The Net Enterprise Project

NEW DATA FROM MARKETINGSHERPA’S ANNUAL Search Marketing Benchmark Guide found that while most search marketers think they get the most bang for their buck with Google, ROI expectations for their investments with Yahoo, MSN and Ask’s search offerings are on the rise.

This June and July, the Rhode Island-based research firm surveyed more than 3,000 marketers online, and followed up with a select few for more in-depth analysis of their responses. MarketingSherpa split the respondents into groups according to their search ad spending, with average spenders (between $5,000 and $10,000 annually) making up the majority at 60%–and big spenders (over $25,000) coming in at 19%.

Average spenders were most likely to view Google’s search dominance as well-deserved, as 84% said that the search giant delivered “the best ROI for search dollars,” compared to 76% of big spenders.

A majority of both large and smaller advertisers seemed to have faith in Yahoo’s ability to innovate, and believed the Web giant would snag more of their budgets within the year. Some 60% of big spenders believed that Yahoo’s Panama advancements would “pay off with a higher share of SEM budgets in the next 12 months,” with average spenders following closely behind at 55%.

Just under half of big spenders (48%) thought that improvements to MSN’s adCenter would increase its search budget share within 12 months, followed by 42% of average spenders. Meanwhile, Ask’s new 3D interface was popular with big spenders, 40% of whom said that the engine would likely garner a greater chunk of search budgets in the coming year. In contrast, only 24% of average spenders thought that Ask’s 3D upgrade would pay off with more search share–possibly because they may not have as much cash to spend on content like rich media or video.

In terms of marketing tactics that produced the best ROI, 25% of all respondents ranked email campaigns using an in-house list as the strongest tool, followed by SEO with 18%, and paid search with 16%. In contrast, print and display ads came in at 4% and 3%, respectively.

But determining the true value of organic search is still a gray area for many businesses, as some 21% of respondents said that it was “hard to gauge” the return on SEO investments, compared to only 8% and 9% who said the same of email and paid search, respectively.

Hiring an in-house search pro also seemed to be somewhat problematic, as almost a third of all respondents (30%) said that it was “very difficult” to hire an in-house SEO specialist. 21% said the same about recruiting an SEM manager, 19% said it would be “very difficult” to hire someone just for PPC campaigns, and 12% said the same about bringing in a campaign analyst.

“It’s a tough market for in-house search employers, partly because of the market’s inherent growth, but also because the field affords a lot of mobility,” said Stefan Tornquist, research director, MarketingSherpa. “There are new companies expanding, and people can go do the same thing for them and get a 15-20% bump in pay.”

Tornquist also said that the high demand for skilled search marketers paves the way for many pros to open their own firms or make other, more lucrative moves. “Once people get the skill, and learn how to effectively drive traffic, they can start a string of affiliate sites, manage part time and collect a tidy sum.”

I HAD LUNCH TODAY WITH Grant Ryan from Eurekster, whose swicki technology aims to enable the long tail of vertical search. Meanwhile, thanks to AltSearchEngines, I now know that there are search engines that find words within songs, or speak the results, or launch from within another application, or provide two-dimensional navigable tag clouds.

On Tuesday, InfoWorld published a piece by Ephraim Schwartz called “The Demise of Google.” His basic premise? Verticals, with the capability of going into much greater depth on a given niche topic, could represent a serious challenge to the search giant.

So is Schwartz right? Will Google’s downfall come not from some upstart building a better mousetrap, but from a change in the way people approach search in the first place? I’ve set out to paint a picture of a world of predominantly vertical search.

SEATTLE — In closing a $6 billion buyout of digital marketing company aQuantive today, Microsoft is taking a first step in its quest to leapfrog Yahoo and challenge Google in the online advertising business.

“Our goal is to be No. 1 or No. 2,” Kevin Johnson, president of Microsoft Corp.’s platforms and services division, said in an interview last week.

It’s an ambitious plan, given that the software maker lags far behind Yahoo Inc. and Google Inc. in search traffic and advertising revenue.

Microsoft has said disruptive changes in the software industry — a shift away from desktop programs and toward applications delivered over the Internet — will touch every one of the company’s products, in ways yet to be determined.

With aQuantive Inc., Microsoft believes that it has cleared away some worries about how to stay profitable during the shift. Johnson said units in the two companies are being combined and reorganized to provide an advertising platform to support new Web-based services.

A new advertising and publishing solutions group is being formed, under the plan Johnson and aQuantive Chief Executive Brian McAndrews outlined last week with The Associated Press.

The group, to be led by McAndrews, includes aQuantive’s ad-serving technologies and tools for tracking the success of online ad campaigns, and DrivePM, which extends Microsoft’s ability to sell Web ads to aQuantive’s broad network of top sites.

It will also include Microsoft’s tools for selling search and display ads across its own sites, as well as Massive Inc., a company Microsoft bought last year for inserting ads within video games, and ScreenTonic, a mobile advertising company Microsoft acquired in May.

Microsoft’s online services group, led by Steve Berkowitz, will continue to focus on expanding the company’s audience on such sites as MSN and Live Search and finding new advertising partnerships like the one recently announced with the social news site Digg.com.

AQuantive’s Avenue A/Razorfish, a well-regarded Web design and online advertising agency, will operate “at arm’s length,” McAndrews said.

That means the agency will make decisions based on marketer’s needs, not on its ownership by Microsoft. Such decisions include whether to use Microsoft’s Silverlight technology instead of Adobe Inc.’s Flash, or whether to buy ads on MSN instead of Google.

Johnson and McAndrews would not say how long it could take to integrate their technology or present a united set of tools and options to customers. They also declined to say what measures, besides the growth in online ad revenue, the company will share with investors who want to assess whether the deal is successful.

Microsoft will have to post stellar improvements in traffic, search query share and advertising revenue to soothe investors’ concerns.

Google’s dominance has come primarily from its prowess at making money from ads placed next to Web search results. Google snagged nearly half of all Web searches performed in the United States in June. Yahoo grabbed about 25 percent, while 13 percent were on Microsoft’s search sites, according to audience-measurement company comScore.

But some analysts see the search-ad market starting to stagnate and believe Microsoft’s bid for aQuantive, one of a slate of buyouts in the sector this spring, indicates a looming shift in online advertising.

“The so-called long-tail advertisers that have really propelled Google’s growth for the past four years is starting to plateau,” said Andrew Frank, an analyst at research group Gartner Inc. “The next wave of growth is going to be big brands shifting their advertising budgets, still largely invested in newspapers and TV, into the Internet in earnest.”

Those marketers will be looking for much more than text links. Microsoft, with aQuantive, and Google, with its proposed $3.1 billion buyout of online ad company DoubleClick, are jockeying to put together a broad range of offerings from multimedia and display ads to mobile, video, Internet television and video games.

Analysts and online advertising players say Microsoft must get more people to visit its Web sites. To that end, Johnson said improved search technology and a new version of the Windows Live online services are due this fall.

But to be one of the top online advertising companies, analysts say Microsoft also must beef up technology that helps marketers target advertising in a way that doesn’t stir up Web surfers’ squeamishness about giving up personal information.

The software maker also will have to provide more sophisticated tools than even aQuantive currently offers to help marketers crunch the huge amount of information about how Web surfers interacted with the ads and see if their dollars were well-spent.

Some question whether Microsoft can divert enough focus from the software and entertainment businesses to really succeed as an online advertising company.

Youssef Squali, an analyst at Jeffries & Co., recalls how Microsoft executives were talking about becoming an advertising powerhouse in 2004.

“Three years later, they’ve not been able to move the needle,” Squali said. “Search [has] lost a fair amount of market share, and they’re not really getting much traction.”

In the upcoming weeks, Google will be releasing an updated algorithm to determine the ads that are displayed in the top ad spot, above the organic search results.

The updated algorithm will continue to use the quality and cost-per-click (CPC) figure but will be slightly tweaked for that top ad position. Instead of using the actual CPC, Google will use the advertiser’s maximum CPC in the overall equation. In addition, Google will be applying a stricter threshold on the quality component for the top ad positions.

Nick Fox, Product Manager of Ad Quality at Google, told me that this will help produce better quality ads in the top ad position because they are adding that stricter threshold for those ads. Plus, this will give advertisers more control over obtaining a top ad spot.

Let’s take a step back and break this out in a bit more detail.

One of the most common questions I hear in discussion forums are how does one obtain the top Google ad position.

Google uses a quality score plus CPC model to rank all their ads. In the past, to achieve a top slotted ad position, you would need to meet a certain overall threshold in both quality and CPC price. Google, as stated above, is changing that algorithm to be more sensitive of the quality component, while also adjusting the figure used to determine your CPC. Now, Google uses the “actual” CPC, but in the upcoming weeks Google will use the “maximum” CPC.

What is the difference between actual CPC and maximum CPC? Every advertiser has to set a maximum CPC for their keywords. But an advertiser won’t necessarily pay the maximum CPC price when their ad is clicked on. In fact, most of the time advertisers won’t pay that amount. Instead, they will pay an actual CPC, which is lower than their maximum CPC.

For example, say I have an ad with a maximum CPC of $0.50, but there are no competitors in my keyword ad space. In that case, I will probably pay an actual CPC of $0.05 and not the $0.50, since I’m not competing against anyone.

In the past, Google used the actual CPC in the ranking algorithm for the top ad position. In the future, Google will be using that maximum CPC. As you can see, this gives advertiser more control on achieving that top ad position. Back to our example above. This advertiser who has been noticing a $0.05 actual CPC, will now be credited for his maximum CPC of $0.50 and will thus have an easier chance at obtaining the top ad spot.

Can advertisers abuse this? Possibly, but with the stricter quality threshold, it will be less likely. It is important to note that Google said while the current algorithm weighs both quality and CPC somewhat equally, the new algorithm for the top ad position will weigh quality substantially more heavily then they have in the past [NOTE: Google has followed up now to say that quality is weighted more heavily now and in the new system, the combined threshold of quality and CPC will be higher. We're double-checking further on this]. Google is implementing this new algorithm change so that those top ads will have a higher quality, so I suspect their tests proved to yield a high quality outcome.

So who will be impacted by this change? Well, right off the bat, those who have top ad positions for their ads will see a lot more competition in those areas. However, Nick Fox told me that there will be a “relatively limited” number of advertisers impacted by this change.

Again, there is no specific date as to when this new algorithm change will go live. It is expected to happen within the next “few weeks.” Google is letting us know now so that we have time to prepare for the change.

In Summary:

Benefits

• Better quality ads in the top ad position for searchers
• More control for advertisers over their ads achieving the top ad position

Algorithm Modification

• Moving from using “actual” CPC to “maximum” CPC
• Placing a stricter threshold on quality of those ads

Postscript: I have further clarification from Google saying that in the current formula for ranking, they weigh both CPC and quality equally. They also added that for the current promotion formula, quality is rated more heavily, and that’s not changing.

Postscript 2: To clarify, you will not be billed the maximum CPC for those top ads. You will still be charged the “actual” CPC. Google sent me this additional information about this concern:

Your actual CPC will continue to be determined by the auction, but subject to a minimum price for top spots. The minimum price is based on the quality of your ad and is the minimum amount required for your ad to achieve top placement above Google search results. As always, the higher your ad’s quality, the less you will pay. And you will never be charged more than your maximum CPC bid.

WHAT BUSINESS IS GOOGLE IN? That question has been debated as much in the past two years as war strategies and national budgets. We stand just over 15 months from the election of the next U.S. president, and one thing is clear. Regardless of the debate around Google’s business, it is clear that Google is in the political business right now.

Much was made over the recent Democratic Candidate debate, presented on CNN in conjunction with the Google property YouTube. It was hailed as a breakthrough in connecting the almighty “youth” segment with the political process. But, why Google and YouTube? Clearly those companies exemplify the new wave of innovation and entrepreneurialship that is once again driving the markets and our culture, but is there a method to Google’s madness here?

There are three areas that show why The Manchurian Candidate may be alive and well — but this time, could the presidency be directly decided by an agenda that is all about Google?

 The ‘Air’ Wave of Change

There is a pending 700 mHz spectrum auction being overseen by the Federal Communications Commission. This is the space that large carriers like Sprint and Verizon play in and are after in order to expand their own mobile networks and the profit-generating content they provide. Google has stated an interest in being a part of this auction and was striving to have the rules of what is required of winners in the auction changed.

Google has stated it will bid the requisite $4.6 billion to participate if it is required that the winner lease access to the airwaves at wholesale rates. Google and others believe that if this were to happen, it would open up competition in the mobile application space, which has lagged behind other developed networks, especially those in Europe. FCC Chairman Kevin Martin has said that if Google’s changes are incorporated into the process, it may make others “less willing” to build out that network. His proposal is that the winners be allowed — but not required — to lease at wholesale rates.

Last week the final rules for auction were approved. Martin’s proposal was approved, and the new system will require winners to allow all parties to use any device or application on their networks in the purchased band, with certain conditions. This means that Google and the whispers of its new GPhone and its enormous development team can turn their attention to application developments to expand its reach in the mobile space, more so than ever before. So, while Google did not get the full extent of its request approved, it certainly marks an important development in an area where Google aims to be a significant player going forward.

A Multi-Party System or a Monopoly

While Google looks at spending potentially $4.6 billion on the wireless auction, it has another multi-billion dollar matter it would like to have settled. That, of course, is its acquisition of DoubleClick. Announced in April, the deal has been met with significant backlash and questioning from all corners. Currently the deal awaits Federal Trade Commission approval. At stake is potential control of the Web advertising ecosystem. A marriage of Google & DoubleClick creates a clear pecking order for all advertising online — an order that would once again put Yahoo and Microsoft in a trailing position.

While Microsoft’s acquisition of Aquantive and Yahoo’s purchase of Right Media have swiftly moved through the FTC oversight process, the Google deal lingers. Why? Many say an acquisition of this nature makes Google an online monopoly. Scott Cleland, president of telecom consulting firm Precursor LLC, released a white paper in which he suggested, “With [about] 60% share of each of their respective technology platforms, search and display, technologies which are mutually-reinforcing, the combination would enable a horizontal merger to monopoly, which would harm users, advertisers and content providers with higher prices and less choice.” And if the FTC review wasn’t enough, the European Commission has also opened up an investigation.

Beyond the monopoly issue sits an even greater concern for many groups around privacy and data retention. While Google has made noted commitments recently, groups such as the Electronic Privacy Information Center and the Center for Digital Democracy have urged the blocking of the acquisition unless Google can present a plan to comply with previously established standards for online advertising conduct. The groups stressed that the increased collection of personal information of Internet users by Internet advertisers poses far-reaching privacy concerns that the FTC should address.

All of this adds up to the greatest challenge to-date for the Golden Empire that is Google. Where Microsoft and Yahoo have failed in their attempts to compete and succeed against Google, now Google finds government regulations and watchdog groups barking loudest and presenting the most real hurdle to long-term success beyond the confines of search activity.

 Buying an Election

A USA Today story from 2005 detailed the burgeoning impact that a growing company, flush with IPO riches, could have in the political spectrum. During the 2000 campaign Google employees contributed a whopping $250 to political campaigns. By the 2004 campaign that number was up to $207,000. When compared to the $3.1 million contributed by Microsoft employees, it was clear that Google had yet to flex any political muscle.

But, where it gets interesting is when you look at the updated details and who is getting the money. As measured by the Center for Responsive Politics, companies classified in the Computers/Internet sector contributed 54% of their dollars to Democrats in 2004, and 52% in 2006. By contrast, Google contributions skewed much more Democratic, with 99% of contributions going to Democrats in 2004, and 91% in 2006.

It is expected that the eventual presidential nominees coming out of the two parties will need to have raised half a billion dollars to reach the finish line of this race. To date, Google employees have out-contributed Microsoft employees toward the 2008 presidential candidates — a stark contrast to the 10:1 contribution margin that existed in 2006. Google has also lost one of its early employees to the presidential campaign of a prominent Democratic campaign, and overall contributions are firmly maintaining the 90-10 Democrat/Republican split. Of final note, neither Larry Page nor Sergey Brin has contributed directly to a presidential campaign since starting Google.

  The Net Gain for Google

 It is a well-established fact that any change in commander-in-chief, like a change in Congress, has a dramatic and substantial impact on companies in all sectors. As Google tries to rewrite the rules on how advertising is done and expands its reach into all spectrums of communications, the importance of Washington will only grow. Over the past two years Google has grown its Washington lobbyists base from 0 to 12 (a sizable number for a technology company), hosted four 2008 presidential candidates on its campus (three Dems, one Republican) and established its own political action committee that has already out-raised its 2006 total.

 So, will the next president be hand-picked by Google? No. But the money and interests of Google and its employees will most certainly influence who becomes the 44th President of the United States and how Google develops its business in the next four years.

A COUPLE OF WEEKS AGO, Google announced the expansion of its Print Ads initiative. As the name suggests, the program offers advertisers and agencies the ability to purchase print ads in more than 225 newspapers nationwide, including The New York Times, The Seattle Times, and the Washington Post.

The growth of Google Print Ads, which was first launched this past November, is indicative of the ever-increasing integration of our online and offline worlds. Faced with consumers who can choose exactly what they look at, when, and through what medium, advertisers have to follow their targets around, ready to serve up promotional content at a moment’s notice.

It’s not enough to stalk consumers, though. Recently on Mobile Insider, Steve Smith made a wise observation: “How do you move from being noticed by consumers to being of use to them?”

I say that this is a wise observation because the extraordinary discretion users now have in what they choose to look at is forcing advertisers to rethink their role. It’s no longer enough to focus on delivering the client’s message. You have to provide the user with a reason to care; otherwise they’ll close the pop-up box, put a skin over the ad bar, or TiVo the program and skip the commercials.

Product placement was the first approach to ensuring a brand actually makes it to the eyes of the consumer, and it’s been working since Seinfeld first hung a Klein bike in his living room. Last year, Microsoft confirmed the value of the concept, paying $200 million to buy Massive and its in-video-game ad network.

At the time of the purchase, Joanne Bradford, Microsoft’s corporate vice president of global sales and marketing and chief media revenue officer, said, “Advertisers are having a tough time connecting with the elusive 18- to 34-year-old male demographic because this group continues to spend less time watching TV and more time playing video games.”

In other words, it’s the advertisers’ responsibility to adapt to the consumers, not the other way around.

While product placement is effective, it doesn’t supply the full range of messaging offered by traditional advertising. By definition, it’s tangential to the context in which it’s delivered. Advertisers frequently need to deliver more robust information, but the trick is getting users to read it, watch it or listen to it.

Back to Steve Smith. If we take it as a given that users have infinite choice and zero obligation to absorb our advertising messages, then we have to change the way we think about the messages we provide. As Steve says, we have to focus on being of use to the consumers.

If advertisers deliver value through the ads, then consumers have a motivation to pay attention. The trick is to make sure the giveaway is intricately linked to the product or service.

What does this involve? It means thinking of ads as a service to the consumer rather than a message from the advertiser. In that same piece, Steve uses as an example a Cover Girl campaign that offers an “interactive skin color chart that lets users find the right cosmetic color.”

Allowing the user to participate in the sales process this way means that she’s more invested in the relationship and she can feel confident that Cover Girl cosmetics will look good on her. She’s gotten value - the value that helps build brand loyalty.

We hear a lot about the customer service mentality. In a buyers’ world, that mentality has to start with the ad.

GOOGLE IS MASTERING the art of the low-key announcement. Increasingly it’s been rolling out changes that have the potential to be fundamentally earthshaking with little or no fanfare and, to this point, it seem to be successful in minimizing the pickup.

Take last week’s announcement, for example. Susan Wojcicki, vice president, product management, quietly announced at a press briefing that Google is offering more targeting functionality on its search ads.

Now of course, as Google moves more towards personalization, I’ve been saying that the introduction of ad targeting, specifically behavioral targeting, has been inevitable. In various interviews, Google representatives, including Nick Fox and Marissa Mayer, have consistently said that whatever factors there are for determining relevancy on the organic listings will eventually also be brought into play on the sponsored listings. The goal for Google is to ensure that all the results, organic and sponsored, are highly relevant to the user.

Whispers of World Domination

What’s notable about this development is not so much the additional functionality that’s been introduced, but the way it was introduced. There seems to be a consistent pattern emerging with these announcements, where the language is very carefully determined and the releases are made with minimal fanfare. My belief is that it’s part of an overall strategy to minimize the pushback to the incremental introduction of higher levels of personalization and behavioral targeting.

First of all, let’s look at what exactly increase functionality means. At this point, targeting is only determined by groups of searches done at the same time. So, for example, if you first search for “Paris France” and then search for “Hotel specials.” Google will likely show you sponsored results specific to Paris, even though you didn’t specify Paris in your second query. While this move is logical and smart, and therefore will be accepted gladly by advertisers, it’s fairly benign for the user. You can see there’s nothing particularly sinister about putting together a couple of searches, especially if they’re done one right after the other. Fellow Search Insider Mark Simon talked more about this development in Monday’s column .

Search Spin Doctors

So if this offers a potentially differentiating value for Google and its ads, why did the company introduce it so quietly? The announcement was quietly slipped under the door of a few industry publications like Search Engine Land , and there was the small piece on Reuters . There was virtually no pick-up. Even advertisers weren’t given a heads-up that Google was rolling out this functionality. Google further proved its mastery of the understated release by somehow convincing Reuter reporter Eric Auchard to lead the story with the title “Google wary of behavioral targeting and online ads.” I’m still not sure how the company managed this particular piece of sleight-of-hand.

Also telling is how Google’s back gets up if the words behavioral targeting are even used in context with these new developments. As Mark astutely points out, even though Google is adamantly saying this isn’t behavioral targeting, it is, of course. Google can play around with semantics all it wants, but this is very definitely behavioral targeting. In multiple interviews with me and others, company strategists have gone out of their way to explain how their approach has nothing to do with profiles and segmentation. The language used by Nick Fox and Susan Wojcicki made it very clear that this is all about the context of the task you’re engaged in right now, and nothing is retained or remembered to build a profile. Google is doing everything it can to distance itself from the world of “traditional behavioral targeting” practiced by Tacoda and Revenue Science.

So why the soft sell? And why the pushback on behavioral targeting? I believe it’s all part of a carefully measured strategy that will incrementally roll personalization into everything that Google does, including the serving of ads. On that Mark Simon and I definitely agree (perhaps I’m “in my Gord” on this one). But the move toward personalization is a long slow tango with the user. Actually, it’s more like the Bolero. Everything is heading in that one direction, but the intensity will definitely pick up as we move along.

Moving Toward Win/Win for Both Advertisers and Users

I had a chance to chat with Larry Cornett from Yahoo last week about search user interfaces. We talked about the fact that user acceptance of personalization will be a moving target. As the wins for the user increase as functionality is rolled out, the resistance to surrendering personal information lessens.

I believe Google is acutely aware of this quid pro quo factor and is carefully playing its personalization cards one at a time so as not to spook the user. There’s just too much at risk for Google, especially on the search results page, if users begin to lose trust in the ads.

And, as I’ve mentioned before, that first time you know you’ve been behaviorally targeted, it can be jarring. It takes a while for the user to get used to the efficiency of behavioral targeting. We’re not quick to forget that advertisers have been screaming at us with irrelevant and bogus sales pitches for the better part of a century now. It scares the hell out of us to think that advertisers might have access to personal information that would allow them not only to scream at us, but also know our name, where we live and what Web sites we look at when we have five minutes to goof off.

But I believe the stand that Google currently taking about the use of personal information as a signal for serving ads is a temporary one. It’s a line drawn in the sand, and as user sensitivity around targeting and personalization begins to drop, as it inevitably will, Google will be a little less reluctant to use the words behavioral targeting.

If you look at the big picture and the pieces of the network that Google is beginning to assemble, it’s very difficult to see any other path than personal targeting in the future. But don’t expect any big earthshaking announcements from Google about it in the near future.

SPENDING ON INTERNET ADVERTISING WILL reach $61.98 billion, and will surpass newspapers to become the nation’s leading ad medium in 2011, projects private equity firm Veronis Suhler Stevenson in its 21st Communications Industry Forecast released today.

At the same time, the consumer migration to digital media–which require less time investment than traditional media counterparts (think 3-minute YouTube clips versus 30-minute TV shows)–has spawned a year-over-year decline in the amount of time consumers spent with media, VSS researchers say. The tally came in at 3,530 hours in 2006, a per-capita decrease of 0.5%. It’s the first time since 1997, researchers say, that such a behavior has occurred.

Consumers are also migrating away from ad-supported media and spending more time with media they support, according to the VSS Forecast. Consumers spent an average of 1,631 hours in 2006 with consumer-supported media, such as the Internet and video games–a gain of 19.8% compared to 2001. Time spent with ad-supported media, such as broadcast television and newspapers, has fallen 6.3% since 2001 to 1,899 hours per person.

Total communications spending for 2006 increased 6.8% to a record $885.2 billion and the compound annual growth rate (CAGR) of 5.9% from 2001 to 2006 outpaced the nominal GDP, the VSS Forecast reports.

According to the VSS Forecast, which was prepared in part using proprietary data from PQ Media’s Alternate Media Outlook:

• Ad spending on pure-play Internet sites reached $15.1 billion for 2006, and is projected to hit $34.78 billion in 2011, for a CAGR of 18.2%.

   

• Growth of 25.79% is projected for ad spending on traditional media-based Internet sites, which hit $8.585 billion in 2006, and is projected to reach $27.2 billion in 2011.

   

• National Internet advertising, which includes search, display, sponsorships, etc., is projected to remain the dominant dollar-generator with $38.897 billion forecast for 2011, representing an 18.2% CAGR from 2006-2011.

   

• Blog, podcast and RSS advertising is projected to reach $1.138 billion by 2011, registering the fastest growth rate at a 70.9% CAGR forecast from 2006-2011.

Pull advertising is a necessity of distributed media advertising. As media have continued to fragment, I have seen arguments for Webs site publishers to play an active role in pulling the advertising content most appropriate for their site/audience. I have also seen arguments that the users viewing the advertisement are the most appropriate source of advertisement pull (after all, they are the end consumers). But, when the those publishing the content are also the target consumers for a given brand, such as is the case in social media, then the necessity of pull is enhanced exponentially. On the other hand, in a medium where the “publisher is the consumer,” the argument of whether it should be the consumer or the publisher who pulls the ad content becomes instantly moot. What remains is how. How do advertisers create, participate and execute in pull advertising markets? How does an advertiser extract value from a market focused on maximizing message pull, instead of focusing on maximizing message reach?

The concept of pull advertising isn’t entirely novel. As an advertiser, you simply figure out the best way to ask to have people help you sell your brand for you. The apparel industry has this down (but we will come back to this point next week). The trouble is that, as an industry, brand advertisers and their agencies are entrenched in the broadcast model of advertising. That is, the brand advertising industry is so heavily focused on, and incentivized by, the ability to buy attention that it can’t get out of its own way to realize the value in the data that no one, given the choice, would like to pay attention to. This is one of those unique attributes of social media we discussed last week that has the potential to solve the accountability issue of brand advertising. When “the publisher is the consumer,” there is the potential for the publisher advertisement pull markets to deliver unparalleled consumer feedback.

To simplify: There is far more value in the data associated with the dialogue of asking a person to pull your brand than there is in the onetime delivery/distribution of your message. Furthermore, there is far more value in the delivery/distribution of your message when it has been pulled to begin with.

There are a couple of reasons for this. First, there is a greater likelihood that your message will receive active attention when viewers know that the person (from professional producer to YouTube star) whose content they have come to view has chosen your message as their own. Second, messages pulled by target publishers are more likely to be creative ones that better resonate with your target consumer — that is, when the “publisher is the consumer.”

There are countless areas in which pull advertising markets can deliver so much more rich data to brand advertisers — but this isn’t possible until two things happen. First, that better systems, capable of enabling, enticing and capturing massive amounts publisher participation data, are introduced. Second, advertisers and agencies must let go, just enough, of the idea of success equaling volume of broadcast attention purchased, and instead look at success as the quality of pull attention given. Advertisers and agencies need to open up to the idea that, maybe, simply ensuring that you spend all of an advertiser’s allotted budget before you even begin a campaign might be a little backwards — especially when social media brand advertising campaigns have the potential for real optimization, in response to publisher pull. You don’t spend your AdWords budget up front. Why would you want clicks that aren’t good ones, just to be guaranteed clicks? Brand advertisers should ask themselves the same question. Why would you want impressions that aren’t good ones, just to be guaranteed impressions? Reach does not equal success; quality equals success.

The beauty of this is that all of brand advertising can actually be more measurable for brand advertisers simply by monitoring the data of the dialogue as they ask publishers for brand pull — that is, when the publisher is the consumer.