From tiny micro-businesses to the world's largest brands, budget pressures are forcing marketers to find smarter ways to reach customers. No surprise they're finding them online, but the scale and speed of change is surprising. This month we've collected the evidence that the speed of change is increasing. For print publishers and traditional broadcasters it's depressing reading because their survival hinges on new digital strategies; for brands and services, the right strategy can mean twice the value from the same marketing budget; for agencies it means more transparency in the value they add.

Worldwide ad spend is down a massive 12%, but in most countries online ads are still the rising stars. Within most firms the use of online marketing tools are far broader than simple ads, and it's growing even faster. At the heart of that growth remains search engine marketing, where accountability proves seductive for marketers needing a direct response (as well as finance directors needing clear ROI). Google's latest profits are part of that story, testifying the prize for media owners who get it right - and that's the key reason Yahoo and Microsoft finally managed to put differences aside and form their 10 year deal.

At Digital Strategy we've seen this scale of change from inside the doors of many new firms - some now switching over 75% of their budgets onto the web. From global brands to young start-ups, getting the strategy formula right has become the only agenda item.

Email me back if you'd like more on any of the trends we're tracking, or to share comments for publication and links about these trends or what you've seen in the market.

Best from all @ Digital


Danny Meadows-Klue
Founder and Chief Executive
Digital Strategy Consulting

Consumer internet behaviour: UK
Monthly internet use: key indicators for UK web users, June 2009

Internet audience: UK
Time per person for top 10 parent companies, UK June 2009

Largest UK internet sites
UK audience reach for top 10 parent companies, June 2009

Consumer internet behaviour: Worldwide
Monthly internet use: key indicators for web users based on global data, May 2009

Total internet users: key markets
Active internet users connected at home, May 2009

Advertising spend: Worldwide
Worldwide advertising spending will reach $421 billion in 2009, June 2009

Advertising spend: North America
Ad spend in North America will decrease by 1.6% from 2009-13, June 2009

ZenithOptimedia: global online advertising to grow 10% in 2009 against total adspend falls
The latest global adspend forecast from ZenithOptimedia has revised the firm's 2009 prediction from -6.9% to -8.5%. The firm's downgraded figures follow lower than expected results for Q1. Not all markets are in decline, with 25 of the 79 analysed still showing growth. Overall ZenithOptimedia expects mild recovery in 2010, though neither North America nor Western Europe are expected to return to growth until 2011.
Online advertising remains the only sector expected to grow in 2009. The firm anticipates online advertising will increase 10.1% during 2009 (to $56,797m or £34,443m) reaching 15.1% of global adspend by 2011 (from 10.5% in 2008). Newspapers however will continue to decline, falling to 22.7% below their 2007 peak, by 2011.
ZenithOptimedia also expects 2009 to be the year China overtakes the UK as the world's fourth largest ad market, on the back of 5.4% growth. In contrast the firm estimates total advertising spend in the UK will drop by 10.5% during 2009, with a further fall of 1.4% in 2010 before the market recovers in 2011.
ZenithOptimedia: http://www.zenithoptimedia.com, 06/07/2009

Worldwide advertising spend forecasts
Global advertising recession 2009, minor recovery in 2010-11, 2007-11

Worldwide advertising spend forecasts
Global advertising recession 2009, minor recovery in 2010-11, 2007-11

Advertising spend forecasts: only internet grows
Advertising forecasts show only internet advertising continues growing, 2007-2011

Advertising share by medium: Worldwide
Internet ad expenditure set to overtake magazine spend in 2009, 2007-2011

Search marketing records lowest drop in Bellwether
Total UK advertising budgets were revised down for the seventh consecutive quarter according to the latest Bellwether report, with only 10% of firms planning to spend more in 2009 (against 38% planning to cut budgets), writes Media Week. Online search remained the least affected sector with a 5.4% decrease, followed by direct marketing (7.5%), online advertising (7.9%), sales promotion (8.8%), main media (18.4%) and "all other" (23.8%).
Overall, the report found that budgets are being cut at a slower rate than the previous quarter.
Media Week: http://www.mediaweek.co.uk, 13/07/2009
Institute of Practitioners in Advertising (IPA): http://www.ipa.co.uk

UK online adspend slows but market share rises
Growth in online adspend in the UK will reach just 0.9% during 2009, according to new data from eMarketer. According to the firm, online is finally feeling the pinch from advertising budget cuts - in particular those in the financial, motoring and retail sectors. eMarketer expect growth to return slowly during 2010, eventually approaching 10% in 2011.
However, the firm also notes that online adspend is increasing its share of the total UK ad market - eMarketer forecast that this year it will take over 20% of all UK adspend (£3.38bn).
eMarketer: http://www.emarketer.com, 07/07/2009

Internet shoppers trust brand websites as much as online consumer opinions
The latest Nielsen Global Online Consumer Survey has found that brand websites are as trusted as online consumer opinions. Recommendations from personal acquaintances are the most trusted form of advertising (with 90% approval) while both online consumer opinions and brand websites share second place (with 70% approval).
Brand sponsorships have seen the highest increase in trust levels since 2007, rising 15% (up from 49% in April 2007 to 64% in April 2009).
The study polled over 25,000 online shoppers across 50 different countries.
From Nielsen Online: http://www.nielsen-online.com, 08/07/2009

Who do consumers trust?
People having some degree of trust in each form of promotion, worldwide, April 2009

Trust in advertising: Worldwide
Forms of advertising ranked by changes in levels of trust from April 2007-09, April 2009

Display ads generate online brand and site searches
The number of internet users who respond to display ads by carrying out search queries is almost as high as those who repond by clicking directly on the ads themselves, according to new research from iProspect, writes KenRadio. Internet users respond to display ads as follows:

• 31% click directly on the ad
• 27% search for the product, brand or company through a search engine
• 21% try to navigate straight to the firm's URL
• 9% look for more information through social media sites

In total, the survey found that 52% of internet users actively respond to online display ads. Furthermore, when long-term response is studied, 49% of internet users carry out an online search for the product, brand or company from the ad they were exposed to.
From KenRadio: http://www.kenradio.com, 10/07/2009
iProspect: http://www.iprospect.com

Internet advertising effectiveness: US
Response to viewing advertising on ad-supported website, June 2009

Internet advertising effectiveness: US
Response to viewing advertising on ad-supported website, June 2009

Ad skipping on course for 20% as DVR sales rise in US
According to DVR Research Institute, 20% of US viewers will actively skip TV ads by 2011 (from 6% currently), as DVR sales continue to rise, writes Media Life. The firm estimates that DVR-enabled households will grow to 50% during the same period, from about a third in 2009. DVR Research Institute also notes that viewers are more likely to skip ads the longer they use their devices.
Rival data from Leichtman Research Group suggests that the 50% ownership level won't be reached until 2012 with ad skipping growing to 16%. However, both studies agree on the general trend, as do marketers: 83% now believe that the growing ownership of DVRs will hit the effectiveness of TV campaigns.
From Media Life: http://www.medialifemagazine.com, 02/07/2009
DVR Research Institute: http://www.dvrresearch.com

Online ad inventory: Telegraph, Bauer and News International could cut out sales networks
Recession forces innovation, and some of the UK's flaghip online publishers could finally overcome their differences and pool advertising inventory, writes Brand Republic. A dozen previous attempts may have collapsed, but the new Project Alliance stands a fighting chance for three reason: the media groups can't afford to continue running high volumes of unsold (or low grade CPC-sold) inventory, compared to the reach of Yahoo, Facebook and other top 10 sites their audiences are still far too small for many brands so the only route to mass market campaigns has been through sales houses that take a high margin and sell at low prices, and thirdly WPP's drive to improve its own margins (they have been pushing for an alliance for some time). If a deal is struck it will open up a more efficient direct advertising channel, and gives a model other countries are highly likely follow.
From Brand Republic: http://www.brandrepublic.com, 30/06/2009

Google quarterly profits reach $1.5bn
Google has reported post-tax profits of $1.48bn (£901m) for the last quarter - an increase of 18%, writes Brand Republic. Revenues reached $5.52bn (£3.36bn) - up 3% from the previous quarter. International revenues accounted for over half of all Google's cash flow ($2.91bn or £1.76bn), though in the UK, revenues were effectively down 8% year-on-year as a result of the weakened pound. Operating expenses were down 4% on last year, on the back of staff cuts of nearly 400 people.
The firm has also announced plans to launch its own operating system in 2010, built around its Chrome web browser. Google Chrome OS will first be released for netbooks before being rolled out for all other Windows, Mac and Linux-based systems. The operating system will be primarily web-based and open source, and Google intend to release the source code by the end of the year.
From Brand Republic: http://www.brandrepublic.com, 17/07/2009
Google: http://www.google.com

Facebook audience: 250m users
Facebook announces a quarter of a billion people now have profiles on its rapidly expanding platform, writes The Daily Telegraph. CEO Mark Zuckerberg pledged continued product development: "As we celebrate our 250 millionth user, we are also continuing to develop Facebook to serve as many people in the world in the most effective way possible." The news broke in the same week rival social media platform MySpace announced plans to refocus following the scaling back of international teams. Don't write it off as a battle won, but the growth rates on Facebook clearly outrank MSN, MySpace, Yahoo and even Google in terms of social media adoption. For examples of brands using Facebook effectively in their marketing, see case studies on www.DigitalTrainingAcademy.com/socialmedia.
From Telegraph.co.uk: http://www.telegraph.co.uk, 17/07/2009
Facebook: http://www.facebook.com

Amazon buys Zappos, plans ads on Kindle
Amazon is buying online shoe retailer Zappos for $928m (£562m), writes Brand Republic. Amazon founder Jeff Bezos announced the deal on YouTube, while Zappos founder Tony Hsieh simultaneously reported it on Twitter. Zappos grossed almost $1bn (£606m) in 2008 and is known for its fierce brand loyalty (boasting over 1m followers on Twitter) and high quality customer service.
Amazon has also revealed plans to place contextual ads directly within ebooks on its Kindle electronic book reader. The firm has filed a patent for opt-in ads which will directly relate to the material within downloaded books, enabling the publisher to make money from content including rare and out-of-print books.
From Brand Republic: http://www.brandrepublic.com, 23/07/2009
Amazon UK: http://www.amazon.co.uk

News Corp won't buy Twitter, keeps MySpace
News Corp owner Rupert Murdoch is not interested in buying popular microblogging site Twitter and will not sell its struggling social network MySpace, writes Reuters. Speaking at the Allen & Co investment bank's Sun Valley media and technology conference, Murdoch said Twitter would be a tough investment to justify because it has not yet come up with a sustainable way to make money. "Be careful of investing here," he said of Twitter.
Twitter has been the subject of much take-over speculation in recent times. Last year, the micro-blogging service turned down a offer from Facebook, and has since been linked with Google, Micorosoft and Apple. Twitter itself isn't short of cash, securing over $35m (£25m) in third round funding from investors in February.
From Reuters: http://www.reuters.com, 09/07/2009
MySpace: http://www.myspace.com

Who should Twitter: The rise of the 'Twinterns'
An increasing number of companies are entrusting interns with their corporate Twitter feeds, writes MSNBC. One such firm, Pizza Hut has employed their first official 'Twintern' at their headquarters in Dallas. Alexa Robinson, 22, was selected out of thousands of applicants, and now spends much of the day on the free micro-blogging service, sending out messages about special promotions, responding to customer complaints, and searching Twitter for mentions of Pizza Hut.
While some corporations, such as McDonalds and Starbucks, keep their Tweets within their corporate communications teams, Alexa's posts are not monitored by superiors. Despite the threat of another PR disaster akin to Habits hashtag fiasco, the gambit appears to have paid off so far, with followers up from 3,000 to more than 13,000 and successfully executed a sales promotion over the Fourth of July weekend.
From MSNBC: http://www.msnbc.msn.com, 13/07/2009
Twitter: http://www.twitter.com

29.4m Brits visited social networking sites in May 2009
Newly released data from comScore World Metrix has found that 80% of all UK internet users (29.4m people) visited at least one social networking site during May - a 9% year-on-year rise.
On average, visitors spent 4.6 hours during the month visiting social networking sites (second only to instant messaging with 8.6 hours).
25-34 year-olds are the leading social networkers, with 89% visiting such sites during the month. However, even the 55+ age-group still achieved penetration rates of 67%.
Facebook was the most visited social networking site (with 23.9m visitors), followed by Bebo (8.5m), Windows Live Profile (6.9m) and MySpace sites (6.5m). Traffic to Twitter grew over 3,000% year-on-year, reaching 2.7m visitors in May.
From comScore: http://www.comscore.com, 20/07/2009

Social networking audiences: UK
89% of 25-34 year olds visited a social networking site, May 2009

Top 10 social networking sites: UK
Facebook dominates, though Twitter's growth is huge, May 2009

Newsquest: classified revenue collapse continues
The collapse of classified advertising revenues has been accelerated by recession, but in spite of the hopes of most publishers they will never recover - and the pricing structures for online classifieds will never make up for the shortfall. Here in the UK, local newspaper publisher Newsquest (part of Gannett) is the latest to declare results with classified revenues down by almost half (45.2%) year on year. Second quarter revenues overall were not much better, at 36.9% down. The migration of marketing activity away from newspapers is something we've been tracking for over a decade, yet the newspaper industry (and its investors) have remained consistently slow at developing new revenue and product strategies both online and offline. For the sector that pioneered web publishing in the early nineties, and showed such promise at transitioning into the digital economy, the lack of continued innovation has come at the most heavy price.
From DigitalStrategyConsulting.com: http://www.digitalstrategyconsulting.com, 16/07/2009

 Comment: tracking the digital networked society for over a decade
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