The Internet Advertising Bureau has come out against new guidelines proposed by the Federal Trade Commission that would require bloggers to disclose their affiliations with sponsors, marketers, and free giveaways. The reason? The IAB claims that the rules unfairly regulate online media more than offline.
"What concerns us the most in these revisions is that the Internet, the cheapest, most widely accessible communications medium ever invented, would have less freedom than other media," IAB president and CEO Randall Rothenberg wrote in an open letter to FTC chairman Jon Leibowitz. "These revisions are punitive to the online world and unfairly distinguish between the same speech, based on the medium in which it is delivered. The practices have long been afforded strong First Amendment protections in traditional media outlets, but the Commission is saying that the same speech deserves fewer Constitutional protections online."
He illustrated it with a personal example:
So there I was last Saturday, about to send out on my Twitter feed--which automatically updates my Facebook page and links to my personal blog--a photograph of this wonderful baked halibut dish I'd just made as a surprise for my wife. I was in the middle of typing a rave review of the recipe, which I'd pulled from my favorite cookbook, "Delicioso! The Regional Cooking of Spain" by Penelope Casas. But before I could press the 'post' button, I stopped and canceled the whole thing.I remembered that the book was a freebie, sent to me by an editor at the Alfred A. Knopf publishing house 13 years ago. And I didn't want you guys to haul me into court and fine me for violating the rules you've just promulgated to muzzle social media.
The FTC has said that the rules, which stipulate that violations may face up to $11,000 in fines, are designed for education rather than punishment. But Rothenberg isn't buying it.
"The Guides do allow you to pursue bloggers," he insisted. "They do hold individuals more liable than larger corporations. They do explicitly say online social media have less protection than offline corporate media. They do obstruct online companies' opportunities to drive cultural conversation more than offline companies'. They do threaten with prosecution book publishers, movie producers, and other companies that supply products to individual social media conversationalists."
The bigger problem is that offline media isn't subject to the same restrictions, he explained. And, according to the letter, clamping down on one medium but not another constitutes a First Amendment violation.
The FTC has not yet responded publicly.
Spending on Internet advertising declined in the United States and worldwide for the second quarter of 2009, and a recovery may still be a ways off.
U.S. spending dropped 7 percent, to $6.2 billion from $6.6 billion, and worldwide spending was off 5 percent, to $13.9 billion from $14.7 billion, compared with the year-ago quarter, according to data released Wednesday by market analyst IDC.
It was the second decline in as many quarters. For the first three months of 2009, Internet advertising revenue in the U.S. was $5.5 billion, down a notable 5 percent from the $6.1 billion for the fourth quarter of 2008.
The classified advertising format saw the greatest decline, tumbling 17 percent in the second quarter, while display advertising was the least affected by the slump, losing 12 percent, IDC said.
Most ad publishers posted double-digit losses in the second quarter, with Monster.com recording the greatest decline, at 31 percent. Google was the only publisher to record growth in the second period, posting low single-digit growth.
IDC said that based on guidance provided by online-ad publishers, it expects U.S. advertisers to decrease their online-ad spending in the third quarter but that the Internet advertising climate is not expected to get any worse.
"We think the industry will continue to see losses in the third and fourth quarters, but the growth rates--or the loss rates, if you will--will eventually begin to improve," Karsten Weide, program director for digital media and entertainment at IDC, said in a statement. "However, we also believe the industry may have to wait until mid-2010 until it sees real growth again."
Spending on Internet advertising took a big drop in the first quarter of 2009 as troubles across the broader economy took their toll.
For the three-month period, Internet advertising revenue in the U.S. was $5.5 billion, down a notable 5 percent from the $6.1 billion for the fourth quarter of 2008, according to a report Friday from the Interactive Advertising Bureau and PricewaterhouseCoopers.
(Credit:
Interactive Advertising Bureau/PricewaterhouseCoopers)
Aside from a handful of smaller quarterly declines, Internet advertising revenue has risen steadily since the middle of 2002, as the sector began to recover from the dot-com bust.
The IAB put a positive spin on the first quarter's downward motion.
"Consumers are spending more and more time with interactive media. For this, and other reasons, interactive media continues to gain share of marketing spend." Randall Rothenberg, president and CEO of the IAB, said in a statement. "We're confident that growth will resume as the U.S. economic climate improves. Interactive advertising is the most accountable way to reach consumers--and in this economy, digital media will be a core component of any successful marketing campaign."
Internet companies such as Yahoo are banking on businesses continuing to migrate to online advertising.
"Your brand is not defined by 20 keywords. You have to put a persona out there," Yahoo CEO Carol Bartz said Wednesday at a luncheon with Wall Street analysts, talking about the potential allure of online display or video advertising to businesses used to buying ad time on television. But, she said, Internet ad sales forces need to get rid of some of the friction in their line of work that isn't there on the TV side.
Internet advertising revenues reached a record $23 billion last year, rising modestly during the fourth quarter as the economy headed further south, according to an Interactive Advertising Bureau report released Monday.
During the fourth quarter, Internet advertising rose a modest 2.6 percent to $6.1 billion during the three-month period, according to the bureau.
"Though some categories in the fourth quarter slowed or even dipped, reflecting the current economic challenges, the overall performance is up, confirming interactive's ever-growing importance to the successful marketing mix," David Silverman, a partner with PricewaterhouseCoopers, said in a statement. PricewatershouseCoopers conducted the study on behalf of the IAB.
(Credit:
Interactive Advertising Bureau)
Last year, Internet advertising revenues rose 10.6 percent to $23 billion over the previous year, according to the report.
Retail, financial services, computing, and automotive were the largest industries to capture the attention of online advertisers.
Search advertising continued to drive growth, with a 19.8 percent increase last year over the previous year. And while digital video accounted for only a $734 million slice of the entire Interactive advertising pie, it posted steep growth--more than doubling.
Google is seeking to turn its TV advertising program into a one-stop shop.
The Internet search giant is currently testing Google TV Ads Online, an interface designed to enable advertisers to purchase ads through its nearly one-year-old Google TV Ads program, its YouTube site, and, eventually, Internet sites running video, according to a report in The Wall Street Journal.
A limited group of advertisers is currently testing the service, which could debut in the months to come, the Journal noted.
Google's move to develop a one-stop system for TV and video advertising comes at a time when consumers are increasingly using the Internet to view television shows and full-feature films. Where consumers go, advertisers tend to follow.
Last May, Google turned the switch on for its TV ad program, which is designed to enable advertisers to bid on TV ads, and pay for those ads when they are actually clicked on and delivered. In September, five months after its official debut of Google TV Ads, the company announced partnerships with Bloomberg TV, as well as NBC Universal, to supply television advertising over its system.
A collection of nearly two dozen online publishers plan to offer advertisers at least one of three new display advertising formats beginning in July, the Online Publishers Association announced Tuesday.
The ad units are designed to be larger than banner ads, offer interactivity, and comprise a greater proportion of the advertising-to-editorial ratio that most publications operate under.
The move by online publishers comes at a time when the economy is in a recession and advertisers are pulling back on their spending.
"Agencies are looking for new ways to integrate their clients' brand experiences with more interactivity on the page, and these new units provide a way for them to accomplish this," said Pam Horan, association president, said in a statement.
The nearly two dozen online publishers represent approximately 66 percent of the U.S. Internet audience, according to the association. And they include FOXNews, NBC Universal, CBS Interactive (publisher of CNET News), ESPN, Time Inc., and The Wall Street Journal Digital Network.
The three advertising units include:
A pushdown ad that runs the width of a page but retracts to the top of the page, as well as offering a second ad on the right hand column.
(Credit:
Online Publishers Association)
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(Credit:
Online Publishers Association)
A second ad unit, XXL Box, will feature page-turn functionality, as well as the ability to run video ads on the 468 wide x 648 tall size panel.
The fixed panel ad, 336 wide x 860 tall, remains stationary and users scroll up and down to view the ad.
MyScreen Mobile announced Thursday it is offering a version of its advertising rewards service for Google's Android smartphones.
Under the service, users sign up for MyScreen Mobile to receive targeted ads on their mobile phones. In exchange for viewing the full-screen ads, users receive rewards points for such subsidized mobile services as ringtones, mobile games, and gift cards.
MyScreen, which already has versions of its service for BlackBerry, Windows Mobile, Symbian, and Palm OS devices, is offering up a service that is akin to other Internet advertising incentive programs that have popped up over the years from the former AllAdvantage to the former CyberGold.
Lycos Europe announced on Wednesday plans to shutter its portal and Web-hosting business and find a buyer for three other areas of its business.
The company, which last month announced a 20 percent drop in revenue to 46.9 million euros ($60.8 million) and a net loss of 17.1 million euros, said the decision was made after reviewing its strategic options for several months.
It also plans to seek a buyer for other parts of its operation: its domains, Danish portal, and shopping activities.
Investors will vote on the management proposal at the company's December 12 shareholders meeting. Should the proposal receive approval, Lycos Europe will distribute 50 million euros to shareholders by year's end.
The closure of Lycos Europe's portal, which includes search, online communities, and content channels, comes as it faces increased competition from Yahoo and Google and a decline in user traffic.
Updated at 9:47 a.m. PST, with details about the likelihood of any potential Yahoo overture to Microsoft.
If Yahoo wants to get Microsoft back to the negotiating table, it would do well to try the lure of a search-only deal--regardless of whether Jerry Yang is CEO.
That's the assessment from one influential Microsoft source.
"If Jerry was still CEO and called Steve tomorrow and said, let's talk about a search-only deal, I think Steve would listen," said the source. "Microsoft is open to a mutually beneficial search deal. But people are still lusting after a Yahoo (buyout) and no one is thinking about that in Redmond. There's been no discussion of it for months and months."
Apparently, the "lust" is still alive. In early morning trading Tuesday, as the stock market opened in the wake of the news that Jerry Yang will be stepping down as CEO, Yahoo's shares soared nearly 12 percent to $11.90 a share. Meanwhile, analysts churned out research notes speculating that Microsoft may come back with an offer to buy the entire company.
Yahoo's shares leaped early Tuesday on news that Jerry Yang would be stepping down as CEO.
(Credit: Yahoo Finance)Analyst Benjamin Schachter at UBS noted in a report:
We still believe Microsoft will eventually own Yahoo. Jerry moving out of the CEO role may accelerate this. Yahoo is a key strategic asset in the online space and given the scarcity of key players of size, we see value here not reflected in the stock's current valuation.
UBS has a price target of $18 a share for Yahoo.
Analyst Jeffrey Lindsay of Sanford C. Bernstein said in his research note that Yang's resignation is a good sign, because it demonstrates Yahoo's board is frustrated with the company's performance and management. He further notes:
It is a signal they are prepared to examine more deal options, in particular with Microsoft.
Back in May, Microsoft walked away from the negotiating table after sweetening its initial unsolicited buyout bid for the entire company from $31 a share to $33 a share. But when Yahoo countered with a proposal of $37 a share, Microsoft ended its buyout talks for the entire company.
Yahoo's stock had closed at $19.18 a share on the day before Microsoft announced its $31 a share buyout offer.
The source noted that Yahoo and its investors should bury the notion of a full-up, or entire buyout, of all of Yahoo. If Yahoo were to come to the Redmond giant with a search-only buyout or a search-only partnership, however, that would get its attention--whether it's delivered by Yang or not.
And the source added that any expectation on Yahoo's part to reclaim the approximately $8 billion to $10 billion Microsoft had offered back in late May under its previous search-only, or "hybrid," deal would be a faulty assumption.
Yahoo's shares were trading in the $27 a share range when Microsoft submitted its search-only proposal. Yahoo's shares closed Monday at $10.63 a share.
"Microsoft would not be willing to buy Yahoo's search business at the price offered back in May," said the source.
Should Yahoo take the initiative and approach Microsoft with a search-only partnership, joint-venture, or proposal to sell just its search business, the source offered up one piece of advice to make the process smooth.
"Consistently, Yahoo's board didn't believe Steve. A hundred percent of everything he said in public was what he thought," said the source. "If people go back and carefully read his public statements, they'll see that what Steve said is what Redmond has been thinking."
Microsoft will likely have to wait awhile for any overtures from the Internet search pioneer, said one source familiar with Yahoo's thinking.
Yahoo is launching a CEO search and, as a result, would want to receive input from the new executive on whether it makes sense to approach Microsoft about a search-only deal or partnership.
As previously reported, the companies have not been in recent contact to date.
See also:
• Yahoo CEO Yang to step down
• Yahoo's ultimate search: A new CEO
• Yang's travails: A Yahoo timeline
• A pity for Yahoo that John McCain didn't win
• Jerry Yang memo to staff about stepping down
Yahoo has no search advertising deal with Google, and ditto for its disappointment in luring Microsoft back to the table for an outright buyout of the entire company. But what it does have to show for its efforts is a $73 million bill to outside advisers, according to the company's filing with the Securities and Exchange Commission.
According to the SEC filing, filed last week, here are the various components that make up the $73 million bill:
Income from operations for the three and nine months ended September 30, 2008 includes incremental costs of $37 million and $73 million, respectively, for outside advisers related to Microsoft's ("Microsoft") proposals to acquire all or a part of the company, other strategic alternatives, including the Google agreement, the proxy contest, and related litigation defense costs.
The Internet search pioneer began accruing its bill back in February, when Microsoft launched its unsolicited buyout bid to acquire the entire company for $31 a share. That offer was later upped to $33 a share, but withdrawn in May after Yahoo countered with a $37 a share price and time had, in essence, lapsed to complete a deal before a change in presidents.
When Microsoft stepped away from the negotiating table, Yahoo faced another fight on its hands when shareholder activist Carl Icahn launched a proxy fight against the company to gain control of the board. Ultimately, the parties settled and Icahn and two representatives from his dissident directors slate in the Yahoo proxy fight were named to the Internet search pioneer's board of directors.
Meanwhile, more recently, the company's search advertising deal with Google, which was discussed when Microsoft was still in the hunt for the Internet company, fell by the wayside this month after antitrust regulators said they would file a lawsuit to block the deal and Google opted to step back from the agreement.
While those various expenses have subsided, one continuing cost for Yahoo is defending itself against the number of shareholder lawsuits that were filed after it rejected Microsoft's initial $31 a share bid and its sweetened $33 a share offer.
When Microsoft made its first offer in February, Yahoo's stock was trading in the high $14 a share range. Today, the stock is trading in the low $11 a share range.
