Media

$100 cost-per-click on Google AdWords? It’s already here.

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How much is one clickthrough to your web site worth? If you’re a legal firm specializing in bringing mesothelioma cases to court, it turns out it’s worth a lot.

In fact, the search term “mesothelioma” was the highest-priced keyword in the U.S. during the third quarter of 2009. That’s according to a recently-released AdGooroo Search Engine Advertising report.

Just how expensive? For Google’s AdWords program, the highest price paid for a #1 ranking on that search term was a whopping $99.44 per click. (Over at Yahoo, the high figure for this paid search term was a little less rich: $60.68 per click.)

One wonders how many times the advertisers have actually had to pay out this king’s ransom. Whether it’s for a few or many clicks, it’s clear that some legal firms recognize a highly lucrative revenue opportunity in filing mesothelioma lawsuits related to asbestos and lung cancer.

Interestingly, the highest paid search term in Bing’s paid search program isn’t “mesothelioma,” but rather “auto insurance comparison.” At $55.20 per click, the dollars aren’t as high, but it would seem like the potential payoff isn’t nearly as great, either. After all, there’s a pretty big difference between a multi-million dollar legal verdict and the value of an automotive insurance policy.

But beyond the eyebrow-raising stats of these extreme examples, the larger issue is how much more costly search advertising has become in recent times. A few short years ago, it was common to talk about search terms costing an advertiser 50 cents or $1.00 per click. Now, those same terms are far more likely to cost $2.50 or more.

Google, being the 500-pound gorilla in search engine marketing (SEM), has certainly contributed to the price inflation. That’s one reason why many are rooting for alternative search options like Bing to succeed (dream on).

More fundamental to the increase in keyword click pricing is the realization that advertising to people at the precise time they’re searching for particular goods and services is a far more effective way to engage customers and prospects and drive actual sales.

And that’s even more the case compared to trying to get their attention or otherwise “intrude” on them when they’re online for other purposes. The abysmal clickthrough rates experienced for banner advertising bear this out.

But paying $100 per clickthrough? That does seem excessive – even for ambulance-chasing lawyers!

e-Books on the March

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The Nook e-Reader, released by Barnes & Noble just in time for the holiday shopping season.
The Nook e-Reader, released by Barnes & Noble just in time for the holiday shopping season.
The e-book revolution continues apace. In the past week, Barnes & Noble announced the introduction of its own electronic book reader – the Nook – to compete against Amazon’s Kindle and Sony’s e-reader. Amazon promptly responded by lowering the price of the Kindle to match Barnes & Nobles’ Nook e-reader price. No doubt, both companies are looking to the holiday season, hoping their products will turn out to be among the few that are “stars” in what will otherwise be a season of tepid merchandise sales.

And now Google has gotten into the fray as well. It has announced new details on the pending launch of its e-bookstore, Google Editions. This is an online bookstore that will deliver digital books to any digital device such as e-readers, laptops and cellphones. Google plans to offer up to 600,000 book titles during the first half of 2010 alone, nearly matching the number of volumes that Barnes & Nobles will be offering with the Nook.

True to form, Google seems bent on taking an idea that is gained acceptance in the market – and then scrambling the deck to create a new set of game rules. In this case, it’s attempting an end-run around Amazon’s and Barnes & Nobles’ proprietary e-reader devices by offering the ability to download books to any digital device.

Google’s hope is that e-readers will eventually lose their luster once books are available for download to any device. But Forrester Research is estimating that ~3 million e-readers will be sold in 2009 — ~1 million higher than its earlier estimate. And some observers think that Google may be underestimating the importance and value of the proprietary e-readers; they note that Kindle users have been highly satisfied with the product and how it performs. (Besides, the audience for reading entire books on a cellphone device is probably pretty limited!)

In Google’s program, publishers will set the price of books, while Google will earn over half of the profits and share them with its retail partners. But there is an aspect of Google Editions that might turn out to be a significant “negative” for at least some users. Google is toying with the idea of including AdWords or AdSense advertising in its book offerings. Cramming a bunch of advertising surrounding the book contents could be a big turnoff. Even having blue-highlighted links in the text — while normal and expected when reading an online article such as this NonesNotes blog post – could be a major distraction when plowing through the contents of an entire book volume.

Regardless of how things play out, it’s clear that the ~$150 million e-book segment is going nowhere but up in the coming years, and it will be interesting to see how each of the key industry players ends up faring in the coming months. (And the story line gets even juicier with reports that Apple is also nosing around this market and may have something important to unveil before long.)

What are the very latest trends in media usage?

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TargetCast TCM logoWith all of the rapid changes occurring in the media world today, it’s hard to know just what kind of impact they’re having on the media usage patterns of consumers. Now a just-released report by TargetCast Total Communications Media based on a September ’09 survey of ~900 American adults age 18-64 is providing some interesting clues as to what’s going on out there.

The report provides a host of interesting statistical figures, but I find a couple broad conclusions from the report more interesting:

 Men and women are consuming media differently. Men are more likely to adapt their usage habits to incorporate more digital and online platforms, while women are more apt to stick with traditional media forms.

 Radio, which surprised many by successfully surviving the challenges of broadcast TV in the 1940s, cable in the 1970s and the Internet in the 1990s, may finally have met its match. As a “passive” media, it’s being tuned out in large degree by a younger generation of people far more attracted to programmable MP3 players, iPods and interactive multimedia devices.

 Newspapers continue to be respected for their role in covering major news events, but they’re losing ground in the face of increasing digital and mobile news media use. What’s more, nearly three-fourths of the respondents in the survey expect their online news to be available for free. (Rupert Murdoch, are you listening?)

So overall, what media has become less popular with consumers? Answer: Newspapers and magazines, with around one-third of the TargetCast TCM survey respondents indicating they’re using these media less than one year ago. Conversely, ~40% reported higher usage of the Internet for informational purposes … and ~28% higher Internet usage for entertainment.

These findings help explain why print magazine advertising is still in the doldrums. In fact, Media Industry Newsletter reports that November 2009 ad pages are down nearly 20% from November 2008. This comes as a surprise for some people because the full brunt of the economic crisis had already hit the media by November of last year. But instead of showing flat performance or maybe even a slight rise in ad pages, the numbers tanked yet again this year – making the two-year drop-off between 2007 and 2009 a whopping 35%.

Sure, some of the blame for the sorry ad numbers can go to the continuing economic downturn. But the rest is due to the fundamental change in media consumption habits that are continuing to happen – as cleanly illustrated in the TargetCast TCM report.

Social Media and the Internet: Click … or Clique?

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All of the hype about social marketing and social media might make you believe that people are flocking to this new form of communications in droves.

Well, if you think this … you’re right. And now we have the stats to prove it. The Nielsen Company has just released web statistics for the month of August that report that time spent on social networks and blogging sites accounted for ~17% of all time spent on the Internet.

Compared to August 2008, this figure is nearly triple the percentage of time spent on social networks and blogging sites just one short year ago. Seeing as how there is an upper-limit ceiling on the total amount of time available to spend online in any given day, the increased attention on social media is coming at the expense of the more traditional use of the web as an informational tool.

This is not to say that text and video content don’t remain central to the online experience, because that is clearly the case. But the ability consumers have now to use platforms like Facebook and blogging sites to “connect, communicate and share” is what’s driving much of the continuing growth of the web and online engagement.

Because of this new emphasis, is it any wonder more online advertising dollars are chasing social media than ever before? Nielsen pegs advertising on social media sites as representing ~15% of total online ad spending in August 2009. That’s more than double its proportion a year earlier.

Along with the shift in online ad revenues to social media sites, we’re also experiencing a major change in clickthrough behavior as it pertains to online display ads. Research published recently by comScore shows that the percentage of people who clicked on one or more display ads during a monthly period of Internet interaction – in this case March 2009 – was only ~16%.

How does that result compare with earlier surveys? It’s dramatically lower, and dropping. Just two years ago in 2007, ~32% of people online clicked on at least one online display ad over a month-long period – twice the proportion as today.

What’s more, the comScore analysis reveals that a very small portion of viewers represent the vast majority of the clickthrough activity. Specifically, only ~8% of the people are responsible for ~85% of all clicks. Of course, we can be sure that the robust clickthrough behavior of these 8% translates into equally robust product sales … NOT!

Clearly, any company that is attempting to promote products and services over the Internet needs to carefully study the composition of its market and the behavior of its online audience targets before making extensive online advertising program commitments.

The reality is, with the dynamics we’re seeing such as the behaviors noted above, it’s more likely an online promo effort will fail rather than succeed unless a dispassionate review of the situation is done beforehand and a practical, realistic program put into place.

But that’s so unlike many of the web advertising programs we’ve seen implemented up to now, which could be best characterized as: “Throw a bunch of advertising at the web and hope some of it sticks.”

Condé-Nast Gets Real – and Reality Bites

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Conde-Nast logoThis week, magazine publisher Condé-Nast announced the closure of four magazines, including two bridal publications plus the prestigious and well-known Gourmet Magazine title.

It’s an indignity for a publishing firm that has fallen pretty far pretty fast. For years, the company seemed by-and-large unaffected by the winds of change in the publishing industry. Even as other firms were belt-tightening and divesting themselves of low-performing magazine titles, the storied “in-your-face” Condé-Nast business style – replete with jet-setting executives and seemingly endless clothing and expense accounts – appeared to remain intact.

It didn’t hurt that parent company, Advance Publications, also owns cable TV properties that could help prop up the print publication segment of the business – at least for a time.

But with plunging ad page revenues from its luxury goods advertisers on the order of 30%+ throughout 2009, it was only a matter of time before the day of reckoning would arrive. And the sense of impending doom was only heightened when McKinsey & Co. consultants started roaming the halls, poking around the company’s headquarters like a nosy relative, asking all sorts of questions and taking notes.

And now, a few short months later, we have this announcement.

Accompanying the news of magazine closures and personnel layoffs, Condé-Nast reported that it is shifting its priorities to digital properties even while focusing on a fewer number of “core” magazine titles.

Will it be enough? One unnamed company executive was quoted in The Wall Street Journal as saying, “We’re going to make a go of everything else.” But I think that’s doubtful. McKinsey has recommended that nearly all of the remaining publications cut their budgets by upwards of 25%. Whether or not that happens – or whether it will be enough to save the remaining titles – is something we’ll be able to judge pretty quickly.

UPDATE (11/7/09) — The New York Post is reporting that Condé-Nast has now hired Michael Sheehan, the famous crisis manager and media coach, to help the company with PR. Sheehan has coached presidential candidates from Clinton to Obama, as well as handling AIG Insurance’s PR during its financial meltdown in late 2008. Reportedly, Gina Sanders, publisher of Lucky magazine, prodded top brass to bring Sheehan in, citing deep morale problems at the company. Considering the dramatic events at the publishing house over the past year, this news is not at all surprising.

The Movie Rental Business: Blockbuster … or Blockbusted?

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Blockbuster logoWhat’s going on with Blockbuster? For several years now, business analysts have wondered whether the company’s movie rental stores could withstand the competitive pressures from alternative delivery systems such as Netflix’s monthly subscription program, or the growing popularity of movie downloads direct to the customer’s own computer.

The latest announcement by Blockbuster’s management seems to suggest that we may be entering into an endgame phase for the company. Blockbuster reported that it will be closing as many as 40% of its stores over the next two years. This figure – nearly 1,600 of its ~3,750 total store population, is significantly higher than had been signaled by the firm earlier in the summer.

Blockbuster seems to be caught in a situation where its business model is no longer attractive – or even relevant – to a large and growing chunk of movie consumers. The company has nicely appointed, well-stocked stores scattered all across the United States. But these outlets are an expensive way to rent movies when compared to Netflix’s “movies by mail” program or Coinstar/Redbox’s $1 movie vending machine kiosks. The Blockbuster stores are losing money – and customers.

Come to think of it, Blockbuster has been playing catch-up ball in the movie rental game for quite some time. When Netflix introduced the idea of “no late fees – ever,” Blockbuster resisted following suit for a time … until it became clear that charging late fees was becoming a deal-breaker for many consumers. And with the end of late fees, a major source of revenue and profits dried up.

Blockbuster has also tried to compete with Redbox, but the latter is expected to have nearly ten times more kiosks than Blockbuster (~20,000 versus ~2,500) installed by the end of this year.

Blockbuster has even tried to compete with Netflix by introducing its own monthly mail-order subscription program. But that program, which had grown to ~3 million customers, sank back to ~1.6 million once its aggressive promotional program for the service had run its course.

And then there’s the direct download business – the proverbial “elephant in the room” that is a threat not only to the Blockbuster model, but also to aspects of Netflix and Redbox’s business as well. Blockbuster is taking a stab at this segment of the business by working out a phone-download program with Motorola plus a TV-download program with Samsung, but it’s not clear at all that these efforts will help preserve Blockbuster’s market dominance.

Looking at the current volume of business done by Blockbuster compared to its competitors, the casual observer might think that the company has nothing at all to worry about. After all, its customer base numbers more than 50 million compared to just shy of 11 million for Netflix. But these point-in-time figures belie the fundamental problems facing the company. Blockbuster – the lumbering ocean liner – is losing upwards of $40 million each quarter, while its rivals – the swiftly maneuvering speedboats – are making profits.

Wonder how much longer that can go on?

Who are ‘Wikipedians’ … and what makes them tick?

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Wikipedia logoBy now, most web surfers have had first-hand experience with Wikipedia, the online encyclopedia to which anyone can contribute. As a quick resource for gaining knowledge, it’s hard to beat; it’s fast,and it’s comprehensive.

Speaking personally, fewer than 10% of my queries on Wikipedia come back empty. So I find it a great resource for getting a quick handle on most any topic.

Of course, it would be unwise to consider Wikipedia an unimpeachable resource because its content is not vetted in the traditional way. Volunteers author the articles, and it’s up to the community of Wikipedia readers to call out and correct errors or omissions to the entries.

Just who are these volunteers, and what motivates them to devote time to Wikipedia? As it turns out, while there’s no pay, there’s a strong mixture of altruism and ego gratification associated with being a Wikipedia contributor.

This is borne out in an international research survey conducted jointly by the Wikimedia Foundation (the not-for-profit group that operates Wikipedia) and United Nations University’s MERIT tech research project. A whopping 175,000 responses were collected. Of these, approximately one third reported that they contribute Wikipedia content in addition to consuming it.

So what makes those people want to become a Wikipedia contributor? Three-fourths of them agreed with the statement that they “like the idea of sharing knowledge and want to contribute to it.” Two-thirds also reported that they “saw an error I wanted to fix.” Nearly half would contribute more often “if I knew there were specific topic areas that needed my help.”

The survey also uncovered some fascinating demographic statistics regarding Wikipedia contributors. It comes as no real surprise that the median age of Wikipedia contributors is in the mid- to upper-twenties … or that one-fourth of them have post-graduate degrees.

But the gender breakdown is curious. In fact, the survey found that only 13% of Wikipedia contributors are women – a startling finding. And even among those who have edited others’ entries rather than contributing full articles of their own, only 31% are women. The researchers steered clear of suggesting any reasons for the gender skew, which was more than likely a cop-out.

And what are the reasons why people don’t contribute to Wikipedia? Predictably, “time constraints” were cited by many respondents. Another factor cited was not knowing how to create or edit the Wikipedia pages. But a substantial percentage (~25%) cited being fearful of making a mistake and “getting in trouble” for it.

So one takeaway from the survey is that it takes certain traits to be a Wikipedia contributor — like being a self-proclaimed “informed expert” looking for validation, affirmation and recognition … or even being narcissistic?

Come to think of it, perhaps it’s not so surprising after all that Wikipedia contributors are over 85% male!

It’s official: Clickthrough advertising effectiveness on mobile devices is somewhere south of atrocious.

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As usage of the Internet on mobile devices like the Apple iPhone has become more prevalent, many businesses have been wondering how important it is for them to cater to these users through the creation of web sites that are optimized for mobile display.

Although creating a mobile version of a web site doesn’t have to be a major undertaking, it is “yet another task” to add to the marketer’s never-ending to-do list. So, just how important is it?

Chitika, Inc., a Massachusetts-based online advertising network, has analyzed the behaviors of “mobilists” and found some interesting results when it comes to their viewing of advertising and taking action. In tracking more than 92 million ad impressions served up by browsers, it turns out that mobile internet users clicked through at a far lower rate than those viewing ads on desktop machines.

How much lower? The overall clickthrough rate for mobilists was 0.48%, compared to a clickthrough rate of 0.84% for non-mobile users. That’s a serious difference, and gets about as far in the basement as you can go.

But why are the numbers so abysmal? More than likely, several factors are at work. First, consider the ways people use their mobile devices. It’s usually because they want to know something immediately … and it’s at times like those that folks are less inclined to get sidetracked by clicking on advertising links. By contrast, the “immediacy” factor with non-mobile devices often isn’t as acute.

Also, consider the load time on mobile devices – rather much slower. For that reason, mobile web content tends to be less informationally rich — or compelling in its appearance — thus decreasing its “stopping” power.

What this means for advertisers is that the key for succeeding in the mobile space is catching consumers at just the right time, not happening to catch them at any time. Easy enough in theory … but would anyone care to volunteer for putting this into practice? Best of luck to you.

From the perspective of the media purveyors, the Chitika findings certainly won’t make their task of attracting additional advertising revenues in the mobile sector any easier. Perhaps that’s why The Wall Street Journal announced last week that, beginning in November, it will be charging mobile users a weekly fee to access its content on mobile devices – and those fees will be charged to WSJ subscribers and non-subscribers both.

It’s further proof that relying on display advertising revenue simply isn’t cutting it as a practical business model in the mobile environment.

Dealing with all those blankety-blank ads.

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In a world awash with advertising messages screaming at consumers from seemingly every nook and cranny, some companies go to great lengths to stand out from the crowd.

The most recent "extreme" example of this comes from Hyundai’s financial services subsidiary business, which purchased $2.2 million worth of advertising space recently in a new subway station in South Korea — essentially all of the available real estate — then populated the large white panels with … practically nothing.

As transit passengers move through the new station, they encounter giant advertising spaces on the walls that are covered by 95% white space, with only one small photo image plus the company logo to hint at what is being promoted.

No doubt, the goal of this “way-less is more” approach is to draw attention to the advertising precisely because of its minimalist message.

After all, it’s different. Unexpected. Even irreverent.

But is it working? Viewing photos of the subway station interior reveals that the largely blank advertising wall signs do attract attention to themselves in a kind of perverse way. They convey a sense of something unfinished, unbalanced, and perhaps a bit unsettling.

I’m reminded of 20th Century American composer John Cage’s famous work titled “4 minutes 33 seconds” which is — you guessed it — four and a half minutes of complete silence. Perhaps not surprisingly, this work got more media attention for Cage than any of his previous compositions ever had — even as one critic quipped that while the quality of the piece itself was simply outstanding, the premiere performance itself could have used a bit more vivaciousness on the part of the players.

What all this shows is how people try to “cut through the clutter” today is the same as has been done for years: Run as far as possible in the opposite direction while lassoing some valuable publicity along the way.

Based on those criteria, it looks like Hyundai has scored pretty well on this one.

Companies are Concerned about the Risks of Social Media

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As blogs, Facebook, Twitter, LinkedIn and other social media tools have moved into the mainstream in a big way, managers at many companies are responding with interest … as well as concern. On the “interest” side, social networking is seen as having great potential for enhancing relationships with customers and promoting brand affinity. But there’s also “concern” that social media has the potential to damage a company’s reputation through the dissemination of information that is unflattering, taken out of context, or simply wrong.

Now, thanks to a July 2009 national survey of nearly 500 management, marketing and HR executives conducted by Minneapolis-based firms Russell Herder and Ethos Business Law, we have a more quantitative idea of the collective corporate thinking about pluses and minuses of social media.

Four out of five respondents in the Russell Herder/Ethos field research believe that social media can help build a company’s brand. In addition, nearly 70% see social media as a viable employee recruitment tool, while two out of three recognize its potential as a customer service tool.

But the survey also found that over 80% of respondents believe that social media poses a corporate security risk. Similarly, half of the respondents consider social media to be detrimental to employee productivity.

These findings show that senior company managers are somewhat ambivalent about social media. They see its positive potential … but at what cost? On the other hand, is shutting the door on social media a wise response (or even a viable one)?

One solution to this dilemma is to be found in dusting off an old standby – the employee handbook. In many companies, policies have evolved over the years to cover pretty much every kind of issue – from what constitutes approved and non-approved workplace activities, attendance policies, and conducting personal business during office hours to policies regarding alcohol consumption, gender/age/racial discrimination, and sexual harassment.

Why not incorporate new guidelines outlining the company’s philosophy toward social media and what constitutes appropriate company-related social media activities on the part of employees?

While it may also be a very good idea to conduct meetings or training sessions on social media as well, this a good first step that will give employees a sense of the “boundaries” they should observe when commenting on company-related issues in the social media realm.

The alternative is a “Wild West” atmosphere in which a problem is destined to arise sooner rather than later. And when that occurs, if no formal social media policies are in place, the company will have no cause for defending itself in the court of public opinion – as well as little recourse for disciplining in addition to counseling the employees involved.