ESPN is upping its game to get America wild about the World Cup. The World Cup is the biggest sports event worldwide – airing across 214 countries and territories, and drawing an even larger audience than the Olympics or the Super Bowl. This year's tournament is scheduled to take place June 11 to July 11 in South Africa.
While ESPN’s intensified efforts are impressive, the question remains: when it comes to soccer (or football, as it is known internationally), can ESPN build a loyal following and score a ratings hit over rival network Univision?
Change is brewing at AOL. The online and media company, prepping for an end-of-year spin-off from parent Time Warner, is slowly putting together the pieces to prove it can stay competitive.
Its first step? Putting its house in order. This includes hiring Google veterans — like CEO Tim Armstrong, President of Global Advertising Strategy Jeff Levick, and Senior VP of Global Advertising Shashi Seth — as well as President of Internet and Mobile Communications Brad Garlinghouse, a former Yahoo! executive.
Its strategy? Content. “Content really is the future of what is going to drive AOL,” Armstrong recently told attendees at the Mixx online-advertising conference in New York. He went on to say that after a decade that was all about “access,” and another decade about “platforms,” the Internet is now approaching a new era: One that centers on content. "Investment in ad systems and platforms over the past 10 years has been tremendous,” Armstrong tells MediaWeek. “We're betting on the fact that the content that flows through the platform is really important."
AOL is beefing up its content division — which includes outfits like TMZ, Engadget and AOL Music — to attract more users and advertisers. And instead of focusing on lower-priced ads through advertising networks, the company will focus on selling more premium-priced ads on its pages, in partnership with big brands and their media agencies, says a Reuters report.
For example, AOL recently announced a partnership with IKEA’s media agency Mediaedge:cia, to create and launch an IKEA microsite that builds on the content provided within three product areas — bedrooms, living rooms and kitchens. The goal is to engage users more deeply, and to drive traffic to both IKEA.com and IKEA stores.
AOL also plans to explore both “paid” and “free” models, as part of its strategy. "Content will have to be good enough to charge for and it must deliver exceptional value,” Armstrong tells MediaWeek. “We will potentially have content on certain areas of the Internet or on paid-for devices." These areas will likely include sites for underserved audiences like young males or niche music fans. AOL has pursued similar opportunities in the past, and wants to dominate this unexplored “white space,” Armstrong tells MediaWeek.
Its future? Some analysts, however, are unsure of AOL’s “premium advertising” game plan. Colin Gillis, analyst at technology research firm Brigantine Advisors, says ad prices in the market are more likely to fall than rise. "The reality is the pricing of premium display ads are going to level out," Gillis tells Reuters, adding that prices must fall for sites like AOL and Yahoo! to win more ad dollars from traditional media. "The game is to serve ads to audiences, not pages."
Likewise, some advertisers think AOL is already too far behind the competition. "Yahoo's a safe bet for advertisers because it has such a massive audience," says Tom Bedecarre, CEO of digital marketing agency AKQA, in a Wall Street Journal interview.
Currently, Web analytics firm Compete ranks AOL at 13th place, with 55.5 million unique visitors as of August. Meanwhile, top ranker Google has 148.7 million visitors, while Yahoo! sits at second place with 139.7 million.
Clarifying its identity and putting its house in order is a start, but more work is obviously needed. “[AOL] needs a clear strategy and heightened focus on customer service to make it easy to do business with and give agencies a viable alternative to Microsoft, Yahoo! and Google,” writes MediaWeek editor Steve Barrett. “Armstrong is clearly a smart operator and single-minded in his approach, but he has a tough challenge on his hands to restore AOL's mojo in such a fast-moving, dynamic and demanding media space.”
Can AOL make it? One thing is clear, for now: Like its recognizable Running Man icon (which was recently inducted into Madison Avenue’s Advertising Walk of Fame) AOL seems intent on running a serious uphill race.
After almost three years since its YouTube acquisition, Google still has yet to make a profit on its $1.65 billion purchase of the video sharing website. While YouTube recorded 420 million-plus unique visitors in June 2009 and is now second only to Google in terms of overall search queries (according to data by marketing research firm comScore), YouTube has yet to bring in enough revenue to compensate for its massive bandwidth and infrastructure costs. Google however doesn’t seem to be worried, and has recently made several improvements to put YouTube on the road to black. Specifically: Better partnerships with users, more ad products, and network tie-ins.
Calling all users! Viral videos are often launched on YouTube, but they don’t always lead to profit — for YouTube or for the users that post them. The company is now hoping to change that. Instead of just monetizing videos from its “partners” (users accepted into the Partner Program because they post regularly and have a wide following), YouTube will now enable ads and revenue sharing on individual videos that prove to be popular. Obviously, the more videos users post, the better chances not only of a hit, but also of advertisers to come around.
Calling advertisers! Aside from banner ads on its home page, YouTube now offers “Click-to-Buy” links, as well as advertising space before, during or after a video. YouTube is also touting its “content management” tools, which it says can help rights holders monitor when their products are being used so that these rights holders can capitalize on the opportunity. Google cites the viral hit “JK Wedding Dance” as an example. Rather than block the video from using Chris Brown’s “Forever” music track, rights holder Sony Music placed “Click-to-Buy” links over the video, enabling viewers to purchase the song on Amazon and iTunes. Google says the move resulted in increased “Click-to-Buy” traffic, not only on the “JK Wedding Dance” video, but also on the official “Forever” music video.
“Despite compelling data and studies around consumer purchasing habits, many still question the promotional and bottom-line business value sites like YouTube provide artists,” says Google in a July 30 blog post. “But in the last week, over a year after its release, Chris Brown's ‘Forever’ has again rocketed up the charts, reaching as high as #4 on the iTunes singles chart and #3 on Amazon's best selling MP3 list. We’ve seen similar successes in the past with partners like Monty Python.”
Calling networks! YouTube knows, however, that it can’t just rely on user-generated content to bring in advertisers. Facing stiff competition from rival sites like Hulu.com, which offers full-length videos from shows like “Saturday Night Live” and “30 Rock,” YouTube is angling to bring in more professional content of its own. It recently signed deals with media companies like Time Warner and Walt Disney, and is ramping up negotiations with other networks.
Will these improvements finally make Google’s investment in YouTube worth it? Obviously, the answer will depend not just on how much content YouTube brings in, or how many views each video gets, but on how many users actually click on ads and make the transition to purchase. Plus, with a plan that seems to benefit various groups in the value chain – monetary incentives for video publishers, quality content for video consumers, and innovative selling opportunities for rights holders and advertisers – YouTube might not be the only one that ends up making a profit.
Ad revenues for traditional media like print, radio and TV shrank in the past year, according to major marketing communications company WPP Group. Even online, once promising, has slipped during the past two quarters, says global market research firm IDC. Mobile, however, has shown a steady — albeit slow — growth. In fact, telecoms analyst firm Juniper Research predicts mobile ad spending will exceed $6 billion worldwide by 2014, up from about $1 billion in 2008.
With this shift in ad spending comes a necessary shift in strategy. Combined with rising peer-to-peer influence due to online social networking, as well as the availability of mobile apps, mobile users have more control than before. This means that ads need to be more interactive, collaborating and adapting to what consumers want, when and where they want it. As interactive marketing firm OgilvyOne and messaging firm Acision say in a recent white paper: "Mobile advertising in 2020 will be mobile directed advertising which is selected and chosen by the individuals themselves.”
This is already happening to a much lesser extent. Users, for example, can get updates and offers from companies they choose to follow on Twitter or be a friend or fan of, on Facebook and MySpace. Users can also download a GPS-based application like Outalot, which sends coupons to their phones based on their current location and preference.
But the OgilvyOne/Acision report goes even further by envisioning mobile advertising in the context of hyper-connectivity. Basically, subscriptions would to be tied to the user and not to the device or network being used, and mobile ads could cross boundaries between devices, not just limited to mobile phones. For example, as users watch TV, they could get details or promotions sent to their mobile phones regarding specific clothing or products used on the show. Instead of billboards changing, relevant and personalized ads would pop up on users’ devices as they pass by. All these, of course, will be controlled by user permissions and preferences.
Granted, there’s still a lot to do before (and if) mobile advertising reaches this optimal point. Technology has to improve, not only to allow hyper-connectivity in the future, but also to create a better user experience today, especially for Web browsing or playing rich media. Measurement and metrics have to be standardized for proper data analysis. And companies need to strike the right balance between respecting consumer privacy, and collecting enough user data to empower advertisers to deliver targeted and relevant ads.
Advertisers who want to master the mobile market need to start mobilizing as early as possible. With consumers in control, it becomes even more crucial to tap into social networking communities, establish strong communication and feedback channels, and keep a finger on the consumer’s pulse. It’s a tall order, sure. But if consumers stop seeing ads as force-fed nuisance, and more like information they actually seek, use and advocate, the potential payback to advertisers might even be more valuable.
If David can’t knock down Goliath, what does he do? He joins forces with the next biggest thing. That’s exactly what Bing (Microsoft’s new search engine) did, when it struck a deal with Yahoo!, currently ranked #2 worldwide, after Google.
A recent study by online advertising network Chitika found that, across its network, Bing users are over 50 percent more likely than Google users to click on Bing ads.
Microsoft prefers to call Bing a “decision engine,” not a “search engine,” touting that it analyzes the content of Web pages and delivers better results in four main categories: shopping, travel, health and local searches.
Basically, Bing will be the default search engine on Yahoo! for the next 10 years, while Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. The deal is still subject to regulatory review, and both companies expect it to close by early 2010.
“Success in search requires both innovation and scale,” says Microsoft CEO Steve Ballmer. “With our new Bing search platform, we’ve created breakthrough innovation and features. This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness.”
For now, that “scale” is still far behind Google’s. June data from comScore shows that together, Yahoo! and Microsoft command about 28 percent of the online search market, while Google holds 65 percent. Even if the new team succeeds in bringing troubled AOL into its mix — AOL’s search-engine partnership with Google is up for renewal next December — that will only add an additional 3 percent.
Google — whose name has become synonymous with “search” — doesn’t seem to be worried about the competition. And indeed, the battle to be the #1 portal for Web users goes well beyond search capabilities. Google still may have “a few tricks up its sleeve,” including the much-anticipated Google Wave. New partners Yahoo! and Microsoft are amping up their own weapons. Yahoo!, for example, has revamped its homepage and will be providing photo sharing features on Yahoo! Mail through Xoopit.
But the two companies are hardly merging. “This agreement does not cover each company’s web properties and products,” Yahoo! and Microsoft said in its joint press release. “In those areas, [we] will continue to compete vigorously.”
Fearful that it could affect the “real” economy or lead to money laundering, the Chinese government recently banned the use of virtual currency to buy real-world goods, and imposed a tax on all profits made from the sale of virtual items. Whether or not that’s an overreaction, one thing is clear: There’s real money to be made in fast-growing virtual economies, for developers, advertisers, content distributors and consumers alike.
Of course, the biggest chunk is still coming from MMOs (massively multi-player online games), with players buying and selling virtual currency, properties and other assets to get ahead in their virtual worlds. In fact, “gold farming,” or hiring people to play so they could earn in-game advantages that can then be sold to other players, generates nearly one billion dollars a year worldwide, according to The University of Manchester’s Institute for Development Policy and Management.
But that's not the only place where virtual currency is a big factor. Facebook, for example, lets users buy credits to send virtual gifts to friends, starting at $1 for 10 credits. Some applications also let consumers earn currency by taking surveys or completing ad offers online.
This growing market is good news for developers looking to monetize their Web apps and games. This is also good for advertisers looking for alternatives, especially as more and more users block ads on their browsers or simply ignore banner ads completely.
“We believe that what contextual ads did the for the Web, virtual currency is doing to the social Web,” Adknowledge CEO Scott Lynn told Mediapost, after his company plunked down an undisclosed amount (close to $50 million, according to TechCrunch) for KITN Media, parent of Super Rewards, a virtual currency platform. It’s an interesting buy: Together, Adknowledge and Super Rewards will be dealing with 80 percent of all top social networking apps, and is expected to generate $250 million in revenue this year.
So what’s next? How about virtual currency that can be used — ideally — on any site? If reports are true, Facebook plans on launching such a system, using Facebook Connect. Basically, users will get to buy credits and spend them not only on Facebook, but on all the Web sites that use Facebook Connect, eliminating the need for multiple credit card transactions and earning Facebook a hefty commission in transaction fees, a la PayPal.
