Viewpoint West Partners

Forecast: Online Will Take More Ad Dollars Than Newspapers By 2015

 

Robert Andrews  -  Dec 8, 2009 7:09 AM ET

Is the upswing in effect? Three industry forecasts are raising their expectations for next year’s ad spend…

Magna Global is predicting a six-percent rise, GroupM just 0.8 percent, and ZenithOptimedia is raising its cross-media global advertising forecast for the first time in 18 months, projecting a 0.9 percent 2010 uplift (up from the previous 0.5 percent growth forecast), buoyed by ongoing internet growth and a TV ad recovery.

The net was the only medium to attract more money in 2009 in Zenith’s figures, though its growth curve is flatter than the early-2000s heyday growth of 40+ percent a year. It’s now on track for more modest but consistent growth pace of 9.5 percent (2010), 12 percent (2011) and 13 percent (2012), in line with that of TV, which will remain the dominant medium.

While those two media will go on attracting more money up to 2012, all others are flat or in decline. Though newspapers now enjoy a 10.9 percent lead over the internet for share of ad dollars, the lead will slim to just 3.8 percent by 2012, when the internet will take 16.2 percent of all spend.

Zenith says: “We expect the internet to overtake newspapers to become the world’s second-largest advertising medium by the time we are half-way through the next decade.”

From Zenith’s forecast: “The downturn has accelerated the structural shift of budgets from traditional media to the internet; in a time when marketing departments have to justify every dollar they spend, the rapid and clear returns offered by internet advertising are more attractive than the longer-term brand-building benefits offered by other media.”

But online’s growth is thanks more to the continuing success of the paid-search model, which attracted 15 percent more money this year and is forecast for the same growth in the next three years, taking 53 percent of all internet spend. Displayadvertising online grew just six percent this year and classifieds just two percent.

—Magna: The most optimistic of the big three ad agency forecasters, Brian Wieser, expects online revenue to reach $60 billion worldwide in 2010, hitting $99 billion by 2015. By that point, online ads will account for 21 percent of all major media spending. Next year, though, that share number will be 16 percent—putting it into perspective, Wieser notes that online’s share was less than 3 percent in 2000. The growth is the result of other media losing share, particularly print, as magazines will have fallen slightly ($40 billion in advertising revenues during 2000, and $35 billion in advertising revenues expected in 2015) and newspapers will be down similarly (from $97 billion in 2000 to $92 billion in 2015).

—GroupM: While talk of even a minimal gains sounds encouraging, any growth in the U.S. and Western Europe will continue to remain fairly weak. The so-called BRIC nations (Brazil, Russia, India, Indonesia and China) are expected to lead the recovery, according to a report from GroupM Futures Director Adam Smith in London and the agency’s Chief Investment Officer Rino Scanzoni in New York. Total ad spending in the U.S. is expected to fall 8 percent this year followed by an anticipated 4.3 percent drop in 2010, according to the report. 

(via paidContent.org)

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Yahoo, Verizon: Our Spy Capabilities Would ‘Shock’, ‘Confuse’ Consumers -- Wired.com

By Kim Zetter  

December 1, 2009  |  

3:30 pm  |  

Want to know how much phone companies and internet service providers charge to funnel your private communications or records to U.S. law enforcement and spy agencies?

That’s the question muckraker and Indiana University graduate student Christopher Soghoian asked all agencies within the Department of Justice, under a Freedom of Information Act (FOIA) request filed a few months ago. But before the agencies could provide the data, Verizon and Yahoo intervened and filed an objection on grounds that, among other things, they would be ridiculed and publicly shamed were their surveillance price sheets made public.

Yahoo writes in its 12-page objection letter (.pdf), that if its pricing information were disclosed to Soghoian, he would use it “to ’shame’ Yahoo! and other companies — and to ’shock’ their customers.”

“Therefore, release of Yahoo!’s information is reasonably likely to lead to impairment of its reputation for protection of user privacy and security, which is a competitive disadvantage for technology companies,” the company writes.

“Customers may see a listing of records, information or assistance that is available only to law enforcement,” Verizon writes in its letter, “but call in to Verizon and seek those same services. Such calls would stretch limited resources, especially those that are reserved only for law enforcement emergencies.”Verizon took a different stance. It objected to the release (.pdf) of its Law Enforcement Legal Compliance Guide because it might “confuse” customers and lead them to think that records and surveillance capabilities available only to law enforcement would be available to them as well — resulting in a flood of customer calls to the company asking for trap and trace orders.

Other customers, upon seeing the types of surveillance law enforcement can do, might “become unnecessarily afraid that their lines have been tapped or call Verizon to ask if their lines are tapped (a question we cannot answer).”

Verizon does disclose a little tidbit in its letter, saying that the company receives “tens of thousands” of requests annually for customer records and information from law enforcement agencies.

Soghoian filed his records request to discover how much law enforcement agencies — and thus U.S. taxpayers — are paying for spy documents and surveillance services with the aim of trying to deduce from this how often such requests are being made. Soghoian explained his theory on his blog, Slight Paranoia:

In the summer of 2009, I decided to try and follow the money trail in order to determine how often Internet firms were disclosing their customers’ private information to the government. I theorized that if I could obtain the price lists of each ISP, detailing the price for each kind of service, and invoices paid by the various parts of the Federal government, then I might be able to reverse engineer some approximate statistics. In order to obtain these documents, I filed Freedom of Information Act requests with every part of the Department of Justice that I could think of.

The first DoJ agency to respond to his request was the U.S. Marshals Service (USMS), which indicated that it had price lists available for Cox Communications, Comcast, Yahoo and Verizon. But because the companies voluntarily provided the price lists to the government, the FOIA allows the companies an opportunity to object to the disclosure of their data under various exemptions. Comcast and Cox were fine with the disclosure, Soghoian reported.

He found that Cox Communications charges $2,500 to fulfill a pen register/trap-and-trace order for 60 days, and $2,000 for each additional 60-day-interval. It charges $3,500 for the first 30 days of a wiretap, and $2,500 for each additional 30 days. Thirty days worth of a customer’s call detail records costs $40.

Comcast’s pricing list, which was already leaked to the internet in 2007, indicated that it charges at least $1,000 for the first month of a wiretap, and $750 per month thereafter.

But Verizon and Yahoo took offense at the request.

Yahoo objected on grounds that its pricing constituted “confidential commercial information” and citedExemption 4 of the Freedom of Information Act and the Trade Secrets Act.

Exemption 4 of the FOIA refers to the disclosure of commercial or financial information that could result in a competitive disadvantage to the company if it were publicly disclosed. The company claims its pricing is derived from labor rates for employees and overhead and, therefore, disclosing the information would provide clues to its operating costs — regardless of whether these same clues are already available in public records, such as those the company files with the Securities and Exchange Commission. The company also claims that since Soghoian is trying to determine the actual amounts the Marshals Service paid Yahoo for responding to requests, the price lists are irrelevant, since “there are no standard prices for these transactions.”

But equally important to Yahoo’s objections was the potential for “criticism” and ridicule. Yahoo quoted Soghoian on his blog writing that his aim was to “use this blog to shame the corporations that continue to do harm to user online privacy.”

Yahoo also objected to the disclosure of its letter objecting to the disclosure of pricing information saying that “release of this letter would likely cause substantial competitive harm” to the company. The company added, in a veiled threat, that if the Marshals Service were to show anyone its letter objecting to the disclosure of pricing information, it could “impair the government’s ability to obtain information necessary for making appropriate decisions with regard to future FOIA requests.”

If anyone out there has a copy of Verizon or Yahoo’s law enforcement pricing list and wants to share it, feel free to use our anonymous tip address.

Image: FBI.gov

via www.wired.com

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