The British are heading online to shop in ever increasing numbers, according to new figures from IMRG/Capgemini. Twenty percent of U.K. consumers now do their shopping on the Internet. Almost $54 billion was spent by Brits on Internet shopping in the first half of this year. That’s a rise of 38% compared with last year, revealed IMRG/Capgemini in its latest e-Retail Sales Index.

“Online shopping growth continues to out-perform the high street, as tight budgets and poor weather keep people at home where they can shop online for bargains,” said IMRG CEO James Roper. Just over half also believe that shopping online is environmentally friendly, a view shared by their movie-watching U.S. cousins.

IMRG Capgemini predicts that sustainability issues will drive between 30% and 50% of all British retail online in the next five years. “This is because, as online reaches 20% of all retail sales, retailers experience a tipping point which forces them to seriously re-think the future viability of their business model,” said Mike Petevinos, head of consulting for retail for Capgemini UK.

Most smaller businesses know by now that search engine optimization is an effective way to get their sites noticed by the almighty search engines. But a recent survey indicates that SEO is the best way to generate online leads. Is your site optimized for search? Paul Bruemmer writes on SearchEngineLand about a recent study done in the UK by eConsultancy on online marketing.

The study demonstrates that “natural search is the best tactic for generating online leads, concluding it is greatly underused despite the fact that it outperforms nearly all other types of online marketing.”

The stats:

Natural search (79%) is the most frequently used online marketing tactic for lead generation, followed by email marketing in-house lists (75%) and paid search (71%). Over half (52%) of company respondents said natural search was “very effective.” Just under half (48%) said paid search was very effective.

Bruemmer writes: ” While online lead generation is becoming more important for many businesses, only a little over half of the company respondents in this survey felt their company wasn’t exploiting this type of marketing as effectively as it could be, illustrating that online lead generation delivers results but could be utilized better.”

Bruemmer notes that according to the report, a larger proportion of online lead generation budgets go to paid search advertising even though “natural search is perceived as providing the best value for the money. Companies haven’t invested in natural search over and above other internet marketing tactics because it requires more effort, but don’t make that mistake in your search marketing efforts.”

Bruemmer addresses in-house search marketing managers in his emphasis on “taking advantage of all search marketing tactics,” but for many smaller businesses, their marketing managers are wearing many hats or in some cases don’t exist. SEO is crucial to a Web site’s success and eConsultancy’s survey validates the point but is it worth hiring an SEO consultant for?

In the course of profiling many small and mid size businesses, it is clear that SEO is becoming increasingly recognized as a necessary part of an online strategy. But it seems that there is no universal approach to how to implement an effective SEO strategy: Some smaller businesses are outsourcing to their Web site developers, some to SEO consultants, and some are trying to learn the art of SEO on their own. Which practice is best of course depends upon the nature of the business, it’s size, and the ability of those involved to implement effective SEO strategies.

The BBC has unveiled plans to spend £68m by 2013 on a network of 65 websites covering the whole country that will provide local on-demand video news. The plans were unveiled today as the BBC Trust launched a public value test and consultation on the controversial plan to expand the corporation’s local online operation, which faces stiff opposition from rival media organisations including regional newspaper publishers.

The proposals submitted to the BBC Trust by the corporation’s management would expand the corporation’s current network of BBC Local websites and add more depth of content, including video.

The corporation’s latest proposals would take the number of BBC Local websites from 60 to 65.

The expanded BBC Local network would include 47 for England, six for Scotland and two for Northern Ireland. Wales will have five sites, although as each will be in both English and Welsh this equates to 10 overall - taking the total to 65.

BBC management has forecast the expanded BBC Local network’s operating budget to be £23m by 2012-2013, growing incrementally over five years.

This works out at the equivalent of around £350,000 a year for each of the 65 BBC Local sites.

The BBC said its main bbc.co.uk site - which has a budget of £114m - currently has an average of 16.6 million users a month out of a total UK internet population of 33 million.

The local online video advertising market in the United States will reach $1.5 billion by 2012, according to a report released this week.

Researchers predict that consumer adoption and conversion rates will drive small to medium-sized businesses to spend 11.6% of their online budgets on video ads by 2012. Video production companies and Yellow Pages publishers represent growing market segments that will present considerable opportunity for expanding local video ads, the company said in its U.S. Local Video Forecast (2007-2012).

“Publisher sales channels put Internet Yellow Pages in the strongest position to benefit from SMB and user demand for local online video,” Matt Booth, senior VP and program director for The Kelsey Group’s Interactive Local Media practice, said in a statement. “At the same time, local video growth will hinge upon [Internet Yellow Pages’] execution of sales and video networks’ distributed production and fulfillment.”

The Kelsey Group said that 62% of consumers surveyed in its User’s View Study in March reported watching online video ads, compared with 59% in 2007. More than 47% of consumers who watched an online video ad visited a Web site, and 19.1% sought information about a product or service. More than 18% visited a store to see a product, and nearly 17% of those who watched an online video ad bought something.

The top 100 advertisers in the U.S., who represent 41 percent of total advertising spending, shifted about $1 billion last year from TV and newspapers to the Web. An analysis from Ad Age shows that overall media spending in “measured” categories (TV, print, radio, Web) by the top 100 advertisers was flat in 2007, with 0.3 percent growth to $61.3 billion. But spending on Web display ads rose 33 percent to $4.2 billion. The article notes: Put another way, these top-tier marketers increased measured internet spending by $1 billion; slashed newspaper spending by $674 million; and cut TV budgets by $406 million.

This is yet one more piece of evidence that dollars are flowing from traditional media to the Web. The analysis is based on data from TNS Media Intelligence for 2007. TNS only measures display advertising, and not search.

The big question is whether the recession that has already hit some categories of advertising will hit the Web this year. Already, the growth of spending in display advertising slowed overall in the first quarter of 2008. And the Interactive Advertising Bureau showed a slight decline for all Web advertising (including search) to $5.8 billion in the first quarter, from $5.9 billion in the fourth quarter of last year.

As Google Inc. pushes to sell ads crucial to its revenue growth, some of its largest advertisers are growing angry with the way the company oversees its sponsored searches.

The problem is a tactic known as “piggybacking,” in which smaller advertisers use major players’ brand names, slogans or other trademarked words in the text of search ads to lure Web surfers to their own sites.

While Google and other search engines have policies against this maneuver, some marketers say the practice often goes unchecked. The brick-and-mortar world has long-established laws in this area, but the legal situation is less clear for the Internet and has only recently started to be tested in the courts.

 

Tensions over piggybacking have been simmering for a couple of years. Companies such as Marriott International Inc., InterContinental Hotels Group PLC, AMR Corp.’s American Airlines and Northwest AirlinesCorp. say the use of their names and slogans in the text of other companies’ search ads confuses potential customers and increases their cost of doing business. They are particularly upset with Google, which is the dominant player in the search business. It controlled 71.2% of the search market last year, according to research firm eMarketer Inc.

As a result, Google could face a backlash as it attempts to grab a bigger share of other advertising niches, including display advertising and video ads. Big advertisers say they may punish Google if they aren’t satisfied with the way the piggybacking dispute is dealt with. “This does play into our decision of overall spending — it has to,” says Michael Menis, vice president of global marketing services at InterContinental.

 

Adds John Gustafson, director of distribution and Internet strategy at Northwest Airlines: “If Google has an inability to help us resolve issues about abuses of our brand, that would impact our decision to participate in future forms of advertising.”

Last August, American Airlines filed a suit against Google in federal court in Fort Worth, Texas, seeking restitution for damages caused by trademark infringement on the search engine. The airline is asking Google to stop selling its trademarked terms to other advertisers. This practice is “utilizing our brand that we’ve built for more than 80 years for the benefit of someone else,” says American Airlines spokesman Billy Sanez.

Google says it is disappointed that the court denied its motion to dismiss the lawsuit. It believes the suit lacks merit. “Google’s trademark policy strikes a proper balance between trademark owners’ interests and consumer choice and has been validated by prior court decisions,” a Google spokeswoman says.

Google acknowledges that piggybacking occurs and says that when it gets complaints, it investigates the claims and tries to stop the practice. “We have a long-running policy where we don’t allow advertisers to use trademarked terms in ad text to avoid creating any user confusion,” says Richard Holden, a product-management director at Google.

The other main players in the search-advertising market are Yahoo Inc. and Microsoft Corp. Both say they have policies similar to Google’s.

The way search-engine advertising works, marketers bid on key words in a continuous auction. InterContinental, for example, bids on millions of key words a day from Google in 11 different languages. Among them are its own brand names, such as “Holiday Inn Express” and “Crowne Plaza Los Angeles.” When a consumer searches for any of the words, the company’s ad appears above or next to the results, depending on the amount the company bids and an algorithm Google uses to determine an ad’s relevance to a search.

Companies only pay Google for the key words if someone clicks on their search ad.

For large companies, the frustration comes when their names and other well-known phrases are used in the text of a search ad leading to an unrelated site. A recent Google search using the words “Marriott Atlanta,” for instance, brought up an advertiser-paid link labeled “Marriott Atlanta.” That led to www.hoteltravel.com, a discount hotel-reservations site. But a link on the site for a Marriott hotel room in Atlanta ultimately led to an error page. Marriott says the site isn’t authorized to use the Marriott name in its online text.

Hoteltravel.com didn’t respond to requests for a comment. The link on Google has since disappeared.

The piggybacking that Marriott, American and others are complaining about is not to be confused with another practice known as “conquest buys,” in which marketers buy a competitor’s term so that an ad for their own product appears when a consumer searches for the other brand. The difference is, the text of the ad doesn’t contain the competitors’ name or slogan. While companies have also protested this practice, Google’s policies allow it, unlike piggybacking.

Piggybacking is a big problem for marketers that do a significant amount of business online, experts say. If it is allowed to continue, companies seeking online visitors will be forced to pay more to advertise in search engines because rising demand will force up the cost of key words, says Eric Clemons, a professor at the University of Pennsylvania’s Wharton School who follows the search-ad business.

The companies interviewed for this article say they aren’t able to put a dollar amount on their claims of lost business as a result of the piggybacking. But concerns like InterContinental, which spends more than half of its online marketing budget on search ads, say they depend on these ads to generate sales. “Any research will tell you search is the place where people research travel,” Mr. Menis says.

A recent Google search with the words “Holiday Inn Orlando” brought up a sponsored link labeled “Holiday Inn Orlando.” It led to LowFares.com, an online travel comparison-shopping site. InterContinental Hotels, which owns Holiday Inn, says LowFares.com is not authorized to advertise using the Holiday Inn name.

LowFares.com says it bids on millions of search terms at any given time and often uses Google’s automatic system to generate its advertising copy. “What we rely on Google to do is to essentially stay within its own policies so that if a given key word or a search term that we are bidding on should not show up in the search ad, it doesn’t,” says Steve Yi, senior vice president of Oversee Marketing Services, which owns LowFares.com. LowFares.com says if it is notified of a violation, it immediately takes down the ad.

Some advertisers are demanding that Google and other search engines create an automatic system that will only allow advertisers to use other companies’ names and slogans in the text of search ads if they have permission.

But Google says its system works. “We are trying to balance advertisers and trademark owners and user interests,” Mr. Holden says.

 

MySpace is getting a renovation this week as it seeks to build advertising revenue and provide a simplified experience to consumers. Famous for its busy, flashing pages, the social networking site is going for a less cluttered look and new features intended to make navigation easier for its 110 million users. Other tweaks aim to make it easier to track down friends and family members. And the company says it has more renovations in store this summer.

But even as the site is clearing space in some areas, the size of advertising on MySpace’s home page will be growing. Starting today, a new full-page ad will let advertisers dominate the home page where users log on to the service. Movie studio Warner Bros. is the first customer, and it takes over the site’s home page to promote its upcoming Batman movie. Steve Pearman, senior vice president of product strategy at MySpace, said that the idea was to present a type of advertisement that engages users because it “feels natural and like part of the experience, rather than just another ad.

Search-based ads are more profitable because Web users actively go to search engines seeking information, said Greg Sterling, principal analyst at Sterling Market Intelligence, a firm that tracks how online behavior relates to real-world sales. MySpace and Facebook, on the other hand, are used more passively.

“Social networks are an important way to reach certain people and do a certain type of marketing,” he said. “But they’re not going to be the cash machine that Google has been.”

Dan Hobin, chief executive of G5 Search Marketing, said his company spends more on search engines like Google.

In certain cases, though, social network advertising is a good fit. One G5 client, a storage-rental company, targeted college students in a Facebook marketing campaign last month. Thanks to the site’s ability to target specific types of consumers, G5 was able to put ads in front of college students in 15 cities. “They rented more spaces to college students than they have ever rented,” Hobin said.

Though her firm’s research shows that the market will shrink this year, eMarketer analyst Debra Aho Williamson said it’s not a surprise that experimental marketing formats would tend to be the first to go in tough economic times when advertisers are tightening their budgets. She believes a “killer app” for social network advertising may be still on the way.

“We haven’t seen any advertisers raise their hand and say it’s not working,” she said.

Making sure even small marketing budgets are not wasted

Niche marketers may have a harder time targeting their audiences, but at least it doesn’t cost as much as mass campaigns.

That is one of the main findings of MarketingSherpa’s “Online Advertising 2008: What Works, What Doesn’t and Why” report.

The research company surveyed marketers in the US in February 2008 and found that nearly one-third of those targeting niche consumer audiences spent under $9,000 during the month. None of the marketers targeting mass consumer audiences spent as little, and over one-third spent $1 million or more during the month.

“The more people you are advertising to, the more you are going to wind up spending,” said Tim McAtee, senior analyst at MarketingSherpa, in a statement. On the other hand, he noted, “If you’re selling nuclear reactors or something, like GE, you can have a huge cost per ad—a huge cost per sale, and have that still make sense.”

Mr. McAtee added that eliminating wasted impressions and making a good impression with great advertising was the best way for advertisers to improve ad spending ROI.

The specific targeting strategies agencies and advertisers in the US use to minimize wasted ad impressions vary, but the vast majority use some kind of targeting, according to Collective Media’s “Ad Network Study 2008.”

Nearly eight out of 10 respondents said that they planned to use demographic targeting in 2008, almost exactly as many as did so in 2007. Contextual, geographic and re-targeting were all set for slightly lower use this year, while nearly three-quarters of respondents planned to use behavioral targeting this year, up from the roughly 64% who did so in 2007.

“When putting together the online portion of a campaign, the question should not be whether or not to target ads,” said David Hallerman, senior analyst at eMarketer. “Instead, advertisers and agencies must examine the best actions to track, what metrics will gauge a campaign’s effectiveness and what goals underlie the marketing.” Source: eMarketer

Amazon.com has filed a lawsuit challenging New York State’s new law forcing online retailers to collect sales tax on shipments to state residents. On Friday, Amazon filed a complaint in State Supreme Court in Manhattan objecting to the law, which was approved as part of the $122 billion state budget that Gov. David A. Paterson signed last week. The law is expected to raise about $50 million. The issue is not whether people should pay tax when they buy goods from out-of-state sellers like Amazon. For decades, the state has required them to pay sales or use tax. The question is whether the vendors must collect that tax on behalf of the state.The company’s complaint argues that the statute is “overly broad and vague.” It is impossible, Amazon wrote, for it to determine which of its affiliates are actually in New York State.

The economic slowdown will eventually take its toll on total US media ad spending, but not in the immediate future. Spending increases in 2008 across all media will bounce back from last year’s flat growth to a 3.3% gain. Much of those increases will be in TV advertising, especially with the national election and the summer Olympics. Even then, the retail, financial services and automotive industries, three large sectors for TV advertising, are already feeling the economic downturn. As Sarah Fay, the CEO of Aegis’sCarat, said in a recent interview with Advertising Age, “When there is a recession, marketers often feel the pressure to work with efficient forms of TV buying, so they are really starting to look hard at the Long Tail of TV or having cable play a bigger role.”  Furthermore, ad spending cutbacks could be expected to trail the start of any full-blown recession for three related reasons: 1) Companies usually commit ad budgets in advance. 2) Companies do not want to slash advertising and decrease their sales until it is clear that consumer spending is going to be less responsive to advertising. 3) Companies are not likely to greatly alter their ad budgets until they feel the effects of decreased revenues. However, the economic slowdown has been anticipated for many months. That has put a conservative slant on many ad budgets, which is why—even with elections and the Olympics—total ad spending growth this year will still be moderate. Source: emarketer.com