Covering May 27 - June 6, 2008
By Mark Glaser

NEWS

• Yahoo makes flurry of deals as takeover idles
• Widget Roundup: Slide's NY office; Userplane success
• Web 2.0, online video short on revenues
• Wash Post struggles with hyperlocal, plans mags

RESEARCH

• IDC: Online ads will surpass TV by 2012
• IAB: European online ad growth outstripping U.S.

NEWS

Yahoo makes flurry of deals as takeover idles

As the Microsoft takeover drama and Carl Icahn proxy fight percolate in the background, Yahoo showed that it wasn't twiddling its thumbs. Instead, Yahoo announced a blizzard of deals at the Advertising 2.0 show, including: an exclusive deal to sell advertising on Wal-Mart's site; an agreement with Havas Digital to create its own ad exchange with Right Media; a new "online circular" program that combines Yahoo Smart Ads and ShopLocal to make promo offers similar to those in the Sunday papers; the addition of 94 more newspapers to its consortium; and a deal to become part of the CBS Audience Network to distribute its video. Yahoo prez Susan Decker said Yahoo is preparing for a "renaissance" in display advertising and planned to pump up its share of those ads to 30% by allying with premium publishers.

But Decker also said the company was not giving up search ads, and considers them part of a converged future where display and search ads will be packaged. "It's a false distinction to say search is one thing and display another," she said. "Our vision is for these to converge. Today we call them search and display. In the future, we'll just call them online advertising." Meanwhile, Microsoft and Google continue to negotiate with Yahoo on outsourcing or combining parts of its search advertising. Microsoft and Yahoo execs were on the stage at the D conference (at different times), and none said a deal was in the offing. But D's maven, Kara Swisher, said that all the other execs at the confab had one piece of advice for the two online giants: Get a deal done

Widget Roundup: Slide's NY office; Userplane success

Watching the space for widgets -- those mini-applications that pop up on social networks and blogs -- is like experiencing the dot-com boom all over again. The widgets from well funded startups such as Slide and RockYou have millions of eyeballs, but not a whole lot of revenues. Slide made waves by hiring Jason Bitensky, formerly of AOL/Platform A, and opening a sales office in New York City. The startup also said it was seeing ad demand from the UK ad agencies as well. RockYou and iLike are also looking to expand their sales staffs, but the question remains how much money they are chasing. The Wall Street Journal points out the ad pie is relatively small -- only $600 million was spent on social media in 2007 -- and they will have to compete with the social networks themselves.

While the big widget makers have been getting the headlines, GigaOm's Om Malik noted that Userplane (a startup that's now part of AOL) has been racking up revenues selling ads for its own widgets, and for others. Even though the CPMs are notoriously low on widgets, Malik figured that if Userplane was serving up a billion ad impressions per day, as it says, then the AOL subsidiary might be bringing in $18 million per year. Aside from widget startups, publishers are also getting into the game, with the Washington Post launching its 25th widget to help house-hunters see the geo-location for listings. Notably, the new widget is sponsored by a local real estate company. "Whether the consumer is on a social network or a mobile phone, we want to be there," the Washington Post's Ken Barbieri told ClickZ.

Web 2.0, online video short on revenues

While widget makers start courting Madison Avenue, they might learn a lesson from social networks and other Web 2.0 companies that have struggled for years to find a profitable business model. The Financial Times reports that most Web 2.0 startups have produced little in the way of revenues, and VCs are wondering if a shake-out is coming similar to the dot-com bust. "If you look at some of the valuations [of startups], you wonder what fantasy of revenues they're based on," Hummer Winblad VC Mitchell Kertzman told FT. Skepticism was also rampant at the recent Under the Radar confab, according to News.com's Stefanie Olsen, who said the social media startups could learn from Web 1.0 companies: "Tech companies often fail to hire media-savvy executives at the top who can sell brand advertising...[and] many social media start-ups are marketing the idea that they have tons of data on people's demographics and preferences."

Within the social media sphere, online video has gone through its own fits and starts in trying to find a business model. GigaOm reported that YouTube's director of monetization, Shashi Seth, recently quit, as the largest video site struggles to bring in money. Om Malik says YouTube brought in $80 million in revenues last year, which could grow to $125 million this year. That's still a paltry amount, and even Hulu, with much less traffic, has made $25 million because of its brand-friendly professional content. CBSSports.com is trying out Heavy.com's "skin" treatment for video ads that surround the video that's playing. Heavy told the Wall Street Journal it gets 1.68% clickthroughs on skin ads and is spinning off its video-ad technology into a separate business.

Wash Post struggles with hyperlocal, plans mags

Change is in the air at the Washington Post Co. The venerable media company has seen the departure of longtime interactive honcho Caroline Little, as well as online wunderkind Rob Curley, as it tries to integrate its online and print newsrooms more tightly. The Wall Street Journal reports that Curley is leaving for the Las Vegas Sun after a botched effort at hyper-local with LoudonExtra.com, a site that never caught on in the community, largely because the developers never got out into the community. "I dropped the ball," he told the Journal. "I won't drop it in Vegas, dude." Meanwhile, Washington Post Co. is hoping that Slate's Jacob Weisberg can extend the success of his online magazine into other niches, as Weisberg is being tapped to run the new Slate Group, a kind of start-up venture within the Post. "I think it's sort of the logic by which Time magazine gave birth to Sports Illustrated and People, and it's the idea that you can incubate a magazine within another magazine," Weisberg told Reuters.

 RESEARCH

IDC: Online ads will surpass TV by 2012

Google and others have long touted Internet advertising as the perfect safe haven for marketers during a recession. IDC is now backing that concept, predicting that U.S. online advertising revenues will explode, doubling from $25.5 billion in 2007 to $51.1 billion in 2012 -- with a compound annual growth rate of 14.9%. Plus, online advertising will go from an 8.6% share of all ads to hit 15.6%, overtaking broadcast TV and newspapers and trailing only direct marketing. That's not bad, considering that IDC thinks that overall ad spending will contract in the years ahead. The firm also believes video advertising will boom. "What will also drive this trend is that consumers are starting to realize that, as opposed to TV, Internet video lets them watch what they want, when they want, and increasingly where they want," said IDC's Karsten Weide.

IAB: European online ad growth outstripping U.S

If you think online advertising growth will be eye-popping in the U.S., watch out for Europe, where growth is almost stratospheric. According to the IAB Europe, online advertising was up 40% last year to hit $17.4 billion -- compared to 26% growth in the U.S. If those rates of growth continue, European online ad revenues will surpass the U.S. by 2010. The IAB noted that the UK, Germany and France vacuumed up two-thirds of all online ad money in Europe last year, but that growth rates were higher in less developed markets: Greece saw 90% growth, Spain hit 55% and Slovenia notched 49%. The IAB predicted that 10 European countries will have 10% of all ads going online -- up from 7 countries that already have that percentage. "Not only is the growth coming from some of the smaller markets...but also from the more mature countries as companies move their advertising budgets online for the first time," said IAB Europe honcho Alain Heureux.

OF NOTE

Advertisers to Consumers: We'll Text You (WSJ; paid subscription required)
Ad executives report click-through rates with text-message ads of 1% to 10%, a significant jump from the figures for Web banner ads

Can Wal-Mart Save Local Newspapers? (Slate)
Wal-Mart can use its free classifieds tool to liberate newspaper balance sheets from Craigslist -- the misunderstood villain of the classified industry

EveryBlock Does Special Report on Corruption Case (MediaShift Idea Lab)
Adrian Holovaty's startup is doing special reports -- collections of recent geographic news -- including one on endangered buildings and another on a Chicago corruption case

FCC delays consideration of free Internet plan (Reuters)
Idea was to auction off spectrum to allow provider to offer free wireless broadband, with charges for higher speeds and other services

Minnesota town tells Google Maps to get lost (News.com)
The North Oaks City Council sent the search giant a letter in January demanding that images be removed or risk being cited for trespassing; Google complied

FEATURED INDUSTRY JOBS
Jun 6, 2008	Senior Web Analytics Manager	The New York Times	New York, NY	Marketing & Sales
Apr 28, 2008	Ad Operations Client Manager, Publisher Solutions (NY)	Collective Media	New York, NY	Marketing & Sales
Apr 24, 2008	Project Manager	thePlatform	Seattle, WA	IT Operations & Engineering

"In the next 10 years, the whole world of media, communications and advertising are going to be turned upside down -- in my opinion. Here are the premises I have. Number one, there will be no media consumption left in 10 years that is not delivered over an IP network. There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form...There are going to be far more producers of content than exist today. We've already started to see that certainly in the online world, but we've just scratched the surface."

-- Microsoft CEO Steve Ballmer

Microsoft's Ballmer on Yahoo and the Future (Washington Post)