Europe’s mobile music scene is more advanced than that in the US. Germany, France, Italy, Spain and the UK are reporting sharp growth. BITKOM and GfK Panel Services reported that 5.2 million full-track songs were downloaded in Germany in 2007, an increase of 53% over 2006. eMarketer predicts that mobile music retail revenues in the EU-5 will reach over $1.4 billion by 2012, up from $267 million in 2007. eMarketer expects ad-supported mobile music in the EU-5 to reach $170 million in 2012, up from $4.6 million in 2007.

The US is the world’s largest retail market for music. However, it lags behind parts of Europe for mobile infrastructure, a justification for Germany’s more advanced mobile music market. The joint venture service from Sky and Universal Music to enable consumers to stream music on-demand or download onto MP3-playing devices, including mobile phones and iPods, shows that European companies are looking to meet consumer demand for online and mobile music.

“Given consumers’ reluctance to pay for music on their phones, marketers are finding new opportunities to partner directly with carriers, labels and even music artists themselves,” says John du Pre Gauntt, eMarketer senior analyst and author of the new report, “Mobile Music: Ads to the Rescue.” “Direct deals between brands and bands are no longer anomalies, but are part of a growing trend by both parties to bypass intermediaries and go directly to customers.”

“Mobile works better as a marketing and customer relationship platform than it does as a retail sales platform,” Mr. Gauntt says. “Bands and artists are increasingly using mobile to form direct relationships with their fans, which are then monetized through other means, such as tickets to live shows, merchandise and fan clubs.”

Marketers will account for a greater proportion of that overall spending as the ad-supported model for mobile music gathers steam.

The music industry is learning a hard lesson: The mobile platform works better as a marketing and customer relationship tool than it does as a retail sales channel. “Bands and artists are increasingly using mobile to form direct relationships with their fans that are then monetized through other means, such as tickets to live shows, merchandise and fan clubs,” says John du Pre Gauntt, senior analyst at eMarketer and author of the new report, Mobile Music: Ads to the Rescue. “In addition, given consumers’ reluctance to pay for music on their phones, marketers are finding new opportunities to partner directly with carriers, labels and even music artists themselves.”

It’s not that there won’t be mobile music sales, they just won’t be as large as many in the industry hoped for.

eMarketer forecasts worldwide mobile music retail revenues will grow from $2.4 billion in 2007 to over $13 billion by 2012.

To replace the drop in CD sales, alternate revenue streams must be developed.

“Marketers will account for a greater proportion of that overall spending as the ad-supported model for mobile music gathers steam,” says Mr. Gauntt.

eMarketer expects marketers will spend over $1.5 billion in 2012 to subsidize or sponsor mobile music to targeted customer demographics, up from $42 million in 2007.

Even in Japan, where speedy multimedia handsets are the norm, many advertisers are not interested in using mobile in their campaigns. That is one of the findings of a June 2008 study by the Nikkei Advertising Research Institute (NARI). Nearly 62% of responding marketers said they were not interested in using mobile ads.

Picture, banner ads and mobile e-mail ads topped the list for respondents who were interested in using mobile ads. Those who had used mobile ads in the past were even more likely to say they would like to use these three formats.

Although the number of companies NARI surveyed was low enough that results should only be considered for directional purposes, they did echo findings from the 2007 version of the survey. Among Japanese firms surveyed last year that advertised to mobile users, nearly three-quarters said they sent picture ads. Six out of 10 sent text ads, and 40% sent mobile e-mail ads.

One reason for the focus on simple ad formats is that most mobile marketers are using the medium for direct response. Integrated campaigns involving mobile are still fairly new.

“This is not a result of reluctance on the part of brands and their agencies to inject more brand-oriented messaging into mobile advertising,” said John du Pre Gauntt, senior analyst at eMarketer. “It is a direct result of the simple fact that mobile media in Japan seem more effective for sales promotion and direct response right now.”

Those who do use mobile ads in Japan are beyond the experimental budget phase, judging by May 2008 Seed Planning data. The company said that mobile ad spending in Japan would reach ¥250 billion ($2.7 billion) in 2011, up from ¥100 million ($964 million) this year.

For all of Asia-Pacific, mobile ad spending will reach $5.3 billion in 2011, most of which will be spent on text messages.

Source: eMarketer.com

Several recent worldwide online ad spending projections indicate that the medium still has a lot of room for growth. Worldwide online ad spending will reach $65.2 billion in 2008, according to IDC’s “Digital Marketplace Model and Forecast.” The research company predicted 15% to 20% annual growth through 2011, when spending would hit $106.6 billion.

IDC said that online ads would account for nearly 10% of all ad spending across all media in 2008, rising to 13.6% by 2011. Nearly one-fifth of Western European ad spending will be online by that time.

“The long-term opportunity for Internet advertising can be seen in the disparity between per-capita spending,” said John Gantz, chief research officer at IDC, in a statement. “Total advertising revenues equate to more than $105 per inhabitant of the planet, while Internet advertising revenues are less than $50 per active Internet user.”

In May, Credit Suisse lowered its worldwide online ad spending estimates and forecast only modest growth in total ad spending for the next two years. The investment bank said the US and most other developed nations would actually drag growth down, thanks to phenomenal growth in developing nations.

Credit Suisse’s estimates of online ad spending as a percentage of total ad spending were very close to IDC’s: 10% last year and 12% this year.

The climbing ratio of online ad spending to total ad spending will help drive up the dollar amount advertisers spend on the Web.

eMarketer senior analyst David Hallerman has noted a number of reasons to expect continued growth in online ad spending in the US, which also apply to the medium worldwide. Among them:

Online ads are more measurable than other media, making them increasingly appealing to advertisers.The Internet audience is huge, so the simple process of advertising following eyeballs will lift spending.Internet ad prices are rising, thanks to targeting and other techniques, which can push up overall spending.

“US Internet ad spending is not impervious to the current economic weakness. However, those economic effects are more the case for display advertising than for paid search advertising,” said Mr. Hallerman. “Even so, the trend toward display ads, including video and rich media, continues to attract brand marketers as they shift spending from traditional media to the Internet.”

Primetime and scheduled TV are losing their impact as consumers create their own entertainment lineups. Digital video recorders (DVRs) and video-on-demand (VOD) allow viewers to watch content on their own schedule and avoid traditional TV advertising.

At the same time, the slowing economy drives advertisers to demand the greatest return on their advertising investments. With interactive digital platforms allowing more measurability, the business case for traditional TV advertising is becoming increasingly weak.

VOD would seem well-positioned to capture a rising share of ad spending, but the way consumers use it may limit its potential as an ad medium.

Most cable TV operators offer free VOD content in combination with pay-per-view options, but time-shifting with DVRs is proving more popular.

According to Comcast—the leading cable operator in the US with 14.7 million subscribers—the most popular free VOD content is karaoke, music videos and programs for children.

VOD’s ad potential is somewhat limited by use. An August 2007 study by IBM indicated that only 48% of US adult Internet users had used VOD.

eMarketer estimates that VOD is available in one-third of TV households today, and will reach over 60% of households by 2012.

Content is the big driver of VOD usage. ChoiceStream data from December 2007 shows there would be greater viewership of VOD if there were “more content of interest.” Notably, however, 57% of respondents said they would not watch more VOD even if the content were better. Clearly price, awareness and usability are also factors in VOD usage.

Increasing the VOD audience (and ad revenue potential) may depend in part on advertisers and marketers: Better content, supported by ads, combined with VOD awareness and education campaigns, could be part of the solution.

By the end of 2009, more than two-thirds of the US population—or 200 million people—will be going online.”Unfortunately, this potential audience for Internet ads is largely unenthusiastic about most forms of advertising, notably banners, rich media and the growing area of online video,” says David Hallerman, senior analyst at eMarketer and author of the new report, Behavioral Targeting Attitudes: The Privacy Issues. “A primary reason for their lukewarm attitude is Internet advertising’s irrelevance, with messages peripheral to their current interests and needs.”

However, with its promise of relevant advertising and greater revenues from ad inventory, behaviorally targeted advertising offers a ray of hope for online advertisers and Web publishers.

“And yet, collecting the visitor data needed for online ad targeting is raising concern among Internet privacy groups, the FTC, state governments—and, most importantly, consumers,” says Mr. Hallerman.

For the public, government agencies and the mainstream media, behavioral targeting can represent all the ways that companies appear to be violating individual privacy on the Internet.

As the FTC indicated in its report, “Protecting Consumers in the Next Tech-ade,” while behavioral targeting “may result in more relevant advertisements being served to consumers, it also may implicate data security and privacy risks if the underlying information used to target consumers is not adequately secured or is misused by companies in the marketing chain.”

The report went on to say, “Given the amount of information—personal and otherwise—about consumers that is likely to be collected, used and stored, privacy will continue to be a top consumer protection priority for the FTC.”

“While Internet companies argue that behavioral targeting benefits Internet users because it greatly increases the relevance of the advertising they see online, perception is reality,” says Mr. Hallerman.

Consumers are confused.

The second annual “State of the Media Democracy” study from Deloitte and the Harrison Group found that while 66% of US Internet users said they would click on additional Internet ads if they were better targeted and 67% would be willing to accept more ads in exchange for free and valuable content, a similar number—65%—called Internet advertising more intrusive than print ads.

Making a strong argument for behavioral targeting, a TNS Global survey commissioned by TRUSTe found that 72.4% of Internet users “agree” or “strongly agree” that irrelevant Internet advertising was intrusive and annoying.

“As people make the Internet an increasing part of their daily lives, privacy issues will become more of a battleground,” says Mr. Hallerman.

However, among marketers and Web publishers attuned to consumer concerns, a good portion of these issues can likely be resolved through a clear process of informed consent.

“In other words,” says Mr. Hallerman, “ask the audience for permission.”

Just like marketers have learned to do with e-mail.

Explore all the pros and cons of this controversial new advertising tactic, download the eMarketer report, Behavioral Targeting Attitudes: The Privacy Issues, today Source: emarketer.com

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

Politicians may be raising millions online, but they are still spending most of it on TV.

This year’s national and local elections are generating record levels of advertising spending.

eMarketer estimates online advertising from political campaigns and advocacy groups will reach $50 million this year.

That is not much compared to political ad spending overall, said Lisa E. Phillips, eMarketer senior analyst and author of the new report, Politics ‘08 Online: Push Meets Pull.

“Over the course of the year, less than 2% of political ad budgets will be spent online,” Ms. Phillips said. “That pales in comparison to the 50% to 80% of the budgets that will be spent on broadcast TV advertising.”

With all the excitement and traffic that political blogs, candidates’ social network pages and campaign Web sites are generating, why are politicians spending so little on online advertising?

“Television’s ability to push candidates’ messages out to a mass audience—and push it fast—makes it the winner for this hotly contested election year,” said Ms. Phillips.

The Campaign Media Analysis Group (CMAG), a division of TNS Media Intelligence, estimates $3 billion will be spent on political advertising on television this year, up 30% over the 2006 midterm elections, and up 77% compared with the last presidential election in 2004.

The presidential candidates alone are forecast to spend $800 million on television ads.

Of course, in many cases, the push TV ads are sending people to the candidates’ Web sites, where they are greeted with requests for donations, e-mail addresses and campaign merchandise for sale.

“The Internet is pulling voters into conversation and interaction with candidates and issues in ways that barely existed in the last presidential election, a mere three-and-a-half years ago,” Ms. Phillips said.

The Internet may not be getting its fair share of political ad dollars yet, but in combination with television it is already being used as a powerful one-two punch—not only to raise awareness, but to raise funds, too. “This push-pull model created by political marketers is a tactic marketers in many categories could profit from,” said Ms. Phillips.

To find out about other innovative ways political marketers are using the Internet, download the new eMarketer report, Politics ’08 Online: Push Meets Pull, today.  

Source: eMarketer.com