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IAB: Search Doing Well, Metrics Meeting Outcome

The Interactive Advertising Bureau seems to be trying valiantly to stay at the top of the news this week. They’ve released their 2006 Internet Advertising Revenue Report and the results from last week’s closed meeting with Nielsen//NetRatings and comScore.

2006 Internet Advertising Revenue Report: Search is Looking Good
The IAB’s report for last year says that search is looking good: 40% of online ad revenues came from paid or natural search. Search advertising revenues came to $6.8 billion, which is higher than 2005’s $5.1 billion, even though search dropped off an entire percentage point (gasp) from 2005.

Other areas they looked at: “Display advertising, Classifieds, and Referrals accounted for 32 percent, 18 percent, and 8 percent of 2006 full year revenues respectively.”

The full study is available in PDF form.

ValueClick Announces FTC CAN-SPAM Investigation

It doesn’t look like lead-generation company ValueClick is going to the acquisition-ball anytime soon. It’s unlikely that anyone will want to acquire the company until it’s had the chance to respond to a Federal Trade Commission investigation.

According to ClickZ, ValueClick filed a Form 8-K (which is basically SEC talk for “we have something material to tell the world”) revealing the FTC is investigating the company for possible violations of the CAN-SPAM act.

“We continue to believe that we are compliant with all current state and federal regulations pertaining to our lead generation activities, and we intend to fully cooperate with the FTC in connection with their inquiry,” John Ardis, vice president, corporate strategy for ValueClick, told ClickZ in an e-mail.

Ask’s Related Search Ads

Ask recently announced plans to roll out contextual advertising to compete with the Google and Yahoo. Of course one of the big questions is whether Ask would have any innovations in the field or would it just be an Adsense copy cat?

While not earth shattering, it does appear Ask has managed to create something unique called Related Search Ads. Self Made Minds is the first webmaster I have seen report the new ad format. It’s similar to Google’s link unit with a few differences.

  • There are a lot more links with the Ask ads compared to Google link units.
  • The links open up in a new window and take users directly to an actual Ask.com search results page.
  • Publishers are paid when surfers click on the ads in the search results.

WPP Buying 24/7 Real Media for $649m

It looks like Microsoft has lost out again, in its quest to buy an internet advertising firm. This time, UK advertising company WPP Group has snuck in and picked-up 24/7 Real Media – a company MSFT had reportedly been in talks with – for $649 million or $11.75 a share – 45% premium on TFSM’s share price two months ago.

“The TFSM team has long experience in the industry and has developed one of the most sophisticated and robust Internet technology platforms, that has enabled the business to deliver strong revenue growth, particularly in 2005 and 2006,” WPP said in a statement.

Microsoft is starting to run out of options. While there are plenty of online advertising companies out there, waiting for MSFT to call, its looking like late in the day of an NFL draft – sure, there’s still some talent out there, but the big names are have already been picked.

Online Display Advertising Finally Helping Denture Wearers

“Imagine an environment where the company that makes dentures and denture products only advertises to people who don’t have teeth”

And that, dear pilgrims, sums up perfectly The New York Times’ look at the resurgence of online display advertising, now that companies are able to better target which ads are shown to site visitors.

Of course, those of us lucky enough to still have our molars and incisors shouldn’t feel left out. The NYT explains how improved technology is allowing many start-ups to enter the online display space.

Industry analysts estimate that there are about 200 such companies. Many call themselves ad networks, while others are referred to as ad exchanges or optimization services. The roster includes Revenue Science, Tacoda, Tribal Fusion, Rapt, AdECN and x+1. In one way or another, they are all trying to bring more effectiveness to the online display ad market.

Four Things to Consider Before Advertising on User-Generated Content Sites

By Greg Howlett.

A recent study from BlueLithium suggests that online retailers can find advertising bargains on Web 2.0 sites that feature user generated content.  While this initially seems like good news, there are additional factors that retailers should consider before jumping on the Web 2.0 bandwagon.

The study compared the cost per conversion between three different groups of sites—user generated content (UGC) sites, non-user generated content (non-UGC) sites, and highly authoritative editorial sites.  Both the non-UGC and authoritative sites had significantly higher click through rates and conversion rates than the UGC sites.  However, when factoring in the ad cost, the UGC sites had a lower cost per click and cost per conversion.

So how is this information relevant to your business?  Just as importantly, what information is not found in this study that you need to know before making advertising decisions about Web 2.0 advertising?  Here are a few thoughts.

  1. Trust is an issue on UGC sites.  Not surprisingly, the authoritative sites generated the highest click through and conversion rates, and were followed by the non-UGC sites.  UGC sites were way behind in these two areas.  This is a clear signal that visitors do not hold UGC sites at the same level of trust as other sites.
  2. UGC sites will only remain an advertising bargain as long as their ad rates are lower than rates on non-UGC sites.  Today, the vast majority of UGC sites have few options for selling advertising, but in the future, it is feasible that even small blogs will have the ability to get much higher ad rates.  If that happens, today’s opportunity may disappear.
  3. This study gives no insight on the “social buzz” phenomenon.  Viral marketing, paying for user generated content, and similar strategies were not addressed.  However, most experts believe that these strategies are where the real advertising opportunities exist with Web 2.0 sites.
  4. The easiest way to advertise on UGC sites is AdWords.  However, few advertisers seem to be able to make this work.  In fact, since Google started allowing advertisers to bid differently for AdSense websites, those bids are dropped drastically and many advertisers refuse to bid for placement on those sites at all.  Going directly to UGC sites to buy advertising does result in lower ad rates.  However, because UGC sites tend to be low traffic, putting together a large campaign is normally too time-intensive to be feasible.

If you choose to advertise on UGC sites with traditional advertising units such as banners or text ads, make sure you are getting as good a deal as you think you are.  It is quite possible that cheap ad rates are being offset by a low click through rate or conversion rate.  As with all advertising, good reporting is critical to identifying problems.

On the other hand, using UGC sites to create social buzz for your product line could be very cost effective and could even lead to dramatic results.  In my opinion, this is the better Web 2.0 alternative for most retailers.

Having launched two multi-million dollar online companies, Greg Howlett has been working in the trenches of internet marketing for over eight years.  He currently is the President/CEO of Vitabase, a leading health supplement company, selling hundreds of products under the Vitabase label.

Tumri’s AdPods Offer Publishers New Advertising Options

If you’re the kind of publisher that likes to experiment with new revenue models, then Tumri Publisher might be worth checking out.

With Tumri, publishers can create “AdPods” which feature products that can be selected from more than 2300 merchants including Wal-Mart, Sears and Amazon.com.

You can select from a pre-defined stores or build your own custom store, and then upload the javascript to your web site or blog. Tumri then uses it’s own algorithms to select which products and offers to display, based upon your page content, updating the selection with each new page view.

How do you get your share of the money? Tumri uses the following revenue share models.