Placements on smaller, niche sites increase response to ads

Many advertisers stick to the top sites on the web when planning an online campaign, but overlooking less-trafficked sites could be a mistake. A study by contextual targeting firm CONTEXTWEB of more than 1,000 ad campaigns across 18,000 publisher sites during the second half of 2010 found that ads placed on long-tail sites—those with an overall reach smaller than 1.5% of the internet population—had a significant lift in clickthrough rate compared with ads on larger web properties. Overall, long-tail sites lifted click rates by 24%. All advertiser verticals studied showed lift when ads were placed on sites in the long tail. Alcohol ads enjoyed the highest lift, at 50%, while automotive advertisers experienced a lift of only 12%.

The site categories that provided the biggest lift in the long tail were education, technology and computing, and hobbies and games. Some site categories, including pets, home and garden, arts and entertainment, parenting and family, and automotive had a negative lift.

However, accounting for the decreased cost of placing ads on long-tail sites, even a negative lift often translates into a more efficient ad.

Not only can the long tail provide greater efficiency in clicks for advertisers’ dollar, according to the report, it is critical in providing a truly mass reach for ad campaigns. The large crop of long-tail sites frequently provides access to a large audience unduplicated by top sites in the same category, and often with similar demographics as visitors to those top sites. And according to comScore, the vast majority of time spent on the web is spent with long-tail sites, while the lion’s share of ad dollars is spent on the short tail. Advertising on top websites is, of course, still critical, especially for major campaigns or for branding. But advertisers can use the long tail as a low-cost, efficient way to augment the reach and scale of their campaigns.

via emarketer.com

Holding company has more than 17,400 digital staffers worldwide

Among the major holding companies, WPP is tops in employing digital specialists across its global networks, according to an extensive report issued by Paris-based agency research firm Recma.

The report found that WPP has more than 17,400 digital staffers worldwide. That's just over 12 percent of its total global workforce of 141,000, per WPP's own stats. The report doesn't comment on the quality of the specialists, just the quantity. But those toiling in the WPP digital space appear to be bringing home more than their fair share of the bacon: the holding company said in its third-quarter earnings update that digital revenues are now "approaching" 30 percent of total revenue. Though somewhat difficult to qualify, WPP's manpower advantage is significant because it gives the firm's divisions on-hand talent to deploy as current clients bulk up on digital projects and efforts are made to add new business in the sector. And it looks like creative agencies have the biggest share of digital expertise across the holding companies, with about 50 percent of all digital specialists reporting into them.

At WPP, roughly two-thirds of the digital staffers report into creative ad shops, while about 20 percent report up through media agencies and the rest are part of digital specialist operations, per the Recma study.

Publicis Groupe is No. 2 in terms of total digital staff, the report found, with a total of nearly 12,700 employees in that realm. But in contrast to WPP, about two-thirds of those staffers report up through media agencies, while just 9 percent report into creative agencies, with the rest attached to digital specialists.

Omnicom ranked third in the report, with nearly 8,800 digital employees, about three-quarters of whom report into creative shops while 15 percent work with media agencies and the rest are attached to digital operations.

Interpublic Group is No. 4 with nearly 8,200 digital specialists. Like Omnicom, nearly three-quarters of those employees work with creative agencies while 15 percent report to media agencies and the rest are attached to digital units.

Aegis has nearly 4,000 digital pros and Havas another 3,600 for a grand holding company total of 54,600 digital employees, per Recma. About half, or 27,400, toil in the creative agency space, 35 percent in the media agency sector and the rest at digitally focused units.

As the digital struggle intensifies, look for all combatants to draft reinforcements.

The medium and the marketing message

eMarketer forecasts that worldwide social network ad spending will rise 31% this year, to $3.3 billion. Next year, spending is expected to increase an additional 29%, to nearly $4.3 billion.

The US accounts for just over half of that total. But in 2011, as outlined in my new report, “Worldwide Social Network Ad Spending: A Rising Tide,” US dominance will start to wane and international social network ad spending will increase more rapidly. There are several reasons why this is the case.

Social networks are popular in the US, but even more popular in many other markets. According to The Nielsen Company, the social network/blog category reached 86% of active internet users in Brazil in April 2010, and 78% of active users in Italy, for example. Reach in the US was 74%.

Chinese social networks are strong performers. According to the Data Center of China Internet, the number of social network users in the country reached 245 million in 2009, up 34% over 2008. Social networks such as Tencent’s QQ, search giant Baidu’s Baidu Space and RenRen (formerly Xiaonei) dominate usage. Although China has just over 500 million internet users, according to eMarketer estimates, QQ has even more accounts than that—587 million as of March 2010. Tencent, a public company, reported $141 million in online advertising revenue in 2009 and $30 million in Q1 2010.

Facebook is growing rapidly outside the US. In New Zealand, Hong Kong, Canada and Singapore (as well as in the US), Facebook was the No. 1 website based on market share of visits in June 2010, according to Experian Hitwise.

Homegrown sites are holding their own. In Western Europe and Russia, several midsize social networks have succeeded in maintaining their dominance in their individual markets, even as Facebook has encroached on their territory. In Poland, for example, Nasza Klasa reached 58% of internet users as of spring 2010, making it the No. 3 website, according to Millward Brown SMG/KRC. Facebook did not rank in the top 10.

Hyves in the Netherlands, Odnoklassniki.ru in Russia and Netlog—which is based in Belgium but has a Europe-wide presence—all are continuing to grow. Netlog, for example, has increased its user base to 68 million members as of July 2010, from 56 million in October 2009. A global buy. As Facebook and other social sites expand their worldwide presence, they will become more attractive to marketers that want to buy ads across multiple markets. So far, most companies have been focused on the US opportunity. According to a survey of brand managers conducted by Harris Interactive for Buddy Media, 43% used Facebook to reach customers in local markets worldwide. Among the obstacles the brand managers said they needed to overcome were the difficulty of keeping country-specific content fresh, customizing the same content for multiple markets and creating scalable campaigns across regions.

Digital shows resilience around the world

Nowadays, the importance of digital is a given. Clients and agencies alike are scrambling to build talent and resources to take advantage of this media revolution in our midst. The power of digital to transform brands and drive growth is well proven through myriad case studies, from Subservient Chicken to Fiat's eco:Drive. What's less understood is how digital impacts marketing investments.  The investment model of mass media is so well understood that it has formed the paradigm of thinking about all marketing investments. Yet, this is one of the sources of confusion about digital -- and one that continues to make it difficult for clients to understand what they are buying when they hire a digital agency.

The mass media model is simple: media + agency fee + production = total cost of marketing investment. While there are three components to this equation, the lion's share of the money is spent on paid media -- somewhere in the vicinity of 80 percent in most cases, with the remaining 20 percent split between increasingly commoditized agencies and production companies, with client procurement teams knocking down these costs every day.  The major cost in mass media is, of course, the media itself, and the cost continues to rise as the elusive mass audience affordable to the Super Bowls and World Cups and handful of hit shows like American Idol becomes the only game in town amid a fragmented, digitally enabled world. In fact, the cost of 30 seconds during the Super Bowl rises every year, and the 2011 upfront market seems to indicate single-digit increases for the mass markets generated by television.

So the analog media model boils down to a substantial investment in paid media -- a rather big pie that clients must buy to chase the mass audience. In fact, when digital first appeared on the scene in the 1990s and early 2000s, agencies simply annexed it onto the mass media model -- a new audience channel that required more investments in paid media. Rather than shrinking the pie, it simply added to it. Clients wanting to participate in digital either had to grow the pie to accommodate this new paid media channel or pull money from some other part of it. It wasn't until the Web 2.0 revolution that the real power of digital became apparent: through user participation and social media, we can actually shrink the pie. As a result, digital today represents an investment model that's entirely different from mass media. In fact, the paid media portion of the digital ecosystem is perhaps the least interesting (with the exception of paid search).

As we write this article, Nike's "Write the Future" spot for the FIFA World Cup, produced by Wieden + Kennedy, has been viewed tens of millions of times on YouTube. The post-Web 2.0 digital age has spawned two new concepts that turn the investment model of marketing on its head: owned and earned media. When a brand creates its own media properties that consumers use over and over again, such as a popular video on YouTube or a popular digital platform like Nike+, this is "owned" media. When consumers share these media properties with each other-as when one person passes along a viral link to another, or blogs or tweets about a brand, or "likes" a brand on Facebook-this is "earned" media.
In each of these examples, the idea of purchasing media space and running interruptive display advertising is nonexistent. Instead, brands are tapping the participative power of digital technology to gain audiences without paid media.

Quite likely, the people opting in for participation are exactly the consumers marketers want to reach-the ones most engaged in the brand or the category.  On the other hand, mass media is still tremendously inefficient at targeting an intended audience. The next time you watch a popular television show, count how many of the ads are for products or services that are relevant to you. The rest are a waste of the marketer's money. The investment model for owned and earned media is the inverse of mass media. It requires a more substantial investment in producing innovative content and ideas, and a much smaller (or nonexistent) investment in paid media to create the initial awareness. But the real point is that the entire investment pie is substantially smaller than the mass media paradigm described above.  Digital agencies can build popular platforms or create viral games or videos that reach millions of consumers for a fraction of the cost that it takes to reach a mass audience through television. Sure, clients may pay more for the production of high-value content or software technologies that consumers seek out on their own (or share with each other), but the overall marketing investment is smaller and more targeted the further away a brand gets from mass media. Indeed, there are paid media investments occurring in the digital space, which make sense for all marketers. Any brand that hasn't optimized its search results or purchased relevant key words is missing one of the greatest online opportunities to directly reach hand raisers. And online display advertising is still a great bargain, plus more highly targeted than most print or television.

But the real opportunity of the digital age, for clients and agencies alike, is the shrinking pie of investment afforded in owned and earned media. The only losers in this new investment equation are the mass media companies that controlled access to audiences for decades.