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Digital Intelligence
The monthly review of new research and developments in digital marketing

April 2007

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Digital Strategy Consulting


Online adspend is already topping 10% of the media channel mix in several countries, and ZenithOptimedia are predicting that worldwide it's now on course to top radio by next year.

In the UK our own analysis now puts online above direct mail, and we remain confident in our 2005 prediction that online would overtake TV adspend in the UK by the end of the decade.

Although online can build brands as powerfully as it can generate direct sales, the success of search engine advertising continues to be a key driver in the refocusing of marketing towards the web across Europe. That's why this month our Company Focus looks at Google, with a round up of the top ten news stories from the search giant.


Danny Meadows-Klue
Founder and Chief Executive
Digital Strategy Consulting

 

 Advertising

Bellwether Report sees 19% of firms increase online marketing budgets during Q1

According to the latest Bellwether Report from the IPA a net total of 7.7% of companies surveyed increased their marketing budgets during Q1 this year, writes Brand Republic. Overall 54% of companies intend to increase their budgets this year, while only 17% intend to reduce them. The 37% net increase represents the highest rise since 2000. 19% of companies said that they had increased their spending on online marketing during Q1. Online adspend now represents around £2bn of annual marketing spend.
From Brand Republic: http://www.brandrepublic.com, 16/04/2007

IPA: http://www.ipa.co.uk

ZenithOptimedia predicts worldwide online adspend will overtake radio by 2008
A new study from ZenithOptimedia predicts that global online adspend will grow six times faster than traditional media spend between 2006 and 2009, with its share of the market growing from 5.8% to 8.7% during the same period (with revenues rising from $23.4bn to $42.9bn (£11.83bn to £21.68bn)), writes ClickZ. The company now expects global online advertising to overtake radio by 2008 - a year earlier than they predicted in December. This will put online in fourth place behind television, newspapers and magazines. ZenithOptimedia predicts that online spending will grow 28.2% during 2007 (against total market growth of 3.7%). By 2009, online adspend will account for nearly 9% of all advertising expenditure. Online adspend already accounts for more than 10% of total marketing spend in the UK, Norway and Sweden.
From ClickZ: http://www.clickz.com, 03/04/2007

ZenithOptimedia: http://www.zenithoptimedia.com

Study shows 60% of firms planning to spend more on search engine marketing
A survey of 700 internet marketers has found that 60% of British firms intend to increase their search engine marketing in the next 12 months, writes Netimperative. The UK Search Engine Marketing Report 2007 from E-consultancy and Neutralize also found that 62% of firms will be spending more on search engine optimisation (SEO) to increase the visibility of their campaigns. 56% of those polled said that their companies spend more than £10,000 annually on paid search, while 25% spend over £100,000 annually. On average respondents said that they spend 32% of total budgets on online campaigns, of which 32% went on search marketing. 61% of the search marketing budget is spend on paid search with 33% spent on SEO. Google was considered the best search engine in five categories: return on investment, quality of traffic, volume of traffic, customer service and PPC management tools.
From Netimperative: http://www.netimperative.com, 12/04/2007

E-consultancy: http://www.e-consultancy.com

Major brands join forces for UK's biggest in-game advertising trial
Ford, Nike, Unilever and Samsung are all taking part in the UK's biggest ever in-game advertising trial, writes Mad.co.uk. The three-month trial will include games for the Nintendo Wii, Sony PlayStation, Microsoft Xbox 360 Live and PC platforms. Ford is promoting its new Fiesta ST model with ads in racing games Need for Speed Carbon, TOCA3 and Trackmedia Sunrise. Ads for Nike, Samsung and Unilever's Sure for Men will be featured in a selection of shoot-'em-up games. Media agency MindShare Interaction brokered the deals in conjunction with Microsoft-owned in-game specialist Massive. Research firm TNS will measure page impressions during the trial - here defined as the duration a player sees an ad.
According to figures from Microsoft the in-game ad market was worth $56m (£28.4m) in 2005 and is set to reach $1.8bn (£912.1m) by 2010. A further forecast from eMarketer echoes Microsoft's view. eMarketer estimate that the global combined video game ad market will increase at a compound annual growth rate of nearly 23% over the next five years, reaching almost $2bn (£1.01bn) by 2011.
From Mad.co.uk: http://www.mad.co.uk, 05/04/2007

MindShare: http://www.mindshareworld.com

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 Companies

Profits rise 65% at Microsoft on the back of Vista sales

Q1 profits at Microsoft grew 65% as consumers bought the latest Vista operating system, writes CNET. Net income reached $4.93bn (£2.5bn), from $2.98bn (£1.5bn) in Q1 2006. Revenues increased 32% during the same period to reach $14.4bn (£7.28bn) (from $10.9bn (£5.51bn) in 2006). Advertising revenues during the quarter grew 23% year-on-year as traffic to Microsoft sites grew 4%. According to data from Nielsen//NetRatings the three-month average monthly unique audience rose from 113.7m unique visitors in Q1 2006 to 117.8m in Q1 2007.
Microsoft has also announced that it is adding instant message capability to the Xbox 360. From 7th May Windows Live Messenger users on the Xbox 360 will be able to communicate through either an on-screen virtual keyboard or through a USB keyboard. Microsoft are planning to launch a new text-inputting device this Summer for the Xbox 360.
From CNET: http://news.com, 26/04/2007
Microsoft: http://www.microsoft.com

Amazon makes record profits and plans MP3 store
Amazon's first quarter profits more than doubled from $51m (£25.78m) in Q1 2006 to $111m  (£56.10m) in Q1 this year writes ENN. Revenues rose 32% during the same period to reach $3.02bn (£1.53bn) . Sales in North America rose 30% (to $1.62bn (£8.82bn)) while Amazon's international outlets grew 35% (to $1.39bn (£700m)).
The news was followed by reports that Amazon is intending to enter the digital music download market. Amazon is apparently interested in selling DRM-free tracks and has been encouraged by EMI's decision to sell tracks without restrictions. The firm is said to have started talks with major labels.
Figures from Strategy Analytics predict that the global online music market will grow 62% in 2007, to reach $2.7bn (£1.36bn). This is forecast to increase to over $6.6bn (£3.34bn) by 2011.
From ENN: http://www.electricnews.net, 25/04/2007
Amazon UK: http://www.amazon.co.uk

Q1 profits at eBay climb 52%
First quarter profits at eBay rose from $248.3m (£125.5m) in 2006 to $377.2m  (£190.66m) this year - an increase of 52%, writes Total Content + Media. Revenues for the period grew 27% to reach $1.77bn (£890m) from $1.39bn (£700m) a year ago and for the first time were equally divided between eBay's US and overseas businesses. During the quarter 82.9m eBay users sold goods worth $14.28bn (£722m) - 14% up on last year's $12.5bn (£632m). Recent efforts by the firm to improve buyer experience paid off as revenues generated per listing reached $2.13 (£1.08) (from $1.77 (£0.89) in 2006).
Revenues at Paypal were also up, rising 31% to $439m (£221.89m) to account for roughly 25% of eBay's total sales. Skype reported its first profit as revenues rose 123% to reach $77m (£38.92m).
From Total Content + Media: http://www.totalcontentandmedia.com, 19/04/07

eBay UK: http://www.ebay.co.uk

Experian buys Hitwise for £120m
Hitwise has been sold to Experian for $240m (£120m), writes The Guardian. The company will be integrated into Experian's Marketing Solutions division. Using data from ISPs Hitwise tracks nearly 1m website every day and reports on the online activities of over 25m consumers. The firm has grown its customer base by over 40% in the last two years and now has over 1,200 clients including Google, eBay, AXA and HSBC. Hitwise has 200 employees across its New York, London and Melbourne offices and will now join other Experian-owned companies including email firm CheetahMail, consultancy Clarity Blue and the online shopping comparison site pricegrabber.com.
From The Guardian: http://www.guardian.co.uk, 19/04/2007

Hitwise: http://www.hitwise.com

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 Trends

Global broadband population grows 26% during 2006

Figures from the Organization for Economic Co-operation and Development (OECD) show that the number of subscribers to broadband services worldwide grew 26% in 2006, writes ClickZ. The year-end total reached 197m, from 157m at the end of 2005. Per capita 16.9 subscribers/100 inhabitants had access to broadband services (up from 15.5 subscribers in mid-2006 and 13.5 in 2005). The US still has the world's largest broadband population with 29% of all broadband connections (totalling 58.1m subscribers at the end of 2006).
From ClickZ here: http://www.clickz.com, 25/04/2007
OECD: http://www.oecd.org

Half of UK's adults use broadband at home
New figures from Ofcom show that over 50% of British adults now have broadband access at home (from 39% in 2006), writes Netimperative. Over 13m UK homes and small and medium-sized enterprises (SMEs) now have broadband services, up from 9.9m in 2006 and 330,000 in 2001. 23% of those without internet access at home expect to connect in the coming year with 76% saying they will go for broadband services. Bundled services are also growing in popularity: at the end of 2006 40% of all UK adults with home broadband services also took other communications services from the same provider. The report also found that the average broadband connection speed has risen from 1.6 Mbit/s in 2005 to 3.8 Mbit/s in 2006. In February 2007 21% of British adults owned a Wi-Fi enabled laptop, one third of whom had used public Wi-Fi services.
From Netimperative: http://www.netimperative.com, 04/04/2007
Ofcom: www.ofcom.org.uk

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 Company focus: Google

Google buys DoubleClick for $3.1bn

Google has agreed to buy DoubleClick for $3.1bn (£1.6bn), out-bidding Microsoft and Yahoo! In the process, writes Netimperative. The deal values Doubleclick at almost three times the $1.1bn (£560m) it fetched in 2005 and will give Google access to DoubleClick's ad serving technologies and client base (which includes AOL and MySpace). The acquisition will significantly boost Google's revenues from display advertising, consolidating the firm's position in the online advertising sector. The sale should be completed by the end of the year.
From Netimperative: http://www.netimperative.com, 17/04/2007

Google's first quarter profits up 69%
Google's Q1 profits rose 69% to $1bn (£499m) (from $592.3m (£299.38m) in 2006), writes ClickZ. Revenues for the period grew 63% to reach $3.66bn (£1.83bn). The UK saw revenues of $578m (£288m), representing 16% of Q1 revenues (up from 15% in Q1 2006). Combined non-US international revenues totalled $1.71bn (£860m) (47% of total revenues against 42% in 2006). Net sales were up 66% to $2.53bn (£1.28bn). Google-owned sites generated ad revenues of $2.28bn (£1.15bn) (up 76% year-on-year) and representing 62% of total sales.
From ClickZ: http://www.clickz.com, 19/4/2007

Google becomes most powerful brand in the world
Google has overtaken Microsoft in Millward Brown's annual "Brandz Top 100" Most Powerful Brands survey, writes ENN. The list combines both brand value and consumer response. Google more than doubled its brand value since the last survey to be valued at $66.4bn (£33.1bn), ahead of both General Electric ($61.9bn - £31.29bn) and Microsoft ($55bn - £27.80bn). The total value of the top 100 brands has grown by 10.6% in the last twelve months to $1.6tr (£810bn). In the UK, Vodafone is the most valuable brand, followed by HSBC and Tesco. Marks & Spencer had the biggest rise in the past year, tripling its brand value to come fourth in the UK and 68th worldwide.
From ENN: http://www.electricnews.net, 23/04/2007
Millward Brown: http://www.millwardbrown.com

The 10 most powerful global brands of 2007 (plus value)

Source: Millward Brown
Millward Brown: http://www.millwardbrown.com

The 10 most powerful UK brands of 2007

Source: Millward Brown
Millward Brown: http://www.millwardbrown.com

Further Google stories this month in brief:

- Sir Martin Sorrell talks about Google and the DoubleClick purchase
From Brand Republic: http://www.brandrepublic.com, 20/04/2007

- Google launches its Google Checkout online payment system in the UK
From Netimperative: http://www.netimperative.com, 13/04/2007

- Google takes 64% of all US searches in March
From Total Content + Media: http://www.totalcontentandmedia.com, 12/04/07

- Google partners with Clear Channel Communications to sell radio ads. Under the deal the largest radio chain in the US will set aside 5% of ad spots on over 675 radio stations for Google to sell.
From Total Content + Media: http://www.totalcontentandmedia.com, 16/04/07

- Google signs deal with Echostar to create automated system for selling TV ads
From Brand Republic: http://www.brandrepublic.com, 03/04/2007

- Google to sell ads on 400 China Telecom websites
From Bloomberg: http://www.bloomberg.com, 25/04/2007

- Google opens new Latin America HQ in Argentina. Office is third-largest after California and Ireland.
From Total Content + Media: http://www.totalcontentandmedia.com, 13/04/07

 
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 Broadcasting

Freeview overtakes Sky in UK

Freeview is now on the main television set in 8.2m British homes according to new research from GfK, writes Brand Republic. Although BSkyB has 8.4m subscribers this figure also includes viewers in the Republic of Ireland (which Freeview does not serve). In total Freeview is now present in 11m UK homes, when all enabled TV sets are taken into account. Freeview is set to launch its new Freeview Playback digital TV recorder to compete with BSkyB's Sky+ service. The recorder will cost around £150 and will include an electronic TV guide, one-touch recording, pausing of live TV and automatic series recording. According to Freeview 1.7m digital boxes and integrated digital televisions were sold during Q1 and roughly half a million new households selected the service as a primary TV source.
From Brand Republic: http://www.brandrepublic.com, 19/04/2007
Freeview: http://www.freeview.co.uk
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 Statistics

Monthly internet usage statistics for Germany, March 2007

Source: Nielsen/NetRatings Home/Work Panel monthly statistics
Nielsen/NetRatings: http://www.nielsen-netratings.com

Monthly top ten German parent companies for March 2007

Source: Nielsen/NetRatings Home/Work Panel monthly statistics
Nielsen/NetRatings: http://www.nielsen-netratings.com

Top Global Web Properties by Unique Visitors, February 2007

Total Unique Visitors (000), Age 15+
Total Worldwide - Home and Work Locations

Excludes traffic from public computers such as Internet cafes or access from mobile phones or PDAs.

Source: comScore World Metrix, February 2007
comScore: http://www.comscore.com

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