For the first time, it is expected that advertisers will invest more dollars in online advertising than in offline counterparts, according to the latest estimates from eMarketer, a digital marketing research firm.
The projections for 2011 put online advertising dollars at $25.8 billion, compared to the $22.8 billion normally spent on ads in newspapers.
The larger audience and more cost-effective rates for online advertising make it a smart move for many advertisers. Even though the total subscription numbers for many newspapers has increased, the advertising hasn’t followed because of the lower rates online.
This will come as no surprise to the advertising industry which has seen consumers, and therefore advertisers, begin to use the Internet more regularly. Studies show that people are spending as much time online as they are watching television and that magazine and newspaper reading is on the decline.
Oprah is known as the undisputed queen of all media, and with good reason.
As her production company Harpo, Inc. poises itself to launch her latest offering the Nate Berkus show, her role as media kingmaker will be put to the test.
Nate Berkus, a regular guest on the Oprah Winfrey show for the past eight years, remains optimistic. Oprah has a knack when it comes to spotting diamonds in the rough and turning them into media darlings. Her ability to make anyone a household name has been proven time and time again. Just a few years ago, names like, Dr. Oz, Dr. Phil and Rachel Ray would have slipped passed the average American viewer. Thanks to some magic provided by Ms. Winfrey herself, her “discoveries” are now seasoned TV royalty.
The odds stack up well in Mr. Berkus’s favor as his boss’s track record stands unopposed. Will her devoted audience buy into yet another design/talk show as the number of female TV viewers continues to decline?
Now more than ever with myriad choices in programming, viewers are reaching for something they can recognize. Oprah Winfrey is a trustworthy brand name and people feel confident in buying things that she recommends. This was definitely the case with Oprah’s book club, which helped send many a lucky author straight to the top of the New York Times Bestsellers list.
Nate Berkus is hopeful for his chances to grab his piece of the pie, but he remains grounded. Shows in the current media climate have less than a 50 percent chance to ever be picked up for renewal. With the prestige of the big O empire behind him, Nate Berkus is banking on success.
Gillette Corporation’s newest battle for market share isn’t happening here in the U.S. or any other established market.
At this moment all eyes are on India as the leader in all-things-razor is placing third behind native brands such as Super Max and Malhotra Shaving Products.
In the past, Gillette focused it sales on flagship products and made their offerings only available to the wealthiest of international consumers. This left the company very little of the market and no way to secure future sales gains. In an effort to remain competitive Gillette changed its product creation strategy. The old way of doing business was not going to win over new consumers.
Gillette had to look at the big picture and decide what path to take. Instead of pricing a product after the costs of production had been accounted for, it relied on reverse engineering. Working from the standpoint of their potential market’s pocketbook, Gillette created product lines that met the budgetary needs of their desired consumer base.
This approach has allowed the company to become a growing fixture in the undeveloped markets, which are quickly being heralded as a key to their success. They have seen the model work with other products such as feminine hygiene products and water-saving laundry aids. The economic climate for traditional business has never been trickier.
The marketplace is now made up of tiny micro markets; Gillette is hoping to recognize more of these opportunities to expand the brand into areas that were once considered unprofitable. These days it pays to be persistent — as Gillette’s raising sales figures can attest to.
The biggest name in online games for social networking has become Zynga.
With Facebook, MySpace and other sites having top games like Mafia Wars, Farmville and more, it’s no wonder Zynga is bent on becoming the “Google of Games.” Zynga’s CEO and founder, Mark Pincus, has told employees at the San Francisco-based firm that he envisions Zynga becoming an enduring Internet icon that is synonymous with fun.
In 2007, Pincus says, he saw the Web as still fledgling with only a few big-name services and not much else. He saw the opportunity to build an online entertainment empire. He compares those days to “search before there was Google.”
The company appears to be meeting that goal, having more top-trafficked games than all other game makers in the space combined. Zynga will pocket in the neighborhood of $835 million this year and already has over 2.5 million users to its credit. Amazingly, the games are free to play. Revenues come from “premium” add-ons that players can buy – such as gifts for friends in-game, virtual goods, etc.
Farmville is the company’s most popular game and allows players who want to bypass the effort of growing and selling enough crops to get the virtual currency to buy equipment, animals, etc. to do so by purchasing them with real-world money. When millions of users spend $3.50 or $5 to buy something, it adds up quickly.
The company now has nearly 1,000 employees and is looking to expand further, with openings for an additional 400 jobs. Zynga’s investors include Google, Facebook founder Marc Andressen, and other big names on the Web. Zynga is currently valued at about $4.5 billion.
Networks have struggled with embracing the fact that the Internet makes their shows available anywhere, anytime – which means they get fewer people sitting in front of the television to watch.
They may have found a model that works for them with paid viewing options for their sports offerings, especially as we enter into March Madness.
CBS offers March Madness on Demand, an online viewing service that is free for users but managed to bring in $32 million in ad revenue in 2009 and projects a 20% growth in that number for 2010. It’s not as good as the numbers for SuperBowl, which brought CBS $200 million in ad revenue, but it’s also not shabby when you consider the relatively slim number of people who prefer watching their sports online.
Other networks are going with a paid option for their viewers, often with a series of packages that let users choose which sports they want to watch. The NBA went from a single streaming option to a number of standalone packages, and Major League Baseball has been using MLB.tv as a pay model since it launched in 2003. Subscription revenues there bring in $88 million.
Networks are getting more creative with iPhone apps as well, but no matter how they choose to make profit from their online offerings, they seem to no longer be attempting to resist the drift online. Now they’re simply learning to monetize that drift – and it seems to be working well for them.
When a network wants to get good advertising revenue for its upcoming lineup, it presents its fall schedules in the upfront marketplace in New York.
In the past two years, NBC has been hosting their own smaller version of the presentation practice, inviting only a few to see their fall lineup in an “infront.” Looks like the network is abandoning its practice this year as they try to recover from several missteps and maintain a strong viewership.
The network is planning on overhauling its evening schedule, in part because of the embarrassing way they handled Jay Leno’s shift to his own talk show and then back again to the Tonight Show, ousting Conan O’Brien from the hosting spot and causing a surge of extremely negative feedback against the network.
The Tonight Show appears to have recovered more or less with 5.6 million viewers on Leno’s return episode, but it’s touch and go as to whether the entire network will follow.
NBC’s current viewer-bringing shows are “Parenthood” and “The Marriage Ref,” but they’re building a new lineup of a reported 20 pilot episodes for possible new shows. They need a hit new show, preferably one that both draws a huge viewership and earns critical acclaim, and at the moment, it’s not at all clear that they have that magic ratings-booster.
In a word of good news, the Olympics coverage from NBC may have helped it shift public perception back toward positive – though it still lags behind other networks including CBS, Fox, and ABC.
The most influential shopping mall owner in the United States is poised to become even more powerful.
Simon Properties Group, currently the largest national shopping mall owner, has put in a bid to acquire General Growth Properties Inc., which is in Chapter 11 and struggling to emerge from bankruptcy. The proposed price is $9 a share, which, General Growth says, is not enough to get the company out of Chapter 11.
However, if the bid proves acceptable or Simon Properties improves its bid, the implications for national shopping malls will surely alter the status quo. The combined companies’ malls make up one third of the national market, and almost half of the best performing malls.
With a single landlord controlling this number of properties, retailers are concerned that the company will have far too much influence when it comes to dictating leases and rental prices. They’re also concerned about possible negotiations to open new locations in less-than-lucrative malls. It’s in Simon Properties’ best interest to improve the foot traffic to its low-performing malls, which they can achieve by opening a popular store like a Gap to encourage more people to visit.
Retail stores, however, naturally don’t want the expense of running a store in a low-traffic area, which means that Simon’s influence as landlord may prove detrimental to them.
The deal is still in the works, but we’ll be keeping an eye out for a changing mall landscape.
About the author:
Peter Koeppel – Founder and President of Koeppel Direct, a leader in DRTV (Direct Response Television), radio, print and online media buying, marketing and campaign management.
Premiere week is often over-analyzed with regard to what it means for advertising budgets, but broadcast execs can still smile over the results.
Bad numbers may have meant that an already-flagging media format was going to have even more trouble getting advertisers to buy space on their shows, at a time when major companies are already pulling out in droves at the last minute if they fear their spots won’t reach a large enough number of viewers.
New shows that did well on ABC include Courteney Cox’s show Cougar Town and FlashForward; there may also be significant strength behind the critically acclaimed comedy Modern Family. On the CW, there’s a new show cashing in on the vampire obsession sweeping the United States called The Vampire Diaries which held onto a whopping 100% of its debut audience and grew from week to week.
Returning shows with good ratings include House, with a 6.5 rating in the 18-49 demographic, The Big Bang Theory, and NCIS. Fox also did extremely well with its return for House, with a 6.5 rating for their 18-49 demographic.
In the less-cheerful news, several returning series that have previously shown good numbers may be on their way out, with Community and The Office loosing significant viewers and ratings points, as well as Law & Order: SVU, CSI, and CSI: Miami showing lower numbers than expected. Heroes looks to be a dead show walking, and Dancing with Stars was down a frightening 24% from last fall’s debut, with the least-watched premiere yet in its 9 seasons at only 17.5 million viewers.
A few other shows are simply holding steady, including The Mentalist, Grey’s Anatomy, and The Jay Leno Show, all of whom are competing for the same Thursday time slot. It’s not a great turnout for broadcast, but it’s not the last trump either.
It did not look like back-to-school madness in a lot of retail stores last year.
Sales had fallen 5.1% among retailers, not including the industry giant Wal-Mart, which recently stopped releasing monthly figures. Consumers are cutting back on non-essentials, which means that traditional activities like buying new clothes for back-to-school might be put off for months or even another year, as parents try to get back their financial footing.
Teen retailers saw the hardest hit, especially clothing stores. One reason why goes like this: Because teens have often already “hit their growth spurt,” they don’t always want new clothes because they need them size-wise, but because they want something newer and “cooler.”
This may explain why the uber-fashionable and expensive stores took the hardest hits – Abercrombie & Fitch Co. dropped by 28% – while discounted name-brand merchandise available at TJ Maxx has actually seen an uptick of 2.3%.
Department stores are also having a rough time selling back-to-school clothes, supplies, dorm furniture, and the like. J.C. Penney reported a 12.3% decline and Macy’s dropped 10.7%, while Target, with cheaper alternatives to similar products, still saw a decline of 6.5%.
A correlated problem is that retailers are cutting back on their staff, which means back-to-school teens and college students are having trouble finding work. No work means no discretionary income for that new back-to-school outfit or the little extras like a better laundry basket.
For right now, buyers are making do with what they’ve got.