Cashing Out: Week of April 10-16th 2011 in Online Marketing News

Senators announce Commercial Privacy Bill of Rights

High-profile Senators John Kerry and John McCain proposed a bill April 12 in the Senate to deal with what has been an ongoing concern of the Obama administration.

The Commercial Privacy Bill of Rights Act of 2011 would see the Federal Trade Commission (FTC) enforcing “a clear and conspicuous mechanism for opt-out consent” from companies whose clients provide them with personally identifiable information.

This would apply to both off- and on-line companies, both of which would have to provide the FTC with “clear, concise, and timely notice” of the use, collection and sale of their clients’ data.

If implemented, the bill, which would be enforcible by both the FTC as well as state attorneys, would only allow companies to gather the data necessary to perform transactions. The collection of any data, including gender, sexual orientation, or age, would be prohibited without the user’s explicit consent, and violations of the legislation could be punishable with fines ranging as high as $3 million.

However, the bill does not necessarily support a do-not-track rule, but would instead seek to “keep our private data safe by laying down fair information practices for anyone collecting it,” said Kerry in a press conference.

In other words, companies would have to offer clients a “robust” option to opt-out of data collection and sale, and would also have to notify them of any changes to privacy policies, but users would have to opt-out on every site they visited as opposed to avoiding tracking across all sites, which would be the case with a do-not-track provision.

Internet ad revenue hit a record high in 2010

According to a report released April 13 by the Internet Advertising Bureau (IAB), the revenue from Internet advertising hit a new record of $26 billion last year, an increase of 15 percent from the previous year. The fourth quarter of 2010 alone also saw a record high, increasing 15 percent from the previous quarter to $7.45 billion.

Among other noteworthy findings are that search ads proved to be the most popular ad format, accounting for 46 percent of ad revenue and experiencing a 12 percent growth between 2009 and 2010, though display advertising grew almost twice as fast at a rate of 24 percent.

Senior VP of Industry Services at IAB Sherrill Mane says the figures show Internet advertising has not been overly affected by the recession. “We now have had five consecutive quarters of growth since the great recession” Mane says, but “the record-breaking revenue in Q4 2010 and the total year indicate that interactive advertising has weathered the storm and then some.”

This statement would seem to confirm the projections of a separate report, released April 13 by the Search Engine Marketing Professional Organization, which forecasts that search marketing alone will grow by 16 percent to $19.3 billion this year.

Facebook hikes price of ads

A report released this week by digital marketing company Efficient Frontier shows that Facebook raised its rates for self-serve ads by 40 percent in the first Quarter of this year.

This comes in the face of criticism that the ads are not as effective as marketers’ demand for them may indicate.

A report cited last week in the Wall Street Journal showed that advertisers on Facebook saw only a 1 percent click-through rate and just 2 percent conversion rate, as compared to the 11 percent click-through and 4 percent conversion rates offered by email marketing.

Despite the arguable effectiveness of advertising on Facebook, Efficient Frontier’s Siddharth Shah believes advertisers’ increased awareness of the network as a marketing tool makes them more likely to use it, and that this increase in demand for Facebook marketing would naturally dictate an increase in its cost, regardless of ROI.

“As advertisers are understanding this medium, they are allocating budgets, and it’s becoming increasingly competitive,” Shah says, “and they are willing to pay a lot more to get to the consumer.”

This may just be another case of marketers counting their chickens before they hatch, as the hike in the price of Facebook ads more accurately reflects advertisers’ eagerness to get in on a marketing platform used by peers and competitors than it does the actual value of investing in such ads.

Kindle launches more affordable ad-supported version

Amazon announced April 11 that it is releasing a version of its existing Wi-Fi Kindle e-Reader that is $25 cheaper, thanks to on-screen ads. The new Kindle3 device, euphemistically dubbed Kindle With Special Offers, will be available for $114.

The company has promised users that the “attractive” advertisements will not interrupt the reading experience, as they will only appear on the bottom of the home screen or as sponsored screen-savers.

Amazon CEO Jeff Bezos attributed the company’s introduction of the new, more affordable device to an altruistic desire to cater to consumers, saying in a statement “we’re working hard to make sure that anyone who wants a Kindle can afford one.”

This would of course sound better than referring to the extra monetization potential offered by selling ads to the likes of Buick, Olay and Visa, who will be among the first to run sponsored screensavers on the device.

Kindle With Special Offers is now available for pre-order and is shippable by May 3.

Google launches “high-quality sites” algorithm as Microsoft gains search market

It may just be a coincidence that Google chose April 11 to unveil a new tweak to its algorithm, promising to “help people find more high-quality sites in search,” partly by making use of user feedback. The algorithm will take into account sites that users block with Google’s new blocking functionality.

But the change at this time may also have something to do with the fact that reports surfacing within the same week indicated that Microsoft Bing’s search market is growing at the expense of Google’s.

An April 11 report from Experian Hitwise showed that Bing-powered browsers had gained 31 percent of the search market by March, growing between 5 and 6 percent since February.

A more conservative report from ComScore indicated that Bing-powered search had only gained 29.5 percent of the search market.

But both reports found that Google had lost, rather than gained, search market since the fourth quarter of 2010; A TechCrunch article details that Google’s “explicit search share in the first quarter was 65.6 percent, down from 66.4 percent in the fourth quarter, or almost a full point.”

Meanwhile, an article on Mashable cites the fact “that users are apparently achieving more success out of Bing-powered search” as “one of the reasons why Yahoo and Bing may be gaining on Google.” Whereas users on Bing and Yahoo (which is Bing-powered) had search success rates of 80.32 and 81.14 percent, respectively, the search success rate for Google users was just 65.91 percent.

If it had anything to do with the release of these reports, Google’s new algorithm update could be viewed as an appropriate and logical response to the threat of a competitor that provides users with more relevant search results.

WordPress suffers hack attack

In his own words, WordPress and Automattic Founder Matt Mullenweg had “a tough note to communicate” April 13 on WordPress’ blog.

Apparently, several of the site’s servers experienced a root break-in this week, and its source code is presumed by WordPress to have been exposed and copied.

The site, which is used by 18 million publishers, has alerted its VIP customers, including CBS and TED, to the security breach and has advised them to change their passwords.

While Mullenweg states that “it appears information disclosed was limited,” the possibility remains that the leaked source code could include Twitter and Facebook passwords, as well as API keys. To say this is not good publicity would be an understatement.

This is not the first security breach in which WordPress has been the victim. In 2009, hackers used its blogging software to set up “hidden” administrator accounts, and more recently, on March 3 and 4, the site experienced large-scale denial of service attacks that were presumed to come from China.

Apple opts in to do-not-track on Safari

Surfers on Safari may soon have better control over how their Internet browsing behavior is monitored, and by whom.

The Wall Street Journal (WSJ) reported April 14 that Apple has introduced a new do-not-track tool for a version of their Web browser, available, for the time being, only to developers. The tool, included on the latest release of Mac OS X Lion, would allow users to stop cookies from tracking their activities online, something both consumers and the FTC have been demanding for some time.

Similar do-not-track options are already offered on Microsoft and Mozilla’s browsers, though, as the Wall Street Journal points out, they “will only work if Web companies agree to respect peoples’ tracking preferences.”

The problem for users is that their requests not to be tracked are just that: requests.

To date, there is no legislation in place dictating how companies must respond to such requests for privacy protection. And it is unlikely that Web companies, who have so much to profit from the ad targeting opportunities that tracking provides, will succumb to consumer demands without the legal pressure to do so.

Ignite releases social media stats

This week, social media analytics firm Ignite released the results of a comparison of 54 different social networks, which provides details about individual networks’ demographics and popularity, as well as an overall view of the state of social media in 2011.

The use of social media sites is more or less equally split between men and women, with men making up 51 percent of users, though networks’ popularity does differ depending on gender. Facebook, MySpace and Foursquare had a higher percentage of female users while Reddit and Digg were used by a higher percentage of men.

While interest in Tumblr, Reddit, LinkedIn, StumbleUpon and Weibo is shown to be on the rise, interest in networks like MySpace, Friendster and Ning, among others, is declining.

Habbo boasted the youngest users (ages 0-17), while Plaxo claimed the oldest (ages 65 and up). The richest users were found on LinkedIn, whereas kaixin001’s users were the most educated.

The chart also looks at average social network search interest by year, with Ignite suggesting that the public’s interest in social media as a whole may have already reached its saturation point.

Though such interest grew rapidly and steadily between 2004 and 2009, it has more or less plateaued since then, with a few minor peaks and dips in the past three years, but without the major upward trend seen in preceding years.

Ignite based its figures on data from Google Insights for Search and Google Ad Planner.

About Emily Wilkinson

Emily Wilkinson is a Montreal writer and editor who recently joined ReveNews.com. Her experience comes largely from her work at print publications like La Scena Musicale, where she alternated between positions as content manager, copy editor and journalist.
She believes in the importance of strong writing, be it in journalism or in other media, like blogging or even social networking. Her prerogative: though language will and ought to evolve, a good writer need never sacrifice the communicative power of text that is written with thought and care, whatever the venue.
Find Emily on Twitter @EditorWilkinson

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