2009-11-21 Zenith, Magna see global online ad rebound

Intelligence Report - 11/21/2009
By Mark Glaser




Google netbook to follow up Google phone?

There are times when it feels like Google is everywhere. And "everywhere" includes getting into businesses dominated by Apple Inc. First came word that Google would be releasing its own Google phone, code-named Nexus One, which would be unlocked so that consumers could choose their own carrier. This move could upset carriers and handset manufacturers who offer Android phones and now will be in competition with a Google phone. However, Reuters reports that one of the new Google phones, due out the first week in January, will come with a T-Mobile contract. Then came news from TechCrunch that Google could be working on its own Chrome-based netbook computer, due out at the end of next year. "What does that mean? It means next Christmas you may be getting a high performance Google branded netbook running Chrome OS for next to nothing," wrote Michael Arrington.

While Google and Apple have long been partners, it was a sign of the changing times when Google honcho Eric Schmidt quit as a board member of Apple. The Wall Street Journal notes that Google and Apple have been competing in buyouts, too, with both vying for AdMob (Google got it) and music service La La (Apple got it). Google has also made recent moves into the local ad market. The San Francisco Chronicle reported that the search giant will be sending out window decals to 100,000 businesses saying "Favorite Place on Google." The decals come with special barcodes that people can read with their smartphones to get coupons, read reviews or write their own reviews. Hmm, that sounds a little like local review service Yelp. Little surprise then when rumors surfaced that Google is in talks to buy Yelp, too. "The deal between Google and Yelp could still unravel...particularly if another acquirer comes forward now that details have leaked," wrote Andrew Ross Sorkin on DealBook.


Facebook in another privacy brouhaha

In the battle for real-time search and data, Facebook would like you to help it become a dominant player. How? By allowing more of your personal profile information to be public. In a move touted as helping people adjust their privacy settings, Facebook made the default choice "public" for an array of previously private information, including your friend list and location. While users were alerted to choose what they wanted to have public and private, the buttons were set to "public" by default. Not surprisingly, privacy groups were upset by the moves, with the Electronic Frontier Foundation's Kevin Bankston laying out the "good, bad and ugly" with Facebook's new policy. "Under the new regime, Facebook treats that information -- along with your name, profile picture, current city, gender, networks, and the pages that you are a fan of -- as 'publicly available information.' Before, users were allowed to restrict access to much of that information. Now, however, those privacy options have been eliminated," he wrote.

It wasn't long before Facebook was backtracking and offering options so people could make their friend lists private again. Plus, the privacy groups took the next step by filing a complaint about Facebook with the FTC, though Facebook says it discussed the new policy with the FTC before launching it. MediaMemo's Peter Kafka says the most important reaction to the new policy might be from advertisers, who were spooked by the old Beacon program, which was later killed. While Kafka says many people are comfortable with sharing information with the public, "the switch has been badly explained, done in such a way that many users don't understand what happened." After the Beacon fiasco and Facebook's much ballyhooed public vote on its terms of use, it's surprising the company finds itself in another mess. Consultant and author Larry Downes says the real problem is one of PR: "Changes to both policy and practice require honest deliberation and engagement with the residents. They can no longer be delivered as fait accompli."

CBS just says no to ad networks

The debate over ad networks heated up again as CBS Interactive's new honcho Neil Ashe announced that would no longer use them. The major publisher, with 60 million uniques per month, says it will sell inventory on its own platform, called Madison, along with some ad exchanges such as Yahoo's Right Media. "We can do it on our own in a way that almost no one else can," Ashe told PaidContent. "We had seen a number of ad networks implying that they had access to our entire inventory and of course, they did not. We wanted to be absolutely crystal clear as to where advertisers could get our content." CBS joins major publishers ESPN, Weather.com, Turner Networks, Forbes and Gawker who have sworn off ad networks. The debate over ad networks cooled during the recession, when publishers were more keen for revenues. How much of a difference will CBS make? "It's not that big a deal, to be honest with you; it doesn't move the market," Undertone Networks CEO Mike Cassidy told AdAge. But what might change things is if Right Media kicks out some networks from its exchange, Cassidy said.

Kindle under heavy attack from rivals

The Kindle's dominance as an e-book reader might not last -- at least, if all the budding rivals have their say. One of the sticky points for publishers on the Kindle is the split in subscription costs for newspapers or magazines, with Amazon often taking 50% to 70%. No wonder that News Corp. sidled up to the rival Sony Reader with a new Wall Street Journal Plus afternoon edition, as well as paid versions of the New York Post and MarketWatch. News Corp. was also non-plussed by Amazon keeping customer information on subscribers to itself. Sony was happy to rectify that. WSJ managing editor Robert Thomson told a press conference that "I think you can assume that we're getting a better deal and that our concerns about customer information have been addressed." But will people pay for static editions of the New York Post and MarketWatch, free online sites? "Even if you're one of the people who loves to read a print paper on a handheld device, most of these offers don't make a lot of sense for an e-reader," wrote MediaMemo's Peter Kafka.

But maybe that's not the point. Perhaps News Corp. is just trying to pressure Amazon for a better deal. On other fronts, Oppenheimer analyst Yair Reiner found that Apple's tablet will likely ship in the second quarter next year, with a 10.1-inch screen, and 1 million units produced per month. Most importantly, Apple has been offering publishers "a very attractive proposal for distributing their books on a forthcoming e-book platform," Reiner said. Plus, the new "Hulu for magazines" joint venture including Hearst, Time Inc., Conde Nast, Meredith and News Corp. aims to sell digital magazines in a unified format that could circumvent Amazon and Apple completely. The interim CEO of the effort, John Squires, said he would respect the various initiatives from Hearst and Time Inc. And to add even more fuel to the fire, a newly rebranded Shortcovers service, now called Kobo, announced distribution deals through book stores such as Borders. "Kobo marks the first serious alternative to the Kindle as a platform," wrote Charlie Sorrel in Wired.


Zenith, Magna see global online ad rebound

Finally, some good news has come trickling in to the world of online ads. Zenith Optimedia and Magna Global predicted positive growth for online ads sold globally next year and beyond. Zenith predicts global online ad spend will increase 9.5% next year, 12% in 2011, 13% in 2012, and will eventually surpass newspapers in share of advertising sold by 2015. Paid search is helping to power much of that growth, with a 15% boost in paid search revenues this year, and the same growth predicted for the next three years by Zenith. Magna, meanwhile, expects that global online ads will bring in $60 billion next year, for a 16% share of all ads sold, which will rise to $99 billion by 2015, making up 21% of all ads. "The downturn has accelerated the structural shift of budgets from traditional media to the Internet; in a time when marketing departments have to justify every dollar they spend, the rapid and clear returns offered by Internet advertising are more attractive than the longer-term brand-building benefits offered by other media," Zenith said.

Morgan Stanley: Mobile to zoom past desktop use

Morgan Stanley analyst Mary Meeker was one of the seers who predicted (and helped prod) the first dot-com boom in the '90s. Now she is predicting a new mobile web boom in two massive reports, downloadable from the Morgan Stanley site. Her biggest statement is that the mobile Internet market will be twice the size of the desktop market within five years. And Meeker is in awe of Apple's iPhone, which "may prove to be the fastest ramping and most disruptive technology product/service launch the world has ever seen." She compares the fast adoption rate of the iPhone to Netscape and AOL adoption from years past. As Apple 2.0 blogger Philip Elmer-DeWitt says, "Morgan Stanley drinks the Apple Kool-Aid." Meeker also praises Facebook, with its 350,000 apps and 137% year-over-year growth, and says the overlap of Facebook and Apple iPhone users represent the sweet spot of the mobile Internet. FT's John Gapper wonders if Meeker has an ulterior motive: "Morgan Stanley is presumably competing hard for a lead role in the likely Facebook initial public offering, for which this report may come in useful."

Of Note

Despite Numbers, Package-Goods Players Are Ramping Up Online Spend (AdAge)
Increasing signs point to a surge in digital spending by package-goods players that's gathered momentum over the course of 2009 and heading into 2010

AOL to Think Locally After Spin-Off (ClickZ)
'Digitizing towns' will provide turn-key platform where schools, governments, local businesses, and classified listings firms can create or update websites

Dear newspapers: I will pay for your content, once (CNET Webware)
Needleman: 'Why on earth should the publication charge me for it twice, or differently, just because I want to view that content, sometimes, on another connected device?'

Location's Social Paradox (TechCrunch)
The way most of these location-based services are built right now, they are becoming an unmanageable mush of finding the location of the people you actually care about

California Watch Says 'Yes' to Open, Networked Investigative Reports (PBS MediaShift)
Non-profit news outlet distributes first story to 25 newspapers, radio and TV; plans to make money from syndication, donations and advertising

Microsoft Is Losing Fight for Consumers, Analyst Says (NYT Bits)
Mark Anderson: 'Walk the halls at Microsoft and you can see it is not a place that gets consumers'


openquoteAs August Turak recently told me, there are three forms of transformation: The first is a transformation of condition. The second is a transformation of circumstance. And the third is a transformation of being... And when Mr. Scrooge wakes up on Christmas morning an utterly new man, he has experienced a transformation in being. All three types of transformation are necessary to life, but for AOL it's not yet Christmas. We'll rejoice when AOL moves from gestures and engagements to actions and results.closequote

Is AOL Perfuming the Pig or Moving the Needle? (AdAge)


The OPA Intelligence Report is a bi-weekly email summarizing and commenting on important news and research for the online publishing industry. As always, feedback is welcome at feedback@online-publishers.org.