Trends Online - The Digital Outlook Report 2009

Each year Razorfish, an interactive marketing company, publishes its “Digital Outlook Report.”  The report is very interesting for anyone who is interested in making a living from the internet.

The first section identifies the key trends to watch over the coming year before examining them in greater depth.  They are:-

Trends to Watch

1.    Advertisers will turn to “measurability” and “differentiation”
in the recession.

2.   Search will not be immune to the impact of the economy.

3.   Social Influence Marketing will go mainstream.

4.   Online ad networks will contract; open ad exchanges will expand.

5.   This year, mobile will get smarter.

6.   Research and measurement will enter the digital age.

7.   “Portable” and “beyond-the-browser” opportunities will create new touch points for brands and content owners.

8.    Going digital will help TV modernize.

Whilst the document is overly long at 180+ pages and does offer a very US centric view, it is definitely worth a look.  Get your copy from this link:-  Razorfish : Digital Outlook Report 2009

Google launches behavioural tracking system

Google has launched a new behavioural targeting system across YouTube and partner sites in its AdSense advertising network.  Google doesn’t like the term behavioural ad targeting and prefers to call it "interest-based advertising." In the interests of clarity, it is easier to call it what it is “behavioural targeting”!

Google ‘s Susan Wojcicki writing under the title "Making ads more interesting”, stated that the new “beta” system will deliver ads associate with categories of interest such as sports, gardening, cars, pets - with your browser, based on the types of sites you visit and the pages you view. Furthermore, Google may then use those interest categories to show you more relevant text and display ads."

Google like Phorm before it, claims to anomylize your IP address and so the service is entirely legal and doesn’t breach any privacy concerns.  However, the out-turn is clear.  Google are monitoring what you surf and will deliver targeted ads based on you surfing activity.  This is not an altruistic move, but clearly aims to ensure that every moment of your surfing experience is monetised and the Google behemoth continues to suck up every ad dollar available regardless of its users’ personal privacy.

You can also opt-out of the program, but this is a cookie-based opt-out so the effect is limited by time to live of the cookie and the specific PC/laptop and browser you are using at the time. It also means that if you're someone who regularly clears your cookies for privacy reasons, you will effectively opt back in each time.

Google Chrome does offer the “incognito” surfing option, but does necessarily prevent your surfing activity remaining untracked just not retained for future sessions.

Whilst I do not believe that behavioural targeting is necessarily evil, I do think we should have a clear choice to be able to opt-in to such systems and not be corralled like dumb beasts without any genuine and permanent choice to the matter.  Increasingly, Google's mantra of "do no evil" has a caveat that may be added - unless it pays!

Google isn't recession proof.

In recent months the behemoth that is Google has started to take action to rein in non-core or non strategic business activities.  In January, Google announced it was shutting down Google Print Ads, and withdrew support for Google Notes.  Recently it announced it was shutting down Google Radio Automation.  Google had seen these areas as less successful than they had hoped.

Clearly Google is not immune to the recession.   Recent figures released by JP Morgan last November suggest that online advertising spend fell by a third in the last six months of 2008.  In addition, advertisers are looking to improve return on investment and are turning to CPA and away from PPC.

With CPA (Charge per action) only costs an advertiser in response to some specific action such as a user buying goods rather than with PPC (Pay per click) which cost as soon as a web user clicks on the ad.  Google’s flagship advertising service is Adsense, their leading PPC service. So the primary driver seems to be sensible economic business steps rather than involved explanations of Google’s strategy etc.

MySpace contemplate life after Google?

News that Google may end their search deal with MySpace will be adding to the concerns of the social networking scene.  The three and half year deal is reportedly worth $900M and it is proving very hard for Google to make money, even with their dominance of the PPC advertising market.  This news comes hot-on-the-heals of News Corps reported Q2 loss in its Fox Interactive Group.   MySpace is thought to bring in the majority of the revenues coming in from Fox Interactive. Here is what they had to say on the issue: “Fox Interactive revenues: $226 million revenues.  Down due to reduced subs at IGN. Search and advertising were similar to a year ago.  Costs were MySpace Music and international expansion”.  Overall the entire division lost $38million.

If Google pulls out, MySpace will become a significant drain on Fox as the shine seems to be coming off Social Networking as users begin to wake up to the many privacy issues that exist and how their personal information may be being exploited without their explicit permission.

As for Google, well Barclays' analyst Doug Anmuth stated that:-

“Google no longer sees the need to win distribution at any cost, and we also think it is internally re-evaluating its relationship with MySpace which includes $900 million in payments in the 3.5 year term leading up to mid-2010.  Importantly we do not believe Google would lose share as a result of this shift”.

With such a ringing endorsement from a “Banker”, I am sure that Larry and Sergey can rest easy……….