Bhupendra Kunwar Blog

2 Jan 2006

What to watch for in 2007….

* Online Ad Spending Will Hit $20 Billion
* Some Money and Lots of Hype for Online Video Advertising
* Social Networks Are Set for a $1 Billion Windfall
* Downloadable Games Will Get Hotter
* Thirty-Seven Million Strong: A ‘Minority’ Bigger than Canada
* Mobile TV Arrives
* US B2C E-Commerce Will Cruise Past $200 Billion
* The Retail Power of Word-of-Mouth
* Broadband Services Will Matter as Much as Speed
* DVRs Pump Up TV Viewing

Online Ad Spending
Total US spending on Internet advertising will reach at least $19.5 billion in 2007. This is 19% more than total spending in 2006. This rate of growth is sharply down from the 30% or more that has been the norm for several years. However, even this reduced level of year-on-year growth would be considered spectacular for most industries. With total US advertising spending projected to grow by a mere 1.4% in 2007, the shift to the Internet is clearly set to maintain its heady momentum in 2007.

Online Video Advertising
Internet video advertising will get more media play than dollars in 2007. eMarketer projects that spending on this format will total $775 million in 2007. To put this figure in perspective, remember that it represents only 4.0% of projected US online ad spending. Although marketers are increasingly keen on including video in their online ad campaigns, they will continue to face a shortage of appropriate premium placements.

Social Networks
Worldwide ad spending on online social networks should top $1 billion in 2007, up from an estimated $445 million this year. Fueling this growth will be factors such as international expansion, “niche” networks and Google’s deal to supply search technology to MySpace.

Video Game Downloads
Digital downloading of video games will take off in 2007, and by 2010 this distribution method will account for 22% of all worldwide game software revenues. Besides online stores pushing the new generation of games consoles, look for Time Warner’s GameTap service to position itself as the HBO of PC gaming, focusing on original content to drive its subscription service. Video-on-demand (VOD) marketers may find their skills in demand for promoting these platforms, which play on subscriber taste for instant gratification via download.

Hispanic and African-American Internet Users
The number of African-American and Hispanic Internet users in the US will rise to 37 million, from 35 million in 2006. This market will continue to grow faster than the total US online population for several more years, giving advertisers with the imagination to reach out to them fresh opportunities. (The population of Canada is 33 million.)

Mobile TV
Mobile TV took its first baby steps in 2006 with professional content. The World Cup offered a first glimpse of what the broadcasting future for mobile might look like, and in 2007 another crucial element will be added to the mobile-TV mix — user-generated content (CGC). Given the impact the Web equivalent of this development has had in 2006, advertisers and marketers are likely to face a dizzying array of new choices.

US B2C E-Commerce
US B2C online sales will comfortably pass the $200 billion mark in 2007, reaching a new record total, which eMarketer projects will be $223 billion. Online retail sales will account for $132 billion of this, with online travel accounting for $91 billion. Some of the impetus for this growth will come from existing online buyers increasing their spending. A significant force driving online travel sales is the demand from travel-loving and relatively affluent baby boomers.

Word-of-Mouth
The influence of consumer generated content (CGC) on US consumers’ purchase decisions will continue to grow in 2007. A recent study from market research firm Compete found that consumers were more likely to be swayed by CGC than by information coming directly from brand advertisers and marketers.

Broadband Services
When broadband emerged, it was distinguished from dial-up by its always-on nature and the greater bandwidth available to users. These characteristics were seen as reason enough to trade up from dial-up. Now, however, broadband is about value-added services and is driven by providers bundling voice, video and data together. Services such as voice over Internet protocol (VoIP) are approaching the 30% penetration range. eMarketer predicts that one in four broadband households in 2007 will subscribe to a VoIP service, rising to nearly 40% of broadband households by 2010.

DVRs and TV Viewing
The alarmist claims that digital video recorders (DVRs) and video-on-demand (VOD) would cause the death of TV and the loss of billions of dollars worth of advertising dollars are increasingly looking just plain wrong. TV distribution and access are changing and audiences are increasingly fragmented. However, every challenge presents an opportunity. More people will watch more TV and video content in the future, not less. They will just be doing so in different ways — via the TV, the Internet, the PC and their portable devices. eMarketer predicts that VOD will be in 30% of US TV households by the end of 2007 and that DVRs will be in 30% of TV households by 2009.

http://www.emarketer.com

18 Dec 2006

Online shoppers set a single-day spending record last week - and broke it two days later - while holiday season spending is so far up 25 percent from last year, according to comScore.

During the first 45 days of the holiday season (Nov. 1 - Dec 15), total online retail (non-travel) spending reached $19.5 billion, a 25-percent increase from the $15.7 billion in during the corresponding period in 2005. And on Monday, Dec. 11, consumers set a single-day record for online spending with $661 million - and two days later broke that record with $667 million spent online.

“The growth rate of online retail spending accelerated during the latter part of last week, with sales on Friday, December 15, growing 38 percent versus the corresponding day last year,” said Gian Fulgoni, chairman of comScore Networks. “This demonstrates consumers’ willingness to rely on retailers’ late-season shipping guarantees.”

The growth rate versus a year ago accelerated toward the end of the week, demonstrating that consumers are continuing to shop online later this season.

“Retailers have been aggressive this year with their online marketing efforts, targeting consumers with early-season promotions,” said Fulgoni. “And now they’re looking finish off the season strong by tempting consumers to continue shopping online later, with guarantees of on-time delivery for items purchased as late as December 18.”

News Source: http://www.marketingvox.com/

14 Dec 2006

Some 75.6 percent of B2B marketing executives say they plan to increase their online budgets next year, according to BtoB Magazine’s 2007 Marketing Priorities and Plans survey of 569 B2B marketing executives.

Moreover, 62.7 percent of B2B marketing execs plan to increase their overall marketing budgets in 2007, up slightly from the 60.7 percent who said so in 2006. BtoB’s survey also found that customer acquisition is the primary marketing goal for 2007 (62.3 percent of survey respondents), followed by brand awareness (19.5 percent) and customer retention (11.0 percent).

The largest share of online marketing budgets (31.7 percent) will go toward website development, according to BtoB’s survey. Email follows with 21.8 percent, search with 18.7 percent, and webcasts at 8.8 percent. Banner advertising will receive only 5.9 percent of B2B online marketing budgets, and sponsorships 5.5 percent.

Online video is expected to receive 2.7 percent of the online marketing budget in 2007. Blogs, RSS, product listings and lead-generation programs will together account for 4.9 percent.

Overall, some 50.2 percent of B2B marketers said they plan to increase spending on direct mail next year, and 44.1 percent said they plan to increase spending on events. Print, broadcast and outdoor advertising budgets will not be significantly upped in 2007, according to the BtoB survey.

News Source: http://www.marketingvox.com

21 Nov 2006

comScore Networks released its U.S. e-commerce sales estimates for the third quarter of 2006 and forecast for the full year, estimating that non-travel e-commerce will break the $100 billion threshold for the first time.

In the third quarter, online retail (non-travel) spending increased to $23.1 billion (up 23 percent from a year earlier), while travel spending reached $18.2 billion (up 9 percent), despite a slowing rate of growth, comScore reports. Overall, total online spending by consumers reached $41.3 billion in the third quarter - a 16 percent increase from the year-earlier period.

Some retail categories far outperformed the average year-over-year growth of 23 percent, including consumer electronics (excluding PC Peripherals), which rose 42 percent, and apparel & accessories, up 32 percent; the sport & fitness and computer software (excluding PC games) categories rose 29 percent and 27 percent, respectively.

Year-to-date online spending (travel and retail) remains strong and is on pace to reach $170 billion in 2006. Through the first three quarters of 2006, total e-commerce spending rose 19 percent compared with last year, reaching $122.1 billion. Retail spending increased 24 percent, reaching $69.1 billion; online travel spending increased 13 percent, to $52.9 billion.

News Source: http://www.marketingvox.com

16 Nov 2006

A new report by JupiterResearch estimates that $128 billion in travel will be spent online in the United States in 2011. The study, titled “US Travel Forecast, 2006 to 2011,” also predicts that 38 percent of travel revenue will be made online in 2011. Higher fares and more people flying will be the main drivers of the increase in total online air travel revenue, which will grow from $49 billion this year to $72 billion by 2011, according Jupiter.

“Online travel revenue will continue to grow strongly from $85 billion in 2006,” said Diane Clarkson, analyst at JupiterResearch and lead author of the report. “Factors that will spur online spending are greater consumer wallet share, increasingly sophisticated products available online, and improved online compliance in business travel.”

The report also predicts that hotel reservations will continue to move away from the telephone, as more customers make their reservations online.

News Source: http://www.marketingvox.com

07 Nov 2006

Online advertising spend from companies in the media and entertainment, financial services, and travel and automotive categories will account for the majority of online advertising spending within five years.

Online advertising spend in those four categories will total $11.5 billion in 2011, according to a new JupiterResearch report, “US Online Category Advertising Forecast, 2006 to 2011.” That amount will account for 57 percent of all online ad spending that year. “Media & entertainment and financial services advertisers benefit from business models that work well online,” said Emily Riley, JupiterResearch analyst and lead author of the report.

In 2011, automotive and travel advertisers will be the third and fourth largest contributors, respectively, to online spending, following financial services in second place, according to Jupiter. The largest online advertiser category will be media & entertainment, and it will also account for over one quarter of search spending overall.

“Audience fragmentation and ecommerce patterns will continue to drive brand and direct response advertisers to shift off-line budgets online,” said David Schatsky, president of JupiterKagan. “With consumers spending as much time going online as watching television - a median of 14 hours per week - the shifting of budgets to online advertising is inevitable.”

News Source: http://www.marketingvox.com

1 Nov 2006

Are your Web surfing fingers getting tired?

There may be a reason. Netcraft, an Internet monitoring company that has tracked Web growth since 1995, says a mammoth milestone was reached during the month of October.

“There are now 100 million Web sites with domain names and content on them,” said Netcraft’s Rich Miller.

“Within that, there are some that are busy and updated more often, and that represents the active sites, which are at about 47 or 48 million,” he said.

Bloggers, small businesses, and simplicity have combined to create the dramatic growth of sites, much of it just in the past two years.

“The bottom line is it’s much easier to create a Web site nowadays, and it’s much easier to make money with a Web site,” said Miller.

Netcraft uses the domain name system to identify Web sites, check how many of them are in a particular location, such as what operating system and Web server software they’re running, and then publishes its information in a monthly report.

There were just 18,000 Web sites when Netcraft, based in Bath, England, began keeping track in August of 1995. It took until May of 2004 to reach the 50 million milestone; then only 30 more months to hit 100 million, late in the month of October 2006.

Netcraft says the United States, Germany, China, South Korea and Japan show the greatest Web site growing spurts.

Today there are seemingly endless Web sites for shopping, social networking, and, of course, sleaze.

But what was the subject of Web site number one in 1989?

“When the Web was started, it was started as a mechanism for sharing high energy particle physics data,” said Professor Rebecca Grinter of Georgia Tech’s College of Computing.

The creator of that Web site, Tim Berners-Lee, wanted experts to be able to share data on particle smashing, even if they weren’t at CERN in Switzerland where he was doing research. CERN, in Geneva, is the European Organization for Nuclear Research.

Research facilities and universities soon started seeing benefits of this new tool for things as lofty as nuclear physics and as mundane as sharing restaurant recommendations.

Even today CERN proudly proclaims on its home page, “The world’s largest particle physics laboratory, where the Web was born!”

It did not take long for this technological baby to flourish.

“As is true of many things, if you teach a lot of students how to do something, these students go somewhere, and around ‘96, lo and behold, you see this much more significant transition of the Internet,” said Grinter.

Soon, a Web “explosion” took place when businesses realized they could use the Internet to make money.

“Web sites begin to be incorporated into advertising. So that just sort of raises the awareness of the general public,” said Grinter.

And by the mid-’90s the cost of personal computers had fallen enough so that the Internet began entering peoples homes and schools as well as their workplaces.

The cost, and the complexity of creating Web sites have both diminished since the beginning of the 21st century.

Computer users no longer have to be experts in HTML, or hypertext markup language, to be masters of their own Web sites.

“There have been price wars going on in both the domain name and Web hosting industries for some time now, and as a result it’s very affordable to create your own Web site, and the tools, the software being offered by these companies are much better,” said Miller.

Blogs and social networking sites link family, friends and experts in just about everything.
Bond and belong

“What we’ve seen is people finding interesting new ways to use the Web to showcase their information and their expertise; particularly in niches in all kinds of subjects where it’s really just opened the door to new uses of the Web,” said Miller.

Whether it is sharing photographs on Flickr.com, showing off an amateur video on YouTube, or looking for a mate on Match.com, Web sites have also become a way to bond and belong.

“The history of humanity is the history of being part of a group, having a group mentality, and the Internet makes a whole other set of those groups possible,” said Grinter. “And they don’t have to be physically proximate to you, you can create content for people who are physically distant,” she said.

So will a URL someday be as common as a birth name and a Social Security number?

For some celebrities, it already is. Angelina Jolie and Brad Pitt registered domains for all three of their children.

And in both the business world and the social scene, a Web site is now an identifier almost as common as a phone number or an e-mail address.

“The Web has gone from being a very straightforward thing where you put some text and perhaps some images, to being this incredibly powerful medium in and of itself. You can engage so much more dynamically, and so many more people are doing so many more things. And who knows what will come about tomorrow?” said Grinter.

News Source: http://www.cnn.com

23 Oct 2006

Some 75 percent of the 80 million U.S. online households have made purchases online, according to a new report from Forrester Research.

More than two-thirds of U.S. online households have made an online purchase within the previous three months, writes Internet Retailer, citing a Forrester report. Some 19 percent of web shoppers spent $500 online in the previous three months, 16 percent spent $250-$499, 26 percent spent $100-$249, and 39 percent spent up to $99, according to Forrester.

Those who spent at least $500 in the previous three months comprise about 10 percent of the U.S. online population. Online commerce, excluding travel and auctions, is expected to exceed $270 billion by 2011, Forrester estimates.

News Source: http://www.marketingvox.com

20 Oct 2006

Google’s third-quarter profits nearly doubled from last year as revenues increased 70 percent, reflecting its growing advantage over rivals. Google’s results were in stark contrast to those of closest online-advertising rival Yahoo, which earlier this week reported a 38 percent drop in third-quarter profit.

Google announced on Thursday that it earned $733.4 million, or $2.36 per share, in the third quarter, 92 percent more than the year-ago quarter’s $381.2 million, or $1.32 per share, reports the Associated Press. Excluding employee stock compensation expenses, Google would have earned $2.62 per share, 20 cents more per share than analysts’ expectations.

Third-quarter revenue totaled $2.69 billion, a 70 percent increase from $1.58 billion in 3Q05. After deducting commissions paid to ad partners, revenue totaled $1.86 billion, or about $50 million more than analysts’ expectations.

Google said 60 percent of ad revenues came from its sites, and 39 percent from its AdSense partners, writes the Mercury News. In 3Q05, Google said 56 percent of its advertising came from its own sites. International revenues constituted a greater proportion of Google’s sales, increasing to 44 percent in the third quarter, up from 39 percent for the same period in 2005.

Google share passed the $454 mark in after-hours trading, after gaining $6.75 to close at $426.06 before the release of the third-quarter results.

News Source: http://www.marketingvox.com

20 Oct 2006

Nielsen/NetRatings on Thursday reported September data for the top U.S. search providers. Google led not only in share of searches but also in year-over-year growth.

An estimated 2.8 billion search queries were conducted at Google search, accounting for 50.0 percent of all search queries conducted during September, according to NetRatings. Moreover, growth in the number of Google searches from Sept. 2005 was 24 percent - twice the rate of searches conducted at second-place Yahoo, which accounted for 23.4 percent of Sept. searches with 1.3 billion.

The two leaders were followed by MSN/Windows Live Search in third with 9.2 percent of searches, or 519 million - 12 percent less than last Sept. AOL was in fourth place with 6.3 percent search share and nearly nine percent fewer searches year over year.

With the second-highest rate of year-over-year growth was Ask.com, accounting for 2.7 percent of Sept. searches at 152 million - 19 percent more than Sept. 2005.

Source: http://www.marketingvox.com