Ad Spending Overview

While Australia raises interest rates and Google is actively hiring its AdWords account strategists, global spending on advertising, including online, seems to be taking a dive, as proven by recent research from Nielsen, Interactive Advertising Bureau, and PWC.

With North America and Europe continuing to cut advertising costs, Asia Pacific looks rather cheerful compared to the first half of 2008:

According to Nielsen, the industries most hit by the crisis are automotive, financial, clothing and accessories and durables - basically offering, high-involvement, long buying cycle products - which keep reducing their ad spend. Sectors that have increased their advertising budgets compared to the first half of 2008 are distribution channels, FMCG, and healthcare.

While overall online advertising seems to be decreasing (following the general trend), there is some evidence that spending on the social networking and blogging sites is actually increasing. In the past some (most) social networking sites experienced difficulties in actually making a profit due to the cautious attitude of the advertisers, now it seems like those issues are being solved. Most attractive social networks to advertisers are obviously the most established ones, namely Facebook (1) and MySpace (2).

Optimistic Revenue Forecasts for Mobile Web 2.0

Mobile Web 2.0 is an evolution, already started, that will create major changes in the online and mobile world. The Internet today is not just PC-based anymore. There are 3 billion mobile phone users in the world today, compared to less than a billion of PC users. The growth predictions for mobile Internet are better than for PC-Internet, and the estimated number of Mobile Internet sites in 2017 is 150 million. As some experts believe, there will soon be a new generation of users whose first interaction with Web will occur through their mobile devices. The research carried out by the Online Publishers Association showed that that majority of Mobile Web users are males about 25-34 years old with a medium level of income.

Mobile Web now is obviously becoming a mainstream market and opportunities for businesses are growing. According to Juniper Research, Mobile Web 2.0 applications, services and advertising will generate about $22.4 billion in revenues worldwide by 2013 as compared to the $5.5 billion of today. Juniper described Mobile Web 2.0 as the use of mobile devices for social networking, search, instant messaging and various applications and services.

The research states that social networking and user-generated content on their own would amount to $11.2 billion in 2013 from $1.8 billion in 2008. The report identifies the ‘prosumer’ – someone who both creates and consumes content and the ‘social web’ – a variety of social computing tools that enables users to develop online identities, create online communities and communicate to people sharing the same interests. As the Juniper analyst Ian Chard points out, ‘combining the power of the social network map… with that of mobility presents the greatest opportunity for revenue generation of any of the applications’.

Today North America, Western Europe and Far East are the main regions dominating this market, but the situation is about to change as more and more mobile phone users appear in the developing countries.

A lot of big brands, such as Pepsi, BMW, McDonalds, Google and others have embraced the opportunities offered by the Mobile Web. However, the challenges are present as well. Mainly, of course, the technological problems, but as well the problem of changing the business model for mobile operators, and, nothing new, the issues of privacy.

To my mind, the findings of the report could turn out to be far too optimistic. For example, three years ago Mobile Web already experienced a huge decline in browsing figures, and there is no guarantee it won’t happen again. Social networking sites are hugely popular today, but as the generation of their users is growing up they might be replaced by something entirely different. The number of PCs in the world is growing fast as well. What I can’t understand (probably someone can explain that to me) is why would anyone who is not able to get a PC spend substantial amounts on Mobile Web applications?

Image source: http://www.mobilecomputermag.co.uk/tag/mobile-services.html

Social Network Ads: Not Much Targeting, Not Much Revenue?

Social networking sites could be, undoubtedly, very successful marketing tools. Unfortunately, the problem is that most of the companies do not yet realize that marketing online requires special marketing mix. They are using Internet as a part of broader marketing campaigns, without realizing the differences of the medium itself. Today we see targeted ads when we use search engines, but advertising on social networks, in which a lot of companies invest heavily, is mostly not targeted.

A research by Prospectiv shows that 56% of the respondents (on the whole 800 social network sites users were surveyed) think that their social networking experience would be better if marketers would use more targeted ads. 62% said they would be interested in offers from their preferred brands, and the majority of 82% said that right now they see very few or no ads relevant to their interests.

I find it very surprising that few companies using social networks realize the potential of targeting to increase their performance. On Facebook, for example, one wedding photography agency increased its business significantly by searching for the profiles of engaged women and placing its ads there. On MySpace two companies which reached consumers according to their preferences in clothes and music increased their performance by up to 300% while they were only on early stages of optimization.

Meanwhile, most of the companies are disappointed by their ad revenue from social networking sites. This week eMarketer reduced its forecast for U.S. and global online social network advertising spending, estimating that U.S. advertisers will spend $1.4 billion to place ads on social networking sites this year, instead of the previous projection of $1.6 billion, as social networks are still trying to come up with successful advertising models. Advertisers worldwide will spend $2 billion on these ads in 2008, and the spending will grow to $3.8 in 2011.

Social network advertising is still considered to be experimental by most brands. Even Google says that it’s not monetizing as expected. As Sergey Brin said recently, ‘I don’t think we have the killer best way to monetize social networks yet. We have had a lot of experiments (and some disappointments).’

Image: http://youblog.typepad.com/

Pepsi's Social Media Marketing: Wanna Play?

Some of you have probably already heard that PepsiCo International, a company with revenues more than $39 billion, is going to launch a social networking site focused on football later in April starting from Europe. The Beta-version of Pepsi Youniverse is already available for football fans, allowing to create your Visual DNA and compare it to those of big football stars like Lampard, Henry, Messi, Ronaldinho, and, of course, Beckham. The Visual DNA is an Imagini Holdings Ltd invention – it is a personality test, you have to answer the questions by choosing the appropriate images to get your psychographic description. Pepsi Youniverse’ Visual DNA describes what type of a football fan you are, using questions like ‘The best thing about being a footballer is…’. My closest match, according to this test, is Lampard, and football is definitely a huge part of my life (they don’t ask you whether you’re interested in it or not, it is assumed that you are). After launching this site Pepsi plans to create even more networks, focused on music and ‘hopes and dreams’.

There already exists another Beta-version (I am surprised how it’s got through the alpha test, though) which I personally find more interesting, but of which almost no one heard about (at least Google search makes me think so). It is another Pepsi social network targeting specifically the Pepsi Max drinkers. I liked it a lot not only because I had to choose what type of man I am (Visual DNA again), select the contents of my car and then select my gender (female, what a surprise), but because it lets you merge your email (whether you use Gmail, Yahoo or Hotmail), other networks (Facebook, Flickr), RSS subscriptions, and that’s not the whole list. It also includes space for blogging, digital storage, videos, and standard social networking site options. And as we are using more and more different sites, with even more appearing almost every day, merging it not a bad idea at all.

But let’s get back to Pepsi: all these networks could definitely become very powerful research and marketing tools. If people do really need them. How many teenage football fans and for how long would be amused by comparing their personal profiles to Ronaldinho’s? Are these investments going to pay off?