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News
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How will iPad impact mobile ads, publishers?
The long buildup to the new Apple tablet is finally over, and the hype quickly turned to backlash as the iPad was unveiled. While Apple leader Steve Jobs wowed the faithful in San Francisco, the new device was panned in some tech circles. The iPad has WiFi and an option for 3G wireless, and will cost from $499 to $829, plus a monthly wireless bill. While most iPhone apps will run on the iPad, the device is missing a camera, USB port, Flash support, and a physical keyboard (though you can connect an optional one). That led to a Mashable post titled "Why Apple's iPad Disappoints" and one in Gizmodo titled "8 Things that Suck About the iPad." The New York Times' David Pogue put a wet blanket on the backlash, noting that no one -- including himself -- had actually used an iPad for more than a few seconds, so couldn't do a thorough review yet. "Like the iPhone, the iPad is really a vessel, a tool, a 1.5-pound sack of potential," Pogue wrote. "It may become many things. It may change an industry or two, or it may not."
One industry that was watching closely was the media business, particulary newspaper and magazine publishers who hoped the iPad would be a better vessel for their content -- hopefully with a way to charge for it. While the New York Times was on stage during the Jobs presentation showing a special iPad app, there was no word on pricing yet. Numerous observers said the iPad likely would not be a media savior, just as iTunes was far from being a music business savior. "Newspapers and magazines still have to figure out what they have that is unique, different and special in a way that makes people want to pay for it," wrote GigaOm's Mathew Ingram. Plus, without Flash support, most rich media ads on websites wouldn't even show up on the iPad's web browser. Meanwhile, e-readers such as the Kindle might be in trouble in comparison to the flashier, color-screen iPad. Amazon quickly moved to give publishers a better royalty split, and opened its platform for app developers in advance of the iPad unveiling.
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NY Times announces metered wall for '11
After a long, deliberate process, the New York Times announced it would start a metered pay wall system by 2011 for NYTimes.com and mobile apps. The newspaper did not announce the price or number of free articles visitors would see before hitting the wall, but said that print subscribers would still get full free access. The metered system is similar to that of the Financial Times' site, FT.com, which allows 10 free articles before charging $3.59 per week for online content. FT.com has had some success, getting 121,000 paying subscribers and 1.8 million registered users. The Times said it would still allow people to see stories for free if they come from search engines or social media sites, and that those visits wouldn't count against the free monthly totals. Blogger and media consultant Jeff Jarvis said the move was wrong-headed, and it made no sense to penalize loyal readers and let more casual readers get content for free. "There is only one thing that can happen should The Times put a meter on us. It will shrink," he wrote.
Hopefully for the Times, its metered wall won't do as poorly as metro rival Newsday has done with its pay wall launched last October. At a staff meeting, publisher Terry Jimenez told the newsroom they had signed up just 35 people to pay $5 per week for the website, with everyone else getting free access from being a print or cable subscriber (the paper is owned by Cablevision). The site went from 2.2 million unique visitors in October to 1.5 million unique visitors in December, according to Nielsen. "The view of the newsroom is the web site sucks," one unnamed staffer told the New York Observer. "It's an abomination," said another. The difficulty for the Times as it pursues subscription revenue is that it could scare off traffic, which could lead to reduced ad revenues. "The Times is, in part, defining what a digital newspaper is worth -- but that number is far less important than habituating a certain kind of consumer to the idea that conveniently accessing certain kinds of content is worth money," wrote Times media reporter David Carr.
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Earnings Roundup: Google, Yahoo, newspapers up
"Overall, things seem to be returning to a normal state in the online advertising world," said Yahoo honcho Carol Bartz. That normal state means that plunging online ad revenues have reversed themselves at top Internet companies and even some newspapers. In the fourth quarter, Yahoo earned 11 cents per share profit, beating analyst expectations. While sales fell 4% in the quarter compared to the year-ago quarter, they were up 10% from the previous quarter, with display ad sales rising 26% vs. the previous quarter. Google reported a more mixed quarter, with revenues of $6.7 billion easily beating analyst expectations, but $2 billion in profits coming up slightly short to raised analyst projections of $2.1 billion. Google's stock was hit hard after the earnings report, but analysts at Stifel Nicolaus said, "What’s not to like? Google beat revenue and profit estimates, paid clicks growth was inline with consensus, cost-per-clicks surprised on the upside."
Microsoft, meanwhile, reported a strong quarter of revenue and net income thanks to cost-cutting and the popular Windows 7 operating system. However, online services revenues were down 5% from the year-ago quarter, and online ad revenues were down 2% -- despite Bing's success. Plus, Microsoft lost part of its ad deal with Facebook in international markets, and might lose the U.S. business as Facebook moves to sell its own social ads on the site. Another brighter spot was in newspapers, who have now cut enough staff and costs to turn profitable. Media General saw an 11% increase in digital revenues in 4Q, and gave a lot of credit to the Yahoo Newspaper Consortium, according to PaidContent. And McClatchy also saw growth for its online ad revenues, jumping 15% in the quarter, with online now making up 15.8% of total sales (up from 10.9% of total sales in the year-ago quarter). Lee Enterprises also swung to profitability in the quarter, but its online ad sales dropped 8.4%.
Yelp reaps huge VC investment
Even in the downturn, local reviews of restaurants, bars and businesses remains an important online sector. Google tried to buy Yelp for around $500 million, but the startup declined the offer, instead raising up to $100 million from Elevation Partners, a VC firm co-founded by singer Bono. Elevation's investment includes buying up shares owned by employees or early investors, helping them cash out without an IPO. That move is similar to investments by Digital Sky Technologies in Facebook and Zynga, giving the startups breathing room before going public. However, Yelp is facing steeper competition, including from Google. Google recently beefed up its "Place Pages," aggregating local reviews from blogs and hyper-local sites beyond the recommendation sites. And AT&T has a new recommendation site called Buzz.com in alpha testing, which will let people poll friends and family about local businesses. The service is not a review service like Yelp, but lets people "favorite" a business, write comments and perhaps receive targeted discounts or offers, Forbes reported.
Research
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Marketers to raise digital, social media spending
As the economic engine starts to regain momentum, digital spending by marketers is also on the rise. That's the finding of a pair of surveys by the Society of Digital Agencies (SoDA) and Alterian. SoDA found that 81% of brand executives plan to increase spending on digital projects in 2010, with 50% shifting funds from traditional to digital media. And a lot of that money will be going toward social networks. The top priority for marketers worldwide was social networks/apps (45.4%) followed by digital infrastructure (44.5%) and search optimization (27%). Often, marketers weren't spending for ads, but for "unpaid/earned media," with one-fifth of respondents saying they would spend 30% more in that area this year.
The Alterian survey found that 66% of marketers will be investing in social marketing channels in the next year, with 40% planning to divert a fifth of their direct marketing budgets into social media. "Marketers now need to appeal to the individual and engage with customers on a one-to-one basis," said Alterian CEO David Eldridge. "The easiest way to achieve this is by investing in social media marketing and social media monitoring."
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Apple surges in mobile apps, web use
Gartner predicts that people will spend $6.2 billion for mobile apps in 2010, nearly double the spend last year, along with $600 million in ad sales for ads that run within apps. Those are bullish numbers, especially when you consider that more than 80% of apps will be free. And who will be reaping most of that income? Apple. Gartner says Apple owns a monster 99.4% of the app market. And in mobile web use, Apple continues to grow worldwide, though it is still splitting up the world with Nokia's Symbian operating system. AdMob found that Apple's iPhone OS dominates usage in North America, Australia and Western Europe, while Nokia leads in Africa, Asia, Eastern Europe and Latin America. Apple's share of requests in the AdMob ad network rose to 36% in Q4 of last year, compared to Nokia's share of 18%. Another big gain came from Google's upstart Android operating system, which rose from 1% of smartphone traffic in Q4 '08 to 16% share in Q4 '09.
Of Note
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 There's no reason that organizations or individuals who want to use the web to relay critical information have to rely on Twitter or Facebook or Google or any other giant of the technology industry in the first place. We've just forgotten a bit about how the Internet was supposed to work. Rescue organizations and charities should simply be able to use the websites they already have to deliver those messages.
Anil Dash, blogger and director of Expert Labs
Don't let Twitter, Facebook, Google be the only game in town (CNN)
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