Local Advertising to Make Gradual Comeback With Digital Leading the Way
Advertising in general has had a soul crushing last couple of years. That’s not a surprise. Combine the rapid changes to how everyone communicates with the worst economy in quite some time and you have the perfect storm for advertising woes. The ones who have the greatest difficulty in these times are the local advertisers because they have limited cash flow and limited ability to keep up with rapid change.
Hopefully there is an end to this cycle sooner than later. A study conducted by BIA/Kelsey sees the rebound in local advertising overall but more importantly a significant shift to digital which could account for 25% of local ad spend by 2014. ClickZ gives us some more to consider
The findings, reported in BIA/Kelsey’s “U.S. Local Media Annual Forecast,” did not surprise BIA/Kelsey President Neal Polachek, who said the recession and lingering economic doldrums have “triggered a more rapid switch to online digital stuff.” Even though companies are increasingly embracing digital media for local advertising, online/interactive was not immune to the recession’s ravages. BIA/Kelsey said there was a slowdown in the growth rate for digital, including search, display and classifieds, but it predicted that digital – now about 14 percent of total local ad spend – will encompass 25 percent by 2014.
I don’t know about you but I really appreciate Mr. Polachek’s technical terminology referring to “online digital stuff”. In the process of becoming 25% of all local advertising spend in the next few years digital spend will grow by 2.5 times to total $37 billion annually. Not a small number for sure.
Now, we have historically been skeptical of research here at Marketing Pilgrim. We always look for the angle as to why anyone would promote certain findings. Polachek further postulates on the impact of mobile by saying
Polachek said a key factor in the local ad market during the next five years will be mobile. However, he said predicting the scope of mobile’s impact is not easy. “I think one of key drivers during the next four or five years will be the phone and how the mobile piece transforms all this,” he said.
Not earth shattering, I admit. What he said next though will get some MP props because I have not heard this much from the research community.
“I don’t think any analyst out there, ourselves included, really knows what will happen.”
Please put up the applause sign for Mr. Polachek! Every other research report is positioned as if it came off a mountain in the form of tablets and should be taken as the truth because, well, the researcher said so. At least this research group has the stones to admit that looking into a crystal ball regarding where any of this goes is probably the least exact science there is.
So how do you view local advertising? Do you think that there will still be just a 25/75 split with online and traditional in 5 years or will online advertising take up more of that pie?
Given the dearth of news to start the week you should have time to comment.
Q4 Results Show Things Looking up for Yahoo
Things might be looking up for Yahoo, which just posted its best quarter since Carol Bartz took the reins a year ago. They earned $153 million (11 cents per share) in Q4—a huge improvement over the same quarter last year, where they saw a loss of $303 million (22 cents per share). And Yahoo might have even done better, if it weren’t for all the internal changes and pending Microsoft partnership.
That may be changing soon. “We are done looking inward,” Bartz told analysts. “We are looking outward at the incredible opportunities ahead.” And this year’s opportunities might even include acquiring other companies. Yahoo also projects that Q1 of this year will be even better YOY, with $1.63B in revenue (which would be lower than Q409, but ain’t that always the way? maybe they held back some of their revenue to report in Q1?).
Of course, it’s not all good news. Revenue for Q409 was down by 4%, coming out at $1.73B (then again, revenue was down 12% YTD, so that’s not so bad, right? And I hear there’s this recession thing going around.). Google’s revenue was up 17%—but a fat lot of good that did their stock. Yahoo’s stock was up 60 cents (3.8%) after their numbers came out.
There have also been some interesting flip-flops in earnings and revenues:
For all of 2009, Yahoo earned $598 million, or 42 cents per share, on revenue of $6.46 billion. That compared with income of $419 million, or 29 cents per share, on revenue of $7.21 billion in 2008.
Perhaps best of all, Yahoo added 700 employees in Q4, though they’re still 1300 below the “recent peak employment” from September 2008.
What do you think? Could things be turning around for Yahoo?
Google Beats Estimates With Very Strong Q4: $6.67 Billion
Google posted a very strong Q4, given the recession, with $6.67 billion in revenues. This beats financial analyst general consensus estimates. Here are some top-level highlights from the earnings release:
Revenues – Google reported revenues of $6.67 billion in the fourth quarter of 2009, representing a 17% increase over fourth quarter 2008 revenues of $5.70 billion.
Google [...]
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Can Snail Mail Be Part of Social Media?
The online space is certainly trying hard to cut the apron strings associated with traditional media techniques and practices. It can be hard though, to completely separate from something that may still have value. Think about how nice it was (or still is) to go back “home” and get that meal that you just can’t make on your own. While you never want to be back there 24 / 7 again there are certain things that are part of our past that will always have great value and we get to take the best of those things with us.
The same concept may apply to the Internet marketing world as well. As much as we try to break away and create our own identity separate from the traditional world of content generation, advertising, PR and every other piece of the overall marketing mosaic, there may be some things that will always have a place. One of them might even be snail mail.
An article in the Wall Street Journal talks about how there may be certain aspects of snail mail that carry importance even in the rush to digitize everything in our business lives. While not right for every business, part of the relationship building that we talk of as the most important aspect of the social web can be cemented with a good old fashioned handwritten note. For instance:
Looking to cut costs amid the recession, Alicia Settle initially thought it would be a good idea to eliminate her company’s annual direct mailing.
Spending about $20,000 on the personally signed letters, which offered customers a discount on early orders, seemed indulgent for Per Annum Inc., which sells city diaries, albums, and planners in the struggling corporate gift market. But after swapping snail mail for email last year, Ms. Settle saw a 25% drop in early orders compared with the same period the previous year.
“We realized we had made a huge mistake,” says Ms. Settle, president of the New York firm.
This is one of the dangers of taking established businesses and preaching that since online is the wave of the future that you need to go there. Damn the torpedoes and full steam ahead into the future! Sure businesses do need to evolve but to what extent is completely dependent on what kind of business it is, what their existing customers are used to and how new customers can be attracted to the offerings.
As a result, you don’t want to throw the baby out with the bathwater so there may be room to get rid of some traditional marketing that is certainly unproductive in the new world order while keeping others. These “old school” activities like handwritten thank you notes and other techniques now are part of the whole social marketing fabric that can serve to benefit the new and the old customers. They are actually part of social media.
The idea is to send something that’s more appealing than “junk” mail and potentially more noticeable than an email message, says Eric Anderson, a professor of marketing at Northwestern University’s Kellogg School of Management. That allows business owners “to offer a personal touch the larger firms may not be able to have,” he says.
Prof. Anderson says other business owners are trying to figure out how to integrate web marketing—such as email campaigns, banner ads and social-networking sites—with direct mail. “The introduction of new media has forced [business owners] to go back and revisit the whole playbook on what’s the best way to communicate with customers,” Mr. Anderson says.
Ms. Settle, for instance, plans to use e-marketing to complement the hand-signed direct-mail piece, not replace it.
So how do you incorporate the best of the old and the new in your business? Have you made a “pendulum swing” adjustment and taken away too much of what was once effective? Did you then find that part of the old way of doing things could still serve you well? Where is the happy medium and what might it look like moving forward?
SEMPO Releases Second Annual In-House Salary Survey Results
Want to make a recession-resistant career move? Consider going to work as an in-house search marketer. According to the second annual SEMPO in-house salary survey, compensation for search marketers working on behalf of a single organization actually increased during the past year, despite a turbulent economy that took a toll on many other types of [...]
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Google’s Q3: We’re “Very Happy”,”Investing Heavily” & “Accelerating Hiring”!
If Google is any litmus test for the state of the US economy, the worst recession in 70+ years is now firmly behind us.
The search giant reported a stellar third quarter, beating all Wall Street Estimates.
…net income in the quarter ended Sept. 30 rose to $1.64 billion, or $5.13 a share, from $1.29 billion, or $4.06 a share, in the same period last year. Net revenue rose to $4.38 billion from $4.04 billion. Excluding special items, the company said earnings for the quarter were $5.89 a share.
While the numbers are impressive, it’s the words from Google’s CEO and CFO that give us a glimpse of a light at the end of the tunnel. Their statements include:
“We’re very, very happy…”
“…the worst of the recession is clearly behind us.”
“[Google is] accelerating hiring across the organization.”
“We’re investing, and we’re investing heavily…”
“[YouTube is] on its path to profitability in the not-too-distant future.”
“We’re certainly looking for larger businesses to buy”
“There is a real wind of optimism and a real wind of confidence around here right now”
Even a decline of 6% in prices paid per click was better than most expected–helped out by a whopping 14% increase in the number of clicks.
So, with Google recovering–heck, even YouTube appears to be close to making a profit!–does this mean that we’re out of the recession? I wouldn’t take it to the bank, but I’d certainly wager a single share of Google’s stock that we’ve seen the worst of it!
What do you think?
Is This Recession Over Yet?
We appear to be caught in a rut as of late. No one wants to make a definitive statement as to whether or not the recession / slow down / depression / aberration or whatever we call this thing is over or not. Depending on who you talk to we can either be on the edge of a recovery or the edge of a cliff. Is there a way to tell if this dark economic time is seeing some light at the end of the tunnel?
We at Marketing Pilgrim are not analysts and we don’t claim to be. What we can do, however, is tell you about reports that are out there that can provide some insight or at least help us think differently. As marketers we tend to land on the hopeful / optimistic side of news because we want people to buy our stuff, right? Well, if the folks at Millward Brown Optimor which is owned by WPP are right with their BrandZ Portfolio study then there may be indications that at least the strongest of the strong, brandwise, are showing signs of life.
The analysis shows the top 100 brands, which Millward Brown refers to as the BrandZ Portfolio and includes many technology companies like Apple, Vodafone, Microsoft, Nokia, BlackBerry, Intel and others, are recovering from the recession at a faster pace than the market. As the chart above shows, the most valuable global brands have been outperforming the S&P 500 for a number of years now but show a much faster recovery from the recession than the market in recent months.
As noted by Robin Wauters of TechCrunch it’s a relief of sorts to at least see both of the performance indicators showing movement in the positive direction.
So why would big brands show a quicker recovery than the S&P as a whole? Well, who really knows? While this data is interesting it may be a stretch to make this kind of comparison since the ranking of the Top Brands is something that needed to be ‘crafted’. Here is some of the criteria.
The ranking is calculated using a methodology called “Economic Use”, taking into account the role that brands play in purchase decisions and identifying what proportion of the business value can be attributed purely to the brand. Besides inputs from the BrandZ study, the ranking uses financial data from Bloomberg and market and product data from Datamonitor. The ranking takes into account regional variations since even for truly global brands measures of brand contribution might differ substantially across countries.
So we need your thoughts again Pilgrims. Putting aside a larger worldview for a minute what is happening in your neck of the woods? Are you seeing signs of recovery or signs of ‘more of the same’? While it’s interesting to look at studies like this what is really happening at the street level. I see some more activity but I think the activity is more around preparing to spend more at some point in the future rather than getting back into the game right now. What about you?
Attention Engineers: Facebook is Hiring!
While we continue to slog our way through the economy (is it getting better, staying the same or worse?) there are a few companies that are defying the general downward trends. Apple’s iPhone has let them weather the storm quite nicely. Apparently, Facebook is doing quite fine as well. In fact, they appear to be in a position to take full advantage of the talent pool that exists in the current marketplace (and one would suspect have some serious salary leverage as well).
Bloomberg.com reports that Facebook’s CEO Mark Zuckerberg isn’t too concerned about how people are struggling. He’s just happy he’s on the right end of this economy
Facebook Inc. plans to expand its staff by as much as 50 percent this year as it benefits from a surplus of engineers amid the recession, Chief Executive Officer Mark Zuckerberg said.
“No one else has been hiring,” Zuckerberg, 25, said in an interview. “It’s been a great environment for us because the economy has helped out.”
While it’s pretty easy to see the business upside for Facebook since so many talented people are being let go during this excuse for cutting staff recession there is likely to be a better way to say it. Can’t you feel the compassion for the down-trodden? Well, considering the source, forget I even mentioned that.
Zuckerberg’s pitch internally is that the Facebook crowd must keep the lean and mean look in order to keep costs under control and to hit the lofty revenue numbers ($500 million this year) that have been set.
“The thing I want to remind people of is we’re way closer to the beginning than the end,” Zuckerberg said in the Aug. 20 interview. “A lot of times buildings can be a signal that you’ve made it. I would rather that our building feel much more like a very large garage.”
Gotta love the HP feel to his approach. Facebook is certainly one of the ones looking better than most during this current day and age. Keeping everything on the cheap makes for good press for sure. One wonders, though, if there going to be the revenue projected for the company and where will it come from as the advertising strength of social networks is still a largely untested area. As it always is, this will be interesting to follow as everyone feels their way through new models and markets with literally no history to look back to for guidance.
No, Google Didn’t Lose Searches to Yahoo. Check the Math…
If we all based trends on one month’s data, from a single research company, we would have been out of the longest recession in 80 years already. Instead, economists know that we need to see a trend that covers many months, with many data points pointing the same way.
I’m not an economist, but even I can grasp that Nielsen’s data–showing Google losing market share to Yahoo–should be viewed as an outlier, until we see an ongoing trend.
The data in question shows Google losing 1.3% in search share from June to July, while Yahoo picked up about 0.8% of that share.
Here’s June:
And here’s July:
Perhaps one of the most intriguing stats is that Google actually grew its search audience from 6.6 million to 6.8 million. That’s hardly a decline–at least the last time I checked. So, rather than saying that Google has lost market share to Yahoo, perhaps it’s more accurate to say that 500,000+ new searches were conducted in July, with Yahoo doing a better job of attracting them than Google.
A better job, based on existing market share that is. Break those numbers down further and you’ll see that Google picked up about 198k new searches, with Yahoo just behind with 176k.
Google Jumps On2 Video Compression; Sends Google Radio into a WideOrbit
I wouldn’t hold your breath, but there’s a chance we’ll soon see the end of pixelated videos on YouTube. Google has today announced the acquisition of On2 Technologies and its portfolio of video compression technology. The $106.5 million deal could signal that we’ll soon see better compression technology used at YouTube– which means those videos that look great on your desktop, will still look great when they get to YouTube.
“Today video is an essential part of the web experience, and we believe high-quality video compression technology should be a part of the web platform,” said Sundar Pichai, Vice President, Product Management, Google in a statement. “We are committed to innovation in video quality on the web, and we believe that On2’s team and technology will help us further that goal.”
But wait! We’re in a recession, how can Google afford to pay $106 million for compression technology? Easy! It just offloaded the remnants of its failed Google Radio division to software firm WideOrbit. According to TechCrunch:
WideOrbit is taking over several assets of Google’s radio business, namely Google Radio Automation, Maestro and SS32 automation products. The company, which is backed by at least $34.5 million in venture capital, commented on the closing of the deal saying that it was looking to expand its product portfolio and taking over Google Radio’s assets was a key step in that process.
So to recap: video is still hot, radio, not so much.
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