US online advertising grow 37%

Out of a busy week for me, I wanted to share these numbers released by IAB and PwC about Online advertising investment in the US for the first half of 2006.

The US online advertising spend over H1 2006 totaled $7.9 Billions growing 37% from H1 2005, exceeding for the first time $4 Billions in Q2 2006. This marks the 7th quarter of consecutive growth for online advertising, reinforcing the growing importance of online focus for our marketing spend compared to traditional media.

As you can see in this table, paid search accounts for 40% of total online spend, still the mainstream online advertising technique. One of the major advantage of online advertising is performance based pricing i.e. you pay for the click through (CPA) rather than the impression (CPM). The split between CPM and CPA is still very much balanced, respectively 48% and 47% of total investment. My advice: you should weigh on your media planning agency to favor performance based pricing deals as this is the way of measuring your campaign impact and adjust it in real-time.

However, and following Yahoo CEO Terry Semel speaking at a Goldman Sachs conference on Sept 19th and warning about a slower online ad growth, overall slowing of the U.S. economy impacts advertising and its online part for the remaining part of 2006, reports Ad Age Digital. eMarketer has lowered its ad-spending forecast this year from $16.7 billion to $15.9 Billion.

The missing one here? Marketing 2.0 of course. No one talks about the share of investment that brands are putting in viral marketing and user generated content techniques. This of course does not account for many dollars, but can reinforce significantly synchronized traditional campaigns results. After all, we are more interested in business results than pure awareness when it gets down to reporting to our CEO.

Are you a web 2.0 winner?

Last week in San Francisco took place an interesting event "The Future of Web Apps" gathering renown speakers to understand what was underpinning successful web businesses. A good friend who recently joined one of the most promising emerging Web 2.0 players, Netvibes, highlighted Mike Arrington's pitch about "What's next for web apps: building tomorrow's Flickr". Mike is known for his popular and influential TechCrunch blog contributions in the Bay Area, especially around Web 2.0 and start-ups.

I wanted to share with you some of his thoughts as a way for us to nurture our Marketing 2.0 brainstorming. This is pretty direct, here is the way he classifies it:

• Winners: writely, grouper, skype, newroo, flickr, weblogs, myspace, bloglines, userplane, ksolo, blogger, del.icio.us

• Very good bets: digg, facebook, youtube, photobucket, zoho, stumbleupon, popsugar, plentyoffish, netvibes

• Ones to watch: jobster, riya, zillow, flock, sharpcast, rocketbookm, 1-800-FREE411, odesk, secondlife, wordpress

• What were they thinking: inform, gather, pubsub, browzar, jigsaw, squidoo

Then about his personal forecast:

• Avoid: Social networking, social bookmarking, video, photos, blogging/podcasting platforms, portal/homepages, feed readers

• Big potential: Platforms, desktop apps (ported to online), office efficiency, cloud storage, identity, developer tools, market destruction (such as 1-800-FREE411), enterprise

And finally, winners and losers behaviors:

WINNERS	LOSERS
Passion for what they are doing	Lifestyle/ego entrepreneurs
Do something extraordinary	Forget about scaling
Remove serious friction	Spent too much money
Great founder dynamics	Poor founder, team choices
Never raise big money or raise it after you have won	Raised too much money
Perfect revenue model is not required	Over business-planned
Launched with post on TechCrunch	Launched with post on TechCrunch

Check out on CenterNetworks if you want to listen to some of his remarks, MP3 files are posted there.

What strikes me here is that Marketing is not mentioned at all and that all these successful companies didn't use classical marketing techniques to get traction and awareness. Instead, they heavily used viral marketing and positive buzz to attract millions of users. The big question to a lot of them, the one that have not been acquired by Google and Yahoo yet ;-), is how to move from volume users to monetization. Advertising sponsored business models may not be suitable for all, then who's ready to pay for additional web services?

Stay tuned.

"iPod ready": a new marketing gimmick

I went to Apple Expo on Friday. I missed the Mac ecosystem for long and it was refreshing to feel this relaxed vibe again. One could smell creativity, innovation and fun everywhere. I was impressed with the amount of business generated around iPod, up to the car manufacturer clearly using this European event to promote their latest innovation like Mini and Audi. Is iPod ready becoming of importance for cars manufacturer?

iPod ready devices were sparkling all around. This iPod ready screen from ViewSonic, announced on Sept 12, would tend to reinforce how PCs are not that important anymore. Plug your iPod and watch your videos, listen to the music or have your photos sliding in. USB connectors and memory card readers would let you use other devices as well. But take a close look at the icons, this is running MS Windows! Anyway, they're promoting a "Made for iPod" label. Road to success? Isn't Apple now the "iPod creator" company rather than the Mac one anyway?

iPod has become an icon for reinventing a fading company around a breaking through innovative product centered on a web 2.0 trend: sharing music on-line. Remain to be seen how Apple iTunes will respond to Universal SpiralFrog investment to turn music into an ad sponsored business. And what about this strange silence from Google about music except this very late announcement into the game: Google Music Search. Now that Google CEO, Eric Schmidt, is sitting on Apple's board of Directors, I'm sure I'll have something to blog about in a very short while about iTunes response to free music. Stay tuned and listen to SOMA FM music, as I do, in the meantime.

One final note. Customization is big when talking about web 2.0 business models, isn't it? Check out this special customized Mini limo -- yes a limo -- that was presented in front of the show -- see my pictures on flickr -- so cool. And what do you think about this gaming seat from Playseats as well?

Creativity is back. Hope and ambition are flourishing just as during the rise of the Internet bubble -- except VCs are still skeptical. Web 2.0 is a reality fellow marketers, Marketing 2.0 is on its way.

Sponsored Links allows Free Software

I was attending yesterday a comprehensive conference in Paris about e-commerce, looking for a solid update on e-marketing techniques. All major players in the on-line industry were represented - Yahoo, eBay, Google, and Microsoft - and the Internet Advertising Bureau (IAB) shared with us the latest development of on-line consumers behavior. To let you discover how passionate these individuals were, I'm sharing with you one of the snapshots I took during the keynote. No obvious passion right?

I was expecting some breaking announcement about Web 2.0 related new techniques, even some marketing 2.0 concepts to flourish. Not only was I disappointed but furthermore, Yahoo's France General Manager just told us how he thought Web 2.0 was just a fad, no new news here he said. He referred to a Tim Berners-Lee statement to explain that he would call it Internet t.c, t.c. meaning "tout court", which would translate as something like "Internet period" as Tim defined the Internet as a way for individuals to communicate. Wow! I don't know how much corporate folks at Yahoo would appreciate it.

During the breakout sessions about sponsored links, I even heard professional marketers, especially from the major TV network in France, take some distance with blogging, coining it to a private non influential activity. I had to ask if he was afraid of blogs regarding his advertising business. You don't want to hear his corporate answer, believe me.

Fellow marketers, this is really the time for a marketing 2.0 manifesto to avoid for these wandering executives to ignore the paradigm shift we clearly are going through. As it always does during such eras -- read Innovator's Dilemma if you didn't already -- incumbents are trying to deny or ignore reality. This usually is announcing their business model fade if not their company's. As a result, brilliant and dynamic small companies are becoming the new category gorillas.

All these individuals might have missed this very interesting venture at spiceworks, providing an IT Management Software for ... FREE! What is their business model? They let you install and use their solution for free, recouping on sponsored links clicks-- especially Google's --. Yes: advertising is now funding software. They have attracted more than 5,000 companies since launch on July 31st. Read this for more. And this is not isolated, as Universal recently announced music was going to be free as advertising was funding it as well. Universal is backing SpiralFrog, a start-up we already mentioned before here.

Bite Marketing 2.0 before it bites you!

Marketing 2.0 manifesto early draft?

I was thinking of starting a Marketing 2.0 manifesto many times, with your help and feedback of course, but I guess this will take some time. As I was reading Guy Kawasaki's blog I found out a pretty good start, at least for small businesses, inspired by Ilana DeBare of the San Francisco Chronicle with this article: “Amateur reviews changing approach of small businesses.”

The pain we all feel is about making a decision where to have diner out, what plumber to call or which dentist should be allowed in our mouth. Here comes online review sites -- find out some here -- in a very Web 2.0 spirit, where consumers empower consumers. This in turn may signal the ending of the yellow pages. DeBare article ends with interesting pragmatic tactics that small businesses can use to take advantage of this new way of advertising and attracting more traffic to their business. Could be a good start for our Marketing 2.0 manifesto? Here are the ones I noticed:

-- Find out what people are saying about you on-line

-- Use reviews to improve your operations. (Don't get Dell'd)

-- Respond to unhappy customers. (idem)

-- Respond to happy customers, even adding a small gift to positive reviewers.

-- Encourage your customers to post reviews by mentioning these reviews to your regular customers.

-- The jury's out on incentives. Offer a rebate to reviewers, whether positive or negative, for their next purchase.

-- Use positive reviews in your marketing, just like Zagat's write-up found on restaurants front window.

Advertising 2.0 bridging the digital divide?

As you're reading this blog, you're probably a "Heavy Internet User" (HIU) i.e. someone who has accessed the Web at least 11 times in the previous seven days as close to 100 million people in the US, or about one-third of the country's population. Don't start calling your mom telling her you're part of a new elite: first of all because you're just a little ahead of the herd and then because it just means you're not taking care of your beloved ones enough ;-). But Marketing 2.0 is also a little ahead of the herd ... for now, but certainly not ignoring our beloved ones: customers.

McCann just released an interesting study entitled The new "digital divide" -- as technology has become one source of the “generation gap”-- trying to understand how the new generation of digital consumers are transforming Mass communication, impacting communication and more specifically advertising.

Let's get out of the way the blogging attitude: 62% of HIUs are blogging, going up to 71% for the 16-34 years old HIUs. "No longer can we simply broadcast our messages to a mass audience and hope that our standard metrics of reach and frequency will guarantee success," said David Cohen, the author of the report.

Why does it matter? Well, one third of the total US population is not a niche really. Then because 84% of HIUs have using Internet to research a future purchase and buying on-line as their most common activities. Go get them fellow marketers, but don't use the wrong marketing mix.

Check out the table above, provided by eMarketers, the technologies they use most are not the ones we market to easily: instant messaging, price comparison web sites and social networking sites (MySpace, Friendster, ...). I encourage you to read the report to find out how HIUs react to various ways of advertising on blogs, but as you would expect 39% are just bothered when a company are seeding blogs to sell their products/services. Wikipedia, MySpace and Craigslist do rank well in the top 10 Internet Services they use currently. And finally, 49% "watch" TV, 47% listen to iPods or CDs and 41% to the radio while surfing the net.

To leave you on an even happier note, "word of mouth" is to them the most valuable and trustworthy channel when purchasing a product. So move it, switch to Marketing 2.0 now before it bites you.

You know where some McCann execs are headed now? Well Robin Kent is starting SpiralFrog, a free ad-supported music-download service in conjunction with Universal Music Group. Yes gang, music is finally going for the free syndrome as well. But SpiralFrog is not alone, Napster is going for it as well, allowing consumers to listen to up to five tracks for free while they view advertising.