Today, comScore announced the acquisition of Nedstat, an online analytics and optimization firm. Based in Amsterdam, the Netherlands, Nedstat has a proven track record of helping companies improve the effectiveness and profitability of online marketing programs.

We are excited to announce this acquisition for several reasons. First, it enables us to substantially expand our presence in Europe as we increase our global footprint. Nedstat has offices in the Netherlands, Belgium, U.K., France, Germany, Spain and Sweden that will enable us to reach out to new clients in these markets and better service our existing clients.

Secondly, this acquisition will help comScore accelerate the development of our Unified Digital Measurement™ (UDM) platform, which combines measurement of individual users from a sample panel with measurements of machines and mobile devices from a census of users, to provide a unified view of digital consumer behavior. Nedstat clients will immediately have the option to incorporate their census-level analytics data into the UDM platform to provide them with a more unified set of reporting metrics. Eventually, Nedstat’s analytics and optimization architecture will be used in conjunction with comScore’s existing audience and mobile network analytics to provide more comprehensive, granular, and real-time analytics solutions that will enhance businesses’ ability to optimize their digital marketing strategies.

comScore’s long term vision is to provide the digital marketplace with a unique set of insights that leverage the most comprehensive analytics solutions and market level audience measurement to help businesses effectively execute their marketing strategies. Clients should be able to optimize at tactical levels in order to maximize impact at a strategic level, resulting in more efficient marketing spend and improved digital ROI.

As the demand for real-time information increases, these assets will enable us to deliver the measurement and analytics platform of the future. The products we envision building simply do not exist today. While these products will likely have some overlap with current analytics offerings, they will offer a different value proposition. An appropriate analogy might be what the iPad has meant to the world of traditional computing; while it has certain similarities to what a personal computer can do, it is designed for a different kind of use that represents a fundamentally different utility to the end user. We believe that Nedstat offers a world-class web analytics solution that we will continue to develop and support, but their core infrastructure will also enable us to pursue these new product development opportunities in the future.

Finally, we are excited to welcome our new colleagues into the fold as part of the growing comScore team. The Nedstat employees have top notch talent that has enabled them to build an exceptional technology thus far and we expect this great work to continue as part of comScore. Together, we will continue to innovate and bring great products to market that will pave the way for the future of digital measurement.

In a blog post earlier this year, I wrote about the challenges facing small e-commerce businesses, noting that their share of online spending in Q4 2009 showed a 4.2 point decline versus Q4 2008. Unfortunately, the situation hasn’t improved since then. In fact, it’s gotten worse. In comScore’s Q2 2010 e-commerce webinar, I reported that larger retailers had gained 5.6 points of market share at expense of their smaller brethren over the most recent twelve months:

The market share loss suffered by the smaller retailers corresponds to an absolute sales decline of about 6%.

The most recent survey (PDF) conducted by the National Federation of Small Businesses (NFIB) in June of this year gives us some insights into the underlying problems. The NFIB says:

The Index of Small Business Optimism lost 3.2 points in June after posting modest gains for several months. The persistence of Index readings below 90 is unprecedented in survey history. The performance of the economy is mediocre at best, given the extent of the decline over the past two years. The small business sector is not on a positive trajectory and with this half of the private sector “missing in action”, the poor growth performance is no surprise.

The NFIB report goes on to say that the weak economy continues to put downward pressure on prices, concluding that widespread price cutting has contributed to small businesses’ sales declines. It seems clear to me that smaller retailers struggle to match the pricing power of their larger competitors.

The picture continues to be bleak on the hiring front, as well. Over the next three months, eight percent of small businesses plan to reduce employment (up one point), and 10 percent plan to create new jobs (down four points), yielding a seasonally adjusted net one percent of owners planning to create new jobs, unchanged from the May reading and positive for only the second time in 20 months. Since the third quarter of 2009, job creation plans have underperformed the recoveries from the other prior two deep recessions covered by the NFIB survey.

With the country’s unemployment rate continuing to stay stubbornly high at nearly 10%, and with small businesses having historically accounted for about two thirds of the new jobs in the country, it seems clear that the problems facing small businesses are hampering the country’s economic recovery. It’s almost a catch-22 situation. Without strengthened consumer demand, small businesses can’t justify hiring. But with unemployment high, consumer demand will remain sluggish.

In my blog post earlier this year, I pointed out that in an ultra-competitive environment such as we have today, it’s especially important that small businesses stay close to their customers and that one way to do that is by leveraging the power of social media. With the continued growth in consumers’ use of social networks, that advice I offered then would appear to be even more appropriate today:

“I think that using social networking to build communities of customers and then reaching out to them with relevant and frequent communications holds a lot of promise, especially for smaller retailers. They should be able to execute better than their larger competitors. For one thing, they don’t have to deal with the internal organizational bureaucracy and delays that can hinder many larger companies when deciding how CRM / social networking programs should be executed. And, the use of social networking offers significant opportunities to reduce marketing costs, which will help smaller retailers overcome the challenge of their larger competitors’ greater financial resources.”

So despite the difficult environment for smaller retailers, there are still opportunities for growth. It will require using their ability to be more nimble and flexible in responding to consumer demands, and social media offers a great way to do that.

At the same time, it seems to me critical that the administration begin to figure out ways to promote job growth among small businesses. Policies that encourage hiring need to be pursued and anything that raises costs avoided. The small business “engine of hiring” urgently needs to be primed.

Nearly a decade before anyone had heard of YouTube, the first viral video spread among snickering teens and procrastinating college students. Discovered via direct download links and embedded QuickTime players, Trey Parker and Matt Stone’s “The Spirit of Christmas” not only launched what would soon become the popular animated series “South Park”, but also reinvigorated an entire cable network. What I remember most about “The Spirit of Christmas” was not the story (or the salty language), but the size and quality of the video. The file was huge! And it took close to a day to download! Even after the download bar clicked through to 100%, the video quality was still a fraction of what you’d experience on TV.

A lot has changed in last 10+ years. YouTube, once maligned for its streaming quality, can now pump out videos in 4K (for the uninitiated, that’s 4x the pixels of broadcast/cable HD), most online TV programming can be found in HD, and even the cheapest camcorders have the capability to upload a HD video. All those extra pixels require bandwidth and computing muscle; and fortunately, over the past two years publishers and portals have made the necessary technology investments to create a significantly better viewing experience. Live streaming video, however, with its own pernicious set of tech requirements, has lagged behind the larger Video-On-Demand portals and publishers in terms of consumer experience.

Now more than ever, live online video sites are willing to build out their technology infrastructure to provide a better user experience. For instance, Justin.tv recently announced mobile applications for Android and iOS, the former allowing users to live stream from their mobile device. The growth of broadband (both through regular and cellular networks) has made features unthinkable two years ago a reality today. What’s the payoff? Over the past year, the amount of time American audiences spent watching video for the major live video publishers (Justin.tv, USTREAM, Livestream, LiveVideo, and Stickam) has grown 648% to more than 1.4 billion minutes. By comparison, the amount of time American audiences spent watching YouTube and Hulu increased 68% and 75%, respectively, over the same time period. Though the amount of time spent watching live video is still only a small fraction of the total time spent watching online video, its sharp growth indicates viewers’ growing comfort with the content.

Live online video sites have not only been successful in building audience, but also in keeping that audience tuned-in. For instance, the average live streamed video view is 7% longer than the average online video view. If you narrow the audience to a specific demographic, though, live video really begins to prove its advertising value to media planners. Live video sites are 72% more likely to deliver the elusive demographic, males age 18-34, than the average online video site. In fact, males age 18-34 comprise almost 30% of the total live video viewing audience in our sample sites. Even without the same brand recognition as other portals and publishers, live video sites are able to retain viewers’ attention and deliver desirable audiences for advertisers.

In particular, Justin.tv, USTREAM, and Livestream have exhibited tremendous growth over the past year and are vying for supremacy as the leading live video publisher. In July, USTREAM reached more than 3.2 million unique viewers, with Justin.tv reaching 2.6 million and Livestream 2.4 million. Livestream, though, served more than 160 million videos, compared to roughly 130 million from Justin.tv and 20 million from USTREAM. Those 20 million videos on USTREAM, however, were viewed eight minutes longer on average than videos on Justin.tv and 17 minutes more than those on Livestream. In terms of total minutes, viewers logged nearly 900 million minutes watching Justin.tv in July, outpacing the other two sites.

Although live video sites may not have the cachet or visitor base of more established broadcast brands or larger video portals, they do provide a savvy planner with the tools to reach valuable targeted audiences. As live-streaming technology moves more mainstream, I believe content creators will increasingly realize the importance of mirroring their live TV strategy with live online video as well.

I’ve been struck recently by the number of Internet companies that are advertising on television. In no particular order, here are some of the online businesses for whom I’ve noticed TV ads:

Clearly, this trend must reflect an acknowledgment by online businesses - big and small - of the appeal and value of advertising on TV, even as the Internet continues to gain share of all media spending. In fact, over the past decade TV has increased its share of global ad dollars from 38% to 46%, confirming that, despite the illusion created by some media pundits who would have us believe that TV is on the ropes, the reality is that the industry continues to perform quite well.

There are several reasons for the continued success of television advertising. To begin, we need to recognize that the total amount of time spent by consumers watching TV is not declining, but rather is increasing. Sometimes it’s easy for people to confuse the fragmentation of TV viewing with a decline in total time spent. However, the reality is that consumers are watching more TV than ever before. This was persuasively illustrated by Byron Sharp et al of the Ehrenberg-Bass Institute for Marketing Science in a paper published in the June 2009 issue of the Journal of Advertising Research (subscription required). The study found that average ratings halve if the number of channels doubles and showed that declining ratings for individual shows or networks are due to fragmentation (more channels) not to reduced overall TV viewing levels, which are remarkably resilient to social and technological changes and to the emergence of new media. Professor Sharp also noted that audience fragmentation has actually been beneficial for the large broadcasters by driving up the prices for the higher rated shows: “CPMs don’t ignore media value, they monetize it.”

Interestingly, television’s popularity continues even as viewing of online video explodes. But here again, it’s easy to get confused by different metrics. The reality is that despite a dramatic growth in the number of online viewers and the number of videos viewed, the overall viewing of online video represents no more than 4% of total time spent watching TV. This approximates the annual percent growth in time spent watching TV.

A second reason for the continued appeal of TV advertising to marketers is that no other medium can compete with it when it comes to the reach that can be attained in a very short period of time. An individual high-rated TV show provides marketers with a unique opportunity to rapidly communicate advertising messages to the largest cross section of consumers possible in a 30 minute period of time. In today’s challenging economic environment time is money, which makes TV advertising extremely attractive to marketers.

The third and perhaps most important reason for TV’s continued popularity is that there is no evidence that the effectiveness of TV advertising has declined – even in the face of a dramatic increase in the number of media choices available to consumers. This was powerfully demonstrated by Joel Rubinson of the ARF in a paper also published in the June 2009 issue of the Journal of Advertising Research. In his study, Joel used seven different databases – accounting for a total of 388 case histories -- to determine whether there had been a decline in the effectiveness of TV advertising over time. The databases included results from advertising weight tests, market-mix modeling, copy testing (provided by comScore ARS), return-on-marketing analysis from quasi-experimental design and media planning tools. Joel found that over the past 15 years TV has not declined in its effectiveness at generating brand sales lifts. In fact, the study revealed that there has been an increase in the persuasion power of the TV copy being used.

This latter point is important because most television copy is subject to extensive research and testing before the commercial is produced and put on air. Copy research seeks to confirm that an ad is doing its intended job in persuasively communicating the desired message. That type of due diligence is a way of life with branding advertising. There is an important lesson here for online advertising: in a branding world, advertising creative is critical. I discussed this issue in a Mediapost article earlier this year titled “Four Times Zero is Still Zero” where I sought to stress that a poor commercial won’t lift sales, no matter how much spending is put behind it (i.e. 4x0=0). As Internet advertising seeks to increase its currently meager 6% share of marketers’ spending for branding advertising and to move beyond a reliance on direct response marketing, using the right creative will become critical. This will be compounded by the move to the use of more expensive ad formats such as rich media and video. The cost of being wrong becomes substantial. It will be vital for the Internet to take a page out of television’s playbook and focus more of its research dollars on getting the online ad message right.

A few weeks ago, I decided to buy a 4G iPhone. Previously, I had used an AT&T Tilt for about three years, having originally bought it because of its ability to reliably synch with comScore’s corporate Exchange e-mail servers. Since I already had an account with AT&T, when I bought the iPhone I simply switched that account from the Tilt to the iPhone. I didn’t have too much time to get used to the iPhone’s functionality before having to leave on a combined vacation and business trip to Europe.

My family is originally from Northern Italy, way up in the beautiful Apennine mountains, so my wife and I were looking forward to spending a few days there visiting with family members and friends before heading down to Rapallo on the Ligurian coast for some R&R. With some free time on my hands, I was able to play with the iPhone and familiarize myself with its remarkable functionality. What I didn’t pay any attention to (or even think about) as my wife and I ate and drank our way across Italy was the mounting bill I was incurring for all the data I was downloading as I received and sent e-mails back to the U.S. and used the iPhone’s browser to perform all kind of online activities, including watching the Pittsburgh Steelers play a preseason game at 2:00 am Italian time. (Incidentally, the quality of the video on the 4G iPhone is remarkable -- I mean HD quality good). Back in the U.S., my comScore colleagues were getting ready to announce our acquisition of Nedstat, the Web Analytics company, so I was also getting copied on a lot of e-mails as we coordinated comScore’s marketing communications plans. Unbeknownst to me, I was consuming a lot of data in a short period of time

Towards the middle of my first week in Italy, I received a free text message from AT&T telling me that my data usage on the iPhone had exceeded my meager 20 MB international plan limit, and that I was incurring substantial additional charges. They kindly provided me with a URL to visit if I so desired and the telephone number of an AT&T client service rep to call. I remember thinking: “Hmm, that’s quite considerate of them to let me know I’m using so much data. They really have no obligation to do that. It’s my own fault for not paying attention.” A day or so later, I called the service number. A friendly voice answered and I explained the reason for my call. No problem, the service rep said, and proceeded to pull up my account data. As he was doing that I asked him where he was located. The answer was Texas. That surprised me since it was 9:00 am Italian time so it had to be very early morning in Texas. I asked if this was an inconvenient time. “Not at all” was the answer “It’s all part of the job.” I was impressed.

The rep then told me the bad news. I had used 70 MBs over my account limit and the additional charge was $5 per MB, or $350. Since I knew I was going to be in Europe for another week, I asked about plans with higher limits and selected one with 200 MBs. The charge was reasonable at about $200 a month for those months when I’m traveling internationally. I asked if I could I cancel at any point, knowing that I wouldn’t be out of the U.S. every month. “No problem,” was the answer. Then I asked a presumptive question: “Can I have the plan implemented retroactively?” I was most pleasantly surprised to hear that the rep could do that. So, AT&T was basically willing to forgive me the $5 per MB charge that I had contractually agreed to pay for data usage above my plan’s limit and instead charge me at a lower rate per MB using a plan that had a higher limit and which encompassed my prior higher level of usage.

In today’s day and age, this kind of exemplary service is worth mentioning publicly. AT&T wasn’t obligated to send me a notice about my data usage, but they chose to do so. And, they did so by texting me a free message. But, most importantly, they certainly weren’t obligated to install my new data plan retroactively.

I’ve used AT&T for years as my mobile carrier (I particularly value their International coverage) and I use them for a variety of other telecom services so it’s very possible that their actions were acknowledging the amount of business I give them. Whatever the reason, I’m really impressed and I can say that this experience has strengthened my loyalty to the AT&T brand. I also believe there’s a lesson here for brand marketers: the power of a surprise.

In a recent comScore press release, I wrote about how brand loyalty has been declining since the advent of the recession. Because of this, there are significant benefits to marketers who take the initiative and provide customers something of additional value that is unexpected. Forrester calls it “strategic generosity”. It’s basically something that surprises and delights and which says: “I truly value your business and here’s something you weren’t expecting that proves it.” Everyone values a pleasant surprise. When a marketer provides it to today’s connected consumers, the result could be a blog post of public praise – just like this one. And, in a Web 2.0 world, that’s a surefire way of increasing the odds of going viral.

Last week, comScore announced our acquisition of Nedstat, a leading provider of global analytics and online optimization based in Amsterdam, the Netherlands. It was great to welcome the Nedstat folks as part of the comScore team, and we have already begun the process of integrating our companies.

In working with a handful of people from Nedstat, I noticed that I’ve begun receiving several invitations to connect with them via LinkedIn. The diligence with which my Dutch counterparts appeared to be using the popular business networking tool got me wondering if there were any cultural dynamics at play.

So I decided to investigate the usage of LinkedIn across countries to see what sort of differences in behavior might be evident. When I looked at the Internet markets with the highest penetration of visitors to LinkedIn in July, I was surprised to find that my hypothesis was indeed founded in reality: The Netherlands ranked #1 among all Internet markets in terms of LinkedIn penetration (i.e. the percent of Internet users visiting the site) at 15.2%. Interestingly, this popularity was also evident in a handful of surrounding countries in Europe including Ireland (14.7%), Denmark (12.1%), Belgium (10.0%) and the U.K. (9.4%).

The Dutch are not just the most likely to visit LinkedIn but they are also among the most highly engaged. They rank #1 among all markets in terms of the average number of pages of content viewed (64 page views per visitor) and #2 after the U.K. in average time spent (21 minutes per visitor).

It was only a matter of time before online social networking fused with real-world business networking in a meaningful way, and LinkedIn is a testament to the emergence of this trend. It should not come as much of a surprise then that LinkedIn attracted 50 million visitors worldwide in July, up 16% in just the past six months. Perhaps more importantly, the site is beginning to surpass 10% penetration, an important critical mass threshold at which many networks begin to expand virally.

In this increasingly global economy, utilities like LinkedIn will only grow in importance in helping connect people and cross borders. In this case, it is helping me get to know more about my new colleagues, and that is a very good thing.

The August government jobs report showed that unemployment remains stubbornly high at a level of 9.7% of the civilian labor force and rose marginally by 0.1 percentage points from July. The loss of jobs during the current recession has been deeper and more prolonged than was seen in any other recession since World War II:

The Bureau of Labor Statistics also reported that "In August, the number of persons employed part time for economic reasons ... increased by 331,000 over the month to 8.9 million." Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule. These workers are included in the alternate measure of labor underutilization (U-6) that increased to 16.7% in August from 16.5% in July. The U-6 number reflects the total unemployed people, plus all persons marginally attached to the labor force, plus the total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force. Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. Whew!

I find the U-6 number to be very discouraging. It means that one in six Americans are either unemployed or working less than they would like. Needless to say, the unemployment problem has had a profound negative impact on consumer spending and I thought you would be interested in seeing how this has manifested itself in e-commerce.

First, let’s look at e-commerce spending trends within income segments:

The middle income segment ($50K-$100K) is the largest segment and accounts for 41% of all online sales, but it’s clear that the spending power of middle-income consumers has weakened considerably. In Q2 2010, they spent 2% less money online than they did the year before and a whopping 9% less than two years ago before the recession really hit home. In contrast, the highest income sector (more than $100K per year) appears to be in good shape, accounting for 37% of sales and growing at a rapid clip (+17%). People in the lowest income sector only account for 22% of e-commerce sales but are also showing strong growth, driven (as we shall see) by financially secure and Internet-literate consumers in smaller households.

The negative impact of household size on spending power is clearly revealed if we look at spending trends according to presence of children within the household.

We can see that very strong growth occurred within households without children (+27%) but for those households with children, spending is under severe pressure and has declined by 9% versus year ago. The BLS reported that in August the unemployment rate for workers 16 to 24 years of age was a staggering 18.1%, causing many to move back to live with their parents. This simply compounds the already existing financial pressure on the middle class.

It’s also informative to examine spending trends by age of household head:

Here we see that it is the older households (with a head age 45 and older) that are generating online spending growth (+22%). In contrast, households with a younger heads spent marginally less in Q2 2010 than they did the previous year.

So, in summary, we can see the negative impact that the unemployment situation is having on the middle class. The middle class – defined as households in the middle income sector with children and younger heads -- are apparently not in an economic position to be able to increase their e-commerce spending, leaving it to the higher income, smaller and older households to generate growth. This was also well documented in a recent LA Times article.

Looking to the future, the middle class faces a period of great uncertainty. As reported by AP business writers:

Even when the job market picks up, many people will be left behind. The threat stems, in part, from the economy's continuing shift from one driven by manufacturing to one fueled by service industries.

Pay for future service-sector jobs will tend to vary from very high to very low. At the same time, the number of middle-income service-sector jobs will shrink, according to government projections. Any job that can be automated or outsourced overseas is likely to continue to decline.

The service sector's growth could also magnify the nation's income inequality, with more people either affluent or financially squeezed. The nation isn't educating enough people for the higher-skilled service-sector jobs of the future, economists warn.

"There will be jobs," says Lawrence Katz, a Harvard economist. "The big question is what they are going to pay, and what kind of lives they will allow people to lead? This will be a big issue for how broad a middle class we are going to have."

With viewership of long form content on a rapid upward trajectory and its addressable audience representing more than 80 million Americans, we are clearly in an era of significant opportunity for the online video advertising market. But despite its growth, the industry is still tinkering with the most effective business model to monetize this valuable, engaged audience.

Among the questions currently being debated by online video publishers is: should we stick with an ad supported model or move towards paid subscription models? (Or possibly a hybrid of the two?) Will viewers prefer monthly flat fees a la Hulu Plus, or episode/series-level micro payments that resemble the iTunes model? Within ad-supported models, how do we get to an ad load that can begin to reap TV-like revenues from online eyeballs, now that we’ve taught our audiences to expect a greatly reduced ad load online?

Putting aside the subscription versus the ad supported debate, and focusing on how to make an ad supported model work, the key starter question seems to be: What is the right amount of advertising to run against a TV program online?

This question splits into two parts:

1. How much advertising will viewers accept as fair exchange for free programming that they can view on their own schedule?
2. At what advertising threshold or with what kind of ad mix will brand metrics and favorability measures begin to exhibit diminishing returns such that it reduces the incremental profitability of more commercials?

This post and related whitepaper examines question 1, and specifically focuses on how the age of the viewer impacts the answer and its implications for developing the optimal ad experience for different programs online.

Survey takers were asked to nominate/choose the length of video ads against a TV hour which they felt was ‘negligible’, ‘minimal’, ‘long enough’ and ‘too long’. We then conducted a sensitivity meter analysis to see where the results intersected, giving us the optimal length of video advertising per TV hour.

In researching this report, we considered multiple variables beyond age, including income, platform preference, reasons for viewing online, satisfaction with TV and opinions on advertising both on TV and online, before continuing to explore age as the variable that revealed the most useful learning.

Key Findings

Across ages 18-49, 7 minutes per hour represents the upper limit of advertising load for which viewers will remain engaged, with just over 6.5 minutes being the middle ground for achieving maximum engagement. Importantly, this 6.5 minute threshold represents an ad load that is more than 50% greater than what is currently being served to online audiences.

6 minutes against a TV hour is at the low end of expectations across all age groups, revealing that there is nothing to be gained by ever lowering ad loads beneath this threshold against a TV hour online:

How Sensitive is Your Target Audience?

Although the optimal and lower end of ad tolerance show strong similarity across age groups, the sensitivity band and upper limit vary greatly, cautioning publishers to be flexible and agile when experimenting with ad loads depending on the age of the intended or likely program audience to avoid viewer abandonment.

For instance, 18-24 year olds show vastly greater sensitivity to ad loads. The difference between negligible and too long is very slight, at less than half a minute, revealing an audience with lower frustration tolerances and less willingness overall to have their viewing experience become too cluttered online. Advertisers need to exercise greater caution with campaigns aimed at this age group and pay careful attention to audience retention and drop-off rates as ad thresholds rise to avoid impacting their online reach.

Interestingly, more than 20% of 18-24 year olds thought that 10 minutes of advertising was still minimal, although at this threshold, you run the risk of going beyond the comfortable threshold of nearly 60% of your viewers. Ad loads against original TV programming can be increased, but a one-size fits all approach will miss the greater opportunity.

The starting point lies at a threshold 50% greater than where we are currently, taking the ad load against a typical TV hour up to around 6.5 minutes. However, when considering the best approach, it is important to bear in mind that ad sensitivity thresholds vary by age and other factors, with 18-24 year olds showing particular sensitivity and the greatest need for upfront and ongoing behavioral testing.

The progress of models for monetizing original TV programming is critical to the growth of the video advertising industry, and will become increasingly important to the evolution of TV advertising as more and more viewers opt for platform agnostic viewing habits. But, we do need to exercise caution when experimenting with video ads online, and look beyond pure replication of traditional broadcast ad models as this fails to recognize the value in new platforms beyond additional eyeballs.

For further exploration of this topic, download the whitepaper: ‘Great Expectations: How Advertising for Original Scripted TV Programming Works Online’. The full study explores the particular question of ad load and ad sensitivity, and does not cover the question of how best to leverage the online platform experience when innovating around video advertising. This, and other related questions will be important ground for future studies, so as to be able to take into account the social, viral and interactive nature of video which provides new value to advertisers in addition to the traditional TV experience.

While we tend to focus much of our attention on retail e-commerce spending trends as a gauge of the U.S. consumer economy, it can be easy to overlook another important sector of e-commerce: online travel. Though it no longer drives the majority of online spending, it still amounts to $80 billion annually, or about 40% of total e-commerce.

comScore’s estimate of U.S. online travel spending – which primarily accounts for consumer and small business travel spending – reached $8.2 billion in July 2010, representing the second highest month on record. (July 2008 still holds the record at $8.3 billion.) July was also the fifth consecutive month where online travel spending eclipsed $7 billion, indicating sustained strength in the sector.

This strength is also evidenced in the Y/Y growth rates, where online travel spending growth reached 9% in July, representing the seventh consecutive month of gains. This is quite an achievement, considering this streak comes on the heels of eleven consecutive months of negative growth rates in 2009. At its nadir, which came in September 2009, growth rates had fallen to -11%.

As demand in travel picks up, so has online advertising for the sector. In fact, the number of display ads among airline advertisers reached 3 billion in Q2 2010, up 67% vs. year ago. Southwest remains the top display advertiser among all airlines, accounting for 20% share of voice in the category in the second quarter, followed by American Airlines (13.0%) and Continental Airlines (12.4%).

After a pretty tumultuous 2009 for many industries, it is nice to see some begin to bounce back from the recession. The online travel industry appears to be one such industry, and as online consumer spending in the sector increases, travel advertisers are allocating greater marketing expenditure to the digital channel.

But as the economy remains in a tenuous position, we can only hope that these trends will continue going forward.

This post was originally published at ClickZ.asia on September 13, 2010.

• Where do 3 out of 4 global Internet users visit during a month?
• What captures 15 percent of total time spent online worldwide?
• What do Asia-Pacific Internet users do online for nearly 3 hours each month?

If you answered social networking, you’re right.

For those people that still consider social networking a niche market, it’s time to wake up and face the data.

In June, 924 million Internet users around the globe visited a social networking site, making it one of the most popular online activities, and it just keeps growing.

In the Asia-Pacific region, half of all Internet users visit a social networking site each month. Although Asia Pacific as a region reports lower social networking usage than other regions (due largely to low broadband penetration in some markets as well as restricted usage in places such as China), usage across the region continues to increase rapidly. Several markets in Asia were some of the most avid users of social networking in the world including the Philippines, Malaysia and Indonesia, which each saw more than 90 percent of their online population social networking during the month.

What’s even more impressive than the sheer volume of traffic to social networks is the amount of time people spend on these sites. Social networks now capture more time than e-mail, news, games and entertainment activities online. Instant messengers are the only online activity more engaging than social networking in the region. In several markets, visitors are spending more than four hours a month on social networking sites including in the Philippines, Indonesia, Australia, Hong Kong, Malaysia, Singapore, and New Zealand.

But wait, isn’t social networking just for kids and young people? No longer the case. What used to be an activity dominated by the 18-24 year old demographic is now a main activity in the digital lives of users across all age groups. In Singapore and Hong Kong for instance, more than half of social networkers are age 35 and older.

So now you have an idea of just how ‘non-niche’ social networking is, but what does this mean for you as a digital marketer? There are three ways to use social networks:

Word of Mouth Marketing

Social networks – as a matter of course – offer communication. Not just two-way communication between you and your customers, but between your brand and your brand advocates and your potential consumers. There are many case studies about successful word of mouth campaigns. That’s the beauty of social networks; if you create content that has intrinsic value and spurs interest in consumers to forward it on, or to retweet it, or to ‘like it’, it will take off with a life of its own. This is not easy and requires much research and creativity and, more likely than not, some failure.

Social Listening and Reputation Management

It is not enough to just put up a Facebook page or Twitter account. Many companies stop there and don’t dedicate full-time resources to read, update, and reply to all the activity that goes on. Social media engagement does not stop when the campaign stops. Your thousand of followers are still there and they are still commenting. In many cases, telling you what they think of your brand or your marketing campaign. You should listen and engage with these consumers – all the time. Whether it’s communicating with customers via Twitter.com, advertising on Facebook or offering special promotions on social media sites, if you aren’t commanding your brand in the social media realm you are missing opportunities to reach and engage with your audience.

Brand Marketing Campaigns

With over 75 percent reach in most Asia Pacific countries, social networks are now mass market media just like Yahoo, MSN, and other major portals. Branding is about reach (eyeballs) and frequency (the number of times these people are exposed to your message). If you have large cross media campaign to brand a new product or service, the social media is just as effective as the other main media. Just like other sites, it’s important to remember that each social media site offers brands and advertisers access to unique audiences. Many people are on more than one or two social networks for different reasons. Are you looking to reach women age 15-24 from a certain region in Malaysia? Are men age 55+ your key audience? Are you looking to reach social networkers that are also heavy users of online retail sites? Each social networking destination is unique in not only the utility it offers to its users, but also who these users are. Understanding audience characteristics from a demographic and behavioral level is integral to a sophisticated digital strategy.

Social media platforms will continue to evolve and it’s important for brands and advertisers to look to the future. That includes examining: How will social networking evolve in the mobile environment? How will this change PC-social networking usage? What are the synergies that exist between PC and mobile social media usage? What are the differences between PC and mobile social networkers?

Although still a niche market, one can assume mobile social networking won’t be for long.

This post was originally published at SearchEngineWatch on September 13, 2010.

When asked for directions, most people use one of two methods of response: they either offer you detailed turn-by-turn instructions with street names, or they use landmarks to guide you around.

If you live in, or have visited Atlanta, how many times have you been offered directions based on which way to turn at the Big Chicken? It's like the nexus of the northern Atlanta universe. One method is not necessarily better than the other, but I'll bet you that you figure out how to get to the Big Chicken faster than you would find your way to "12 Cobb Parkway North" (the actual Big Chicken address).

Search activity can be quite similar at times. Even with an end destination in mind (let's say Amazon.com in this case) when you begin your search, you may enter "DVDs" because your journey begins in a more obtuse fashion and maybe there's a better route to good "DVDs" than to go directly to Amazon. Each link on the page is like a street corner, ensuring that you stop, look, read, and review before moving on to the next step in your navigation process.

But imagine entering "Amazon.com" as your search term, and you now have your landmark specific directions. You aren't concerned with any particular street corner or stop light along the way, but simply using the landmark -- in this case the Amazon.com website -- as your point of reference. The search page now becomes quite focused for you because you're only on the lookout for Amazon.com, right?

A navigational search is defined as any search phrase that doubles as a website address (think anything containing the suffix .com, .net, .org, etc). The scenario mapped out above represents an ongoing SEM and SEO issue for all website owners.

How often are searchers searching not only for your brand name, but your actual web address? Should you bid on it (given that you will already be the top organic listing)? Is it worth the money? Are your competitors bidding on your address? Do searchers actually do this? Let's look at the data.

About 12.5 billion searches were performed in July on the Big 5 search engines (Google, Yahoo, Bing, Ask, AOL Search) in the United States. Of those, approximately 1.9 billion were navigational in nature, or more than 15 percent of all searches in a given month.

Of the 1.9 billion navigational searches, 83 percent were with the ".com" suffix. No major surprises here, but the notable fact is that the ".com" percentage is decreasing year over year, down from 85 percent in July 2009. As the global Internet keeps expanding and ICANN continually revamps their domain registration rules, we're seeing large increases in search activity for the less popular web address suffixes.

The fact is that the ".com" web address search marketplace is a bit saturated, but the alternative suffixes are growing at decent, if not fantastic rates. Since last July, ".edu" is up more than 80 percent; ".org" is up 12 percent; even ".tv" is up almost 85 percent.

As an organization looking to corner valuable future Internet real estate, alternative suffix addresses should be part of your consideration. Search activity is always a killer proxy for the evolving lexicon of the public, so don't discount the growth in the alternative suffix searching.

When a traveler (or in this case, a searcher) is in unfamiliar territory, there is no better navigation tool for them than landmarks. Based on the enormous portion of searches that involve web addresses, determining a navigational search marketing strategy is by all means worth your time.

Just do your best to be the Big Chicken and not the third stop light past the highway overpass.

In August, Groupon surged ahead with its 11th straight month of gains to reach 6.5 million U.S. unique visitors, capturing the title of the web’s most visited coupon site. To look at Groupon’s current growth curve shows a site whose audience is expanding exponentially, up 1,000% in just the past year. And these numbers don’t even account for Groupon subscribers who receive the daily email offer but don’t respond by visiting the site over the course of the month.

Groupon has clearly emerged in the online coupons sector in a major way, bringing even more innovation into this category. Online coupons had been growing their audience strongly over the past two years due to the impact of the recession (and consumers’ resulting need to save money wherever they can) and the new coupon services that offer consumers the ability to redeem “paperless” coupons at retail that are tied electronically into their loyalty cards. But given how many well established sites there were in the category, it is a pretty remarkable accomplishment to grab the #1 position in just a few years, pulling ahead of longtime category leader Coupons.com. Other top sites in the category include RetailMeNot.com (4.6 million visitors) and Eversave.com (3 million visitors). (Note: Groupon competitor LivingSocial, which comScore does not technically include in the Coupons category, attracted 3.7 million visitors in August.)

I think Groupon’s success thus far can be attributed to the fact that it created a market for transactions to occur between consumers and local businesses that did not previously exist in a digital, print or mail delivery format. Because consumers like to try new things (and receive discounts) and local businesses love to get new customers (but struggle with upfront costs without a “guarantee” that they will be able to expand their base of consumers) there was a market need for an online service that would facilitate these transactions. The closest approximation of this service in the print world would be coupon mailers, but they require payment upfront for the cost of distribution and they lack digital’s social, collective buying format that seems to make the consumer experience more engaging. There is perhaps also a perceived aura of exclusivity in receiving daily deals that consumers find compelling.

Ultimately, without an efficient digital marketplace for these transactions to occur in high volume, local businesses were left to spend a lot of marketing and advertising dollars just to get the offer in front of consumers. These are budgets that local businesses don’t always have, especially when there is a very real risk that the marketing effort doesn’t pay off. With Groupon, businesses don’t pay for the distribution of the offer. They only pay if the offer is redeemed. This virtually guarantees that a business is paying for some new customers to come through the door. (Sure, it may also attract some existing customers who may have already been willing to pay full price, but I think that is part of the built-in cost of attracting new customers.) Another brilliant aspect of the Groupon business model is that Groupon receives payment upfront for the purchase directly from the consumer and receives a “piece of the action,” i.e. a portion of the discount offered. In traditional coupon models, the distributor of the coupon gets paid by the business customer for the distribution effort but receives no part the discount.

One of the questions I’m asked most often about Groupon is whether or not it’s just another fad. The short answer is: no, I don’t think that’s the case. Fads are usually dependent on a temporary shift in consumer tastes and preferences, while legitimate long term trends occur when new models take root and consumers adopt and see value in that model. I think the latter is the clear case with Groupon.

And despite its fairly impressive ascent in a short period of time, there remains ample opportunity for continued growth. As Groupon establishes a presence across most local markets around the U.S., it still has significant room for continued penetration of existing markets. Consider that in a given month, just 3.1% of the U.S. Internet population visited Groupon.com. That still adds up to a lot of people – 6.5 million to be exact – but it also means that the other 97% are still potential customers.

Most web companies are more or less limited to growth within their target market, which means that even if they do an excellent job of penetrating that market, there is a natural saturation point. However, Groupon’s appeal spans age and gender, indicating that it has a lot of upside before reaching that point. For that reason, Groupon appears poised to continue to grow its customer base, though it should also be noted that dozens of new competitors (BuyWithMe, DealOn, Gilt City, Tippr, HomeRun, just to name a few) are swarming into the market every day trying to claim a piece of the pie.

Only time will tell how this market develops, and it will be an interesting market to watch. But clearly Groupon has tapped into a new behavior to which consumers are responding in a powerful way. And it’s great to see continued innovation happening in the online world.