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

April 2009

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Digital Strategy Consulting


There's a polarizing effect in the digital media and marketing sectors: firms with good business models, strong products and great people are weathering the storm, but those without are seeing sustained revenue falls as customers shift.

Recession is accelerating structural change, forcing brands to find new ways to connect with customers and improve their supply chains and value chains. This is across retail, media and marketing services and is unlocking new disruptive business models. What emerges after the storm has passed will be an advertising and media industry with a fundamentally different structure.

Our review of the last month's research and company announcements confirms this. The vast majority of advertisers are boosting their online spend, while heavily cutting classic media. Social networks continue to leap forward - with Facebook putting on 50m new customers since January to cross the 200m mark - and the race to own the mobile space has never been faster.

Smart digital strategies will be the deciding factor for many, so enjoy this month's research digest and let us know if you need more on any of the trends.

Best from all @ Digital


Danny Meadows-Klue
Founder and Chief Executive
Digital Strategy Consulting

 

Advertising

Online ad expenditure up 17% to reach £3.35bn in 2008

Online adspend in the UK grew 17.1% during 2008 to reach £3.35bn, a year-on-year increase of £540m, according to IAB UK's bi-annual online advertising expenditure study. In comparison, total UK advertising fell 3.5% in the same period to £17.5bn. In total, online advertising accounted for 19.2% of all UK advertising during 2008 (from 15.5% in 2007). However this peaked at 19.8% in the second half of the year, overtaking total press display advertising. The UK is now the world's leading online advertising market: £1 in every £5 of ad budgets is spent online.
Paid-for search remained the leading sector, accounting for 59.3% of all online advertising, with year-on-year growth of 22.7% (to £1.987bn).
IAB UK: http://www.iabuk.net, 01/04/2009

US online adspend tops $23.4bn in 2008
The latest Internet Advertising Revenue Report from the IAB US and PricewaterhouseCoopers reveals that total online ad revenues totalled $23.4bn (£15.77bn) in 2008, up 10.6% on 2007 ($21.2bn or £14.28bn). The figures represent the fifth year of consecutive record results, although growth slowed by 50% to the lowest rate since 2002. Q4 revenues reached a record $6.1bn (£4.11bn), passing the $6bn barrier for the first time on year-on-year growth of 2.6% (up $154m (£104m) for $5.9bn (£3.98bn) in Q4 2007). Search advertising continues to hold the lion's share of online adspend accounting for 45% of revenues ($10,546m or £7.11m) from 42% in 2007 ($8,805m or £5.93m).
Projections from eMarketer for 2009 expect growth to continue to slow, reaching 4.5% during the year on total online adspend of $24.5bn (£16.5bn). However, much bleaker figures from Screen Digest predict a 5% fall in online adspend during 2009.
IAB US: http://www.iab.net, 30/03/2009

Online Advertising Spend: US

Digital Strategy - Most searched for brands: UK

Source: IAB UK: http://www.iab.net

70% of European advertisers increase online ad budgets
The annual Internet Ad Barometer report from the European Interactive Advertisers Association (EIAA) has found that 70% of European advertisers intend to increase their online adspend during 2009. In addition, only 8% of firms are intending to cut their online budgets this year. Advertisers are primarily cannibalising other media budgets in order to fund the increases: 37% of firms are cutting TV budgets, 32% are cutting newspaper budgets and 46% are cutting magazine budgets. Online is increasingly playing a bigger part in ad strategies and 47% of firms now see it as "an essential factor within the marketing mix" (up from 38% in last year's study). 16% of advertisers are now also increasing their pan-regional campaigns (from 11% in 2008).
EIAA: http://eiaa.net, 22/04/2009

Global online adspend to grow 8.6% as total media budgets fall
The latest forecast from ZenithOptimedia predicts that global media spend will decrease by 6.9% during 2009, writes Brand Republic. In particular the firm expects drops of 8.7% in the UK, 8.3% in the US, 5.5% in Germany and 5% in Japan. All forms of media will see cuts except for online which is predicted to grow 8.6% worldwide this year to $54bn (overtaking magazines for the first time). Online's share of global adspend will also grow, from 10.4% in 2008 to 12.1% in 2009, Only television will also increase its share (from 38.1% to 38.6%) though actual spend will fall 5.5% to $173bn.
The firm now expects positive growth to return in 2010, with the global spend forecast to rise 1.5%.
From Brand Republic: http://www.brandrepublic.com, 14/04/2009
ZenithOptimedia
: http://www.zenithoptimedia.com

Bellwether report sees signs of confidence
The IPA's latest Bellwether survey indicates that the rate of adspend budget cuts slowed in Q1 2009, writes Brand Republic. The IPA also found that the number of firms with positive outlooks grew from 5% to 14%. The IPA believes that the bottom of the market has now been reached, although the majority of firms are still reporting advertising budget cuts. However the proportion of firms who believe that their prospects are worsening fell from 63% last quarter to 44%.
In total, traditional media (including television, press, radio and outdoor) saw cuts of 34% during Q1. Online advertising and search also saw budget cuts, though these remained much lower at 10% and 2.4% respectively. Overall though, online continued to grow its share of total UK ad budgets at the expense of other sectors.
From Media Week: http://www.mediaweek.co.uk, 06/04/2009
IPA
: http://www.ipa.co.uk

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Ecommerce

Online sales rise in US

New data from Forrester Research and Shop.org has found that online retail in the US rose an average of 11% in the first three months of 2009, writes eMarketer. Of 80 firms surveyed 58% saw a year-on-year rise in quarterly online sales.
Further research from Citi Investment Research predicts that US online retail sales will grow 4.4% this year (reaching $141bn or £95bn), rising to 16.5% in 2010.
From eMarketer: http://www.emarketer.com, 27/04/2009
Forrester Research
: http://www.forrester.com
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Companies

Google revenues up year-on-year but down on previous quarter

Google has posted its first ever quarterly drop in revenues, writes Netimperative. The firm saw revenues of $5.51bn (£3.7bn) during Q1 2009 - a 3% drop from the last three months of 2008. However year-on-year revenues were up 6% from the first quarter of 2008. Income for the period reached $1.42bn (£959m), from $1.31bn (£884m) the year before. Google-owned sites generated 67% of all revenues (equivalent to $3.7bn or £2.5bn) - up 9% from last year. Revenues from AdSense were down 3% on last year and accounted for 30% of total revenues ($1.64bn or £1.10bn).
In other news, Google has been named the world's first $100bn-brand in the latest BrandZ survey. The firm's brand value has been put at $100,039m (£67,384m) - a 16% year-on-year rise. Microsoft and Coca-Cola came second and third respectively. Despite the global economic crisis, the value of the top 100 brands grew 2% to $1.95tn (£1.31tn). 85 of this year's top 100 brands were in the top 100 list last year.
From Netimperative: http://www.netimperative.com, 17/04/2009
Google
: http://www.google.com

Microsoft posts first ever quarterly decline
Revenues at Microsoft have been hit by the global economic slowdown as sales of PCs have fallen, writes Brand Republic. Revenues for the quarter ending March 31 were down 6% year-on-year reaching $13.65bn (£9.31bn). Revenues from the firm's PC software division dropped 16%, while those from its internet division were down 14%. Profits were down 32% though still managed to reach $2.98bn (£2bn) on the back of cost-cutting measures and 5,000 job cuts. Shares rose 3% on the news as Microsoft announced further cost-cutting measures.
From Brand Republic: http://www.brandrepublic.com, 24/04/2009
Microsoft: http://www.microsoft.com

Apple posts record $1.21bn profit
Growing iPhone sales helped Apple generate revenues of $8.16bn (£5.61bn) in the three months to 28 March - up 9% from $7.96bn (£5.6bn) the previous year, writes Telecoms.com. Profits reached a record $1.21bn (£832m). Apple sold 3.79m iPhones during the period, a 123% year-on-year increase in sales.
In further news the firm has also revealed that consumers have downloaded over 1bn applications from its App Store since its launch in August 2008. The service now offers over 35,000 applications in 77 countries.
From Telecoms.com: http://www.telecoms.com, 23/04/2009
Apple
: http://www.apple.com

Profits up 24% at Amazon
First quarter results for Amazon beat expectations as revenues grew 18% to $4.89bn (£3.33bn), writes The BBC. Profits were up 24% to $177m (£121m) as sales for the firm's new Kindle 2 e-book reader soared. US sales were up 21% during the quarter, with overseas sales growing 15% during the same period. The firm now expects both sales and profits to rise again during the second quarter.
Amazon was recently voted the second most-popular retailer in the UK behind Tesco, in a TNS Worldpanel poll.
From BBC News: http://news.bbc.co.uk, 24/04/2009
Amazon UK
: http://www.amazon.co.uk

Revenues fall 13% at Yahoo!
Yahoo! has announced it is to cut 5% of its workforce following news that its revenues dropped 13% to $1.58bn in the first quarter of this year, writes Brand Republic. Year-on-year profits fell 78% to reach $118m (£81m) during the same period.
The firm is continuing its expansion into the mobile content sector with the UK launch of Yahoo! Mobile. The site provides easy one-stop access to Yahoo search, email and popular social networks in addition to instant message, address book and calendar tools.
From Brand Republic: http://www.brandrepublic.com, 22/04/2009
Yahoo! Mobile
: http://new.m.yahoo.com

Facebook signs up 200m users
Facebook has added over 50m new users since January 2009, bringing its total membership to over 200m - nearly half of whom are in Europe, writes Brand Republic. Worldwide over 500,000 new users are joining the site every day. According to the figures more than one in four people with internet access visited Facebook in February. Significantly the majority of new users are no longer of student age - during the first quarter the fastest-growing segment of Facebook's US population was aged 26 to 44. Data from comScore also shows that Facebook accounts for one third of all social networking in Europe. In February 2009 Facebook accounted for 4.1% of all minutes spent online in Europe, up from 1.1% in the year before. The site's largest European audience is in the UK with 22.7m visitors (up 75% year-on-year).
According to Silicon Alley Insider, if Facebook were a country, it would come fifth in the world after China, India, the US and Indonesia.
From Brand Republic: http://www.brandrepublic.com, 09/04/2009
Facebook
: http://www.facebook.com

Television advertising icon Kellogg's change channels
It's a stepchange for the brand, writes printweek.com. Every brand is wrestling with the role of the web in their media mix, but the announcement of breakfast cereals giant Kellogg's that TV is being dropped for their next launch in favour of print and online is a massive psychological step in FMCG brand strategy.
From Printweek.com: http://www.printweek.com, 01/04/2009
Kellogg's
: http://www.kelloggs.co.uk

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Mobile

Mobile web use higher in China than US
According to new research from Netpop Research, 56% of subscribers with web-enabled phones in China (102m people) use them to go online, writes ClickZ. In comparison only 31% of people in the US with web-enabled phones use them to connect to the web (18m users). Chinese mobile users spend between 2-3% of their monthly incomes on mobile voice and data subscription plans, while in the States users are more likely to spend only 1%. In contrast, costs for premium content tend to be lower in China: mp3s cost around $0.25 compared to $1 in the US.
From ClickZ:: http://www.clickz.com, 03/04/2009
Netpop Research: http://www.netpopresearch.com
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Comment

Viral marketing: Smart regulations arrive in US?
Latest moves from the Federal Trade Commission in the US suggest the long awaited change in culture for social marketing online is near to arrival writes the Financial Times...
More...

Maxim: Web only
Latest in the dozens of magazines that are stopping their presses. Dennis Publishing lads' mag Maxim is a flagship title, confirming that if they can't get the economics to stack up then most of the sector will head online-only...
More...

Classified ads migration to web: still mid-way writes Hitwise in their latest US research figures
In a year that will see the print editions of many newspapers fold, you could be forgiven for thinking that the switch to web was complete. Not so. Latest data on the US market shows a massive 84% leap in year on year traffic growth with free-to-post CraigsList now taking a whopping 97 of the 100 top sites...
More...

Twitter switch for Guardian, after 188 years of ink
Loving the April fools story in Britain's most digitally savvy national newspaper: "newspaper to be available only on Twitter messaging service, experts say any story can be told in 140 characters"...
More...

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Statistics

Internet behaviour in the UK, March 2009

Digital Strategy - Internet behaviour in the UK, March 2009

Source: Nielsen Online home and work panel monthly statistics
Nielsen Online: http://www.nielsen-online.com

Internet audience in the UK (time per person, March 2009)

Digital Strategy - Internet audience in the UK (time per person, March 2009)

Source: Nielsen Online home and work panel monthly statistics
Nielsen Online: http://www.nielsen-online.com

Internet audience in the UK (audience reach, March 2009)

Digital Strategy - Internet audience in the UK (reach, March 2009)

Source: Nielsen Online home and work panel monthly statistics
Nielsen Online: http://www.nielsen-online.com

Total internet users: Key markets (January 2009)

Digital Strategy - Total internet users: Key markets (January 2009)

Source: Nielsen Online, 2009
Nielsen Online: http://www.nielsen-online.com

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