Condé Nast Eyes Eye-Tracking

Condé Nast Eyes Eye-Tracking
By Jason Fell
http://www.foliomag.com/2008/cond-nast-eyes-eye-tracking-ads
Publisher to monitor effectiveness of ad campaigns; others wait on technology.
When the thought of "eye tracking" comes to mind, one may invariably picture some amalgamation of popular sci-fi flicks-the Matrix, Minority Report, Total Recall-with test subjects wearing cumbersome, Robocop-style headgear to trace eye and head movement.

Today, the clunky headgear has been replaced by cameras that are built into computer monitors. By collecting and analyzing data like "first gaze" and a person's vision path across a page or screen, publishers can use the information to help design covers, monitor the effectiveness of advertisements and help plan Web site redesigns-and they are beginning to do so. Condé Nast recently partnered with eye tracking service provider MediaAnalyzer to analyze the effectiveness of its clients' ads, especially for its long-term advertisers.

According to Scott McDonald, Condé Nast's senior vice president of marketing research, the partnership enables the company to offer "a unique value add to advertisers in our publications." Using MediaAnalyzer's methodology, he says, "helps our advertisers maximize their ROI and determine whether readers are engaged with their ads."

MediaAnalyzer's Web-based "AttentionTracking" technology tracks the path of eye movement while a print or online ad is being viewed. This, combined with a questionnaire, allows MediaAnalyzer to quantify the ads that leave the most lasting impressions. Or attempt to, anyway.

"In an increasingly competitive magazine market-with publishers fighting declining circulation numbers and a shift in ad dollars to other media-it is important that publishers continue to differentiate their products and offerings from the competition," says Charles Boyar, MediaAnalyzer's vice president of U.S. operations. "Research can help publishers create better-looking and more compelling magazines [and Web sites] and can aid them in helping their customers to create ad campaigns that will best address readers."

Are Other Publishers Buying It?

Despite some of the stated benefits, magazine publishers so far have been slow to buy into eye tracking technology, even online. So far, Condé Nast is MediaAnalyzer's only magazine client.

"Most of the eye tracking technology science is used for video and Web work," says veteran magazine consultant Bob Sacks. "When we start to get into digital editions, then the science becomes more meaningful and important, e-paper, eye tracking technology and a Web connection changes everything."

"When used appropriately, eye tracking studies have the most immediate impact for magazine publishers as they relate to Web sites," says Tim Kauffold, director of business development at Oneupweb, an integrated online marketing firm that provides eye tracking services. Kauffold says studies can cost as little as $4,000 or "well into six figures." Oneupweb does not have any magazine clients.

"The demands for user attention online are huge, and it's critical for sites to maximize all the opportunities they have to interact with their users," says Kauffold. "Poor navigation, cluttered content, and unnecessary confusion can force users away. This is a huge loss for publishers, especially in the relationship with their advertisers."

But as print magazines continue to see their business move online, Sacks says more publishers will start turning more to eye tracking services. "When we as publishers adapt to the next level of digital information distribution, and abandon a print-only mentality, we will have to use all the science and technology at our command," says Sacks. "Our use of eye tracking technology will grow as we do."

What Are You Worth in a Free Economy?

What Are You Worth in a Free Economy?
Chris Anderson Explains How 'Freeconomics' Will Change the Media World
By Nat Ives

Chris Anderson's book "The Long Tail" described the rising potential in niche media -- enabled by plummeting digital-storage costs -- and predicted a declining reliance on blockbuster media. In his first (as yet untitled) book since then, Mr. Anderson, the editor in chief of Wired magazine, plans to crystallize the implications of doing business when the cost of products, services and storage is falling rapidly toward zero.
Wired's new issue is free .. sort of. You still have to pay for the mag.

"'Free' shifts the economy from a focus on only that which can be quantified in dollars and cents to a more realistic accounting of all the things we truly value today," he writes in a forthcoming Wired cover story previewing the topic.
That's not to say Wired's growing print circulation is about to become free for readers, or that Wired didn't happily pocket every new penny of revenue when ad pages edged up 5.6% last year, according to its estimates.

It does suggest, however, that media companies and their advertising clients might rethink their strategies amid growing competition from the sector called "free." In an interview ahead of that cover story and Hyperion's planned book release early next year, Mr. Anderson told Ad Age what's coming now. We edited lightly for space, which still has a cost attached to it for Ad Age.

Advertising Age: Give us the broad strokes on "freeconomics." What's free, for whom and why?

Chris Anderson: When you think about it, there really are three kinds of free. There's the free we've known forever, which is the King Gillette razor-and-blade model, which is a form of cross-subsidy. A spin-off of that model is the media model, where the product is free because it's subsidized by the advertiser. That's called a three-party market -- the publisher, the advertiser and the consumer who gets everything for free.

The second kind of free is this weird kind of the free that's never existed before, simply because cost goes to nothing. Moore's Law said processing would get cheaper every year, but there are corollaries for bandwidth and storage. As the price gets closer and closer to zero, you can eventually just treat it as free.

Hotmail started with a tiny amount of storage for free and then you had to pay for the rest. By 2000 to 2002, you were getting more. Then Gmail said, "We're going to give away one gigabyte for free," and revolutionized the market. Yahoo said, "We'll give them infinite storage. We'll use that to reinforce people's connection with Yahoo and make the money somewhere else, maybe banner ads on Yahoo News, maybe just the information you get from people's user behavior that allows you to charge more for ads."

The third model of free is the gift economy. This is what used to be called freaky, Berkeley, hippy-commune stuff and now is the basis for Wikipedia, the blogosphere, Craigslist. There is a real economy out there that is motivated by nonmonentary consideration such as reputation, attention, expression -- all the social incentives that are turning out to be incredibly effective in getting people to do things for free. Before we didn't have a platform on which they could work.

Ad Age: If everything is getting closer to free, why did the cover price on all my celebrity-gossip magazines just go up?


Mr. Anderson: Magazines are in the essentially free business. At Wired, we charge $10 a year for a subscription when the actual cost to us is more than 10 times that much. So why do we charge anything? We charge a nominal fee simply as a psychological fee that shows that you want it -- which allows us to charge advertisers more. A single penny does it. We charge $10 because we don't want to devalue the product, because that would be sending the wrong message. But from our perspective it's essentially free.

Ad Age: Which media companies or marketers win with free, and which lose?

Mr. Anderson: Obviously you don't want to compete with free. If your economic model doesn't let you get to free but your competitor's does, you're fighting a very powerful proposition. If you are selling software and some other company decides to make that software a free service, Microsoft Office is going to be more and more competing with online word processors. That's a wake-up call for Microsoft.

Music labels are the best example of an industry threatened by free. They're in the selling-discs business, the selling-songs business. Obviously the newspapers are dealing with Craigslist. Newspapers charge for classifieds; Craiglist runs them for free. We know how that story ends.

Advertising is a very interesting question. Right now the agencies are competing with cheap. Google can serve very small advertisers who can't pay for big agencies. There's going to be more and more advertising forms that are free to somebody. Advertising isn't the victim of the free economy; it's the engine of the free economy.

One of the biggest issues is it's not all about advertising. Advertising pays for a lot and will pay for more, but there are many other models such as premium, cross-subsidies that are not based on ads.

Ad Age: You discuss the effects of abundance in your article. What happens when we get to play with bandwidth and storage that's free or nearly so?


Mr. Anderson: The best example of this today is YouTube. We focus on the viral hits and phenomenons and the most popular videos. As a Long Tail guy, what's really interesting about YouTube is the extent to which we waste the bandwidth and storage for passing around videos that are of interest to, like, three of us. It's YouTube, not Viral Tube or Lonelygirl15 Tube. It's not about quality; it's about relevance and focus. It's about being incredibly targeted on narrow interests.

Ad Age: So how does a "freeconomic" media model affect or interact with the Long Tail?

Mr. Anderson: The Long Tail is all about infinite choice. If you can give people infinite choice, you can discover the latent demand for products of niche appeal. Infinite free shelf space was essentially the enabling factor. It was simply by being able to be indiscriminately, profligately wasteful that we are able to discover the demand for niche content.

Chris Anderson, editor in chief of Wired magazine

What we're discovering about the world of the narrow, of the specific, of the niche is that's where people's engagement is the highest. That's where they care about stuff. We have relatively superficial engagement with mass products and relatively deep engagement with niche products. As you go down the tail of popularity, people will pay more to reach narrow audiences than they will to reach broad audiences. You can sell things for big money; you can charge more for advertising.


The world we live in -- a mass-market, commodity, cost-per-thousand market -- is very interesting to compare with the hyper-local. There's a site on Seattle-geek parenting -- you would say that's pretty narrow. We asked what their CPMs are. They said: 'We don't calculate that; we have local merchants who will pay us a few hundred dollars.' If you work it out in CPMs, they're paying $100 per thousand.


A site on Seattle-geek parenting is only possible because the cost of production is zero and most of the labor is donated.


Ad Age: Does free empower consumers, whose attention and respect are becoming the media companies' chief asset, or dis-empower them by eliminating the vote-with-your-wallets influence of circulation revenue, subscriber fees and so on?

Mr. Anderson: I'd like to think that getting more for less is empowering. As we shift from the currency being money to attention and reputation, in a sense, the field becomes a relatively level one. We all have attention and respect we can offer. That's a far more democratic access to the marketplace. We all have attention that has some value. As more and more becomes free, we're able to deploy that wherever for whatever. Basically everything is available to everybody -- not necessarily at all tiers and all features, but the walls to entry to products and services are falling faster than ever before.

Ad Age: What's going on at The Wall Street Journal online, which Rupert Murdoch had strongly hinted would go free once he took over but now is slated to retain a walled garden at its core with possibly even higher prices?

Mr. Anderson: Murdoch has to be culturally sensitive to the company that he bought and deftly change it. Ripping out the pay side overnight would have probably been too traumatic. I'm not sure we've seen the end of that story.

It reminds us that the original Stewart Brand quote is "Information wants to be free." The actual quote also says some information wants to be expensive. What he meant was that commodity information wants to be free and noncommodity information wants to be expensive. I could give away my book and sell you speeches, which are targeted. A band does exactly the same thing: commoditize the album and then monetize the performance. What Murdoch is exploring is the difference between a commodity and a noncommodity.

Ad Age: What's your take on micropayments? Edward Wasserman recently asked in the Miami Herald whether journalism could live without ads, imagining instead "a vast menu of news and commentary offered to you ad-free for pennies per item, the charges micro-billed, added up and presented like a utility bill at month's end."


Mr. Anderson: At this point, my opinion is that micropayments have always failed and will always fail. They violate the fundamental law of free. Free is psychologically powerful. Charging one penny ruins the psychology. Asking people to just think for one second, "Is this worth it?" or "How much is it worth?''is often too much.

Ad Age: Will your book be free?

Mr. Anderson: Obviously we're going to walk the talk. The issue is going to be free. Send us your snail-mail address, and we'll send you an issue free

Advertisers Will Have to Cut Costs

As Giant Retailers Reel, Marketers Gird for Worst
Advertisers Will Have to Cut Costs to Keep Pace With Changing Consumer Priorities, but Can They Afford to Slash Ad Spend?
By Ad Age Staff
http://adage.com/article?article_id=124972

Even the most optimistic had to stop and take a deep breath last week.

First came the retail industry's January sales, and the gain -- a meager 0.5% year over year -- marked the slenderest growth since "The Brady Bunch" ran in prime time. In announcing its numbers for the month, Wal-Mart made the almost apocalyptic pronouncement that consumers were hoarding their gift cards -- "more often for food and consumables than discretionary purchases." All of that was capped off by a Federal Reserve report that consumer credit-card borrowing was down sharply, along with reports that the credit is more often being used to fund the bare necessities.

So just how sobering is this news for marketers of just about anything beyond food, gasoline and home-heating oil -- and the agencies and media that subsist on their advertising? Ad Age looks at the implications for some of the key marketing categories.

Automotive
More loan defaults, more trading down and deferred purchases might be on the way for the already beleaguered auto industry. Morgan Keegan & Co. analyst Peter Hastings believes that in 2008, 15.7 million automotive units will be sold. If that happens, it would mark the industry's second year of declines; 2007 sales slid by 2.5% to 16.1million units, according to Automotive News.
If consumers need to buy a new car, they will step down in price and size, said Mr. Hastings.

Toyota Motor Sales USA's Bob Carter, group VP-general manager of Toyota Division, admitted that the auto industry will undergo "a lot of volatility in the first four or five months of the year." But, like the majority of other auto executives, he projected a stronger second half. Sophia Koropeckyj, auto analyst at Moodys Economy.com, said automaker finance arms have seen loan-default rates rise since the last downturn in 2001 and she predicted they would be more conservative in lending practices this year.

Package goods
Unilever CFO James Lawrence was perhaps the first industry executive to acknowledge a slowing economy may be having an impact on package-goods. "In the second half of the year, we've seen slightly weaker demand in personal care in the United States," he said on a Feb. 7 earnings call. "There has been some softness in [food-service] channels, but in contrast, we have seen quite strong demand for food products which are used in the home, such as meal kits and side dishes."

Household and personal-care industry sales grew an anemic 0.5% in the four weeks ended Jan. 27, according to Information Resources Inc. data reported by Deutsche Bank. That was better than the decline of 0.9% in December, but still nowhere near the sales increases of 4% in the first quarter of 2007.

As the economy slows, U.S. package-goods players will have to rely on cutting costs for the vast majority of their earnings growth in 2008-2010, Sanford C. Bernstein analyst Ali Dibadj said in a research note last week, though he doesn't expect the knife to hit marketing spending. "Every company in our coverage," he said, "speaks passionately about its focus and ability to cut costs to offset increasing commodities, inflation and marketing spend."

"A lot of people are using gift cards to buy food," said Burt Flickinger, principal at Strategic Resource Group, but "they may be trading up rather than using them to buy pasta and peanut butter sandwiches for dinner tonight. They might buy five or six steaks to treat the family."

Consumer electronics
A move by Americans to buy only necessities doesn't worry the Consumer Electronics Association. "There's certainly a discussion about whether tech today should be considered discretionary vs. necessary," said the trade group's economist, Shawn DuBravac. "Consumers continue to allocate away from other categories for technology." He said it's more likely that consumers will buy cheaper diapers and groceries than cut off a mobile phone or deprive their kids of a computer.


Forecasts for 2008 -- from CEA and other CE researchers such as iSuppli and in-Stat -- bear that out, with predictions of overall electronics growth, albeit slower than last year. Computer analysis from researchers IDC and Gartner predicts similar softer growth in that sector.

"Last year, when oil prices were going through the roof, we saw that people said, 'Since we're not traveling, let's spend some of that money on buying a flat-panel TV,'" said iSuppli analyst Riddih Patel.

But not everyone is buying that argument. "I've found the greatest correlation in PC shipment levels is overall economic indicators of GDP and consumer confidence," said analyst Roger Kay of Endpoint Technologies Associates, and formerly of IDC. "There is some shifting in buying where people who were going to buy a new PC now content themselves with an MP3 player. ... It's the delay scenario that's most troubling. People still want it, but they decide to put it off, wait to see how things go."

Fast food
Two words: value menus. In the next six months, they're likely to become even more important to the nation's biggest chains. "I think you're going to see more options for the dollar," said Darren Tristano, exec VP of Technomic. He added that if consumers are paying with a credit card for their burger fix, it isn't necessarily bad for the industry. "Your check average goes up with credit-card purchases."

Gift-card purchases were up 16% at Starbucks during the first quarter ended December 2007. Reloads were also up 12% during the same period. Spokeswoman Tricia Moriarty said some customers use its gift cards to keep spending under control. "The reload feature can be an effective way to help people ... enjoy their daily latte while maintaining their budget."

Retail
"Marketers are doing the one thing that they should not be doing right now," said Zain Raj, global practice leader-retail brands at Euro RSCG. "They are out there trying to promote and discount their way to growth. When you have a consumer-confidence issue, it's not about spending less money, it's about spending any money. Marketers need to say 'Here's why you need these things.'"

"You've got to play offense. Now is the time to be aggressive and go out and get market share," said Mike Boylson, exec VP-chief marketing officer, J.C. Penney. The retailer remains committed to the biggest launch in its history later this month, an exclusive brand created in partnership with Polo Ralph Lauren called American Living that will be supported with a splashy campaign debuting during the Academy Awards.

Others are trying to do more with less. ""People are going to have less disposable income, so that's going to change the way we do advertising," said Jose Docabo, senior advertising manager for Home Depot. "We're also going to have to get more creative with less budget."

"Retailers need to take part of their budget and block and take part of it and experiment," said Ric West, exec VP-marketing promotion and production at Sears Holdings.

Telecommunications
Bad economy or no, telecommunications marketers can't afford to trim back $5 billion in spending with cable companies breathing down their collective necks. "We could see more aggressive advertising by cable companies trying to drive customers to their all-in-one plans," said Ross Rubin, directorindustry analysis at NPD Group. He added that consumers may switch plans to take advantage of promotional offers.

It's also possible consumers will drop optional services that tend to run up phone bills, such as call waiting or caller ID, and some may be pushed to consider lower-price options to long distance, such as phone service provided over internet connections.

On the wireless side, a downturn could fuel acceleration in the growth of prepaid-wireless services, primarily for those who can't meet credit requirements for post-paid plans, said Roger Entner, senior VP-communications sector, IAG Research. Yankee Group estimated the number of pre-paid wireless customers will grow from 41.8 million last year to 61.7 million in 2011. Among the phone companies that would benefit from the shift would be TracFone, Boost Mobile, and AT&T pre-paid products such as the Go Phone.

The Coming Ad Revolution

The Coming Ad Revolution
By ESTHER DYSON
Wall Street Journal Page A18
While the big news in the online world focuses on Google, Yahoo and Microsoft, a more profound revolution is taking place on the online social networks: The discussion about privacy is changing as users take control over their own online data. While they spread their Web presence, these users are not looking for privacy, but for recognition as individuals -- whether by friends or vendors. This will eventually change the whole world of advertising.

The current online-advertising model will become less effective, even as it gets increasingly sophisticated. New players are emerging to devalue the spaces that the ad giants are currently fighting over. Companies you've never heard of called NebuAd, Project Rialto, Phorm, Frontporch and Adzilla are pitching tools to Internet service providers that will enable them to track users and show them relevant ads. This approach (called behavioral targeting and already in service by ad networks that track users through so-called tracking cookies) undercuts traditional online publishers, who employ content to lure users and to sell adjacent ads. Now, the ISPs can sell advertisers direct access to the same users.

Take user number 12345, who was searching for cars yesterday, and show him a Porsche ad. It doesn't matter if he's on Yahoo or MySpace today -- he's the same number as yesterday. As an advertiser, would you prefer to reach someone reading a car review featured on Yahoo or someone who visited two car-dealer sites yesterday? His identity is still private: The ISP and behavioral-targeting networks don't know 12345's name and don't care. They just know what they think he wants.

This market will get more competitive, and users will be barraged by ads to which they will pay less and less attention. Call that public space, a world of billboards and cacophony. Even though the ads will be more "relevant" than ever, users will increasingly tune them out.

Now consider the new world of social networks. Facebook, unwittingly or on purpose, has been teaching people to manage their own data about themselves. Facebook's launch of the Beacon service -- which informs Facebook of members' activities (i.e., purchases) on other sites -- was a PR fiasco. But it still familiarized millions of users with the notion that they can control information about themselves online -- and determine to whom it is visible.

What might seem like a horribly complex and tedious task to their elders -- categorizing "friends," managing news feeds, handling intersecting communities of contacts -- feels natural to the Facebook users of today. They want more granularity of control, not less.

Each user determines who will get into his own garden, whether friends or vendors. Look at Dopplr (where I plan to become an investor), a site for travelers. I list my trips, and see how they intersect with my friends' itineraries. "Oh, we'll both be in London April 4? Let's get together!" Or, "Juan and Alice will be in town next Tuesday. Let's hold a dinner!" You can imagine or visit equivalent approaches for books (a hypothetical Amazon 2.0, new and more personalized), clothes (Glam.com and Stardoll.com), and even money management.

So what's the business model? I'll "friend" British Airways, which will say, "We see you're going to Moscow next month. Why not fly through London and we'll give you 10,000 extra miles?" I'm no longer in a bucket of frequent travelers, my privacy protected. I'm an individual with specific travel plans, which I intentionally make visible to preferred vendors. British Airways, of course, will pay Dopplr a handsome sponsorship fee to be eligible to be my "friend" (just as a Nike rep might pay to sponsor a basketball game and be part of the community). Someday NetJets may show up, offering to ferry me and my friends to a conference we'll be attending together.

I'm far more likely to respond to BA or NetJets within a trusted site, and for a specific offer, than I am to heed their ad while reading a newspaper article on the troubles in Russia. (As for Orbitz, my old standby: After five years, it still doesn't acknowledge my preferred airlines.)

The new model creates a more trusted environment for reaching high-value, frequent purchasers, whether of airline tickets, electronics, clothes or other items. Where does that leave the less-frequent purchasers? Probably looking to their friends rather than to advertising for advice. I'm an expert on travel; my friends may look to me for hotel choices. When I'm in the mood to buy a book or a new computer, I'll check out what my friends on Facebook are doing.

This does not mean that traditional online advertising will go away, just that it will become less effective. Value is being created in users' own walled gardens, which they will cultivate for themselves in real estate owned by the social networks. The new value creators are companies -- like Facebook and Dopplr -- that know how to build and support online communities.

Ms. Dyson is an investor in companies including 23andMe, Eventful.com, Meetup Inc., WPP Group and Zedo

Advertising's Brave New World

Advertising's Brave New World
Different Lineup of Players
Emerges With Online's Rise
By EMILY STEEL

For decades, advertising has been a relatively simple process dominated by a clubby world. Long-established advertising and media-buying agencies, most owned by half a dozen global giants, make TV or print ads and negotiate for airtime or space with TV networks or publications, most owned by a handful of other big media companies.

But as a series of recent high-profile deals makes clear, the emerging importance of digital advertising is making for a shifting and more complicated advertising terrain.

"The biggest innovation in the advertising industry during the last 70 years before digital was color TV," says Ajaz Ahmed, chairman and co-founder of independent digital marketing agency AKQA. "The agency of the future will be half a software company and half an entertainment company because that's the new landscape."

A host of newer firms from outside the traditional ad mainstream dominate the technology-rich process of making and delivering ads to the Web. And while TV networks, magazines and newspapers have a presence online, much of the Internet media is controlled by companies such as Google Inc. and Yahoo Inc.


Marketers -- seduced by the perception that Internet ads offer a more cost-effective way to reach specific consumers and measure results -- have shifted more of their ad budgets online. Internet advertising has grown into a $16.9 billion industry -- 5.9% of the $285 billion total U.S. advertising market in 2006, up from 4.7% in 2005, according to the Interactive Advertising Bureau.

To try to get a slice of that online spending, both traditional ad companies and Silicon Valley titans have battled for a stronger position in the digital-ad food chain. Google bought Internet-ad broker DoubleClick for $3.1 billion last month; Microsoft Corp. struck a deal to acquire Seattle-based online ad concern aQuantive for $6 billion last week; and ad giant WPP Group PLC last week acquired search-marketer and ad-network 24/7 Real Media Inc. for $649 million.

Much of online's allure can be traced to its precision. In television, for instance, media buyers from Madison Avenue try to place an ad on a TV show that attracts the highest concentration of target customers. Someone wanting to promote their wares to young women, for instance, might advertise on ABC's "Grey's Anatomy." But audience measures for television are, at best, rough approximations, based on surveys of a small number of viewers, and advertisers have always found it difficult to judge whether their costly TV ads succeed in driving sales.

Online, advertisers can be much more scientific in where they place their ads. Using behavioral targeting companies, such as independently owned Tacoda Inc. or Revenue Science Inc., marketers can track the online habits of potential customers. For instance, if a consumer clicks on two car sites then visits the Web site for Us Weekly magazine, car ads might show up on the magazine site, in addition to the car sites. That way the ads will appear in front of the person most likely to respond -- even when that person is on a site unrelated to cars.

"We might know what term they just searched on, which is essentially them raising their hand and saying give me information about this subject," says Jeff Lanctot, senior vice president of global media at digital marketing agency Avenue A/Razorfish, a unit of aQuantive.

What's more, the most popular category of online advertising -- paid search -- requires advertisers to pay only when a consumer has clicked on their spot. With paid search, which accounts for 40% of online ad spending, advertisers pay Internet search engines such as Google or Yahoo to post a link to their Web site next to a specific word or phrase that visitors plug into the search engine.

Up until now, paid search has benefited just a handful of players, particularly Google and Yahoo because those ads have mostly attracted smaller businesses that don't use ad agencies. With bigger companies becoming more involved in paid search, agencies and search-marketing firms are playing a greater role. Also firms have sprung up to help marketers design their Web sites to make it easier for search engines to understand what information appears there. The goal of this "search-engine optimization" is for a company's Web site to show up at the top of a search engine's free results listings when a person is looking for information related to that particular company or industry.

A more diverse cast of characters dominate the other forms of online advertising, including display ads -- such as banner ads -- online video and the various types of animated ads that dance across the screen. These ads are usually designed by digital ad agencies and then transported to various Web sites through a circuitous route often involving a number of technology-focused companies. It is this area that has seen most of the acquisition activity in recent weeks, as bigger ad players try to streamline the online advertising process.

For example, Avenue A/Razorfish bought ad space on a total of 863 individual sites last year for its clients, which include Kraft Foods Inc., Walt Disney Co. and Nike Inc. To line up all that space, Avenue A/Razorfish used firms that deal with hundreds or thousands of Web sites. These firms, called ad networks, buy space from sites and resell it to advertisers at a premium. Among the major ad networks are Advertising.com, acquired in 2004 by Time Warner Inc.'s AOL, and 24/7 Real Media.

In the middle of this process are another set of players, called "ad-serving firms," technology companies that get the ads from the advertiser to the Web sites that the ad network firms have lined up. The top two ad-serving companies are DoubleClick and Atlas, another unit of aQuantive. Ad-serving companies save the digital information that creates an online ad on a computer server and then deliver that data to the sites where marketers bought advertising space. This lets ad agencies change the contents of an online ad or where it runs on a site by switching that digital information on the computer server instead of communicating with each of the hundreds of sites where an ad might appear.

"Ad serving is kind of like oxygen. You need it for every major [online advertising campaign] that you run," says Sarah Fay, president of Aegis Group PLC's digital-marketing subsidiary, Isobar U.S.

Some ad-serving companies also have ad-network arms. DoubleClick, for example, provides both these services for advertisers and Web sites.

All of the major digital ad players also generate measures to track the effectiveness of campaigns. While in the traditional media, marketers assess response to their ads by surveying audiences before and after the ads have run, digital advertisers can gauge response within minutes by using a number of metrics -- including how many people clicked on an ad, the time a consumer spends with the ad, what a Web surfer does after viewing the ad.

If advertisers find that a certain creative component of the campaign isn't working or if a specific Web site isn't delivering, they can make a switch at the click of a button to try to improve the results. These data ultimately determine where advertisers spend money on the Web and is expected to become an increasingly important aspect of the industry as other aspects of the business -- such as delivering an ad -- become more streamlined.

"The Internet was built on little companies," says David Kenny, chairman and CEO of Digitas and digital strategy chief for Publicis Groupe SA. "Now that we've got big advertisers putting money on the Internet, they need big scalable operations."

The year advertising turned digital

The year advertising turned digital
http://news.independent.co.uk/business/analysis_and_features/article2530809.ece

Traditional media groups are finding it hard to claim a share of increasing advertising budgets as online services grow at breakneck speed. By Nic Fildes
Published: 11 May 2007
Commercial media companies that have struggled amid tough market conditions over the past few years will have to navigate further choppy waters in 2007 with the latest data in the radio and newspaper publishing sectors suggesting that the threat from online competitors will continue to bite hard.

Despite steady increases in the amount of money that companies have spent on advertising, the proportion allotted to television and radio marketing has stayed flat and, in the case of newspapers, has fallen.

The UK radio sector has been one of the worst hit by the surge in interest in online advertising. Alongside outdoor and cinema advertising, radio companies have struggled to fill the gap left by advertisers attracted to online advertising, a form of marketing that can be targeted specifically at individual groups based on demographic data.

With advertising industry heavyweights such as Sir Martin Sorrell predicting that online advertising will continue to grow at breakneck speed in the UK, newspaper publishers, television broadcasters and radio companies face the prospect of further revenue declines in the coming year.

Online advertising has taken off particularly quickly in the UK due to the equally rapid uptake in broadband services among consumers. Traditional forms of advertising like billboards and radio jingles are fairly unsophisticated compared to flashy new video advertisements that can be used on webpages. While traditional advertising relies on attracting the attention of random passers-by or unknown radio listeners, online marketing can be targeted at specific individuals, increasing the relevance of the advertising. Advertisers can also tell whether the user looked at the marketing, important data in gauging the effectiveness of the campaign.

Radio companies' struggle to attract more advertising revenue is not helped by volatile audience figures. The latest data from Rajar, the radio industry's ratings body, yesterday showed that commercial radio companies have continued to lose market share to the BBC, which took a record 56 per cent of the radio audience during the first three months of the year. Despite the ongoing progress of digital radio, commercial broadcasters slipped to 42 per cent from over 43 per cent last quarter.

Commercial broadcasters like Emap, Chrysalis and GCap took some heart from increases in the number of young people listening to stations like Magic and Galaxy. However there is still much work to do to challenge the BBC and win back advertisers that have moved online.

Some commercial radio companies are coping better with the tough market conditions. UTV's TalkSport station reported record listening figures whilst Emap's Magic station won back its top spot in London status during the quarter.

However analysts were disappointed with the performance of Chrysalis, whose Heart station lost out to Magic, and GCap's flagship station Capital which reported a record low audience share of 4.6 per cent. Paul Richards, an analyst at Numis Securities, said that SMG's performance was the most disappointing with Virgin FM recording its worst ratings performance since 2003.

Analysts said the data suggests that radio companies face an uphill struggle in 2007. Howard Bareham, an investment director at Mindshare, said: "It's a Catch-22. Radio companies need to invest in product but to do that, they need the advertising revenue."

Newspaper publishers have also struggled as advertising budgets have increasingly moved online. Trinity Mirror yesterday warned that advertising conditions remain "challenging and volatile" with advertising revenue falling 2.4 per cent in the first four months of the year. The drop represented an improvement on the 6 per cent fall that Trinity Mirror reported in the last quarter of 2006, but analysts attributed the slowing rate of decline to easier comparative figures, rather than an improvement in the underlying advertising market. Advertising revenue at the company's national newspapers such as Daily Mirror fell 4 per cent while circulation revenue dropped 0.7 per cent.

Companies such as GCap, run by long-serving chief executive Ralph Bernard, and Trinity Mirror, which has Sly Bailey at its helm, face tough challenges over the coming year as the structural shift in the industry gains pace. Mr Bernard has said that he doesn't expect recent investments in improving its radio stations to show up in Rajar figures until August but remains confident that the company can be turned around after a disastrous performance since the merger of GWR and Capital in 2005. Meanwhile Ms Bailey has overseen the acquisition of a number of websites in areas like online recruitment and real estate to offset the collapse in newspaper advertising revenue. However, digital revenue still only accounts for 5 per cent of Trinity Mirror's revenue.

Publishers, terrestrial television broadcasters and radio companies also face significant threats from emerging online competitors aiming to take advantage of changing consumer behaviour to take a large chunk of advertising budgets. In the radio sector, Rajar reported that 24 per cent of people in the UK now listen to the radio via the internet while 11 per cent listen to the radio on mobile phones. With computers becoming an increasingly popular way to consume media, a new form of radio station has emerged where consumers have control over the sort of songs that are played. Pandora and LastFM, two of the most high profile user-controlled radio stations, have proved very popular among young radio listeners.

In the television sector, Joost has created headlines as the first broadcast-quality internet TV platform that offers users free access to an increasingly large amount of content. Similarly advertising-funded services have been launched in the music and mobile-phone space as new media companies look to offer consumers free services if they agree to listen to advertisements.

Patrick Yau, an analyst with Bridgewell Securities, said that radio companies have been slow to invest in the internet despite attracting large audiences to basic internet radio websites due to a "fear of the unknown". "Radio and the internet are very complementary media - we can consume both at the same time. Why aren't we seeing a more integrated online strategy from radio companies?" he said. He noted that Virgin Radio argues it has the most popular internet radio site in the world but has not taken advantage of that traffic, perhaps by offering community-based information.

Richard Menzies-Gow, an analyst with Dresdner Kleinwort, said that overall radio-listening figures will continue to rise as more people listen to radio on mobile phones or at work but that radio companies need to figure out how to ramp up revenue as a result of higher listening figures. He expects that over time, there will be an interweaving of old and new media with a relaxation of cross-media ownership laws "inevitable" as advertisers look to run integrated campaigns.

Mr Bareham said: "In some respects, technology is against radio at the moment but the strengths of radio are as relevant today as a decade ago when the young and sexy radio industry outflanked the traditional media sector. Now it's online that is in vogue." He said radio companies needed to focus on taking advantage of the interactive elements of online radio and personal devices such as mobile phones over the coming year to stimulate growth in 2008 and 2009.

BT unveils vision to compete with Sky and Virgin

The media sector is getting increasingly crowded, with BT upping the ante in the television space.

Sky and Virgin Media have torn strips off each other to win new customers over the past few months while BT has slowly added customers to its BT Vision service. Customers will receive a set-top box that connects to BT's broadband network and offers customers video-on-demand services, Freeview television and an in-built video recorder.

BT will kick off a multi-million pound national marketing campaign tomorrow to promote the service and compete more aggressively with Sky and Virgin. BT is expected to spend at least £10m promoting the service.

BT Vision is designed to be more flexible than its cable and satellite-based rivals as it does not charge customers a minimum monthly subscription. There will be a set-up fee of around £90 although BT expects to launch a self-installation version later in the year at which point, analysts expect customer numbers to soar. The company has invested in building a large library of content for the on-demand service, including sports and hit movies.

BT expects to have up to 3 million customers in the medium term as it continues to invest in offering services outside its legacy residential telecoms business.

The threat to advertising revenue

* Personalised internet radio stations such as Pandora and Last.fm have built large customer bases by giving listeners control over playlists and dispensing with DJ chatter. Such stations ask the listener to list bands they like and then play songs by similar artists based on those preferences. Listeners can reject songs they don't like and buy ones they do. However the companies have hit licensing problems and Pandora has stopped allowing access to the site outside the US.

* Following on from the success of YouTube, new companies that offer free broadcast-quality television over the internet have started to emerge. Joost, set up by the founders of Skype, has made headlines and built a large library of content, and the company has just secured financial backing from a series of investors, including eBay backers Sequoia Capital, to strengthen the offering. However analysts expect it to be a niche service in the medium term.

* Another possible threat to advertising revenue comes from new companies which aim to offer free content and services to consumers who accept advertising. Blyk, a mobile phone company that uses Orange's network in the UK, will offer free calls and texts to people looking to save money by pumping ads down their handset. Meanwhile, We7, backed by Peter Gabriel, left, offers free digital music tracks to customers happy to accept advertising.

Macy's to Publishers: Engage Audiences

Macy's to Newspapers: Engage Audiences
Tuesday May 8, 1:31 pm ET
By Seth Sutel, AP Business Writer
Macy's Chief Marketing Officer Delivers Tough Love Speech to Newspapers

NEW YORK (AP) -- The chief marketing officer of Macy's department stores delivered tough talk to the newspaper industry Tuesday, telling a publishing conference why her company is moving ad dollars to other media such as TV, magazines and the Internet.
Anne MacDonald, a self-proclaimed newspaper "junkie" who keeps stacks of them around her home and reads several each day, told publishers they need to do more to win back business from Macy's, which is part of Federated Department Stores Inc.

With Macy's now a national brand following Federated's acquisition of May Department Stores, the chain is turning increasingly to media with a national reach such as fashion magazines, television and Web sites, she said.

Newspapers are still effective at delivering local messages, she said, but need to do more to engage Macy's shoppers -- primarily women aged 18-54.

"In order for your newspapers to be winning our advertising dollars, you need to be winning in the marketplace, and that's not currently the case," MacDonald said in a keynote talk at the conference held by the Newspaper Association of America.

Analysts and investors have long been concerned about the decline in ad spending by department stores, and in particular Macy's, as they become national brands and less likely to use local media such as newspapers. Also, newspapers have been struggling with declining circulation and ad dollars as more people get their news online.

Among MacDonald's several suggestions for change was for newspapers to collaborate more effectively across regions and with each other in selling advertising, which would allow national companies such as Macy's to reach a broader audience.

As it is, individual ad buyers for Macy's stores deal with individual newspapers on advertising plans. "That's not productive for either of us," MacDonald said.

She pointed to her own industry, department stores, which had to undergo significant changes over the past several years to adapt to competition from online stores, television shopping channels, big box retailers and discounting clubs.

Macy's, she said, is seeking to establish itself as a more upscale, fashionable brand and drive foot traffic even when there aren't promotions, and is still trying to understand how customers are changing the ways they shop. "Like us, you must change the way you think," she said.

MacDonald pointed to the example of her two favorite sections of her hometown newspaper, The New York Times. Every week she pulls out the science and dining sections and reads them first.

If the Times were to somehow deliver those sections to her wrapped on the outside, she would be impressed that the publisher had learned something about her reading habits, she said.

She also issued a plea to publishers to collaborate with advertisers on research to better understand the rapidly evolving habits of their customers. The idea was immediately embraced by Jack Sweeney, publisher of the Houston Chronicle, who asked MacDonald how to find out what questions they needed answered.

Mark Contreras, senior vice president for newspapers at E.W. Scripps Co., called MacDonald's remarks a "very thoughtful call to action for newspapers to pay very close attention to. ... We have the wherewithal to meet many of their needs."

Beam To Restrict Ad Buys To Media Reaching 75% Legal Drinking Age

Beam To Restrict Ad Buys To Media Reaching 75% Legal Drinking Age
by Joe Mandese, Tuesday, May 8, 2007 8:30 AM ET

BEAM GLOBAL SPIRITS & WINE Inc., marketer of Jim Beam bourbon and other distilled spirits brands, Monday announced a voluntary standard that would restrict its print, TV and radio advertising to media whose audience composition is at least 75% legal drinking age consumers. The move raises the stakes among alcohol marketers who have adopted a voluntary industry standard of placing ads in media with 70% of their audience of legal drinking age. Beam also committed that on an "aggregate annual basis," its advertising would reach a minimum average of 85% of legal drinking age consumers.
In addition, the company announced it has voluntarily established the following policies:


* Not to market or advertise at "Spring Break" events nor utilize the term "Spring Break" in any marketing materials.
* To restrict brand images in video games.
* Not to market or sell any products in the "Flavored Malt Beverage" category.
* Not to advertise on outdoor locations within 500 feet of playgrounds.

Beam said it received a letter signed by 37 state attorneys general applauding its move.

Marketers to Mags: Give Guarantees or We'll Walk

Marketers to Mags: Give Guarantees or We'll Walk
Exclusive: MediaVest Wields $900 Million to Land Issue-By-Issue Circ Promises
By Nat Ives
http://adage.com/mediaworks/article?article_id=116544

NEW YORK (AdAge.com) -- Kraft, Wal-Mart and Coca-Cola are among the marketers that are prepared to stop spending in magazines if they don't get issue-by-issue circulation guarantees.
Robin Steinberg, senior VP-director of print investment and activation at MediaVest, insists that magazines should make issue-by-issue circulation guarantees to marketers.

Media buyers long have been frustrated with many magazines' insistence on guaranteeing only average paid circulation -- instead of guaranteeing the paid circulation of specific issues in which ads actually appear. But now MediaVest USA has gathered support from heavyweight clients to make issue-specific guarantees a reality.

"Let me be clear that I am a print champion," said Robin Steinberg, senior VP-director of print investment and activation at MediaVest. "However, we believe that all publishers should make this guarantee, and we will walk away from business for those who don't." MediaVest spent about $900 million in consumer magazines on behalf of its clients last year.

New leverage
The new power play reflects the growing demand for precision metrics in the media business, a drive fueled by an internet model that seems to promise instant accountability. It is also, though, part of a broader regime change in the industry, one that has delivered dominance to advertisers from media owners. Marketers now have too many options and have found too many ways to sell themselves, beyond traditional advertising, for publishers or broadcasters to keep setting the agenda. There's a reason commercial ratings on TV have arrived at last: Advertisers seem to finally have enough leverage to force the issue.

"As somebody who's ultimately paying the bills, what I'm looking for is accountability and transparency," said Donna Campanella, executive director for global media at Avon, a MediaVest client. "We want to make sure that the impressions we were hoping to get for a particular issue have been delivered. Because what we advertise is coordinated with what's in our brochures, timeliness is important."

"In this age when there are so many choices out there, particularly in the digital arena, traditional media needs to step up and really prove their value, good or bad," Ms. Campanella added.

But change still doesn't come easily or instantly. Time Inc., the country's biggest magazine publisher, guarantees most advertisers an average paid circulation across the issues in which they buy space; if you buy into five issues, the company promises those five issues will achieve a certain average paid circulation.

Pressure
Anything else would only hike costs for everyone, said John Squires, senior exec VP at Time Inc., because publishers would pump up print runs to make sure not one issue falls even a percentage point shy of its rate base. "They want all guarantees and all protections at all times," he said of marketers and media buyers. "That just kind of forces a completely unrealistic expectation on our business. We do have to concentrate on some efficiencies."

Publishers don't get any reward when magazines sell more copies than guaranteed, Mr. Squires noted. And swings of 50,000 copies in newsstand sales at magazines that consistently sell millions can't be the top challenge in marketing right now. "In these times, in this world, with the kind of competitive pressure that there is on publishers already and the intense pressure on rates, is this really a big issue?" he asked.

Ms. Steinberg said advertisers need protection against tactics publishers can use to meet average guarantees. A few titles have made up for shortfalls early in the standard six-month reporting periods by drastically increasing their use of copies -- called "verified" by auditors -- that are distributed in hair salons, doctors' offices and so on. "Verified circulation was put forth with the notion that publishers would use and place these copies strategically and with transparency," she said. "However, we believe the proper use is not taking place, and the current use is to make up for rate base underdelivery from newsstand decline."

A challenge from Hachette
Hachette Filipacchi Media U.S., publisher of magazines such as Elle and Car and Driver, already has started selling its men's enthusiast titles against issue-specific guarantees and is considering doing the same across its portfolio next year. But if Jack Kliger, president-CEO, is going to meet the buyers' challenge, he has one of his own for them.

"Issue-specific circulation-based pricing, to me, is an interim step to issue-specific audience-circulation guarantees," he said. That is to say, once the industry can better measure how many people see an issue, whether they borrow it from a friend or read a public-place copy, media buyers should drop this obsession with refining paid-circulation metrics. "It's like trying to make the kerosene lamp produce more light because that's what we're familiar with," Mr. Kliger said, "and don't trust this newfangled electricity thing."

Editor resigns over apparent ad pressure

PC World editor resigns over apparent ad pressure

By Tom Krazit
http://news.com.com/PC+World+editor+resigns+over+apparent+ad+pressure/2100-1030_3-6181075.html

Story last modified Thu May 03 06:39:03 PDT 2007


Award-winning Editor-in-Chief Harry McCracken of PC World resigned Tuesday over disagreements with the magazine's publisher regarding stories critical of advertisers, according to sources.
McCracken, reached Wednesday evening, confirmed that he resigned after 12 years at the magazine and 16 years at publisher International Data Group, over disagreements with management. He declined to comment on the nature of those disagreements.

But three sources, who spoke on the condition of anonymity, told CNET News.com that McCracken informed staffers in an afternoon meeting Wednesday that he decided to resign because Colin Crawford, senior vice president, online, at IDG Communications, was pressuring him to avoid stories that were critical of major advertisers.

Wired News reported Wednesday evening that McCracken quit after Crawford killed a draft story titled "Ten Things We Hate About Apple."

An IDG representative confirmed McCracken resigned, but said he was unable to comment on personnel matters. In an e-mail to News.com, Crawford denied that advertiser pressure played any part in McCracken's resignation.

PC World is best known for its product reviews and how-to expertise. The magazine has won numerous awards over the years for its coverage of the PC industry and technology in general, including six prizes--such as Best Computer/Consumer Magazine--just awarded last week at the Maggie awards, run by the Western Publications Association.

Now on News.com:
Digg in tough spot with DMCA debacle
Images: Hidden gems among Webby winners
A battery of questions about lithium ion
Extra: A cleaner environment--through beer
Video: Play old games on your PC
"I spent 12 years at PC World; it's been incredibly good to me," McCracken said. He said he will still have some sort of writing relationship with the organization.

A source at PC World who wished to remain anonymous praised McCracken's decision.

"It saddens us all that Harry, a PC World institution, decided to leave," the source said. "But dammit, we're proud of him of doing it."


PC World is published by IDG, a venerable trade publishing organization that has been covering the technology industry since 1964. The monthly magazine reaches 4.3 million "purchase influencers," and PCWorld.com has 6.8 million unique visitors per month, according to a Wednesday press release touting the Maggies winners.

IDG also publishes well-known trade magazines and Web sites about the computer industry such as ComputerWorld, Network World, and InfoWorld, which recently shuttered its print publication and focused solely on its Web site. IDG was founded by Patrick McGovern and is privately held.

Crawford has been with IDG since 1994, according to his blog, when he became CEO of Macworld. He ran Macworld until 2003, when he became vice president of business development within IDG's corporate management structure, before assuming his current role.

P&G Will Boost Marketing Spending for Fiscal '08

P&G Will Boost Marketing Spending for Fiscal '08
Emphasis Will Be on 'Nonmeasured Media' but TV Still a Priority Investment
By Jack Neff

Published: May 01, 2007

BATAVIA, Ohio (AdAge.com) -- Procter & Gamble Co. will spend heavily on marketing for its year starting July 1 -- possibly at the expense of margin goals -- as it makes boosting top-line growth a priority, executives said today.

Despite an emphasis in 'nonmeasured media' as an area P&G will increase spending, TV still remains 'a hell of an efficient investment.'


The comments came as P&G issued quarterly results that, while meeting or exceeding its stated goals, failed to impress the market. P&G shares were down 2.2% to $62.95 today. Morgan Stanley analyst Bill Pecoriello said in a research note that P&G's trade-up of consumers to higher-priced items and its margins both were lower than he had expected.

Maintaining sales growth
Speaking on a conference call for analysts, Chief Financial Officer Clayton Daley said, "For fiscal-year 2008, the priority for the company is to sustain strong sales growth. As such, we plan to invest in our leading brand equities. We plan to launch a strong initiative program."

Later, Mr. Daley made it clear P&G will be willing to sacrifice margin improvements if required for the sake of top-line growth. He said if P&G can meet its double-digit earnings-per-share growth goal "with more sales growth and less margin expansion, that's OK. ... I don't want to imply that we are going to do anything to try to hold back sales growth."

While P&G may be looking to spend more aggressively in fiscal 2008, it appears to be pulling back on measured media right now in what Chairman-CEO A.G. Lafley termed a shift toward the internet and "nonmeasured media."

Shifting mix
"If you step back and look at our [marketing] mix across most of the major brands, it's clearly shifting, and it's shifting from measured media to in-store, to the internet and to trial activity," Mr. Lafley said. The latter he didn't define precisely, though he gave Gillette sampling programs, which include distribution of free razors by mail, as one example. On Gillette Fusion razors, he said, "you are going to see ... more sampling, because we still have relatively low trial rates."

Though it's impossible to measure how much P&G is spending in-store, as much of it is accounted for as deductions against net sales, data from TNS Media Intelligence do appear to indicate a pullback in measured media spending in its fiscal first quarter. P&G spent $459.9 million in January and February according to TNS, excluding newspaper inserts, a run rate that, if sustained over a full year, would trim P&G's measured spending 17.5% in 2007.

But the proportion P&G spent on TV in January and February -- 70.4% -- is in line with proportions the company has had for years and last year's 69.9%. P&G's spending on internet display ads inched up to 2.1% of its outlay in the first two months of 2007 vs. 1.6% last year.

Efficiency in TV
"We are still investing a lot in television, because, especially in developing markets, it's a hell of an efficient investment," Mr. Lafley said.

Overall, he said P&G ad spending as a percent of sales was "about 10%" in the fiscal third quarter, about where it was last year.

The talk comes after two consecutive years in which P&G has trimmed reported advertising spending as a share of sales, which peaked at 10.7% in 2004 and slid to 9.9% of sales last fiscal year.

It's not clear where that number will end up in fiscal 2007, as P&G officials have declined to provide specifics and won't report the number until after the fiscal year closes. But Global Marketing Officer Jim Stengel and Mr. Lafley have said in investor presentations late last year that they were more concerned with advertising effectiveness and brand equity than with ad-spending-to-sales ratios. P&G's trims in ad-spending ratios also have come as rising raw-material costs have pressured margins in recent years.

P&G reported sales up 8% to $18.7 billion, up 6% organically, or excluding acquisitions, divestitures and currency effects. Earnings per share rose 17% to 74 cents. Both numbers were helped by a weakening dollar, which added two percentage points to sales, and by a relatively weak year-ago performance, when P&G's top line and profits were pressured by consolidation of distributors for newly acquired Gillette and apparently temporary weakness in Russia and China.

Beauty biz not so pretty
While the fabric and home-care business led growth, with sales up 12% (10% organically) the beauty business trailed the company as a whole and rival L'Oreal with organic sales growth of 5%.

P&G also reported relatively weak results in three more areas. Gillette's blades and razor business had only 4% organic-sales growth, despite comparison to a year-ago period hurt by sales lost as distributors were consolidated in China and despite much stronger growth reported last week by rival Energizer Holdings' Schick. Organic sales for the Braun and Duracell businesses, acquired along with Gillette in October 2005, were flat. And sales for the pet food, snack and coffee business declined 1%, hurt by the Iams and Eukanuba pet-food recall, whose impact P&G declined to specify.

Toothpaste spending pays off
One area where P&G ad spending has been unrestrained -- U.S. toothpaste -- appears to be seeing some strong results, and Mr. Lafley claimed P&G has taken broad market leadership in the U.S. toothpaste market.

He noted that in 1998, the first full year after Colgate Total was launched in the U.S., Colgate had a 27% toothpaste while P&G had a 25%-plus share. Last quarter, he said P&G had a 38% in all outlets, including Wal-Mart, club and dollar stores not measured by syndicated services, compared to 32% for Colgate, he said.

"There is plenty of room," he said, "for our principal competitor to grow and for us to grow in the oral-care business."

Advertisers Look Forward to One-Stop Shopping on Google

Advertisers Look Forward to One-Stop Shopping on Google
by Lee Sherman


SAN FRANCISCO -- Google cast a long shadow over this year's adtech interactive media conference, where the search and advertising giant's recent agreement to purchase DoubleClick for $3.1 billion was clearly on the minds of advertisers and publishers in attendance at the Moscone Center.

Microsoft and AT&T oppose the planned acquisition, saying it violates antitrust law and gives Google a dominant position in online advertising. Privacy groups are nervous about what it means for Google to have access to data on so much customer activity.

But for advertising professionals, the deal, which represents further consolidation in an already solidifying market, has more-positive implications -- starting with the promise of one-stop ad shopping.

"Ninety-nine percent of the ad dollars are going to the top 10 websites," says David Naylor, online media director at Richter 7, an advertising agency. "From a media buyer's standpoint, it makes it much easier to have one point of contact."

Bryan Vickery, a marketing executive at Credit One Bank, agrees, noting that as Google adds display advertisements to the mix, its ability to drive traffic only increases. "As an advertiser, a one-stop shop is extremely appealing," Vickery says. "The question I have for any advertising medium is, 'Can you deliver customers to my doorstep?' At the end of the day they can."

One concern raised by advertisers Wednesday in an adtech panel discussion on networks and exchanges was the rise in user-generated content, such as that found on Google's YouTube. As online advertising starts to take on more of the characteristics of traditional media, advertisers want filtering technologies that can shield their brands from proximity to inappropriate content.

For publishers, the situation is more problematic. Display ads are the bread and butter of large content sites, and they will soon be in the hands of a company known for its programmatic approach to delivering information. Google collected an estimated 30 percent of all online ad revenues in 2006, mostly on the strength of its text-only ads. The DoubleClick acquisition will give it the dominant position in graphical ads, which account for another 34 percent of the overall ad market.

Henry Vogel, chief revenue officer at Quigo Technologies, a Google competitor, says publishers fear that the lack of transparency in Google's AdSense may be extended to display advertising: "The biggest single downside (of the DoubleClick purchase) is that it concentrates more information and control in one company."

Quigo's AdSonar product lets advertisers bid on specific media properties and determine precisely where their ads will end up, in addition to purchasing run-of-network ads. Vogel says Quigo's approach allows publishers to own the customer relationship, something that isn't possible with Google's network.

"Is Google friend or foe?" Vogel asks. "If Google is competing with you for your audience and your advertisers, they now have even more ammunition to do so."