By Amy SchatzMedia-ownership rules should be loosened to allow more consolidation and attract capital to the industry, representatives of the investment community said Tuesday at a Federal Communications Commission workshop on how the agency might change ownership rules later this year."We have so many other voices out there, [loosening ownership limits] does not stifle the free exchange of ideas out there anymore," said Rick Peters, president of Bluewater Broadcasting, a small Montgomery, Ala.-based radio company.FCC officials are looking at what the agency can do to improve the health of the newspapers, TV and radio stations, which continue to lose customers and advertising revenue to online competitors. FCC Chairman Julius Genachowski recently hired Steven Waldman, a former reporter and co-founder of Beliefnet, a religious Web site, to lead the effort.Mr. Waldman and other FCC staffers grilled station owners and investment professionals at the workshop Tuesday, which is the first among many that the agency is expected to hold over the next few months.The FCC is required by Congress to revisit the U.S.'s media-ownership limits every four years. The agency's last effort to change the rules -- which resulted in its attempt to loosen the newspaper-TV station cross-ownership ban -- is still tied up in the courts.During the workshop, panelists detailed the financial woes of the media industry and the lack of interest among many investors in the sector."Debt and equity providers are largely disinterested in media and broadcast properties," said Brian Rich, managing partner at Catalyst Investors, a New York private-equity fund.His testimony echoed the views of other investment professionals and station owners who urged FCC officials to loosen ownership limits during the workshop, which focused on the broadcast industry's financial woes."Broadcasters cannot catch a break," said Marci Ryvicker, a media analyst with Wells Fargo Securities, who also said that media-ownership rules should be relaxed to allow station owners to seek out possible combinations that might help create operational efficiencies."As you think about the rules, I'd encourage you to take out a fresh piece of paper," said James Cotter of SunTrust Robinson Humphrey, SunTrust Banks Inc.'s investment banking arm. "Don't just tinker with what you've been doing for a long time."Any efforts by Mr. Genachowski to loosen media-ownership limits could be problematic, given the strong opposition by congressional Democrats and Democratic activists toward allowing media companies like News Corp. or Walt Disney Co. to own more broadcast or newspaper properties.News Corp. owns Dow Jones & Co., publisher of The Wall Street Journal.Former FCC Chairman Kevin Martin ran into strong opposition from Democrats in 2007 when he proposed relatively modest changes to a long-standing rule that barred companies from owning both a newspaper and TV or radio station in the same city. The proposal was eventually adopted but almost immediately challenged by activists in a federal appeals court, where it remains pending.After the workshop, a nonprofit interest group opposed to media consolidation, Free Press, released a statement expressing disappointment that the FCC did not include the views of consumer advocates on the panel.In a statement, an FCC spokeswoman said the workshop was focused on broadcasters' access to financing and was "one in a series we will hold throughout the proceeding."Watch the video of the workshop here.
Why Contextual Advertising Fails by Sacha Carton
By Sacha CartonThere is something missing from contextual advertising ... context!Am I actually implying that the entire basis of the revival of the online advertising sector is flawed? I sure am! Got your attention now?The basis of contextual advertising is a desire to make advertisements in some ways relevant to the themes of articles; it has been this way since Bill Gross and his team came up with the idea, way back when. The idea of linking ads to the context of a page of web content has created a monster. It is the monster,however, that refuses to go back into the box.Of course the model has been adapted by other leading lights in this sector, none bigger than Google with its monolithic Adsense products. Many a new advertiser has been drawn into this sector and contextual has driven a new revenue model, creating a plethora of "me too" operations.So what is the problem?The genre has failed to adapt to the increasing volume and react to the massive reach and diversity that this growth brings about. The increase in volume presents issues with the increased amount of language usage and sheer breadth and depth regarding terminology.Why is this an issue?According to language experts, for every world in the English language, there are approximately 2.4 alternative meanings. Added to that are the countless company names, product brands, domain names, people's names; the average soon increases to nearly four alternative meanings. Take, for example, the word orange. It has some 17 alternative meanings - the name of a town, a river, a telecom company, a fruit, a color, etc.In failing to take this into account, there are some glaring anomalies ... ads for a garden bridge on a page about contract bridges; ads for condoms on a review page for the movie Troy; ads for nursery furniture on a page about sudden infant death syndrome (or SIDS). The list is endless.There are also some cultural differences. For instance, selling a fanny pack to a British market won't result in many sales. Let's just say that "fanny pack" in the UK is used to refer to a very specific part of the anatomy -- taboo for a general advertisement.Another issue is with the execution of contextual advertisements. Delivery has been blighted by poor execution. For example, many in-text providers have been somewhat profligate with their links. It is not unusual to see the links in the headlines, links on links and other spurious places. It is also the selection of the keywords to highlight. Take, for example, a web page seen recently where every iteration of the word "its" was emblazoned with an ad for an "International Travel Service."Many of the issues are faults of the advertisers, and not necessarily the service providers. Poor keyword selection is the downfall of any contextual campaign. It should not be beyond the realms of humans to do quick searches to see what other senses of a word can be found. Some examples are quite hilarious while others are just downright shocking. We recently discovered that "white slavery" was used as a keyword to drive traffic for a well-known international website. What was the marketing department thinking when it made this selection? As you can probably imagine, the resulting ad placements were inappropriate, offensive to many, and potentially damaging to the advertising organization.With all these pitfalls, wouldn't it be nice to have a solution that took all the guesswork out of the equation and was able to place the ads in real context? Thankfully, just such a solution exists in the form of semantic advertising. This technology examines the page for its themes in its entirety. In doing so, it is able to identify the theme with the most relevance to the core subject of the ad campaign and to link the two together. The semantic advertising system creates a hyper-targeted ad that not only will boost campaign performance, but will also create additional brand recognition for the content. This creates a classic win-win scenario for both advertiser and publisher alike.It would be churlish to suggest that semantic advertising is going to replace contextual overnight, but unless contextual adapts to the growth in the market and becomes more sophisticated in its targeting, it is not inconceivable that in time semantic advertising will do to contextual, what happened to traditional display advertising back in the heady days of the early internet. Time will tell.Sacha is a founding partner of ad pepper media, an international online marketing services group offering semantic advertising, lead generation, email marketing, affiliate marketing and adserving solutions.
Private Equity Gets Back To Basics by Brian Rich
By Brian RichFrom 2004 to 2007, private equity was one of the top performing asset classes, with average annual returns of 24.1%, according to data compiled by Cambridge Associates. Sometimes success breeds its own demise. As has been well documented elsewhere, a large part of the gains made during those years were the result of innovations in the debt capital markets that enabled the application of higher-than-normal financial leverage. High leverage driven by easy money leads to increased valuation multiples. Increased valuation multiples on top of high leverage leads to strong returns, which draw more money to the asset class, and so on.We all know what has happened since 2007--the debt markets have retrenched, valuations have declined, and the private equity business is sitting on a pile of capital commitments with a business model that will be broken for the foreseeable future. All is not lost for private equity, though, provided the industry gets back to focusing on the roots of value creation: revenue and/or earnings before interest, taxes, depreciation and amortization (EBITDA) growth.Leverage Is Brilliant — Until It Isn?tIn normal markets, the role of private equity firms have been to acquire poorly run public companies to unlock shareholder value by improving operations. Private equity firms also provide liquidity or growth capital for private companies and corporate spinoffs. In certain periods, innovations in the debt capital markets provide the ability to make profits solely through financial engineering. In the mid-1980s, debt capital came from junk bonds, and in the mid-2000s it came from collateralized debt obligations and credit default swaps. Either way, it points to the same thing–a relaxation of credit standards.Whereas in a normal private equity market debt would typically be 50% to 60% of the capital structure, in a period like the mid-2000s the leverage ratio reached as high as 90%. This allows for egregious practices like the “dividend recap” where an already highly leveraged company issues even more debt to pay a dividend to its private equity investors, allowing them to profit even if the company later goes bankrupt. In a normal market, no lender would ever consider allowing a dividend recap of a highly leveraged company. In a hot market, leverage is like gas on an open flame.Blinded By The LightIn addition to the $1.3 trillion of debt that was issued for leveraged buyouts from 2005 to 2007, endowments, pension funds and other institutional investors increased their allocations to the private equity area in an unprecedented fashion. Three recent vintages, between 2005 and 2007, raised in excess of $460 billion, surpassing the amount raised in the previous 12 vintages combined. Equally important is the increase of private equity managers during those years. The sheer number of GPs with capital to invest, each armed with easy sources of debt financing, contributed to the frenetic bidding for target companies and to record prices paid.Students of economics understand that prices rise to satisfy demand. That is precisely what happened. From 1995 to 2008, the average purchase multiple across industries for an LBO was 7.4 times EBITDA. In 2007, it was 9.6 times, or 30%, higher. In fact, almost 20% of the deals were done at a multiple of 13 times or higher. There are not many classic LBO-oriented businesses worth 13 times EBITDA.Fundamentals, Not TradesSo why were the returns so terrific if GPs were overpaying for businesses and overleveraging them?Many of the gains were based on ?trades? and were not replicable. For years, private equity generated returns by buying businesses and improving them either organically or through mergers and acquisitions, reducing costs and finding the absolute best management teams incentivized by a piece of the upside. Typical exits were through an initial offering, sale to a strategic buyer, or by break up and sale to multiple industry purchasers.Now it is déjà vu all over again. The markets are reverting back to the mean. Sellers are realizing that recent valuation multiples were meaningless, and buyers now have to run their models with 50/50 debt-to-equity mixes at best. Prices have come down and will continue to. Now more than ever, GPs need a plan that shows improvement in the core business and, most important, growth. I am referring to revenue and EBITDA growth in a real and sustainable fashion. Additionally, investors must plan on longer holding periods to achieve this growth and be more cautious about the exit multiple assumptions. In short, it is going to look more like the 1980s and 1990s than the first decade of the 21st century.Perhaps The Best Is Yet To ComeLPs are now able to exert more influence and are dictating terms to GPs and are being extraordinarily selective about how they invest in the private equity asset class. Much has been said about excess management fees, lopsided GP terms and excessively sized funds. It is absolutely critical that GPs articulate not only cogent investment theses, but also the differentiators between themselves and their competitors. Only the best-performing funds will receive continued support from LPs.Having said that, LPs should be careful not to miss the upcoming period. It is entirely plausible that the next several years will be fabulous vintages for private equity, if the GPs get back to basics.
Ten Trends For 2010
By Tyler NewtonA new decade is right around the corner. I expect we’ll start to see a lot of prognostication soon, so I will attempt to get out ahead of the crowd. At Catalyst we research growth industries and invest in businesses that have recurring, advertising or subscription-based revenue. Growth industries ride the big product adoption trends. Here are 10 big industry trends we intend to capitalize on:Applications move to the “cloud”–An obvious prediction, but its importance cannot be overstated. Software and content will continue to migrate to the Internet, or the “cloud.” Devices on the edge will therefore be able to simplify and specialize, like net books for Web surfing, iPods for listening to music, BlackBerrys for accessing corporate information, Kindles for reading. Business applications will rapidly move to the Internet, where they are cheaper to deliver, more frequently upgraded and will allow access to more real-time information.The tribal Internet–Social networking and Internet content will evolve into networks of sites and information streams focused around common interests. Whether it’s for work, hobbies or issue advocacy, interest groups will form virtual “tribes” online, sharing content, ideas, opinions, advice and information among themselves. Magazines, blogs, e-mail newsletters and video content are already interlinked and shared and promoted via RSS feeds and social networks like Twitter, LinkedIn and Facebook. Because these tribes are built around natural affinities, in many ways they will have a more powerful hold on us than our existing groups based on schools and location. Marketers will not be successful with old-fashioned advertising that interrupts this flow of content. Successful marketers will be those that are able to join and gain the trust of the tribes, where people WANT to receive the marketing message.The Internet is all around you–As applications, content and communities move to the Web, we become increasingly dependent on the it and will demand access everywhere and at all times. The functionality of smart phones and other wireless access devices will keep increasing, so that we can wirelessly do most of what we currently do on the computer. Wireless networks will dramatically increase the amount of data capacity and will at least rival the speeds of today’s DSL lines. We will get to the point that we’re connected to the Internet 24/7, both for work and for fun.The web gets smart, really smart–As more information flows through the Internet, parallel processing technology will enable an Internet that understands the relevance of information as it appears in real time. The confluence of all of this data and these technologies will necessitate sophisticated algorithmic models to aid interpretation and decision making. Many of the great advances will be in what is today called business intelligence or business analytics. The speed in which managers and marketers can react to changes in the business environment will accelerate dramatically.Sensors, sensors everywhere–With a Smart Web analyzing data and ubiquitous wireless network access, Internet-connected sensors will be measuring all sorts of data. Our vital signs, energy usage, soil moisture, traffic patterns, manufacturing efficiency ? it will all be tracked remotely and analyzed in real time and fed into the Smart Web, increasing business productivity. Some have called this the “Internet of Machines,” “machine-to-machine communications” or “M2M”. Asset productivity and utilization will soar immensely, reducing the relative demand for business investment overall. The combination of Web-based software, the Smart Web and M2M will create one of the fastest leaps in worker productivity in human history over the next 10-20 years.The decentralization of medicine–The current hospital-centric health care system is an inefficient amalgam of disparate systems that do not communicate with each other. Networked medicine, information record standards and focus on prevention and wellness could break it all apart. Data tracking can revolutionize disease management, nutrition, exercise, home health care and remote medicine. The centralized delivery model is more of an industrial-age organization form relative to the networked-based economy of today. The use of hospitals will decline in favor of doctor house calls, “video visits” and visits to (or visits from) specialists loaded with high-tech equipment and software.The decentralization of education–The current one-size-fits-all educational system seems even more industrial age than our health care system. People learn in different ways and follow different life paths. Parents will want more choice in programs for kids. Adults will want more access to programs that help advance their careers. More learning will be done online and outside of a “school.” Apprenticeships will make a comeback. More charter schools and private schools will be built. More will be invested in early childhood education. A much larger percentage of colleges and universities will be specialized and “for profit,” while many nonprofit universities will leverage their brands to broaden their revenue streams to include some for-profit activities. Americans will have more opportunity to invest in themselves and to make themselves more productive.Building the “electricity superhighway”–The shift away from fossil fuels will increase our reliance on electricity, particularly in transportation. The smart grid initiatives pursued today are equivalent to the Telecom Act of 1996–a catalyst that will lead to the transformation of the utility industry as the electricity superhighway gets built out. The implementation of a smart grid will allow for more efficient and balanced use of the electrical grid. Energy storage systems will take energy from intermittent sources like sun and wind or from traditional power plants during off-peak times for use during peak times. Power will continue to be sold from utility to consumer, but it will also flow from small-scale power sources like rooftop solar panels back to the utility when not being consumed. Small-scale energy storage systems like reversible fuel cells or batteries could do away with the whole concept of peak/off-peak pricing altogether. The move to electric or hybrid cars, combined with investments in more electrical generation capacity (from nuclear, alternatives and natural gas) and a smart electrical grid will dramatically reduce the largest cause of the U.S. trade deficit: our reliance on foreign oil.The integration of transportation–If the last 50 years in U.S. urban development were about the buildout of the suburbs and the last 20 years were about the buildout of the outer suburbs, or “exurbs,” then the next 10-20 years will be about lashing together our far-flung metropolises with an integrated transportation network. There will be a great deal of investment in rail, both commuter rail and inter-city rail (within 300 miles). Rail will also be more integrated with our other transportation hubs. Rather than a trend of suburbanites moving to the cities (a “trend” not supported by any data), the city will likely move to the suburbs as density increases and transportation patterns evolve. Very light jets, or “VLJs” will get rolled out, allowing for more direct flights between non-hub destinations. There will be a movement in favor of time-shifting commutes and increased adoption of telecommuting. A more integrated and efficient transportation network will benefit both the environment and the productivity of the American workforce, which currently wastes $87 billion per year in fuel and lost productivity by sitting in traffic jams, according to a 2009 report by the Texas Transportation Institute.Workers of the world, connect!–Tom Hayes wrote an interesting new book called Jump Point: How Network Culture is Revolutionizing Business,that hypothesizes how the world will change when the 3 billionth person (~50% of the world’s population) becomes connected to the Internet in 2011. Change will accelerate and volatility will increase. New companies and ideas will arise seemingly out of nowhere and spread around the world in no time (see Twitter) and old, steady industries will appear to collapse in the blink of an eye (see magazines). These ideas and companies can come from anywhere in the world. Since young people are often the most creative inventors of new ideas, and the vast bulk of young people reside in the emerging world, many of the great new ideas of the decade will flow from the emerging world. Governments and companies that rely on hierarchy and control will struggle to adapt to a world of decentralization and volatility. While individuals will be empowered for good (blogging) and for ill (terrorism), they will also be more connected as a global community (see Facebook). Brace yourselves for a wild and interesting ride.At Catalyst we intend to capitalize on these trends. That means we will continue to invest in software-as-a-service, managed hosting, data centers, vertical ad networks, online marketing, smart phone applications, wireless infrastructure, machine-to-machine communications services, for-profit education, education software and potentially remote medical services, medical software, smart grid services, energy efficiency services and next-gen transportation services and infrastructure.Tyler Newton is head of research at Catalyst Investors.
Fujifilm SeeHere.com Hosts Housewarming Party for Injured Marine on Veterans Day
WHEN: Wednesday, November 11, 2009 - 11:00 a.m.-3:00 p.m.WHERE: St. Regis Hotel New York - 2 E. 55th Street (at 5th Avenue)2nd Floor – Versailles Room (along Veterans Day parade route)WHAT: As part of its recent partnership with Homes For Our Troops, SeeHere.com will honor Cpl. Gonzalez with a housewarming party for his friends and family, and the volunteers who helped build his specially-adapted home.* Surprise presentation of significant monetary gift to Cpl. Gonzalez to furnish his new home *WHY:
While serving in Iraq in 2004, Cpl. Gonzalez’s spinal cord was severed when he was shot by a sniper, paralyzing him from the chest down.
With more severely injured Servicemen and Servicewomen returning from duty than any other American war, Homes For Our Troops, with the help of corporate partner Fujifilm, is working to provide these veterans with homes that allow them to maintain their freedom and dignity.
A video documenting Cpl. Gonzalez’s story, his recovery and therapy, and the building of his new home can be found here.
Fujifilm's SeeHere.com Helps Build Homes for Troops
By Aaron BaarSeeHere.com, the year-old photo sharing site created by FujiFilm, is branding itself as the "Home of the Free" with a new cause-marketing effort that helps an organization that builds homes for severely injured veterans."When we were looking at our brander marketing campaign, we hit upon the idea that SeeHere.com is the 'Home of the Free,'" Joan Rutherford, vice president of marketing Web businesses for Fujifilm, tells Marketing Daily. "We felt [injured veterans] were an under-served population that we could help out."As a corporate sponsor of Homes For Our Troops, SeeHere.com will make an initial $25,000 donation to the nonprofit and has committed to a minimum donation of $100,000 over the next 12 months. As part of its sponsorship, SeeHere.com will donate $2 from the sale of certain products -- stainless steel travel mugs, hooded sweatshirts and tote bags -- on its site.
"We were looking for an organization that served families in the United States," Rutherford says of the sponsorship. "We thought this would be a good way to spread these messages across the U.S."
On Thursday, SeeHere.com kicked off an ad campaign touting the initiative with a print ad in The New York Times. The ad shows a disabled veteran and his family alongside a house. "They've helped protect our way of life. Now it's time to improve theirs," reads the headline. Body copy reads: "We created a new kind of photo-sharing site with SeeHere.com from Fujifilm. Now we're going to be sharing in a different way," before explaining the details of the initiative.Later this month, the company will break TV ads promoting the partnership, as well as extensive online and search-engine marketing, Rutherford says. The company will also participate in the building of about 20 new, accessible homes for veterans and will provide the new owners with digital cameras and photo gifts to chronicle the first year in their homes.Fujifilm will also support Kids for Our Troops, a student-run organization that activates schools and student groups to support the local Homes for Our Troops "Build Brigades" in their communities.
Happy Birthday, Digital Advertising! by Frank D'Angelo
The Banner Campaign that Started a $24 billion Business, and Got a 78% Click-through RateBy Frank D'Angelo, founder and partner of CL&S, New YorkOct. 27 marks the 15th anniversary of the industry's first banner display ads, which appeared on Hotwired.com. To the many of you reading this who weren't in the business back then, that's not a typo; I'm not referring to www.HotWire.com, the travel site, but HotWired -- the first commercial digital magazine on the web and the offshoot of Wired magazine.For us, it started with a speech. It was May 1994, and Ed Artzt, the chairman of P&G at the time, made his landmark speech at the 4A's meeting in White Sulphur Springs, WV calling for marketers and their agencies to dive headlong into the "new media" revolution or be left behind.My boss and mentor Bob Schmetterer, president of Messner Vetere Berger McNamee Schmetterer (MVBMS), a unit of Euro RSCG, was in that audience and he was totally energized by Artzt's challenge. It's important to note that our largest account at the time was MCI, which employed Vinton Cerf -- the "Father of the Internet" -- as VP-data services.At the time I was an MCI account guy and Bob assigned me to this new media and created a deadline in order to jumpstart the agency's involvement in "cyberspace." Our challenge seemed simple: develop something called a "graphical ad unit" for HotWired. This initial assignment was under the guise of "let's explore this new medium and see what happens."HotWired was the first commercial web magazine to attract blue chip corporate sponsorships dollars on the web. The site launched shortly before Netscape's browser, and the advent of such other new media such as Pathfinder.com (Time Inc.'s commercial web content offering) and Cnet.com.Once the media commitment to HotWired was made, we needed to select clients we believed would share our excitement in entering this new space. We went through the client list and quickly reasoned that MCI (telecom), Volvo (automotive) and ClubMed (travel/hospitality) would be as good a core of candidates for this exploration as any.Four of our then-clients placed ad banners as part of that first campaign, MCI, Volvo, Club Med and 1-800-Collect. (The other two advertisers were AT&T and Zima.) Keep in mind, this was 1994; the first graphical web browser, Mosaic, was less than a year old (soon to be replaced by Netscape Explorer), and Web access? Purely dial-up, 24.4kps if you were lucky, meaning these ads took a while to load. The online U.S. population? Two million, if that.These "original six" were the first brands to take a leap of faith and place advertising in the unchartered "cyberspace" territory. But several didn't know they were taking it until after the fact. Corporate America was still largely unfamiliar with the graphical web, so we didn't even try to sell the concept. We decided to commit agency media and development dollars to place client banner ads on HotWired without clients' prior consent or knowledge. The way he saw it was if they liked it, they would be happy to pay us and if not, that was OK too; but at least the agency would get a running start at exploring this new exciting medium that was on course to change all of our (professional) lives.
AT&T banner ad
We were given the ad specs by HotWired and it was only then that we realized banners ads were clicked on and could drive consumers to a client designation on the web. Oops! This accidental lesson sparked us to develop websites for these initial ad banner placements. Some of our clients weren't too sure they even wanted to "interact" with this new online population. Can you imagine?!Its launch in 1994 was not without debate internally as to whether the ad units offered to the advertiser community should be simple text links or graphical ad banner units. Graphical ad display banners won out and the rest is history. And take a look at the hilarious come-on AT&T used to generate a click-through: "Have you ever clicked your mouse right HERE? You will!"The reaction ran from enthusiastic to somewhat leery. MCI, as one would expect, was truly supportive of our proactive initiative. Their corporate culture encouraged exploration. Volvo, on the other hand, understood the value of our experimenting with the new medium, but did not want to push/urge any interaction with the consumer. They didn't know what to expect, did not know how to handle responses and was concerned legal implications were involved. As a result, you see the first Volvo ad banner was nothing more than the Volvo logo and photo of an auto. No call to action or direction to click was to be incorporated into the Volvo banner. In fact, if someone clicked on that banner in October of 1994, it would take them to a simple questionnaire that could be emailed by the consumer on what kind of Volvo they might be interested in.
Volvo banner ad
Looking back at the birth of this industry and the first simple graphical banners, I am still amazed at how much has been achieved in the first 15 years. That said, I anxiously await the further advancements coming our way in terms of new ad technologies, ad forms and ad measurement capabilities (e.g. attribution modeling). The issues surrounding display banners and online brand measurement are many and have been well chronicled (see the recent special eMarketer report entitled The Online Brand Measurement: Connecting Dots for example).Research suggests we have a long road ahead in terms of measurement -- and I don't disagree; however, I'm not convinced we're that far off. I don't believe there will ever be a "silver bullet" to solve all of our problems, as our industry is constantly evolving, becoming more complex and proving to be a moving target. But all that said, from what we have learned through the use of fundamental building blocks of acquired knowledge, industry and case studies, the use of traditional media metrics, the use of existing best measurement practices for digital and a quest to continually "test and learn," we will ultimately be successful.Has any one item in our industry been encased with so much debate -- at times even disdain -- as to its true value, role and contribution to marketing communications from its inception in 1994 to this day? Yet the display banner is the impetus to the creation of the online advertising category that will reach beyond $24 billion in 2009, according to eMarketer. Perhaps more important, no other development since has advanced advertising measurement, effectiveness and accountability than the display banner.So on Oct. 27, I hope you will join me in toasting the birthday of the banner display ad -- whether you are a "cup is half-empty" or "cup is half-full" type of person. Some days I love the business and others day... well, not so much... but I have to admit: it's been an unbelievable 15 years.I leave you with a challenge... Can you guess the two-word copy from one of the original banner ads that generated 78% click-through rate? I look forward to your answers.
Semantic advertising: Digging deeper for context by Sacha Carton
By Sacha CartonLegend has it FBI Director J. Edgar Hoover once received a poorly drafted letter from his secretary, to which he added a footnote, “watch the borders.” The result was legions of agents dispatched to patrol the U.S. borders with Canada and Mexico.How is this relevant to the world of online advertising? It just goes to show that one can never truly know the context of a statement based on as few as three words. And yet isn’t that what contextual advertising does?The basic premise of contextual advertising is that a web page is examined for words against which advertisers bid for their ads to be placed alongside. Simply marry the words up with advertising and wait for the clicks and the resulting revenue to amass. Simple, isn’t it?The old adage is spot on: “If it sounds too good to be true, it probably is.” The simplistic notion that the context of an entire article of indeterminate length can be understood simply by detecting bidded keywords is proven fallible again and again as ads run alongside inappropriate or irrelevant content.For example, an internationally renowned luggage brand embarking on one of its first online marketing campaigns was understandably dismayed when its campaigns ran alongside a news article about a serial killer who dismembered and disposed of his victims by hiding them in suitcases. I am sure you can guess the murderer’s choice of luggage. The result is one very unhappy advertiser that will refuse to evolve beyond traditional marketing.Why does contextual advertising fail? The basic principle is entirely plausible: Connect the context of the article to the available ad inventory and marry the two together. What is at fault is the execution. The process fails to consider that language is entirely flexible and responds to the usage of words dreamed up by the article’s author.What many seem to forget is that most words can mean different things, depending on how they’re used. In the English language each word has on average 2.4 alternative meanings . However, if we add in brand names, models, website names and countless other possible variants, the average increases to four possible alternative meanings for many of the words used in everyday language.The word “orange,” for example, has some 27 alternative meanings ranging from a fruit, a color, a wireless network operator, a brand of mountain bike, a river, a county and several towns. And yet with contextual advertising, the expectation is that every time the word orange is identified, the correct ad will be deployed on the page. If you were a gambler, you wouldn’t accept odds like these!Thankfully, the emergence of a new technology that has been dubbed “contextual’s younger and better looking brother” improves the outlook for display advertising.Semantic advertising addresses the problems with contextual and delivers a system that is equipped to deal with the usage of language and place ads that are truly in context with appropriate content.With semantic advertising technology, no one single word makes the distinction about a page. Instead, each and every word is examined and the cumulative effect of all of the words on the page then determines the context — all before an ad is placed.Semantic advertising’s more thorough approach to display advertising begins by examining each page without preconceived notions or tendencies. Just because a page is within a travel site does not necessarily signify that the page is about a travel-related subject. A distinct advantage of the technology is its ability to mine sites to extract the nuggets of gold that would otherwise have been ignored.A semantic advertising system will not only identify differing senses and meanings of words on a page but also extract all the themes present. This will expand the number of advertising opportunities available on a single page, all of which will be in some way relevant to the content.In addition to identifying enhanced ad-targeting opportunities, semantic advertising also brings about an element of brand safety to campaign managements. As important as knowing when and where to advertising is knowing when advertising would potentially be detrimental to a brand’s image or ideals. This new process is capable of filtering out any objectionable content and deterring ads from being placed alongside damaging subject areas such as adult content, drug, crime and other unpleasant aspects to be found on the web.To illustrate, returning to my earlier example of the luggage, semantic advertising would have identified that the page’s content had nothing to do with the specific brand of suitcases. This result would have been obtained by the volume of all of the words on the page, leading to the conclusion that the subject was more about homicide than luggage. In addition, through a thorough examination of the page’s content, semantic advertising would have determined that the page contained controversial content and a negative sentiment. Because of this, the page would not have be flagged as an opportunity for online advertising and semantic technology would have deterred any other brand from being potentially damaged by placing ads alongside this highly dubious subject matter.Advertisers have nothing to fear from this new approach to display advertising and everything to gain. Semantic advertising has no privacy concerns, no integration requirements and no setup and represents a significant step forward. With this approach, the accuracy of categorization of the page is greatly enhanced, every nuance of pages examined to deliver highly targeted campaigns and enabling advertisers to produce creatives that repond to the enhanced granularity resulting from this significant advancement in online advertising.So unless you want your ad campaigns to end up like the FBI agents in our opening story — miles off course and headed down a dangerous path — consider semantic advertising technology next time you are planning a display advertising campaign. Written by Sacha Carton, founding partner of Ad Pepper Media, an international online marketing services group offering semantic advertising, lead generation, email marketing, affiliate marketing and adserving solutions.He currently holds several positions - President ofiSense, leading the company’s semantic targeting initiatives, Director Product and Technology Development overseeing all product development activities and Director of the Board.Over his 10-year tenure at ad pepper media he has also held the positions of Director Western Europe and Director Corporate Development helping to establish the company as a leading international online advertising network with 16 offices in ten countries.Prior to ad pepper media, Mr. Carton was co-founder and COO of Fountains – a U.S. based online beverage retailing business and co-founder and COO of Count Zero – a Venezuela based direct marketing service agency.
Traditional Media: Down but Not Out by Tyler Newton
By Tyler Newton, Partner & Director of Research at Catalyst InvestorsGrowth private equity firm Catalyst Investors issued a research report documenting historical drivers in the drop of traditional media. As reported on by Forbes.com, from 1976 to 2000, a boom in consumer spending touched off an explosive demand for new advertising inventory. That produced an overwhelming supply, "…making the 1980s the heyday of media fortunes." Cable programmers rolled out new shows and channels; magazines expanded their page counts. Later, the ad boom helped build the Web itself. "Now we have a nearly unlimited supply of potential advertising inventory," says the report.Spending as a percentage of gross domestic product declined in the years that followed (2000 to 2007)--Catalyst blames the Internet. Its unlimited content and ability to measure ad impact broke "the oligopolistic pricing power that traditional media enjoyed in the 1980s and 1990s." A further dip in ad spending as a percent of GDP will occur over the next two to three years, predicts Catalyst.
Inc. 500 | 5000 - Critical Media and Squarespace
Squarespace, Inc. ranked #339 on the 2009 Inc. 500 list of fastest growing private companies.Squarespace's Trophy Case* Ranked No. 23 in New York-Northern New Jersey-Long Island, NY-NJ-PA* Ranked No. 32 in IT ServicesCritical Media, Inc. ranked #582 on the 2009 Inc. 500|5000 list of fastest growing private companies.Critical Media's Trophy Case* Ranked No. 45 in New York-Northern New Jersey-Long Island, NY-NJ-PA* Ranked No. 44 in Business Products & Services