted a bill “that would make it a crime for certain Web companies to use personal information about consumers for advertising without their consent.” Yahoo and Microsoft have already sent lobbyists to meet with Mr. Brodsky. The article covers some interesting issues that this bill raises.

Some interesting highlights from the article:

“A law like this essentially takes some of the gold away from marketers,” said Joseph Turow, a professor at the Annenberg School for Communication at the University of Pennsylvania. “But it’s the right thing to do. Consumers have no idea how much information is being collected about them, and the advertising industry should have to deal with that.”

“There has really been no harm shown by behavioral targeting or third-party advertising, so this rush to regulate the Internet is really unnecessary,” said Mike Zaneis, vice president for public policy for the Interactive Advertising Bureau, an industry group that represents companies like Google and Yahoo.

Moreover, Mr. Zaneis said, the New York bill threatens to undercut the business model that supports the Web. “If you take the fuel out of this engine, you begin to see the free services and content dry up,” he said.

And to finish up, check out Janet Meiners’ post at Marketing Pilgrim about the British company Phorm. Apparently Phorm is using British ISPs to track every single action a British web surfer takes to be able to show them ads. The company claims they have access to the surfing habits of 70% of all British households that have broadband.

Google Finally Gets EU Approval for Acquisition of DoubleClick

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The European Commission announced today that Google’s $3.1 billion acquisition of DoubleClick can proceed without conditions. Google proposed the deal back in April to increase its sales of online display ads. Microsoft had vigorously opposed the deal saying it would hinder competition in the global online ad market. In the end Microsoft could only stall the deal, not kill it. You can read the rest over at Bloomberg.

Kelsey Group Annual Forecast: Interactive Advertising Revenues to Reach US$147 Billion Globally by 2012

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The Kelsey Group released their Annual Forecast (2007-2012) today. The Kelsey Group is the leading provider of research, data and strategic analysis on directories, small-business advertising, online local media, vertical market advertising and mobile advertising. According to the Annual Forecast, the global advertising market will be fueled by exceptional growth in the interactive segment.

Some interesting highlights from the press release:

Interactive advertising revenues will increase significantly from US$45 billion in 2007 to US$147 billion globally in 2012, representing a 23.4 percent compound annual growth rate (CAGR).

“We see Internet development—including increased subscriber/user access and broadband penetration—as a driver of both interactive advertising revenue as well as migration of traditional ad spending to new media platforms.” -Matt Booth, senior vice president, Interactive Local Media, The Kelsey Group.

Interactive advertising, which comprises search (including local search), display advertising, classifieds and other interactive ad products, grew its share of global advertising revenues from 6.1 percent in 2006 to 7.4 percent in 2007. By 2012 Kelsey Group analysts expect the interactive share of global ad spending will reach 21 percent.

Directional advertising, which comprises local search, print Yellow Pages and Internet Yellow Pages (IYP), will grow from US$33.3 billion in 2007 to US$41.4 billion globally in 2012 (4.5 percent CAGR).

  • Local search revenues will grow from US$2.1 billion to US$6.6 billion (25.5 percent CAGR).
  • Print Yellow Pages revenues will decline from US$27.5 billion to US$25.6 billion (-1.4 percent CAGR).
  • IYP revenues will grow from US$3.7 billion to US$9.2 billion (20.1 percent CAGR).

What does this mean to a small business’s online marketing budget? My bet (and I’m really going out on a limb here) is that costs are going to increase as more small businesses begin advertising online. Cost-per-click (CPC) bids are going to increase for the majority of keyword phrases and advertising rates for local search directories and Internet Yellow Pages (IYPs) will increase.

Small businesses that follow best practices for search engine optimization and provide the informational content that online consumers want will reduce their dependence on online advertising for leads and customers.

Recession Resistant: Marketers Likely to Rely on Mobile, E-mail, and Search

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Advertising Age published a great article yesterday, How Media Would Weather a Recession. The article covers all the major media channels and gathers opinions from some major players in media buying and selling. There is a general consensus among these media buyers and sellers that online marketing will remain strong through a recession due to marketers’ ability to accurately measure online marketing ROI.

Some highlights from the article:

Digital, said Bryan Wiener, CEO of digital agency 360i, is the least vulnerable media spend in times of economic downturn because it is inherently more measurable than other media. [Wiener] add[ed] that the categories that tend to drive the best return on investment are e-mail and search — so marketers are likely to continue investing in those categories regardless of the economy.

Search marketing, because it’s so closely tied to sales, more often is thought of as a cost of goods sold rather than a marketing and administration expense. Therefore, it is assumed to be the most recession-proof of all marketing channels.

“As consumers get more frugal, [Consumer Package-Goods] will shift their media to things that have a more immediate return on investment,” Mr. Garga said. “Shopper marketing is a captive audience in the store with an immediate effect. … Online is a medium, too, that supports more value-oriented messages.”

I highly recommend reading the article. It offers some great insights.

Microsoft Proposes Acquisition of Yahoo! for $31 per Share

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The proposed deal, valued at approximately $44.6 billion in cash and stock, would provide a 62% premium to current trading price for Yahoo! stockholders. Microsoft claims the combined entity would be a more competitive company while offering greater value to stockholders and a better choice for customers.

Read the full press release.

Some highlights from the release:

The online advertising market is growing at a very fast pace, from over $40 billion in 2007 to nearly $80 billion by 2010. The resulting benefits of scale along with the associated capital costs for advertising platform providers make this a time of industry consolidation and convergence. Today this market is increasingly dominated by one player. Together, Microsoft and Yahoo! can offer a competitive choice while better fulfilling the needs of customers and partners.

The combination will create a more efficient company with synergies in four areas: scale economics driven by audience critical mass and increased value for advertisers; combined engineering talent to accelerate innovation; operational efficiencies through elimination of redundant cost; and the ability to innovate in emerging user experiences such as video and mobile. Microsoft believes these four areas will generate at least $1 billion in annual synergy for the combined entity.

Microsoft has developed a plan and process that will include the employees of both companies to focus on the integration of the combined business. Microsoft intends to offer significant retention packages to Yahoo! engineers, key leaders and employees across all disciplines.

It will be interesting to see how this plays out.