23 Musings

Widgets are gaining some serious traction! U.S. companies have spent approx $15m on widget based campaigns in 2007 and that is projected to grow to $40m in 2008.

That spend reflects only 2.5% of the total amount that is projected to be spent on social network advertising in the next year. Now that's quite low, I believe this is because so many widget campaigns have been so poorly executed in the past year and corporates are having difficulty seeing the potential ROI in comparison to traditional banner advertising and more brand led efforts (such as sponsored pages and profiles).

I stick by my earlier prediction that 2008 will be the year of the widget; if portability, engagement and usefulness are all kept in mind then a widget campaign can serve both branding and conversion. For more on my thoughts on widgets see this post.

For more on widget spend visit eMarketer.

As we've all known for a long time measuring the success of online ad campaigns based on the last-click is not really representative of how engaging your advert or link is to users.

Finally Microsoft have announced a solution that may be the beginning of the end for these old advertising techniques.

Engagement Mapping will allow campaigns to be attributed to every click in the journey of a user, one suspects that means they will attribute percentages of sales to each click to end up with a weighted user journey.

This is good news and great progress but what is needed now is a tracking tool that will allow conversions to be tracked in this way across channels such as affiliates, paid search and banners and attribute sales correctly. Only then will online marketers really understand the ROI each channel is delivering.

Marketing Sherpa has quizzed 420 top digital marketing experts about what they feel are the most effective methods for advertising online and which give the best ROI.

Search engine optimisation came top, this is not surprising as the ROI is incredible. Some changes take such little effort and can return such amazing gains that SEO will always be the top in a survey like this.

Second came behavioural targeting for adverts, slightly more surprising this one as I wasn't aware the technology was quite there yet to get a better ROI than other ways of advertising such as paid search.

Paid search (or PPC) showed quite a drop in confidence in delivering ROI, however marketers said that the biggest increase in budgets would be in the paid search arena.

And the biggest trend in measurement for this year was voted to be the integration of search and email analytics with your standard onsite analytics thus completing the tracking of the customer journey. Integrating offline and online campaign tracking came second here, now that's a holy grail and I don't believe will be truly possible for a year or so longer.

Interesting study; more available here.

A study by ComScore, Tacoda (behavioural ad network) and Starcom has turned up some not wholly unexpected results regarding the profile of users who are frequent ad clickers in the U.S. online population.

It turns out that measuring your banner campaigns performance on click through rates may not actually signify brand engagement to the level that you've been expecting.

There is a small group of consumers out there who account for the vast majority of all banner click throughs. These heavy handed individuals make up just 6% of the online population in the U.S. and yet they account for 50% of all display ad clicks. Worse still, this small group is not fully representative of the public at large, rather it is made up on predominantly users between the ages 25-44 and with a household income of less than $40k. These people spend a lot more time online than the rest of the internet population but at the same time their spending online does not proportionately reflect this heavy usage.

What does this mean for marketers? Well, it could suggest that good click through rates do not correlate strongly with good brand awareness for the ads subject.

Time to diversify! Banners have their place, best used as a response mechanism to attempt to acquire or convert users, and that means best measured for effectiveness using other metrics than click throughs. Conversion rate and acquisition numbers are a far more accurate measure of success. A brand specific measure may prove to be engagement and their are now ways to measure engagement with banners and online adverts. Diversifying your online spend into other mediums is key, making sure you are represented well in search, more viral types of advertising and offline will have a better overall effect on your brand equity.

It's up to web people to educate your marketing departments, many of you will have understood or suspected this for a long time!

Hat tip to Josh at Read Write Web for his write up regarding this link that I'd never come across before. It's a demo of an analytics tool aimed at web 2.0 and AJAX websites.

With the death of the page view as the all important metric of the analyst there has appeared a need to be able to measure users engagement with a website rather than just how many pages they viewed.

The rise of AJAX has been a major player in this with whole websites sometimes being a single screen which makes many calls to databases and servers in order to refresh itself multiple times in a users visit. Thus devaluing the page view completely.

The demo shows a novel way to gauge a users engagement by measuring in time how long segments of the page stay in the browser viewing pane. This isn't perfect by a long way but it's a sign of how analytics tools will have to work in the future as websites get more difficult to measure and marketeers and management get more demanding in their hunt for data to help understand their users.

Also really interesting is the demo of a tool to measure users engagement with a banner advert. I can't wait till metrics like this exist as they may help marketers see that throwing money into display advertising is not the way forward anymore.

What I'd really like to see is mouse interaction data on pages as well. It surely is possible to collect the data on the X and Y coordinates and it's a good hint as to what area of the screen a user is actually focused on (users tend to hover the mouse over what interests them). It's great to know that the item you're interested in is within view but how do you know that users are actually looking at it? Short of installing eyetracking as defacto in PC's we may never answer questions like that!

Bloomberg are reporting that Google may well get what it wants and secure the DoubleClick acquisition it's been looking for.

About time too! It's been going on for far too long now, it makes sense to just get it over with, there are far bigger threats to our online privacy than this merger. Every other major player has managed to buy an advertising network this year, so why not Google too?

This is coming too late for some though. Viacom have just signed a deal to move over to Microsoft, away from DoubleClick. Perhaps they would have stayed if Google had the reigns?

Techrunch carried a post the other day highlighting the way publishers have little control over what adverts Google Adsense puts on their websites, using an example of the U.S. baseball/steroid drama. It's always been a bit of an issue for publishers that they could end up carrying advertising that isn't really suitable for their content, and as usual Google have an answer.

Google's just announced the Ad Review Center. This allows publishers to review the ads targeted for your site and lets them ensure they get suitable content related adverts. This should help publishers increase their revenue from Adsense as any adverts that are totally unrelated to their content are more likely to get clicks. Feedback from the publishers will make its way back to the advertisers as well, thus allowing advertisers to target ads better and get hopefully more qualified referrals.

The NY Times technology blog surmises that this could reduce Googles revenue but I highly doubt that as this could encourage wider take up of Adsense by those who've found it poorly targeted in the past.

It's another added value tool from Google that makes Adsense still the most viable ad serving solution for small publishers everywhere.

So, after attending a widgets conference I'm now gripped by all things widgety and waiting to see the latest developments in this area of the web marketplace. I didn't have long to wait...

Clearspring have just announced the launch of a widget ad network called (wait for it) WidgetAd Network. They've been serving adverts as widgets for a while but are now offering a network to widen the distribution possibilities.

It's the next in a line of widget ad announcements. Advertising.com launched WIDGNET as a network to serve widget ads last week.

My concern would be if widgets end up being seen as the new MPU. They have so much more potential than that, I've got a list of applications I want to embed in a widget for my employers benefit, and all will show a decent ROI. Brands need to think differently.

A widget is not just a display point (like a traditional banner)! It is an interaction point, an engagement point, an application container and a way to automagically seed your websites functionality onto other websites quickly and easily. And all this is down to the user to say, yes please I'd like to grab your widget and embed it in my page/site. It's direct response with user permissions thrown in for good measure, you can't get much better than that.

So please, don't just embed a flash banner in a widget and think that you can get away with it. You could seriously damage the potential of widgets and give users the wrong impression.

Keep them smart, keep them engaging, keep them useful and you'll see real ROI and drive the kind of brand loyalty and qualified visitors that we are all looking for from these networks.

Even if you're not a member...

Beacon is raising privacy concerns left right and centre! It's becoming a bit of a thorn in the side of Facebook and could help increase the backlash that they will face through their continued advertisation (is that a word? Maybe it should be!). There are already reports of some advertisers pulling out of using the system, worries about how Beacon tracks users without them opting in and now it seems they may be receiving data on anyone whether a member of Facebook or not.

PC World is carrying a story about the results of investigations into the Beacon system by some security researchers. They've found that even if you don't have a Facebook account or your account is deactivated you will still be tracked on any Beacon third-party sites and your data sent back to Facebook. Quite what happens to that data we don't know, but one would imagine that it sits on their servers hoping you will sign up so they can identify your cookie and serve ads to you.

It's all getting a bit big brother. Facebook appear to have monetisation as their mantra now, where as they started off being useful they are gradually becoming surplus to requirements!

A few tidbits of insight from some of the webs best blogging reporters here today. As I'm busy I'm just going to link to them and let you read at your leisure:

The Facebook Ad Backlash Begins - an insightful look into the beginning of a possible backlash against the latest Facebook advertising announcements. My opinion; it will take time for users to understand the enormity of having their personal data in the hands of an advertising network of this scale. Expect to see the noise around this backlash grow.
Erick Schonfeld - Techcrunch

Why Is Google Afraid of Facebook? - a decent look into the reasons Google should be worried about Facebook. Traffic is only half the story, the main points are around the lack of access the Google spiders have to this data. Do Google feel shut out? Sure they do, otherwise why OpenSocial?
Om Malik - GigOM

Is Facebook Beacon a Privacy Nightmare? - a closer look at the reasons the new 'beacon' advertising tool from Facebook could be a privacy concern for users.
Om Malik - GigOM

I expect many more articles about the issues surrounding privacy and personal data with Facebook in the coming days, I'll continue to post and comment on the best. I also expect the focus to switch back to Google as more news emerges about OpenSocial and it's integration with Adsense and once the DoubleClick deal goes through it'll probably be Google taking all the flack!

Both Techcrunch and Venture Beat have posts about the forthcoming (still rumoured though) ad technology from Facebook. Word is that it will use cookies to track users data and activity on Facebook and then serve them ads based on that data when they leave the social network and browse other web properties.

Sound idea! Facebook profiles carry a wealth of data that could be of use to ad serving technologies.

Now, this won't work unless there is a third party cookie involved which is tied to the ad network and not Facebook. Otherwise the cookie would only be of use to serve ads while on the Facebook site. So will this cookie be part of Microsofts ad serving technology, another third party ad network who Facebook could sell the data to or will Facebook go it alone and set up an ad network?

It's an opportunity for Facebook to make some serious money, although I really doubt the valuation touted by Venture Beat. $100 billion will not be seen from an online company in the near future I'd be willing to bet. The ads served through this technology will be very targetted though (potentially more than ever before), great news for those of us in online travel who suffer high CPM's and low clickthroughs due to the lack of targetting data available currently.

Only issue with this is the prevalance of cookie blocking technology. Any ad network using this cookie will get listed on all the blocking sites and software very quickly and also the knowledge that this is happening could turn off a large amount of Facebook users very quickly.

It's supposed to be announced on the 6th November, so I'll reserve final judgement until then. Perhaps Double Click will be the partner of choice ;-)

Just a quick post to publish some of the thoughts that are appearing on the web about the huge valuation of Facebook. The $15B valuation makes it the 5th most valuable U.S. internet company according to Michael Arrington at Techcrunch .
Is a company with no evidence of profit actually worth such a huge sum? Possibly; it has the traffic (the most important thing for any site which will derive most of it's revenues from advertising), it's just signed a deal with a good technology partner (Microsoft), it's open standards should help it (unless of course MS integrate their services with it, how open would it's platform be then?) and with the current bubble mentality it's likely to get more investment very easily.

The BBC has published 15 reasons why Facebook may actually be worth $15B. Very interesting, my comments interspersed in blue:

1. The network has gone viral in the last 12 months, with more than 50 million users worldwide and a user base that is growing faster than great rival MySpace. According to Facebook, it adds 200,000 new users each day.
Yes, it's certainly a traffic monster! The growth rate is astounding, but that could slow as it must reach a saturation point eventually. The eyeballs is great for advertising revenue though so that should guarantee them a profit (eventually). They need to be careful to avoid the saturation point though, keep it fresh, become the webtop of choice and don't let anyone launch something more interesting (or the fickle web users will forget about you very quickly).

2. The average user spends 3.5 hours a month on Facebook - more than the average user on rival MySpace - which is increasingly attractive to advertisers.
Funny one this; I don't spend long on it at all, in fact I've taken to updating my status via a browser plug-in now. So a lot of people must be using Facebook as their email and communication alternative, that's what they need to do to keep the eyeballs, become a default location for peoples web browsing.

3. Facebook is the current Web 2.0 darling - popular with ordinary users and "tech heads" alike.
Darling of the moment, but it could easily slip from being the techies darling, especially with Microsoft on board.

4. US research reveals that Facebook users come from wealthier homes and are more likely to attend college than MySpace users - increasing that attraction for advertisers.
Not sure on this one; often the more prosperous will be the earlier adopters anyway, and as Facebook descends closer to the more chavy MySpace I believe the demographic will change anyway.

5. Microsoft's investment makes them a serious player in the growing market of "social advertising". Social network profiles are full of personal data that users voluntarily hand over, which is very useful for targeting adverts.
Big point this one! The data Facebook is gleaning is amazingly powerful to an advertising network. Facebook could be one of the first websites to carry adverts that are actually contextual and useful to their targets, this can result in a huge revenue stream if done right.

6. Sixty percent of Facebook users are outside of the US - so Microsoft's investment buys access to a global audience quickly and simply.
Microsofts ad network is global anyway and there are plenty of other places they could have invested in to get a global market. Global doesn't matter as much as size (as the old adage goes).

7. Facebook is the new web: The decision to open up the network to outside developers turned Facebook into a destination for many uses, like messaging, photos and video. Of course, as Facebook is on the web it could never really be the new web.
Facebook could be the newest web if it integrates with Microsoft Live platform... That could be huge and really make it into a webtop.

8. Every major content firm with an online presence is either working on a Facebook application or has already launched one - from Google to the BBC.
Hype; everyone will always try to dive into something new which gains popularity as quickly as Facebook. I don't believe that is any sign of value.

9. According to a report, 233 million hours of work are lost each month in the UK due to staff looking at social networks. Advertisers can now target people when at their desks.
Advertisers have always been able to target people when at their desks, now they can target them on another site where people are actually very engaged and in my opinion less likely to interact with adverts than a traditional site or portal.

10. The openness of Facebook is attracting a wealth of talented developers who can launch their applications to millions of users quickly.
Yes, but this helps those developers make money it doesn't increase Facebooks value directly, only indirectly. Of course the better the developments the greater amount of traffic is attracted...

11. Facebook messaging is the new e-mail. Everyone feels stressed from a deluge of e-mail from unwanted people and companies. But Facebook messages are always from friends.
How long till spam becomes a feature of Facebook??? If Facebook could integrate with Live Mail and become the email destination of choice that would be the coup of the decade.

12. Facebook's "status updates" have become the easiest way to let friends know what you are doing and how you are feeling at any given moment.
Along with Twitter and a multitude of other status alert services. I do like the Facebook status engine, but it can get annoying. We need better ways to filter the types of alerts sent!

13. Facebook thrives on playful applications such as Pirates, Zombies, Super Wall and Top Friends, which have made the network a place to play as well as communicate.
And they add no value! All style no substance this aspect of Facebook, it needs more productivity apps and networking features to be really succesful and not end up another MySpace.

14. Facebook is the acceptable face of blogging - you can reflect your life and personality online without being seen as a "blogger", which often carries a geeky stigma.
Geek? Me??

15. Facebook is worth $15bn only because Microsoft says so. The value of Facebook is based on a 1.6% share of the firm being worth the $240m Microsoft paid for it. Microsoft and Google were in a bidding war for a slice of the firm and both companies have large pockets. This was not just business, this was personal, according to some analysts.
Very true! It will take a market valuation for me to believe it is worth so much, and even if it had one I'm not sure $15B is worth it in it's current state. A year down the line, if it becomes a web starting point of choice then it may command a valuation many times higher!

Some good, thought provoking points from the BBC there!

So I surmised previously (here and here) that some enterprising person may work out a way to scrape Facebook profiles to gather demographic and behavioural data which could then power an ad serving platform. I also asked whether Facebook is just a data gathering exercise...

An article in the Wall Street Journal has been published talking about just these ideas but it turns out that its Facebook who are planning a new advertising system using the data from profiels and the users activities and interactions on their social network.

It's aiming for the holy grail of ad serving tools, to allow it to predict what products and services users may be interested in even before they have specifically mentioned them. Now that would be powerful!

Apparently this is top priority for Facebook workers now. They've got the audience, they've now got outsiders creating apps and building momentum for them now they just need to monetise all that activity.

If they get it right and can make this the most targeted ad platform around, keep their audience and get buy in from advertisers then they will have sealed their fortunes. This has the potential to be Adwords for a social network, and if Facebook can become the communications platform that some think it will then this will be massive!

Note: of course this could all result in a horrible backlash for Facebook if the users decide that using their personal info to target them with ads is unethical...

YouTube have today released their long awaited inVideo advertising functionality.

Now, when you watch a video, about 10 seconds in a small overlay appears in the bottom of the clip. Click that overlay and it will expand and play the video ad over the top of the clip you were watching. The original clip pauses and restarts when the ad finishes.

I don't know how widely these appear on videos as I haven't managed to find one yet but Mashable has screenshots. Mashable make a good point that YouTube have managed to come up with something that meets all the commercial needs of themselves and advertisers without impinging on the viewing experience of users too much. That said, there are some reports of video playback becoming 'choppy' for those who don't have much processing power in their PC's.

Ads will be sold on a CPM basis at approx $20. This makes them a very good alternative to traditional banners and quite possibly a better buy. Targeting is the one thing I need more info on before I'd be buying any, I'd need to know how you target certain videos so as to attract the right users. For example, as a travel business can I target videos which are about destinations or will I appear randomly anywhere in the YouTube network? Testing showed a click through rate of 5 to 10 times that of traditional banners so if they continue that kind of uptake they will be extremely powerful tools for marketers!

Google has been undergoing immense growth lately. Since it's IPO in 2004 they have experienced 500% growth in value which is extraordinary!

Growth of that magnitude doesn't come easy and Google is experiencing that right now with the lawsuits and anti-trust process they are going through currently. They also have all the issues that any fast growing company experiences such as finding enough skilled staff, dealing with the latest competitors and keeping cash flows liquid.

One test could come from Openads, a London company whose free ad-server software competes with DoubleClick. Openads is headed by James Bilefield, a veteran of Skype and Yahoo, and backed by Index Ventures and Mangrove Capital Partners, who also backed Skype, as well as First Round Capital and O'Reilly AlphaTech Ventures.

Unlike DoubleClick, Openads does not collect consumer information from the publishers who use its software. While its 20,000 customers are primarily small publishers, larger players who are concerned that DoubleClick could end up sharing information with Google are looking at Openads as an alternative.

This article has a lot more detail.

Be careful where your banner adverts appear! When you serve ads through a network it's really tricky to keep an eye on where they appear and what the content surrounding them is referring to. Yes you can specify the types and categories of sites they appear on, you can even specify the actual websites it gets placed on, but some are finding that this level of control is not enough.

We had an issue a year ago where we were running millions of impressions a day on a behavioural ad network. We were targeting the travel and leisure community and also major portals but somehow we ended up advertising holidays on a link farm site which had a rather less than decent advert for a swingers club on the same page as our advert! Needless to say as soon as this was spotted we pulled that site out of our target group. We could of course have been placed on many other sites like this during that campaign without even knowing it...

And then there's websites like Facebook. Social networks are really difficult to target for advertising as being full of user generated content you have no control over what your advert could appear next to. Vodafone has now experienced this and has pulled all advertising from Facebook after it's banner was displayed on the group profile for the British National Party. Vodafone pulled the ad straight away, but other brands such as Virgin Media and Orange have also appeared on that page.

I can't see how Facebook could possibly control to a granular level where adverts are appearing in relation to the content on the pages. It will be a really difficult task and so if a lot of their big advertisers start complaining about the content on the pages their ads are appearing on it could spell trouble for their revenue streams quite quickly.

This is the trouble with user generated content and advertising. As bad as Facebook content can be I'm sure MySpace is worse. With the increasing popularity of corporate responsibility it is only going to become a bigger issue!

Latest update on the Google-Doubleclick dealings...

The Senate's antitrust subcommittee is planning a hearing this autumn to delve into how the combination of the companies will affect competition in the market for Internet advertising. The panel is expected to ask Google, Microsoft and Yahoo to appear before them.

Also, there are reports that a House Commerce subcommittee is planning a hearing based around the Google-Doubleclick deal and will be focusing on privacy concerns.

Google issued a statement saying they are "confident that upon further review the Federal Trade Commission will conclude that this acquisition is good for both competition and privacy and should be approved."

It's all sounding a bit ominous and like it will be dragged out for a long time which isn't good for Google or the industry as a whole as it's holding back progression.

It seems Yahoo has fundamental problems in their ad sales team (at least that's what I think).

Yet another quarterly profit report that's down on last year and again it's blaming sales of display adverts on the drop. However, everyone is reporting huge investment in online marketing and massive growth in this area. Yahoo have a major piece of internet real estate but just don't seem able to capitalise on it.

I realise a lot of the increased online ad spend is going into paid search with the likes of Google, but display should be Yahoo's meat and drink and shouldn't be an area they are losing money on. Yahoo provides masses of eyeballs for banner adverts but it seems the money is being held back to be spent elsewhere.

The solution? Capitalise on what you've already got! Huge traffic, massive amounts of quality content, huge amounts of page views. Create brand centric areas which can be sold for large amounts of advertising dough and fix Yahoo 360, turn it into a proper social network. Yahoo still has a huge community who use Messenger, Mail, Flickr etc. All these users have a Yahoo profile which could be a 360 profile, fix the social networking aspects (or build them if they don't exist) and you could get some loyalty back which in turn will attract the ad dollars back.

More trouble for Google. A consumer group in Germany (BEUC) has launched a formal protest against the deal to buy DoubleClick claiming it may have a negative impact on the selection of content available to consumers and to privacy.

It's likely that this may force the EU's anti-trust authority to investigate. Usually that would only happen on competition grounds, but this protest seeks to make privacy an issue that could bring that sort of investigation into effect.

Google really is in the firing line these days. It will be interesting to see how this impacts their business and whether they can get the DoubleClick deal through. They need to as it's hindering their progress in the online advertising market now, they need the deal done asap so they can release new platforms to get back ahead of competitors.

Yahoo has launched a new display advertising product called SmartAds, this allows marketers to offer ads that are customised based not just on the usual demographic data (age, gender, location) but also on their online activities. This type of behavioural marketing is popular but Yahoo have thrown in a new twist which makes their SmartAds very powerful.

SmartAds combines Yahoo's demographic, geographic and behavioral targeting capabilities with a new ad assembly platform that allows the customised ads to be created in real-time. Yahoo will get different backgrounds, logos and other features from the creative agencies that can be re-configured with ad copy based on who is seeing the ad and what they are interested in.

Yahoo give some examples of how this could be used:

'For instance, instead of just seeing a generic ad for a Toyota Prius, a woman in San Francisco who conducts research on hybrid cars on Yahoo Autos could be served an ad for a local San Francisco dealer with information on the types of Priuses that are in stock and the purchase price. The ad, which is configured on the fly, could also feature a background color targeted for women in her age range, as well as a Golden Gate Bridge logo.

Someone searching for flights between Dallas and Phoenix could be served an ad, for example, with specific up-to-the-minute fares from a particular airline along with a button that says "buy now," all within the ad.'

This turns your usual, run of the mill banner adverts into a vehicle that can drive direct response, almost akin to paid search. This tool has the potential to make a huge difference to Yahoo's bottom line if it gets adopted by the major creative agencies. Used cleverly this tool will help businesses increase both brand awareness (something that all banner ads are good for) and also drive incremental business (something not many banner ads are good for).

What's the betting Google counter with a new display advertising tool in the very near future now that DoubleClick are on board??