Advertising

The Continuing Slide in Newspaper Advertising

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Continuing declines in newspaper advertising revenues
Industry practitioners were hoping to stem the decline in newspaper advertising revenues in 2011. Alas, it was not to be ...
The hoped-for uptick in newspaper advertising has yet to materialize. In fact, the Newspaper Association of America’s just released final statistics for 2011 advertising revenues show a significant continuing decline in ad revenues rather than a leveling off, as some industry practitioners had hoped.

Overall advertising revenue dropped ~7% during the year. The print portion was off by more than 9%, while digital advertising revenues weren’t able to offset those losses; they rose only a modest ~7%.

Translated into dollars, newspaper industry ad revenues were just shy of $24 billion. If you add in other sources of income from things like contract printing, the total revenues for 2011 were about $35 billion for the entire industry in the United States.

Compare that figure to Google’s revenues for 2011: ~$38 billion.

That is correct. One single company – one that wasn’t even in business 15 years ago – chalked up more revenues than all of America’s 2,000+ daily and weekly newspapers put together.

Looking past the decline in print ad revenues is the sluggish pace of digital ad revenue growth, which has come nowhere close to replacing print advertising revenues. For every $1 gained in digital advertising, $7 in print advertising is lost.

A recent Project for Excellence in Journalism study by the Pew Research Center concludes that slow culture change at newspapers is partially responsible for the problem, not simply changing news consumption habits among consumers of all ages. The analysis from Pew and others contends that the prognosis remains bleak for the newspaper companies, even as the U.S. slowly climbs out of the economic doldrums.

From the vantage point of a few more years to see how consumer behaviors have evolved, it now seems quite likely that we’re headed to a two tiered structure in the newspaper industry: Strongest at the top with a few papers with truly national circulation (The Wall Street Journal, The New York Times, Washington Post, USA Today) … and also somewhat strong at the bottom with hyper-local papers that deliver news to an audience that finds it difficult to access it from other sources. (High school sports stories are always a hit.)

Everything in between? Unfortunately for them, it’s going to continue to be a major struggle. And is there even a light at the end of the tunnel?

When “Push” Comes to “Pull” in Marketing

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Push versus pull marketing. "Push" has the upper hand now.
"Push" vs. "pull" marketing: Does "pull" have the upper hand now?
It’s clear that social media is delivering a wide range of interesting and beneficial online experiences for people. One that’s among the most highly valued is the ability to “vet” products, services and brands through reading reviews posted by “real people.”

According to a survey of ~3,330 consumers conducted in late 2011 by Deloitte’s Global Consumer Products Group, a large majority of consumers report that they rely on user reviews to guide their purchase decisions, rather than merely being influenced by brand advertising.

The Deloitte survey found that nearly two-thirds of consumers read consumer-written product reviews online. Of that group, 82% report that their purchase decisions have been directly influenced by these reviews – either confirming their decision to buy or causing them to switch to an alternative product or service.

Because of the perceived value of these consumer reviews, most people begin their search for information via a search engine query or by going to blogs, e-commerce sites such as Amazon that also feature consumer reviews, or review sites like TripAdvisor and Yelp.

By contrast, the incidence of people beginning their information quest at a company or brand website is far lower.

These dynamics are part of the reason why so many companies and brands are looking to increase their engagement with the online public. They’re particularly keen on ferreting out their natural allies – people who have a strong positive opinions about their brand – and turning them from armchair advocates into vocal cheerleaders.

For many marketers, this means going well-beyond collecting “likes” and similar “trophy counts.” They’re also continually monitoring comments in the social sphere concerning the quality of their products and customer service in order to make sure they deal with any issues or complaints expeditiously in order to minimize negative fallout in the “review” environment.

There’s also a powerful impulse for brands to offer “incentives” to customers in exchange for posting positive reviews. Those incentives can range from the small or innocuous – offering discount coupons or inexpensive product samples – all the way to incentives that seem more like bribes. (Here’s the latest example of this, courtesy of Honda.)

The keen attention companies are paying to social platforms reminds us that we’re in the midst of a migration away from traditional “push” marketing into a land of “pull” marketing.

There have always been “push” and “pull” aspects to marketing, advertising and PR, of course. But the balance of energy these days appears to be shifting quite sharply in the direction of “pull.”

There’s no reason to think that pattern will change anytime soon.

Social Media Communities: Digital Potemkin Villages?

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Social media stats riddled with fake accounts and cipher profilesMarketers like to talk about the 90-9-1 rule of web engagement: For every 100 people who are online, one person creates content … 9 people comment on that content … and the remaining 90 may lurk and read, but never participate in any other way.

The more we learn about social media engagement, the more we’re seeing the same phenomenon at work. To wit, studies of social networks like Twitter, Facebook and Google+ are finding far fewer numbers of “real” and “active” users than the gross statistics would suggest.

Alarmingly, these evaluations are finding that as many as half of social media accounts could be fake, or are ones that contain no user profiles.

And if there isn’t a user profile, of what value is a social media account to marketers? After all, it’s the information in these user profiles that provides the data for targeted advertising and marketing campaigns.

Just how extensive is the problem?

Let’s start with Google+, one of the latest entrants into the social media sweepstakes. Kevin Kelly, an industry specialist, published author and former editor of Wired magazine, recently conducted an analysis of the ~560,000 people who have him in their Google+ “circles.”

Reviewing a random sample of these ~560,000 users, he found that the majority of them had not made a single post … had not posted their image … and/or had never made a single comment.

More specifically, here’s what Kelly found:

Only ~30% had ever posted anything
 ~6% were “spammers”
 Fully ~36% were “ghosts” … accounts lacking even a user profile

Evidently, Google+ is taking “ghostwriting” to new heights.

What about Twitter?

Several editors at Popular Mechanics magazine reported recently that only ~25% of their Twitter followers were “real.” About half were identified as fake users or spammers.

Twitter may be tweeting away … but how many people are actually listening and who’s actually engaging?

Who’s gaming the system here? Clearly, there are reasons why people are trying to show higher social media engagement than is actually occurring. Marketing campaigns love to cite metrics where the number of followers and “likes” is high. It’s great for bragging rights … and sometimes financially beneficial, too, when performance goals are met and monetary payouts triggered.

And today there are plenty of ways for people to find services that will jumpstart campaigns by garnering thousands of followers or “likes” … all for a tidy fee, of course.

It would be nice if the social media platforms would step up to the plate and show some transparency in what’s going on. It’s highly likely that these platforms have developed sophisticated ways to pinpoint which of their accounts are real … versus those that are contrived.

But will they be publishing their findings anytime soon? Don’t hold your breath.

Until marketers can get a better handle on the “real facts” behind the elevated engagement numbers being hyped, it’s best to view any such stats with a jaundiced eye.

Here’s a suggestion: Take any stats you might hear about page “likes,” viral video views and the like … and discount them by a massive percentage – say, by 50%. Then, you might be approaching the reality.

Over time, we’ll probably learn more about “authenticity” when it comes to tracking true activity and engagement in the social realm. Marketers would do well to demand it. It’s just not clear how soon it’ll happen.

Until then, keep your antenna up and apply caveats all over the place.

(Still) Seeking the Sweet Spot with QR Codes

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QR codesI’ve blogged before about how QR codes – those splotchy icons at which someone can point their mobile device and be taken to a website for product information, a coupon or some other type of content – seem to be having difficulty becoming accepted by the mainstream of U.S. consumers.

And now we have yet more evidence to suggest that QR codes may never achieve the level of potential that marketers have hoped for them.

Youth marketing and esearch firm Archrival give us the latest clues as to the lack of adoption we’re seeing when it comes to QR codes. Here are two key findings from a survey it conducted among 500+ students at 24 American college campuses in late 2011:

 Although ~80% of respondents owned a smartphone and claimed to have come in contact with QR codes, only ~21% were actually able to successfully scan the QR code example that was presented in the Archrival’s survey.

 Three out of four respondents reported that they’d be “unlikely” to scan even one QR code in the future.

What’s the problem? Archrival uncovered a number of hurdles when it comes to QR codes. Several of them could be classified as “deal breakers” in the overall scope of things:

 Many survey respondents did not realize that a third-party app needs to be activated in order to scan a QR code. They mistakenly assume that it can be activated with their camera.

 Other respondents believe that the QR code-reading process is too lengthy and cumbersome.

And on a more fundamental level, doubts are being expressed about the value or usefulness of the web landing pages that are promoted via the QR codes.

What we may be witnessing is a dynamic that’s similar in some respects to what happened with CD-ROMs about a decade ago. There was once a boomlet of CD-ROMs being sent via mail to consumer and B-to-B customers. CDs were viewed as a great way to provide extensive rich content that was difficult to download and expensive to print traditionally.

But because the tool was “one step removed” (it needed to be loaded into a desktop computer in order to be viewed), the rate of interaction with these CDs turned out to be abysmal.

Similarly with QR codes, first there’s the need to possess a smartphone with a barcode scanning app installed. Once properly equipped, people then need to take the time to find and launch the app on their mobile device before pointing the camera at the QR code.

For many in today’s “instant gratification” world, taking those extra steps, however simple, may be a bridge too far.

Consumers and coupons: The latest stats are in.

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Consumers are redeeming coupons more than ever in 2011Coupons are big business in the USA. According to the latest Coupon Facts Report published by NCH/Valassis, a whopping $470 billion worth of coupons were offered by consumer package goods marketers in 2011.

Of this, an estimated $4.6 billion in coupons were redeemed. That represents more than 3.5 billion individual coupons at an average value of ~$1.30 per coupon.

It’s not surprising to learn that the offering of coupons by manufacturers spiked during the recessionary period that began in late 2008, when shoppers were more value-conscious than ever.

But by 2011, manufacturer behavior changed. In fact,this past year saw the first decrease in coupon offerings since 2008 (the drop was 8%) … although the volume hasn’t declined anywhere close to the volume of coupons consumer goods manufacturers offered back before the recession started:

 2007: $373 billion in coupon value distributed
 2008: $379 billion
 2009: $445 billion
 2010: $511 billion
 2011: $470 billion

Not every consumer category behaved similarly in 2011. Grocery product marketers reduced the total quantity of coupons they made available during the year, while marketers of health and beauty products showed no such decline.

With the increased popularity of digital couponing, one would expect that the growth rate in this segment would significantly outpace that of traditional coupons.

That turns out to be correct: NCH estimates that ~11% more print-at-home and paperless coupon offers were distributed in 2011 compared to the previous year.

But digital couponing still represents only a very small fraction of the total coupon landscape, which continues to be dominated by the free-standing inserts that are found in nearly every Sunday newspaper published in America. Here’s how FSIs dominate:

 Free-standing inserts: ~89% of U.S. coupon distribution in 2011
 In-store handouts: ~4%
 Direct mail: ~2%
 Magazines: ~2%
 Coupons inside or on product packaging: ~1%
 Digital couponing (paperless or print-at-home): ~1%

One other interesting study finding is that even though manufacturers reduced the volume of their coupon offerings during 2011 … consumers themselves showed no inclination to reduce their participation.

In fact, coupon redemption was up more than 9% in 2011 versus 2010. Clearly, many people are still thinking in “recession mode” when it comes to squeezing every ounce of productivity from their shopping dollar.

When it comes to advertising … the Super Bowl is supreme.

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Super Bowl XLVISuper Bowl ad placements have the reputation of being the most pricey ones on television. And based on an analysis by Kantar Media of Super Bowl ad activity over the past decade, that perception is quite accurate.

According to Kantar’s analysis, over the last ten years the Super Bowl game has generated more than $1.7 billion in network ad sales from more than ~125 companies.

Just five Super Bowl advertisers account for more than one-third of the activity, led by – no surprise here – Anheuser-Busch:

Anheuser-Busch: 10-year advertiser … ~$239 million
 PepsiCo: 10 years … ~$174 million
 General Motors: 8 years … ~$83 million
 Disney: 10 years … ~$74 million
 Coca Cola: 5 years … ~$67 million

It doesn’t seem that long ago when the rule of thumb was that a 30-second ad for the Super Bowl game would set you back one million dollars.

That’s not the case any longer. In fact, the average rate for a :30 ad increased by ~40% over the past decade, reaching $3.1 million in 2011.

[And for 2012, the ad rate is expected to be even higher at $3.5 to $4 million per spot — a double-digit increase.]

At such stratospheric prices, you’d expect only a handful of ads to be longer than 30 seconds. That’s true to a degree; only about one in five of the Super Bowl ads are :60 spots. But compare that to just ~6% of ads on broadcast networks being long-form.

And if it seems as if you’re seeing more advertising during the Super Bowl game than in years past … you’re not hallucinating. Back in 2006, the volume of commercial time for ads during the game was ~44 minutes. That rose to ~46 minutes as of 2011, and will probably continue to creep upward in 2012 and beyond.

Most Super Bowl advertisers are big consumer brands. But Kantar also finds that nearly one-third of Super Bowl advertisers allocate more than 10% of their annual media budgets into the game. Clearly, it’s not only the big Hollywood film studios, car companies or food brands that are shelling out the bucks for the Super Bowl.

Kantar Media also compared advertising volume for the Big Game against the dollar volume of ads placed during other major televised sports events, such as the Baseball World Series and the NCAA Final Four Mens Basketball. In nearly every year, the one-day Super Bowl out-pulled these multi-day sporting events when it comes to raking in the ad dollars.

To sum things up, even in the world of advertising where the only constant is change … some things don’t change all that much.

Digital Advertising Growth Forecasts: Rosy Scenarios on Steroids?

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Ad spend forecasts lower than projected.Isn’t it interesting how industry growth forecasts for emerging digital segments always start out looking stupendously stellar? Terms like “swelling demand” … “robust growth” … and “tipping point” often accompany these breathless predictions.

And of course, the business media are highly prone to report the news, as it underscores the fact that highly interesting things are afoot in the marketplace.

What’s done much less often is to go back at a later date and compare the growth forecasts to the actual performance.

But digital media company Digiday has done that, and if you think you remembered industry growth predictions that were a bit high on hyperbole … Digiday’s analysis reveals your memory is right on the money.

One market prognosticator – eMarketer – is often cited for its digital ad market predictions. But how accurate are they? Here’s how it forecast annual mobile ad spending in the United States:

 Prediction by eMarketer published in 2008: $5.2 billion in 2011
 Revised prediction from eMarketer restated in 2011: $1.2 billion
 Percent off-target: ~77%

And here’s how eMarketer forecast U.S. annual video ad spending:

 Prediction by eMarketer published in 2007: $4.3 billion in 2011
 Revised prediction from eMarketer restated in 2011: $2.2 billion
 Percent off target: ~49%

Granted, it is a challenge to forecast growth rates in digital advertising activity early on in the developmental cycle. But being off by such a dramatic degree makes the forecasts essentially worthless – and laughably so.

Another phenomenon may be at work as well. Invariably, the initial growth forecasts are too aggressive rather than too timid.

Why? Rosy forecasts tend to spark more interest from journalists, venture capitalists, publishers and others – and hence have a greater propensity to be published. So there may well be subtle pressure to “err on the plus side” when formulating the forecasts.

Digiday’s Jack Marshall poses that question, too, and then writes: “It’s important to think about where new markets and technologies are headed, but the ad industry often gets preoccupied and overexcited with what are essentially just guesses.”

As for the latest crop of (downwardly revised) growth estimates, Marshall adds: “Let’s reconvene in four years for the inevitable update.”

If you’re a betting person, you’d best wager on the revised figures being lower.

Internet advertising: Blue smoke and mirrors?

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Online advertising spurious claimsIn today’s online world, marketers can’t afford to do advertising the old fashioned way. They need to rely on automated programs that serve ads to the right audiences in cyberspace.

One question I hear often from business leaders is to what degree of confidence should they place in these automated programs to actually deliver what is promised. There’s a nagging concern that some of the promises might be a bit more like “blue smoke and mirrors.”

As it turns out, some of that concern may be well-placed. Here’s one recent example of problems along these lines. And Trust Metrics, an online media rating firm, has studied more than 500,000 unique web domains – in effect, “taking inventory of the ad inventory.” And what it’s found is pretty sobering.

For starters, the online ad inventory supply is marked by dynamic change and constant evolution. Approximately 20% of the domains studied by Trust Metrics in late 2010 don’t even exist anymore as of the end of 2011. Tens of thousands of sites that may have once been vetted by agencies or networks are gone. There is no content at these domains … or they’re simply “ad farms.”

Trust Metrics claims that never have so many marketers purchased so much online ad inventory in an environment that is so degraded, a significant portion of the domains might not even be around a few months from now.

Moreover, approximately 10% of the domains Trust Metric evaluated that sell ad impressions in scaled buying environments (e.g., exchanges and networks) are actually non-English language sites – hardly valuable places to advertise. Plus, that represents more domain names than those identified as pornographic, or containing significant profanity or hate speech.

Trust Metrics’ evaluation also found that well over half of the sites available in large ad networks are what it classifies as “substandard environments which don’t adhere to even the barest minimum in publishing or editorial principles.

The bottom line on this is that of for 1 million domains that sell ads … most advertisers wouldn’t want to be on ~600,00 of them!

Of course, the flip side of this is that there are thousands of sites that do perform for advertisers – and those “good” sites drive valuable clickthroughs, sales and brand building.

But clearly, advertisers would be well advised to adopt a “buyer beware” stance in the current online advertising environment.

What’s the Latest in Content Creation for B-to-B Marketers?

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Content creationThere’s an interesting new study just published that gives us interesting clues about what B-to-B marketers are doing in content creation.

The B2B Content Marketing: 2012 Benchmarks, Budgets & Trends study is a joint research effort of the Content Marketing Institute and marketing information resources firm MarketingProfs. The survey found that nine out of ten B-to-B marketers are using some form of content marketing activities to achieve their business goals.

[For this survey, content marketing (also known as custom publishing or branded content) is defined as “the creation and distribution of educational and/or compelling content in multiple formats to attract and/or retain customers.”]

The research found that usage of several content tactics is now quite widespread:

 News articles: ~79% of respondents are using
 Social media (excluding blogs): ~74%
 Blogs: ~65%
 e-Newsletters: ~63%
 Case studies: ~58%
 In-person events: ~56%
 Videos: ~52%
 White papers: ~51%
 Webinars or webcasts: ~46%

When queried as to how effective marketers believe these tactics to be, a combination of traditional and “new” ones were cited with high effectiveness scores:

 In-person events: ~78% view as an “effective” tactic
 Case studies: ~70
 Webinars or webcasts: ~70%
 e-Newsletters: ~60%
 White papers: ~60%
 Blogs: ~58%
 Web microsites: ~56%
 Articles: ~51%
 Social media: ~51%
 Videos: ~51%

The survey also investigated how content tactics are being measured for success. Tracking web traffic stats is the most popular measurement tool:

 Web traffic: ~58% use to measure success
 Sales lead quality: ~49% use
 Direct sales figures: ~41% use
 Sales lead quantity: ~41% use
 Qualitative feedback from customers: ~40% use
 Search engine rankings: ~40% use
 Inbound weblinks: ~30% use

And what is the biggest challenge these marketers see in content creation? It’s the age-old problem of coming up with interesting topics to write about.

More than four in ten respondents cited “producing the kind of content that engages prospects and customers” as their biggest challenge.

Some of the comments heard from survey respondents on this topic sound all-too-familiar:

 “Finding people within my organization to contribute their expertise … nobody outside of marketing seems to see the value in sharing our expertise with the market via content.”

 “Having the discipline and being able to assign sufficient resources to create and manage the right content for the target audience, in a sustainable manner.”

 “The ideas are all there; it’s just a matter of finding time to create and write copy.”

 “Management patience: Management needs to understand that in today’s B-to-B environment, it takes time to engage prospects.”

What about your situation? Are your content management issues the same ones as reported in this study … or are you facing different challenges?

Print Publications: Hanging In There?

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Print magazines are hanging in there.There’s one thing you can say about print magazines: They’re not giving up without a fight!

The latest evidence of this comes in statistics released by Mediafinder®, a magazine tracking service run by Oxbridge Communications. It turns out that in 2011, there were 239 print publications launched in the United States and Canada. That’s a 24% increase over 2010, when 193 magazines were launched.

And at the other end of the scale, the number of magazines that ceased publishing in 2011 decreased over the previous year: 152 versus 176.

Actually, new magazine startups as well as closings are down significantly from just a few years ago. The worst year was in 2009, when a whopping 596 print magazines closed (but also 275 were launched).

Reviewing the stats, it’s not hard to understand the dynamics as to why print magazines have been on the ropes. For starters, magazine newsstand sales have dropped by nearly 50% over the past decade. And ad pages in consumer magazines fell more than 30% just between 2006 and 2010.

And in 2011 year-to-date, ad pages are continuing to track a smidgen lower (-1%), but at least the trend is now nearly flat rather than steeply downward.

To be sure, magazines have tried different tactics to stem the slide. One of the more interesting moves has been by the publishing firm Meredith Corporation, which announced a plan in the summer to begin guaranteeing that advertisers’ magazine buys will yield an increase in sales for their products or services.

Dubbed the “Meredith Engagement Dividend,” the program represents a new level of accountability for “analogue” media, which long relied on fuzzier metrics like audience reach and before/after market research.

The publisher’s new program is available to advertisers who commit to a minimum level of advertising impressions annually across multiple Meredith magazine titles. It works by correlating Meredith’s magazine readers with Nielsen’s Homescan (National Consumer Panel) service. That’s the same marketing research resource many top consumer products firms use to measure their product sales.

The Nielsen/NCP database of ~85 million consumer magazine readers is used to correlate the effect magazine ads have on resulting product purchase behaviors.

Meredith claims the research shows that advertisers in four key categories – household goods, beauty products, OTC drugs and food – have increased their product sales an average of 10% via ads placed in the Meredith publications. That claim is based on measuring the sales impact of “higher frequency” ad campaigns that ran during 2009 and 2010.

It’ll be interesting to see how the performance of print magazines evolves over the next few years. For now, the steep slide appears to have ended, but there’s no real evidence of a turnaround. The question is whether publishers can adjust their operating models to continue to work within the new, lower level of business activity.

Maybe they’ll succeed. You know … hope and change and all that.