Too much inventory: Internet advertising is over-rated and here's a look at the future.

"We think that a modest amount of advertising is the right thing because that's going to drive atypical results for marketers."

Web site's formula for success: TV content with fewer ads
By Brian Stelter
Wednesday, October 29, 2008
"THUMBS up" and "thumbs down" ratings for commercials. Choose-your-own-advertisement options before shows begin. Interactive games during advertising breaks.
In the last year these online advertising innovations have been popularized by Hulu, the online video Web site that will celebrate its first anniversary on Wednesday. For all that has been written about Hulu's easy-to-use, aesthetically pleasing interface, the advertising experience is equally important.
In the place of the long commercial pods that TV viewers have become accustomed to, only one ad is shown during each segment break on Hulu. Fewer ads make the ones on the site more memorable, Hulu executives say, allowing the site to charge higher prices for the ad units.
"The notion that less is more is absolutely playing out on Hulu," Jason Kilar, the chief executive of the site, said. "This is benefiting advertisers as much as it is benefiting users."
While Hulu was not the first site to serve up full-length television shows or create new advertising units, it now dominates the emerging market for ad-supported TV and movie streaming. It emerged in public beta form one year ago with 10 advertisers, made its official debut in March, and now counts more than 100 sponsors, from General Motors to Old Spice.
The site has grown steadily, providing 142 million streams to 6.3 million unique viewers in September, Nielsen Online reported last week. Hulu is now the sixth-most-popular online video brand in the United States, surpassing the online video networks operated by ESPN, CNN, MTV and Disney. (It ranks far below YouTube, which streams 20 times as many videos as any other brand in the United States, and behind sites owned by Yahoo, Fox, MSN and Nickelodeon.)
With a library of more than 1,000 television series and 400 feature-length films, Hulu attracts a wider audience than individual network Web sites or competitors like Veoh and Joost. Recently, the site's biggest hurdle has been a shortage of advertising amid a sudden increase in video viewing. The cause? "Tina Fey happened to do an unbelievably good impression of Sarah Palin," Kilar said, referring to the "Saturday Night Live" skits lampooning the Republican vice presidential nominee.
Buzz about the sketches drove millions to view them online. The first skit about Palin, on Sept. 13, was viewed 14.3 million times on Hulu and NBC.com and watched by 10.2 million on television. The second sketch, on Sept. 27, has been viewed 11.1 million times on the site after being watched by 7.9 million on TV. While the comparisons are inexact because online viewers could be watching more than once, "Saturday Night Streamed" may seem a more apt title for the show.
At the same time that "Saturday Night Live" helped spike Hulu's traffic, the fall premieres of many popular TV shows attracted more visitors. To match the advertising inventory to the rapid growth in video views, "we now have to go back out into the marketplace very quickly," Kilar said.
While the site, a joint venture of NBC Universal and News Corporation, is reportedly not yet profitable, it has won over many advertising executives. "I've been waiting for this for 10 years," Greg Smith, the chief operating officer of Neo@Ogilvy, an interactive agency of the Ogilvy Group, told Kilar during a product demonstration last November.
Smith now uses the site regularly. "Hulu takes TV content, which is the best long-form video content there is — the Web has yet to come up with something as good — and it just breaks it out of the tyranny of the schedule," he said in an interview.
In a customer survey commissioned by Hulu and conducted by Insight Express in July and August, 76 percent of nearly 18,000 respondents said that the site had the right amount of ads given the can't-be-beat cost of viewing (free). Just over 17 percent said there was less advertising than they expected. The survey also found a 22 percent bump in advertiser message association and a 28 percent increase in intent to purchase among users.
Kilar is an advocate of the fewer-ads approach. The half-hour comedies that are so popular on Hulu — "Family Guy" from Fox and "The Office" from NBC — have an average of eight minutes of commercial time on TV. On Hulu, where the sitcoms are especially popular, each show averages about two minutes of ads.
"We think that a modest amount of advertising is the right thing because that's going to drive atypical results for marketers," Kilar said. He said the site had no plans to increase the advertising load.
As effective as the ads may be, it must be hard to resist adding more. ABC, a unit of the Walt Disney Company, conducted focus groups with consumers last summer to gauge potential changes to the advertising load on its video Web site. The company is now analyzing the focus group findings, a spokeswoman said.
ABC.com was the first network Web site to introduce full-episode streaming in 2006. Research by ABC last January found that the one-ad-per-segment format resulted in a 54 percent ad recall rate. ABC and the other broadcast networks now make the recent episodes of almost every TV series available for streaming. NBC put the season premieres of "30 Rock" and other shows online a week before they were shown on TV this season.
Despite all the experimentation, it is still difficult to know exactly how many viewers are watching individual TV shows and movies online. Hulu ranks its most popular content, but unlike YouTube it doesn't show the view count for each video. Still, it is clear that millions of viewers are watching some shows online. The Season 3 premiere of "Heroes" in September was streamed 8.1 million times on Hulu and NBC.com, according to the network. (All online streams are not counted as equal, because on NBC.com each segment of an episode is counted as a stream, so a full episode could count as six streams. On Hulu, one episode equals one stream.)
It is easier to count the click-through rates for the video ads. On ABC.com, nearly one in four users participate when the ads are interactive, the network said. On Hulu, companies like Nissan have offered multiple versions of commercials for viewers to choose. The site is also experimenting with longer-form advertisements, sometimes letting users choose to watch a movie trailer in place of a 30-second spot.
Hiccups remain, Smith said, noting that technology sometimes limits innovation. "I'm still getting the same spot five times in an hourlong program sometimes," he said. "If I stop watching a movie and come back a few days later, it remembers where I stopped, which is great, but I wish it would remember which spots I was exposed to."
In a glimpse of the future of ad feedback, Hulu users are encouraged to click buttons indicating whether they like or dislike each ad they see. "As we collect more and more data, we can personalize the ad experience for you," Kilar said.

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People will pay for content and internet advertising is over-rated.

O.K, TimesSelect was a failure (sorry, a success, but an ad model was better) we are told. And there a lot of believers out there who want you to believe that there is no future in paid content.

I disagree.

On the reader side there is heaps of content I would pay for, content I shamelessly nick and post in full on this blog just to demonstrate the fact that there is content that I personally would pay for and don't have to.

On the ad side, a lot of these ad networks (300 by last count?) are delivering poor value to advertisers because their metrics systems are poor (at best).

And, back to the reader, they are often annoying, and for the advertiser don't offer the impact of print. Way, way too much inventory and poor industry pricing models.

There are people who don't run with the sheep, the FT is one of them.

Where we're at with the Internet and media is NOT a crisis point but THE VERY VERY BEGINNING of what will come: better thought out models - that exploit audience fragmentation, not fight against it; better technology for monetizing content; changing user demands and habits.

I hate the cliche carpe diem, but this is the day to go for it.

When is the NYT Company going to demonstrate they can do this?

FT.com focuses on "quality not quantity (Editors Weblog)

Posted by Alisa Zykova on October 28, 2008 at 10:29 AM

As we reported yesterday, FT.com has launched the Long Room page on the Alphaville blog. In an interview today, Managing Editor Robert Grimshaw reported that the website will not be participating in monthly traffic measures by the UK's Audit Bureau of Circulations Electronic (ABCes), because its focus is on "quality not quantity."

Grimshaw said that online news sources in the UK that have cut back on advertising and stopped charging for their content may experience difficulties in the future in the event of declines in advertising revenue. "We think it's philosophically right. We've produced some hugely valuable content and we know for a fact that our users are prepared to pay for it," says Grimshaw. "It's about using the flexibility of the access model and the business model overall."Grimshaw thinks that his site's competitors are too reliant on the advertising industry, whereas FT.com aspires to "carve out its own path online," according to Journalism.co.uk.

Long Room's content will adhere to FT.com's business structure and will be "high-level" and "intellectually charged", but will not propagate "expertise."

In March, the site attained 7.1 million users, although it is more interested in the 500,000 to a million senior users.
Source: Journalism.co.uk
http://www.editorsweblog.org/multimedia/2008/10/uk_ftcom_focuses_on_quality_not_quantity.php

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Is Recession good for Internet Advertising Business?

Web Ad Growth Falls Off -- and So Do the Salaries
Recession to Result in Less of a Talent Crunch and Leaner Paychecks

By Michael Learmonth

Published: October 27, 2008 NEW YORK (AdAge.com)

-- The $23 billion online ad market is slowing down, and so is the once white-hot market for online-ad talent. Five years of double-digit growth fueled a scramble for talent unseen since the last boom, as hundreds of ad networks and venture-funded start-ups competed with the portals, agencies and marketers to hire anyone who knew -- or agreed to learn -- how to sell or buy and online advertising.

Michael Lebowitz, founder of Big Spaceship

But that market has cooled considerably in the past month. Start-ups such as AdBrite, Heavy.com, Imeem and Zillow kicked off what appears to be industrywide belt-tightening. Last week Yahoo announced it will cut its payroll 10%, or about 1,500 employees. In August, the number of workers employed by internet-media companies and portals reached 82,000, its biggest tally since 2001. But given that the subprime-mortgage debacle sent the stock market off a cliff, the latest Interactive Advertising Bureau statistics show that online advertising stalled in the second quarter. While few predict the overall online ad market will contract, executives are expecting some relief from the talent shortage that has plagued the industry in the past few years. That means less cutthroat competition for new hires, more job hopping among established pros and lower salaries.

"I do expect it to be easier to recruit and hire people in this industry," said Lynda Clarizio, president of AOL's Platform-A. With online advertising growing at a double-digit rate, the number of ad networks, publishers, social networks and other start-ups seeking slices of the advertising dollar expanded at a breathtaking rate. The sheer number of new outlets added complexity to a process that was already much more labor-intensive than TV, radio or newspapers.

Crowded field

Case in point: The market now includes more than 300 ad networks, giving rise to yet another layer of start-ups (PubMatic, Rubicon Project) to manage ad network relationships. None of this has made the buying and selling of online ads any easier or less labor-intensive. Bant Breen, president-digital for Initiative, said he figures it takes 2.5 times as many people to execute a digital-marketing campaign as a traditional-media campaign. "The average buyer has between 150 and 175 people calling on them looking for a piece of their budget," said 24/7 Real Media Chairman David Moore. To handle demand and added complexity, agencies instituted training programs to convert traditional-media buyers to digital. Salaries for account execs ballooned from the $150,000 range to $300,000 in some cases. The market looked so good it attracted refugees from mortgage banking and finance, who filled training programs, many on their own dime. "They knew selling but didn't know online selling," said Lisa Laredo, president and founder of Laredo Group, which offers courses on online advertising. "They would be in our classes because the ad networks and portals needed feet on the street, and warm bodies are warm bodies." Indeed, as fast as dollars have shifted online, they might have flowed even faster had there been more talent to sell it, according to Bank of America advertising analyst Brian Pitz. It's also a reason why spending online remains concentrated among the top sites and portals rather than following consumers to niche sites. Mediocrity painsThe talent squeeze on the creative side meant some pretty dismal online ad campaigns in the past few years that helped drive down ad rates. "All this money was pouring into digital, and there weren't enough people to do it. That led to mediocrity, and mediocrity didn't help the market at large," said Michael Lebowitz, founder of digital creative agency Big Spaceship. "A slowdown of cash and slowdown in the need for talent will give this industry a bit of space to breathe; too much too fast is bad for a company and bad for an industry," he said. A downturn is likely to trigger movement among the top stars in online advertising, particularly when their employers start to struggle. Those with stock-based compensation won't see that as an incentive to hang around publicly traded web and media companies trading at a fraction of their values of a year ago. "It's obvious we prefer to hire during the downturn," said video-ad network BrightRoll CEO Tod Sacerdoti. "What's more interesting is the superstars tend to get dislodged during these times." Aside from the burst of another asset bubble, there are few similarities between the internet bust of 2000 and the slowdown occurring today. First, most believe we're looking at a few years of single-digit growth, not negative growth, as occurred between 2000 and 2002. In 2000, online advertising was still experimental for most marketers; today it's part of the mainstream. Indeed, unlike in 2000, agencies are unlikely to cut any online staff and likely will use the downturn to fill or upgrade positions. "The talent war on the agency side will be as intense as ever," said Interactive Advertising Bureau Chairman Wenda Harris Millard. "I don't think there is any agency who won't tell you that they are still starved for interactive talent." Since there is growth left, companies will be looking to grow -- and to hire -- through the downturn. And for the first time in five years, there may be bargains. AOL's Platform-A is hiring salespeople, as is Initiative, which has doubled the size of its digital staff in the past year.

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Internet advertising is over-rated.

I've blogged before that in MHO, internet advertising is over-rated and will increasingly prove so to be.....

Financial turmoil catches up with online advertising
By Eric Pfanner
Sunday, October 26, 2008
PARIS: Are you clicking "close" more often, to work your way past advertisements that get in the way of your Web browsing?
If you are, it is because Web sites are trying harder to attract advertisers, one symptom of a slowdown in the previously runaway growth of online ad spending.
"Publishers are being much more flexible, because they're trying to attract the money," said Nigel Morris, chief executive of Isobar, a digital advertising agency owned by Aegis Group, based in London.
Until recently, attracting money to Internet advertising was hardly a challenge. With spending racing ahead at 30 percent-plus rates, everyone - from Web 2.0 start-ups to the media giants of the offline world - was trying to get a bigger piece of the action. Some analysts said online advertising might even prove immune to the effects of the global credit crunch, as money flowed onto the Internet and out of newspapers, television and radio.
Now it is increasingly clear that Internet advertising is also getting hit hard by the economic downturn. Spending is still rising, but growth has slowed sharply, to low double-digit percentages in major markets like the United States and Britain. And some kinds of Internet advertising are faring considerably worse.
"What's happening in the economy is clearly pulling growth down much more quickly than people expected even a few months ago," said Ian Maude, an analyst at Enders Analysis in London. "It's certainly a grim outlook compared with what we've gotten used to over the last few years."
The reversal has been particularly striking in Britain, the world's most advanced market for online advertising. About 20 percent of British ad spending goes to the Internet, the highest percentage of any large country and more than double the worldwide average. Online ad revenue in Britain is nearly as high as in Germany, France and Italy combined.
Enders Analysis still expects online ad spending to rise by 18.5 percent this year in Britain. But that is less than half the growth rate of 2007. And most of the gain is going into one advertising category - contextual ads that are sold by Google and other search engines and shown alongside responses to users' queries. In the first half of the year, 58 percent of Internet ad spending in Britain went into search, according to PricewaterhouseCoopers. Google mopped up 87 percent of that amount, according to Efficient Frontier, a specialist in search campaigns.
Search ads, which often link users directly to e-commerce sites, offer budget conscious advertisers the prospect of instant gratification. Online ads whose payoff is less immediate - screen-covering "interstitials," for example - are doing worse. Spending on online display advertising in Britain fell to $497 million in the first six months of this year, from $575 million a year earlier, according to the research company Nielsen.
While weakness in display advertising has been most pronounced in Britain, analysts say other markets, including the United States, are showing softness. And new online formats, like video advertising, are also growing more slowly than analysts had expected.
Eva Berg-Winters, an Internet analyst at PricewaterhouseCoopers, said the financial crisis had made advertisers more cautious. A year ago, they might have been willing to experiment; now they are more likely to stick with the tried-and-true, like television.
The thinking, she said, goes like this: "Nobody is going to fire me if I do that, whereas if I spend money on online video advertising and all I get is a few page impressions, that could be risky."
Old media are still losing market share to the Internet, but not as quickly as some analysts had predicted they would during the economic downturn. Rob Norman, chief executive of Group M Interaction, a digital advertising unit of WPP Group, said one reason was that some marketing managers prefer television or print because of a need to reach the largest possible audience with the minimum amount of spending.
For start-up companies seeking to develop the Internet as a mainstream, ad-funded medium like television, that is bad news, at least until the economy improves. Their founders have dreamed up myriad business models based on tapping online display advertising to make money from blogging, social networking, music and video sharing and other Web 2.0 services.
Amid the economic downturn, "there's definitely going to be a flight to quality - known Web sites, companies that we know are strong and will be around next week," said Debra Aho Williamson, an analyst at eMarketer, a research firm.
As Web powerhouses like Google consolidate their strength, analysts say, there are already signs that the "long tail" of niche sites is getting squeezed. Growth is slowing for some Internet advertising networks, which group together space available on such sites into a single ad buy so that marketers do not have to deal with each individual site. One network, Adbrite, said this month that it was laying off 40 of its 100 employees.
The networks have made vast amounts of space available to advertisers. That has contributed to a general drop in the price of online display ads, said Morris, of Isobar. For advertisers, who often buy ads based on the number of "click-throughs" they deliver, that can be a good thing. But for niche sites, that may mean tough times.
"If you're doing a 'long tail' buy, there's enormous downward pressure on price there," Morris said.
The popularity of social networking has also created a vast new pool of available advertising space, much of which has been hard to fill.
Simon Levene, a partner in London at Accel Partners, a venture capital firm in Silicon Valley with investments in Facebook and dozens of smaller Internet businesses, said as many as a third of venture-backed Internet startups worldwide could fail over the next two years.
Levene said he remained optimistic about the prospects for Web 2.0 companies and other digital startups. Accel recently invested in AdMob, a specialist in mobile advertising, for instance.
But in order to survive, some Web companies may have to look beyond advertising, Levene said. He added that he was urging some companies in the Accel portfolio to consider charging users subscription fees for premium services, for example.
LinkedIn, a fast-growing social network for business users, has benefited from such a model, generating a majority of its revenue from nonadvertising sources.
The company has also maintained its appeal to venture investors. Last Wednesday, it said it had raised $22.7 million in new financing from Goldman Sachs, McGraw-Hill, SAP and Bessemer Venture Partners.
With other sources of revenue, Levene said, "at least you're not worried about whether an agency will call up and say, 'We're going to put an ad on your site."'

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Pop up ads on www.iht.com

You're on www.iht.com as I am on a nearly daily basis, you have a subscription to the print paper (I appreciate many Internet users do not) and this advert (see below) pops up as an entire page. Indeed entire page pop-ups even on home pages are common on many media sites.

In the case of these pop-ups, or specifically in the case of the iht.com subscription pop-up, I don't know what the click-through rate is nor the click through to conversion rate is nor the conversion to retention rate is, but either way, they bug the hell out of me.

Is Internet advertising over-rated?

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Is Google now so big that it is recession, even depression, proof?

More to the point, is their business model actually one that is ideal for a recession?

Google CEO Eric Schmidt

Google's Profit and Sales Leap, Firing a Rally
A big earnings surprise confounds analysts, who hadn't reckoned the Web search colossus would contain its costs so well
By Robert D. Hof
Google has defied the skeptics. The Web search leader reported third-quarter earnings that far exceeded the expectations of analysts, especially those who thought the company might finally fall victim to the slumping economy. Thanks largely to having contained costs better than in previous quarters, Google reported on Oct. 16 that profit rose 26%, to $1.35 billion, significantly higher than analysts had predicted. Sales jumped 31%, to $5.54 billion.
Relieved investors propelled the stock higher by as much as 10% after the results were released. The rally followed a 4% gain, to 353.02, which mirrored a broader market surge in regular trading. Until Oct. 16, Google's stock had plunged 53% this year.
In a conference call with analysts, Google (GOOG) executives sounded the familiar, confident notes of the past several quarters. "The economic situation today is globally worse than what people were predicting just a month ago," CEO Eric Schmidt said. "But we're optimistic about Google's future." The comments resembled those of about a month ago, when Schmidt said the "drama is in New York, not here," and "it's business as usual at Google."
Analysts Had Cut Targets
Schmidt's remarks—and the numbers that back them up—underscore Google's resilience, even as growth slows in overall online advertising. Search-related ads, which make up the bulk of Google's sales, appeal to advertisers because they reach customers ready to buy and because their results can be measured, analysts and Google executives say. "Advertisers are willing to take all the clicks we can give them" at current prices, Hal Varian, Google's chief economist, said during the conference call. A recession will prompt consumers to use search even more frequently to find deals, Varian said.
Google's profit per share, before stock option expenses, was $4.92—17¢ over expectations of $4.75. Net revenue of $4.04 billion, after payments to partners that run Google ads on their sites, was just a hair below the $4.06 billion expected by analysts. However, many analysts were informally assuming earnings might undershoot previous forecasts and have been reducing estimates and price targets in recent weeks.
Much of the earnings surprise came because Google slowed expense growth. The company hired 519 people in the quarter, compared with 2,130 a year earlier. It also reduced once-rampant capital spending by 18%, to $452 million. "Across all categories of expenses, people have been very diligent" in watching costs, Chief Financial Officer Patrick Pichette said. Rob Sanderson, an analyst with American Technology Research, said investors are relieved that Google is willing to keep a lid on expenses to buoy profit.
Online Advertising: Slowdown Evident
While growth in the U.S. continues at a respectable pace, some analysts saw cause for concern in Europe. Although most regions experienced "solid" growth, according to Pichette, revenue in Britain rose only 17% from a year earlier, compared with a 29% gain in the second quarter. "That is going to spread into Continental Europe," Sanderson says.
Google beat forecasts despite a negative impact from the strengthening dollar, which reduced effective earnings because of Google's significant international business, which accounted for 51% of sales. That's likely to continue into the fourth quarter and next year, even with a currency hedging program that began last quarter.
Encouraging third-quarter results aside, Google may not be able to withstand the headwinds of a protracted recession, which economists see as increasingly likely. "We're starting to see evidence of a slowdown in online advertising," says Jonathan Weitz, an analyst at Interactive Broadband Consulting Group. Recent Interactive Advertising Bureau figures showed the first quarter-to-quarter decline in ad spending since 2004, Weitz noted. A recession could affect even search advertising, especially because it is driven by small and midsize businesses—which may be especially hurt by falling consumer demand and a scarcity of funds as banks curtail lending.
Search Ads Keep Selling
And even if companies keep spending on search ads, it's possible that consumers who click on them will end up choosing to buy less frequently. This, in turn, would make the ads less effective for advertisers, who could then bid less for ads placed alongside Google's search results. A new study by search marketing firm SearchIgnite, for instance, found a trouble spot: Retailers in particular are starting to reduce search ad spending, which slid 10% in September.
For now, however, overall search-related advertising is holding up, and that's good news for Google. "Search is not immune to macroeconomic gyrations," says Craig Macdonald, vice-president for marketing and product management at Covario, which makes online-marketing analysis software. "But [Google] will be the last to be affected," he adds. According to SearchIgnite, overall U.S. spending on search ads rose 27% in the third quarter. "Our clients continue to want to spend on search," says Kevin Lee, CEO of search marketing firm Didit.com. "Like it or not, paid search is the front door to your store."
Another reason Google's results may not reflect the larger picture in Internet advertising is the company's sheer dominance. Covario estimates that Google accounted for nearly 83% of search ad spending in the U.S. and more than 95% in Europe. Because of that lead in one of the fastest-growing segments of Internet advertising, the results shed little light on the broader market—in particular on the climate for Yahoo (YHOO), which reports its third quarter on Oct. 21.
Given the market meltdown of the past few weeks, Schmidt conceded that the economy is in "uncharted territory." As a result, analysts may remain cautious on Google's prospects. "There's a lot of doubt about whether the 2009 estimates are too high," says John Aiken, managing director of Majestic Research. Currently the consensus is for 23% revenue growth. Aiken thinks that 20% is more likely, and even 15% is possible. But for one more quarter, at least, Google has held the bears at bay.
Hof is BusinessWeek's Silicon Valley bureau chief.

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Could Recession Help Big Media? (Forbes)

Online Publishers

Could Recession Help Big Media?

James Erik Abels, 10.15.08, 7:45 PM ET

Today's ugly media truth: Online advertising rates are falling. "Pricing has definitely trended downward this year," says PubMatic President Rajeev Goel.
His firm, which lets publishers automatically search mulitple ad networks to find the one that will earn the most money, has been tracking online display ad rates since the fourth quarter of last year. In a report issued on Wednesday, Goel says these rates dropped 21% in the third quarter of this year to $0.27 per thousand impressions from $0.34 per thousand impressions in the second quarter. The information is culled from some 180 online ad networks, including seven of comScore's top 10 largest ones.
Numbers like these chill media honchos from coast to coast. At a Media and Money Conference in New York on Tuesday, a whole panel of executives discussed the issue. Martha Stewart Omnimedia co-CEO Wenda Harris Millard said she's worried, noting that advertisers are holding out until the last second to buy ads.
But so far it's hard to say how a recession will impact digital media. On one hand, the rate of online display ad spending has been slowing down. Though it reached $11.5 billion in the first half of this year, reports the Internet Advertising Bureau, the 15.2% growth rate that got the industry there was a lot slower than the rate seen in the first half of 2007, which was 27%.
On the other hand, the slowing market may actually help, boosting traditional media's control over the digital media ecosystem by giving it an opportunity to buy smaller upstarts or watch them get crushed. Think about it this way: The digital businesses that may be hit hardest by a downturn aren't really media businesses at all. Instead, outfits like Facebook, Meebo, and Twitter provide fun tools and communications technologies for people who, when aggregated in one spot, may be worth a lot of ad dollars--if they can actually grab them.
That's going to get tougher. Chrysler said Wednesday that it is starting to withhold ad dollars from "experimental" ad campaigns for things like virtual worlds or social networking applications. That hurts Facebook but maybe not traditional publishers like Hearst. It's also bad news for ad networks and helps to explain their plunging rates.
Here's why. Advertisers have a pretty good idea on their own of who is paying attention to certain types of editorial content--and they bet its quality level improves the value of their ad. In the media universe, it's called "sold against" and it's nothing new. But online advertising networks, which place ads via technology, have devalued the notion in recent years by making ad serving a commodity business that benefits nonmedia sites as much as it does media ones. Some see the value of "sold against" gaining more ground online in a nervous time when fewer dollars are available.
Brian Fitzgerald, president of Gorilla Nation Media, an ad rep firm that exclusively sells display ads for publishers and others, such as Marvel, says his rates aren't slipping yet. And though he admits it's still early to know how the markets will ultimately affect them, "We're actually seeing revenues growing, CPMs are constant," he says.
Constant--and a whole lot higher than $0.27 per thousand views.

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U.S. newspapers see growth in online advertising slow to a crawl (IHT)

U.S. newspapers see growth in online advertising slow to a crawl
By Stephanie Clifford
Monday, October 13, 2008
NEW YORK: Already facing a grim economic forecast, U.S. newspapers are digesting another piece of bad news: The growth in online advertising they saw as their salvation has slowed to a crawl.
In the past few years, newspaper companies have been rapidly expanding their Web presence - adding blogs, slide shows and podcasts - in the belief that if they built it, advertisers would come. But after 17 quarters of ballooning growth, online revenue at newspaper sites is falling. In the second quarter, it was down 2.4 percent from a year earlier, to $777 million, according to the Newspaper Association of America. It was the only year-on-year decline since the association began measuring online revenue in 2003.
The decline in revenue came even as overall online advertising increased. Display advertising, the graphics-rich ads that newspapers carry, grew 7.6 percent in the second quarter, according to TNS Media Intelligence.
Newspaper executives say the new features have drawn bigger, more engaged audiences, which they hope will translate to more advertisers. Unique readers this August were 17 percent higher than a year earlier, at 69.3 million. They also point out other factors for the decline, like the economic downturn and the continued flight of classified advertisers away from newspapers and their sites.
But the advertising glut, particularly in display advertising, on which companies based their optimistic projections, has shrunk. As newspapers keep adding pages, they are required to sell ads at cut-rate prices.
While large papers like The Washington Post, The Miami Herald or The New York Times (whose global edition is the International Herald Tribune) can sell premium ad space on, for example, a newspaper's homepage, for $15 to $50 for every thousand impressions, other papers have increasingly relied on middlemen - known as ad networks - to auction less desirable space, typically for 60 cents to $1 for every thousand impressions, and networks keep that data for themselves.
"Unwittingly, I think, the publishers commoditize their own inventory," said Paul Iaffaldano, the general manager of TWC Media Solutions Group, which sells advertising for The Weather Channel and Weather.com.
According to a recent study from Bain and the Interactive Advertising Bureau that examined seven high-end publishers (their identities were not disclosed), about 53 percent of newspaper sites' ad space would go unsold without networks, up from 50 percent in 2006.
Given the choice of showing an ad-free page and making no money, or using an ad network and making a few cents, many publishers choose networks. In 2007, 30 percent of their sold ad spaces came from networks, up from 5 percent in 2006, according to the Bain study.
"If we sold every scrap of inventory, we wouldn't use ad networks, but right now it makes some sense for us," said Jeff Webber, publisher of USA Today.com. At Gannett, which owns USA Today.com, online revenue in the United States rose a modest 3 percent in the second quarter. Results from other newspaper chains have been more grim. In the second quarter, online revenue dropped about 12 percent at A.H. Belo, 8 percent at E.W. Scripps newspapers, 4 percent at Tribune and 9 percent at Lee Enterprises, all compared with a year earlier.
Denise Warren, chief advertising officer of The New York Times Media Group, said NYTimes.com used ad networks despite some concerns. She said they were useful when traffic spiked; this September, for example, the financial crisis spurred lots of page views.
"We couldn't sell that inventory because we didn't know it was going to exist, so if we have an ad network we're able to have all those extra CPMs," she said, using the industry term for cost per thousand impressions.
Internet revenue at the Times' News Media Group, which includes The Boston Globe and regional newspapers, rose only 0.9 percent in July and 7.9 percent in August, well below the usual double-digit growth rates.
Warren said that the two months were anomalies, adding that display-advertising growth at NYTimes.com alone had been much higher, though she declined to specify a figure.
As for the blogs and video content that the site is adding, "those investments will definitely add to advertising revenue," she said, but "those things are just getting started right now."
Steve Stup, the vice president for advertising sales at Washingtonpost.Newsweek Interactive, said he began using networks this year only because the site had unpredictable traffic flows because of the elections. He added that some advertisers might start to see networks as an inexpensive substitute for dealing with papers directly.
"It's still a situation where if advertisers even perceive they can reach your audience, they might be inclined to go with a network, and that's a concern I have with networks in general," he said.
This has meant a spurt in networks. There are now more than 300 networks, most offering targeted ads of some sort, and they are popular venture-capital investments and acquisition targets. Last year, Microsoft bought the network DrivePM, Yahoo bought Blue Lithium and AOL bought Tacoda. "The ad networks have actually been using the presence of publisher inventories as part of their selling story to ad buyers," said John Frelinghuysen, a partner in Bain's media practice. Many publishers join only the networks that do not disclose what sites they include, but even so, savvy advertisers can guess.
In response to the downturn, some publishers are also exploring a larger, counterintuitive strategy: instead of creating more ad space, they are limiting it.
"We're going to reduce the number of ad sizes we use and the number of units," said Christian Hendricks, the vice president for interactive media at McClatchy. "It is a case where yeah, you could probably sell another advertiser by creating another ad space," but that could hurt overall revenue, he said. Online revenue at McClatchy rose 12.5 percent in the second quarter; a year earlier, it had dropped 2.2 percent.
McClatchy also tries to avoid ad networks, Hendricks said. "We don't want to get in the habit of filling every little space we have with remnant," he said.
Frelinghuysen said limiting the number of ads per page could be smart. "That high level of unsold inventory often creates a real challenge in terms of sustaining pricing or growing pricing," he said. "In most media, especially in television, the traditional model has been that you drive sellout, and that gives you the ability to drive pricing over time." Some Web sites unaffiliated with newspapers have also tried limiting inventory and banning ad networks, and many report good results.
Weather.com limits its ad spaces so it can sell out each day, and it does not use ad networks, Iaffaldano said. Prices there have increased 10 percent to 15 percent over last year, he said.
Forbes.com stopped using ad networks this year, as did ESPN.com, CNN and other Turner sites. (Turner and Forbes then created their own networks, which they say are different from the remnant networks because they focus on narrow subjects.)
"As more and more sites like ourselves forsake networks and are public about it, the ability for the agency to think for themselves, or even suggest to a client, that they're going to get quality expressions, will get harder and harder," said Jim Spanfeller, the chief executive of Forbes.com.
At CNN.com, where online advertising rose 17 percent in the second quarter, the site does not use ad networks and limits available space.
"We want to get as much value for our product as possible, and that means not having an endless supply of inventory," said Greg D'Alba, executive vice president and chief operating officer of CNN Advertising Sales.

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The Sucking Sound of Ad Dollars Disappearing (Businessweek)

Businessweek ran this piece just 5 days ago. I think it would need a rewrite today.






Media Centric October 9, 2008, 5:00PM EST
The Sucking Sound of Ad Dollars Disappearing
Newspapers and magazines have already been hit, and hard. Even network TV and luxury advertisers may not escape this recession
by Jon Fine
It has been a lousy few years for much of the media, and 2008 has offered no respite. But to quote the hideous '70s band Bachman Turner Overdrive, b-b-b-baby, you just ain't see n-n-nothing yet.
Because on top of the wrenching change affecting essentially every non- online media, here comes a very scary-looking economic downturn.
Think of the recession, says Barclays (BCS) analyst Anthony DiClemente, "as a vine growing up a wall. Except instead of a healthy vine, like at Wrigley [Field], it's like—'feed me, Seymour'—from The Little Shop of Horrors."
Forgive the surfeit of pop-culture jokes. I'm only trying to inject levity into an extremely grim picture. According to ad tracker TNS Media Intelligence, which provided all such figures for this column, automotive and financial services were the No. 1 and No. 3 U.S. ad categories last year. We all know what happened to the latter in recent months. In 2007, Merrill Lynch (MER), Lehman Brothers (LEH), Bear Stearns (BSC), and Washington Mutual (WM) spent $213.1 million on advertising. Even if those companies' new owners spend something to reassure old customers, you're likely looking at a nine-figure sum sucked out of the ad marketplace by those guys alone. And when major carmakers report sales drops of 30%, boffo ad buys do not follow. Ford Motor's (F) ad spending was down over 31% for the first half of this year. Car sales' slide has accelerated since. In case you're wondering, the No. 2 ad category was retail, which is now under severe pressure as consumers spend less.
The consequences of all this contraction are readily apparent when you talk to key media executives. Magazines sell ads long before they appear, and advertisers already are making noises about cutting back in the first half of 2009, says one senior executive in that industry. "Everyone says they are going to keep advertising in a downturn," says another executive, who has run major sales organizations in different media. "But not everyone actually does it. That's just the reality of having to report earnings and profits." And while the wealthiest consumer may remain relatively untouched, those who have recently traded up to high-end products may slam the brakes on such consumption, raising chances that luxury advertisers will be affected, too. Food looks more likely to stay stable. One mordant TV executive puts it this way: "The auto industry is out. And Campbell's Soup (CPB) is in."
How the dollars flow—or rather don't flow—in any downturn can shape events in ways obscured until much later. As strange as it sounds today, the tech bust that started in 2000 meant that total dollars spent on online display advertising declined 21% between 2001 and 2002. And as strange as it sounds today, many established media organizations used that decline as a rationale for deemphasizing the Web in favor of their traditional businesses—and underinvestment allowed all manner of Web-only startups to outflank them in the one medium that's still growing. While online display ads will still be up in '09, says BMO Capital Markets analyst Leland Westerfield, that growth rate will likely slow. Look for search advertising to hold up, so Google should be hurt the least.
Elsewhere, Barclay's DiClemente suggests, the slowdown's effects will move up a media ladder of sorts, starting with newspapers, magazines, radio, local TV, and then hitting broadcast and—possibly—cable TV. There's a "high probability," he says, that the "advertising malaise spreads to network TV"—the one long-running medium that's held steadiest as others have fallen off.
DiClemente is forecasting a 5.5% pullback in ad spending next year, with only Web and cable TV posting ad upticks. It may be hard to conjure a scenario worse than today's, given what radio, local TV, and newspapers are currently experiencing. This has been a year in which many unthinkable things have happened—newspaper executives, for instance, mulling which days of the week they won't publish. But the coming downturn means that what once was unthinkable ... well, you better start thinking it.
Fine is BusinessWeek's MediaCentric columnist and Fine On Media blogger .

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Wires, wires, wires: too expensive? Paid digital content?

I've been blogging a fair bit about the relative strengths and weaknesses of the wires versus the original news content generated by the NYT/IHT. There is a lot of MSM resentment to their fellow MSM providers - insults over quality and maturity of their writers and now of course, to add to this, we have the sin that they - guess what - CHARGE FOR DIGITAL CONTENT.

That is of course a pretty revolutionary concept for newspapers and one they find impossible to do with the exception of a handful - South China Morning Post, WSJ, the Japanese business newspaper whose name completely escapes me (this is a blog, sorrry) for example.

LexisNexis® is a leading global provider of business information solutions to professionals in law firms, corporations, government, law enforcement, tax, accounting, academic institutions and risk and compliance assessment.

Yet paid content is out there in big numbers: the wires for one, LexisNexis for newspapers and companies, investment banks - whoops, scratch that last term - big financial institutions, law firms etc; your Mum's voice over your mobile phone (yes, that's digital content which you pay for, sorry) and CNN on your cable package. In some cases it's very clear you're paying for content, in others, like your cable package, you probably have a sense its free, but it's not.

So seeing newspapers in a tizz about paying for something they can't monetize themselves is kind of ironic and mildly amusing.

But I'd like to tip my hat to Star Tribune Editor Nancy Barnes, whose remarks are in bold below, and seems to be one of very few newspaper people who kind of get this paid content thing.

Newspapers Weigh Alternatives to AP: But Do They Add Up?By Joe StruppPublished: October 11, 2008 10:21 AM ET
NEW YORK Since the Associated Press announced its controversial rate change last year, many newspapers have started considering other content options. And things are not likely to calm down any time soon.

A handful of dailies — including several who admit their AP rates actually fell — have given notice to drop the service, editors in several states are forging content-sharing alliances, and Politico and PA SportsTicker are quickly positioning themselves to help replace the 160-year-old news cooperative in daily news pages.

But is the latest dispute over AP rates and services a real sign that its relationship with newspapers will be forever changed? Can a mid-sized or major daily really exist without the news cooperative? Or is this just a bluff?

"AP is going to lose newspapers, it is a question of how many," says Editor Dean Miller of the Post Register in Idaho Falls, which several months ago gave its required two years' notice that it plans to drop the news service. "My guess is most of their losses will be in medium and small markets." Since the beginning of the year, when the backlash began against AP's rate change, more than a half-dozen dailies have given notice, including The Bakersfield Californian, the Star Tribune of Minneapolis, and Washington's Yakima Herald-Republic and The Wenatchee World.

"I think the AP regional report has fallen off in quantity, and in some ways, quality," claims Paul Emerson, managing editor at the Lewiston (Idaho) Tribune, which gave notice to AP in September — even though its rates would drop about 17% under the new system. "It is mostly a concern about content." At least one paper, the Spokesman-Review of Spokane, Wash., is challenging AP's two-year-notice requirement and plans to stop using and paying for the wire service by the end of the year. "The legal point here is that we are not canceling a contract, we are declining to sign a new contract," says Editor Steve Smith, who admits a $30,000 expected savings in 2009, but says the remaining $375,000 AP bill is too high.

"More editors are feeling disenfranchised and disregarded by AP."

AP officials declined to comment for this story. But AP Executive Editor Kathleen Carroll, addressing the rate issue during the Associated Press Managing Editors conference in Las Vegas last month, told a group of newspaper editors there, "we certainly hope that the basic fundamentals of the economy and the marketplace will firm up enough so that the pressure is off some of the people who own the AP."

But even with promised AP cuts, editors have been dissatisfied, saying they cannot afford it. Others have claimed the news content is not what they need, particularly with regard to regional and state coverage. "We are exploring our options to see what our outs are," says Ben Marrison, editor of The Columbus (Ohio) Dispatch and one of eight Ohio editors who wrote jointly to AP in late 2007 to complain.

"All of our department heads are exploring what it would mean if we had AP or did not have AP."

The dispute dates back more than a year to mid-2007, when AP announced the rate restructuring (and some new services), which will not even take effect until 2009. When the new approach was announced in 2007, AP promised a combined savings of $5.6 million across newspaper member budgets, which increased to $14 million, and, finally, $21 million just days before the AP's annual meeting in April 2008.

Aside from price, there is growing criticism that AP offers content to newspaper competitors at television and radio stations that directly compete online. Star Tribune Editor Nancy Barnes says that is the key reason she gave notice to dump AP: "We want more control of our content and how it is distributed. It is very difficult for us to do that under the current AP contract."

At least one major daily, The Star-Ledger of Newark, N.J., tested that theory, publishing an entire newspaper on Sept. 10 without AP, using a combination of local staff, non-AP news services, and PA SportsTicker, a growing sports outlet that has already signed on with New York's Daily News to provide sports coverage. "They are in an evaluation period to evaluate all of our content," Jay Imus, PA SportsTicker's director of sales, says of the Star-Ledger. Editor Jim Willse and Publisher George Arwady did not respond to requests for comment.

Imus says that at least five other U.S. dailies are reviewing PA SportsTicker and have indicated interest in signing up. "I think we will be successful in serving hundreds of clients because there are many willing to give it a try," he says. "They are fed up with how intolerable AP has been.

"Another recent newspaper option is Politico, the political Web site nearing its second anniversary. It recently launched a content-sharing arrangement with numerous newspapers in which Politico provides content in exchange for the right to sell ads that are placed with that content. Politico and the paper split the ad revenues.

"There is no doubt that the trend of papers pulling back on Washington coverage is growing, and it will put more of the burden on places like Politico because people want coverage," says Jim VandeHei, Politico's executive editor. "Washington coverage is still absolutely necessary." Newspapers that have signed on include The Atlanta Journal-Constitution, The Philadelphia Inquirer, The Denver Post, and The Plain Dealer in Cleveland.

If enough papers seek to drop AP altogether, Politico could serve as an even more viable alternative, at least in part. VandeHei says, "We think we have a pretty distinctive voice."

Editors say using Politico copy with that of traditional news services such as McClatchy-Tribune, Hearst, or The New York Times News Service could fill the AP void. "I would be interested in cobbling something together," says Rex Rhoades, executive editor of the Sun Journal in Lewiston, Maine. Rhoades says even with what he terms a "small decrease" under the new AP rate structure next year, his annual cost will be about $157,000 for AP, while McClatchy-Tribune charges him $10,000 per year.

There's also the approach of newspapers sharing content among themselves. Statewide sharing has already increased significantly between some papers in Idaho, Washington, Ohio, and Florida. The Ohio group recently decided to co-sponsor campaign polls and publish the results on the same day. Rhoades of the Sun Journal also says he could see the day when newspapers nationwide share content.

Adds Miller in Idaho Falls: "Remember, AP was created by newspapers."
Joe Strupp (letters@editorandpublisher.com) is a senior editor at E&P.

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Good digital idea - show me the money: Twitter.

Just in case you don't know, here's the simple answer to what is Twitter:

Twitter is a service for friends, family, and co–workers to communicate and stay connected through the exchange of quick, frequent answers to one simple question:

What are you doing?

It's none of your fucking business is not the reaction of two million users worldwide. However, they aren't yet making any money....which is the business of the people who stumped up $15million to get it flying. And in the current climate, pressure must be on for a return.

Here's Slate on it all.

Tweeter Pan
By chadwick.matlin
Created 10/08/2008 - 1:14pm
For months, tech writers have marveled at Twitter [1]'s quirky success. One-hundred and forty characters at a time, the company has brought in more than 2 million users [2], 2 million monthly page views [3], and $15 million in venture capital [4]. Especially in the last few months, the microblogging, instant-messaging, social-networking platform has gone mainstream.
As Twitter has made the leap to the masses, a fundamental, quantitative question has started [5] to [6] percolate [2] among technoscribes: How the hell is Twitter going to make money? Behind that query, though, is another that often goes unasked in today's Silicon Valley: Does Twitter even want to make money in the first place? Or is it all peer pressure?
Plenty of people have played armchair CFO and tried to graft a business model onto the service. The advice: Twitter should start using banner ads [7] (as they already do in Japan [8]), charge for pro accounts [7] that guarantee uninterrupted service, insert text ads midfeed [9] a la Facebook, and/or sell data to advertisers so they can narrowcast ads based on what you and friends are Tweeting about (a tactic that social networks employ [10]). That's not all-the Twitterverse, blogosphere, and mainstream media have plenty of other pearls of wisdom to share.
Through all the noise, Twitter has made it clear that it's in no rush to start making money. Co-founder Evan Williams told TechCrunch [11] last month that Twitter has "thought about" its revenue model, but that "it's not actively in development right now." Williams floats a few ideas about how to monetize, but they're sketchy. He suggested similarly murky ideas in 2007 [5], but the company hasn't moved forward with its revenue model since then.
Twitter gets the revenue question so often, it devotes part of its press room FAQ [12] to the monetization question:
Twitter has many appealing opportunities for generating revenue but we are holding off on implementation for now because we don't want to distract ourselves from the more important work at hand which is to create a compelling service and great user experience for millions of people around the world.
The Big Money interviewed Biz Stone [13], another Twitter co-founder, who recently told Portfolio [14] that focusing on a revenue stream would be "a distraction." We wanted to know whether this was all an act, whether Twitter was really just keeping plans close to the vest. So: How often do folks sit down to talk about a revenue model. Once a week? Once a month? It's never discussed, Stone said.
Why not? Because Twitter, according to Stone, still isn't "sustainable." Stone used the S-word as an excuse repeatedly during our chat, as if it were a safety blanket made out of chainmail. Twitter wants to have both a sustainable product and business plan before it starts to capitalize on its community. The product bit makes some sense-for months Twitter's service had been plagued with glitches. But Twitter's servers have been performing relatively well [15] for the last few months, so maybe sustainability has been achieved.
Stone's other comment—that Twitter needed a sustainable business model—was more troublesome. Here, sustainability entails finding revenue without alienating current or future users, a common refrain among Web 2.0 folk. Facebook's ill-fated Beacon advertising platform failed while trying to find that balance [16]. Williams told Download Squad [5], "Our top concern when it comes to monetization will be to do so in a way that does not negatively impact users." So instead of experimenting with a business model that might accomplish that goal, Twitter's founders continue to lounge within the comfortable status quo.
There may be a deeper, psychological reason that Twitter can't follow the dollar. It may have a Peter Pan complex-it just doesn't want to grow up. Pan ultimately chooses Never Never Land because he is worried about the pains adulthood will invite into his life. For now, Twitter is choosing to do the same.
Because Twitter is so resolute in its nonmonetization, it has earned a certain amount of respect among tech entrepreneurs. They're the champions of an improbable and absurd scenario: Imagine, a company restricts its users' self-expression, builds a global community, and raises millions of dollars. It's impressive enough that somebody actually pulled it off. Even more impressive, though, would be if the geniuses who gamed the system then chose not to reap the monetary benefits. It's a brand of asceticism one can find only in Silicon Valley, and even there only in selected pockets.
It wouldn't be the end of the Internet economy if Twitter chose to go Craigslist's route and operated as a nonprofit disguised as a for-profit [17]. But it can't. In order to get to where it is today, the site had to raise money from venture capitalists—$15.1 million [18] worth. In exchange for the booster shot, the investors demand a considerable return on investment. That means Twitter is going to actually have to try to make some money at some point. Also of note: To get the venture capitalists onboard, Twitter's leaders presumably had to show some type of business plan, so we assume somebody, somewhere, is doing some (private) thinking about monetization.
So, Twitter's dilemma has taken the shape of an Ouroboros [19]. The soul of the site is still rooted in the community ethos of the idyllic Web. Trying to make money off the service, they fear, will alienate the community and rob the service of its plucky aura. But in order to build the best product possible, it needs investment capital. And with investors comes a responsibility to turn a profit (whether by revenue or a buyout). But turning a profit means monetizing the community. And monetizing the community means stripping the aura. Around and around we go.
I asked Stone whether the two forces-idealism and capitalism-are mutually exclusive. He assured me they were not and that there's a way to live within both worlds. Google, of course, is the shining example of a tech company that has figured out how to straddle the boundary. For now, though, Stone and Twitter are firmly rooted in only one, too comfortable to try and find that happy medium. Some friendly, parental advice: It's tough to grow up without taking a few leaps of faith.

Source URL: http://tbm.thebigmoney.com/articles/monetize/2008/10/08/tweeter-pan
Links:[1] http://www.twitter.com/

[2 http://www.businessweek.com/print/technology/content/aug2008/tc20080815_597307.htm

[3] http://siteanalytics.compete.com/twitter.com/?metric=uv

[4] http://www.crunchbase.com/company/twitter

[5] http://www.downloadsquad.com/2007/04/25/six-ways-twitter-can-make-money/

[6 http://money.cnn.com/2008/08/06/technology/true_meaning_of_twitter_lashinsky.fortune/

[7] http://www.thestandard.com/news/2008/07/14/10-ways-twitter-could-make-money-quickly

[8] http://www.flickr.com/photos/morikenstyle/2436222239/

[9] http://www.mdoeff.com/blog/2007/03/21/the-future-of-twitter/

[10] http://www.thestandard.com/news/2008/04/29/myspace-user-ad-targeting-will-be-optional

[11] http://www.techcrunch.com/2008/07/15/interview-with-evan-william-summize-acquisition-api-issues-and-their-revenue-model/

[12] http://twitter.com/help/press

[13] http://www.twitter.com/biz

[14] http://www.wired.com/techbiz/people/news/2008/08/portfolio_0804

[15] http://www.techcrunch.com/2008/09/03/has-twitter-solved-its-uptime-issues/

[16] http://www.dmwmedia.com/news/2007/12/03/facebook-beacon:-cautionary-tale-about-new-media-monopolies

[17] http://dealbook.blogs.nytimes.com/2006/12/08/craigslist-meets-the-capitalists/

[18] http://www.crunchbase.com/company/twitter#src3

[19] http://en.wikipedia.org/wiki/Ouroboros

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In a recession/depression who does better? Internet advertising, print advertising or sponsorship?

Good question. Certainly, in the last recession display advertising overall went badly downhill, but the key point here is that when the economy rebounded, print display advertising did not in the same quantity as it had done before. Media buyers, looking to maintain brand visibility on lower budgets migrated heavily to the Internet. If the same thing happens again this time, newspapers are in even greater trouble. It's not the 2009 advertising budget the NYT needs to worry about (well, they do, but you'll see my point), it's the budgets post-recession/depression.

Another problem, and this is very specific to the IHT, is that in a recession advertising budgets contract (or in 2009 perhaps implode) so media buyers go the bottom of their scheduled buys (by bottom I mean the marginal add-on spends that in flush times they can afford) and cut them.

And the IHT, because of its poor performance on research (which Goldmark - see previous post - tried to fix but then gave up on as cost-cutting became his way to serve his masters), is one of those marginal, add-on spends.

Some excellent IHT material regarding sponsorship to reflect on in the two IHT articles posted below.

The first article is interesting in that Richard Scudamore, the English Premier League's cheif, manages to talk about revenue and over-leveraged debt without mentioning the words 'sponsorship revenue'. As if the clubs problems were consumer confidence (buying tickets to games) and high salaries.

He is presumably aware that West Ham's sponsor, Excel, went bankrupt?

********************

English Premier League chief says game is sustainable

LONDON: English Premier League chief executive Richard Scudamore said Thursday the structure of the game is sustainable despite the global financial crisis.

"People need to be realistic. We are entering interesting financial times. But football is very sustainable. Club names are very sustainable, they don't disappear. Revenues are very sustainable," he told Sky Sports News.

"We are not complacent, I am not saying we won't at some time feel the wind of the consumer crunch, but generally we are not in such a bad condition."

FA Chairman David Triesman said Tuesday English football had amassed debts of about three billion pounds and a top club could fold in the current financial climate.

But Scudamore has moved to calm fears that a leading club could go bankrupt and put the debt situation into perspective.

"Debt is neither good or bad, it is inevitable," he said. "It depends on the value of the asset the debt is against, and some of our clubs are hugely valuable assets, certainly the biggest clubs."

It is also a product of whether you can service the debt. And that is a debate that goes on.

"I'm not saying we don't have concerns, but it is also dangerous to be alarmist in the current financial conditions."

We have always worried. Football has always spent a little bit more than it has earned."

However, Scudamore ruled out a salary cap in the Premier League although he said it had been debated for some time.

"We have discussed it on and off for 10 years but we don't believe that, with the range of clubs we have, you can come up with a meaningful salary cap," he added.

"There are only two ways of doing it. A percentage of turnover -- where the likes of Arsenal, Manchester United and Chelsea would have a huge potential wage bill."

Or to put a fixed amount in, what would you fix it at?"
http://www.iht.com/articles/reuters/2008/10/10/sports/OUKSP-UK-SOCCER-ENGLAND-SCUDAMORE.php

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In hard times, who's in the mood for Volvo's high seas adventure?

We know they are resilient. How could they not be as they prepare to leave Saturday from Alicante, Spain, for the Volvo Ocean Race, a grueling round-the-world event that will take them to five continents and eventually to the finish line in St. Petersburg, Russia, in late June?We know they are intrepid. How could they not be if they choose to take part in a 35-year-old race that remains one of sailing's supreme tests as crews push their boats to the breaking point or beyond with wind shrieking and waves breaking across their decks?But the real question, with all the danger on shore and on Wall Street these days, is whether anybody in the all-too-real world is much in the mood to keep close track of sailors courting danger for the sake of a mere sporting event.One suspects not.

http://www.iht.com/articles/2008/10/10/sports/arena.php

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