U.S. Internet Advertising Surpasses Broadcast TV For the First Time Ever

For the first time, U.S. Internet advertising revenue has surpassed that of broadcast television due to sharp growth in mobile and digital video ads.

CNET reported,  A 17 percent increase over 2012′s results, last year’s number helped the online ad industry beat the $40.1 billion in sales seen by traditional TV advertising. That achievement marked a first for online ad sales. Mobile ads contributed to the growth in 2013 with $7.1 billion in revenues, a 110 percent jump from the $3.4 billion generated the previous year.

Search accounted for:
41% of Q4 2013 revenues,down from 44% in Q4 2012, as mobile devices have shifted Search-related revenues away from the desktop computer.
Search revenues totaled $ 5.0 billion in Q4 2013, up 10 % from Q4 2012, when Search totaled $4.6 billion.


Desktop Advertising to Drop $1.4 billion in 2014 as Search becomes more mobile

eMarketer released a report today that estimates desktop advertising to drop by $1.4 billion while mobile search will increase over 82 % in 2014. Of course Google has been talking about this in their earnings reports for the last couple years. This is certainly not great news for domain investors who park their domains, as mobile clicks pay less than desktop clicks. It stands to reason that parking earnings will be down across the board as the traffic becomes more mobile centric and a lower cost per click.

From the eMarketer report:
eMarketer estimates that desktop search ad spending will drop $1.4 billion this year, a decrease of 9.4% from 2013, while mobile search will increase 82.3% year over year. Mobile search will total $9.02 billion, compared with $13.57 billion for desktop search. Overall, US spending on advertising served to desktops and laptops will decline 2.4% in 2014 to $32.39 billion, down from $33.18 billion in 2013.

Devindra Hardawar wrote on Venture Beat that mobile has the flexibility to offer more opportunity to be creative.

For example, Yahoo’s newly launched Gemini product, a “unified marketplace” that marries mobile search and native advertising.

“By bringing the two together, advertisers can now buy, manage, and optimize their mobile search and native ad spend in one place — driving greater performance and higher impact for their businesses and brands,” wrote Jay Rossiter, senior vice president of Yahoo’s cloud platform group, and Adam Cahan, senior vice president of mobile and emerging products.

Speaking broadly, the mobile advertising market is still nascent, but it’s heating up quickly, with more and more mobile marketing startups popping up every week.

Overall, mobile advertising is expected to be a $40 billion market by 2018.

Are The Days Of Outrageously Expensive Super Bowl Commercials Over ?

Avi Dan  wrote a piece for Forbes on whether the days of big money ads on Super Bowl Sunday are over.

Of course looking at a game that was a blowout makes those people who had an ad running in the fourth quarter cringe. They paid the big bucks for a much smaller audience.

Dan wrote in his piece:

The CMOs of Audi, Intuit , T-Mobile, Chobani, Kia, Sprint, Heinz, Honda, Chrysler, Microsoft ,Jaguar, Danon, SodaStream, and Go Daddy among others, might just have had an even worse day than Peyton Manning

You spend 6 months convincing your CEO, your CFO and the board that spending $4 million on a 30-second Super Bowl commercial, plus a couple million more on producing the commercial. And you figure that sticking your commercial after half-time, in what’s likely to be a tight game according to the Vegas oddsmakers and just about everybody else in the country , is the right spot to get maximum exposure.

The proponents of shelling out this fortune defend it this way:

  • “But the Super Bowl delivers such a huge crowd.” That’s true. No other show can deliver such viewership numbers, even Sunday’s disastrous numbers. But that’s a matter of proportion. As more viewers migrate online or to their mobile devices, the number of eyeballs that TV delivers would necessarily contract.
  • “But people are more interested in the commercials than the game itself.” Not so, as proved by yesterday’s game. Years ago somebody measured the level of water pressure in New York City during the game. It was considerably higher during the commercial breaks when people got up from in front of the TV and headed to the toilet. For all the hoopla, people tend to forget the Super Bowl commercials after a day or two.
  • “But the Super Bowl is the Super Bowl of Advertising. It’s an opportunity to do something ‘special’.” In truth, research has shown, the commercials the viewers like the best are the least effective at selling. Rather than exploit this opportunity to sell a benefit, too many companies blow it by focusing on entertainment. And the entertainment is usually predictable: cute puppies, babies, celebrities, or sexy supermodels.

Dan goes into the reasons why the advertising is a waste for most companies, as Dan sees it many companies are in an era of frugality

Read the full article here

Voice Search May Lower Cost Per Click

People have talked about voice search for a long time, many use it on their mobile phone to dictate their query using voice instead of typing.

Laurie Sullivan wrote a piece a couple hours ago that could have an effect on people who park domains and generate income from websites that monetize through Google Adsense.

The longer phrases spoken in voice search queries create a much closer match. It serves a more relevant ad to consumers, improves the quality score of the brand, and produces a lower bid for the phrase. In this scenario marketers will pay less for the top position.

The bottom of a detailed post from Alex Funk, director of digital media strategy at Covario, closes with an interesting thought about updating keyword lists to match longer natural language queries from users on the go. He said a few marketers have begun to explore that option, but not many. Frankly, I’m surprised, given the increase in mobile searches and smartphone use.

Now Google has already talked about the fact that mobile ad clicks pay less.  They noted it when they missed their second quarter 2013 earnings number. They said that it started hurting their numbers in 2011. Business Insider reported:

So what happened in Q4 2011? That was the point at which the number of people using Google on smartphones became so great that mobile ad revenue started to hurt Google’s numbers.

google q2 2013

So clicks could get cheaper still, which is good if you got a site to advertise but lower revenue for parked domains and Adsense.

ANA Sounds The Alarm: US Tax Proposals Could Kill The Ad Industry & Domain Monetization

Under US tax law, advertisers are allowed to deduct 100% of the amount they spend on advertising on their tax returns.

However according to The Association of National Advertisers (ANA), several pieces of legislation are expected to be introduced by House Ways and Means Committee which would require advertising costs to be amortized over three years, rather than deducted in the year the funds are spent or limit the amount of tax deductions for advertising to a percentage of the amount spent in any particular year.

The ANA wrote in a note to its members:

“We have learned that there is a strong likelihood that Ways and Means Committee Chairman Dave Camp (R-MI) will include some restriction on advertising deductibility in his initial draft of a tax reform bill.

“The restriction being discussed could take two forms: (1) allowing businesses to deduct only a percentage of their advertising costs or (2) requiring them to amortize those costs – postponing the deduction of the costs over several years until long after the advertising has appeared. Either change would impose multibillions of dollars in additional costs on the business community.

“Chairman Camp is expected to release a draft of a tax reform bill soon and begin markup later this month. It would appear that the Ways and Means Committee is giving such serious consideration to this change because it would generate a substantial amount of tax revenues, not because their position is supported by economic theory.”

“Indeed, either form of a tax on advertising would cost the nation millions of jobs and hundreds of millions of dollars in lost economic activity. This is a direct impact documented by a landmark study of the economic impact of advertising on the U.S. economy. ”

Of course included in advertising  are money companies spend on PPC advertising, payments to affiliates and other sources that trickle down to domain holders that  monetize their domains through parking and affiliate programs and direct relationships with advertisers

You might want to follow the ANA advice here:

“It is critical that you contact your Member of Congress who serves on the Committee and express your strong opposition to such a proposal. If your Member of Congress is not on the Ways and Means Committee, ask them to contact their colleagues to call on them to oppose strongly this misguided proposal. We have prepared talking points you can use in your contacts.”