MediaSavvy

MSNBC reports that 43 percent of Americans say online advertising is “a nuisance” and 53 percent of active Web users are irritated by online ad clutter:

To be fair, clutter is considered a problem all over, with 75 percent of Americans saying that advertising is shown in “far too many places,” Roper found. TV commercials annoy 65 percent of Americans, and 56 percent object to the ads in print publications, Roper found.

But impatience with online ads is growing faster than with traditional media, according to Roper, posing a bigger problem for Web publishers who are still trying to prove the Internet’s marketing power.

While 38 percent of consumers found online ads to be “useful and informative,” an almost equal number, or 37 percent, found “almost none” of them to be useful and informative, the survey found. By comparison, 78 percent of Americans believe at least some TV commercials are “useful and informative.”

“This is a critical time for online advertising,” said Jon Berry, senior research director of Roper Reports. “In terms of usefulness, online ads have a long way to go to catch up to other media.”

Roper loses credibility points for having no information about this study on their site.

Let’s face it, the advertising industry doesn’t care whether it’s irritating or intrusive, only whether it’s effective. I’m not sure anyone in the ad industry puts a lot of stock in whether consumers find their ads to be useful and informative, only in whether they take an action or change their attitudes.

Having said that, it’s pathetic that online advertising isn’t considered at least as useful and informative as (gasp) TV advertising. Utility and information are what the Net is about, yes? [Thanks, MarketingFix!]

CMR/TNS Media Intelligence says that Internet advertising will grow 7.4% in 2003, after declining 12% to $5.7 billion in 2002.

This makes Internet advertising five to ten times the size of the paid content market, depending how you define content.

The biggest sites will probably get the largest share of this increase.

I’m winding down bashing the OPA’s billion-dollar-content report, which does contain a lot of good information. But I have one last question: why are personals included in their definition of content, when you can read the listings for free, but have to pay to add your own listing?

Shouldn’t personals be classified (no pun intended) as advertising?

I got a thoughtful and irritable reply from Rick Bruner of MarketingFix on my analysis of the Online Publishers’ Association study of the size of the content market. Rick has gotten me to refine my thinking (but not to change my mind).

Defining content is really hard. I’m leaning toward dumping the term entirely because it’s so vague as to be meaningless. I think the OPA has exploited this vagueness to overstate the size of the market that online publishers can address.

I would include the following in my definition of content:

• News & Information: General news, magazines (consumer reports, salon), horoscopes. Excludes Business & Investing. Includes archive database revenue from a single site. Excludes aggregated content databases, such as Northern Light.
• Business & Investing: Wall Street Journal, TheStreet.com, Smartmoney. Does not include stock prices.
• Databases: Hoovers, Northern Light, Ancestry.com, stock prices. Includes database that aggregates information from multiple sources for flexible searching.

I would exclude the following from my definition of content:

• Services: Includes greeting cards, online games, fantasy sports, email, and personals. Personals aren’t content, they’re a service. You can browse the listings on Match.com for free. You pay to add your name to the database and to get contact information on people you want to meet. It’s not clear how much of Yahoo’s and MSN’s “content” revenue comes from services.
• Music: This seems like a different thing altogether. It’s produced, delivered, and consumed differently, using different media. It’s more like software than it is like published content. This includes streaming and downloadable music.
• Electronic documents: Credit reports, people trackers, and vehicle histories feel more like ebooks–single, indivisible lumps of content sold and delivered electronically. Aside from the fact that they’re delivered electronically, this business is a lot like selling books.
• Pornography (hard & soft core): Includes webcams, amateur sites, Playboy.com, etc. No one is buying Playboy.com for the articles.

What’s my objection to the OPA’s definition of content? Rick says on MarketingFix:

For those who maintain “users won’t pay for content,” I reply “neener, neener, neener.” Paid content would appear to now amount to roughly 20% of all revenue for online publishers, and spending for content roughly doubled in 2002 over 2001.

Rick seems to be saying that “online publishers” are getting all $1.3 billion–about 20% of the $6 billion in online advertising in emarketer’s 2002 estimate. He’s making the mistake the OPA wants everyone to make: inferring that there’s $1.3 billion dollars out there for online publishers to get their hands on.

But (a) Two thirds of this revenue will go to companies that cannot be described as “publishers”, (b) ten percent of the remainder is going to one property, the Wall Street Journal [NOTE: this used to read 1/3, but I overestimated the revenue of the WSJ], and (c) the growth rate of the revenue available to publishers is a lot less than 100%.

My conclusion from the OPA study:

Paid content is less than 10% of all revenue for online publishers, and that share will not grow in 2003. However, there does appear to be an opportunity for online publishers to increase non-advertising revenue by using their sites to sell services to their readers. The market for online services is twice as large and growing five times as fast as the content market.

Emarketer has an interesting description of how they arrived at their broadband forecast.

I’ve done a lot of forecasts, and taught forecasting at IDC, and I think this is a good description of one way to approach the problem. This is worth reading. Emarketer is very smart, their forecasts are reasonable, and I really admire their presentation.

The Online Publishers Association is promoting a study [PDF] that says online content sales in the U.S. totaled $1.3 billion in 2002, an increase of 95% over 2001.

However, a closer examination of the data makes this billion-dollar figure suspicious. Here are some of my observations from their top 25, which I have classified into Content, Service, Entertainment, and Database:

• The single biggest category is more properly described as “services”. It includes Yahoo, MSN, and personals.
• Yahoo is seeing results from its efforts to increase revenues from fees, and MSN is falling behind.
• Financial information is the biggest contributor to true content sale, with sales of $292 million.
• The OPA describes financial content as “maturing”, with a growth rate of 18%.
• Sales of “General News” rose from $52 million to $70 million. No “General News” site was in the top 25.
• Consumer Reports and Encyclopedia Britannica are the two true consumer content brands on the list.
• Consumer Reports has fallen from #5 to #11.
• The IEEE.org site sells conferences, so it’s not clear how much of their revenue is really for content.
• Pressplay, the much-maligned music service, is on the list at #22.
• ESPN’s revenues are apparently mostly from fantasy sports games.
• It’s not clear why Playboy is on the list, since “pornography” is excluded from the survey.

Here are the top 25 content sites, according to the OPA:

		Content	Service	Entertainment	Database
1	yahoo.com		up from #4
2	match.com		personals
3	real.com			down from #1
4	classmates.com		friend finder
5	wsj.com	down from #2
6	weightwatchers.com		x
7	ancestry.com				x
8	consumerinfo.com				credit reports
9	matchmaker.com		personals
10	1800ussearch.com				people tracker
11	consumerreports.org	down from #5
12	espn.go.com		fantasy games
13	carfax.com				vehicle history
14	thestreet.com	no change
15	bluemountain.com		greeting cards
16	playboy.com			OPA says it excludes “pornography”
17	kiss.com		personals
18	msn.com		down from #15
19	egreetings.com		greeting cards
20	ieee.org	Does this include conference sales from web site?
21	arttoday.com		ugly clipart
22	pressplay.com			Music service
23	britannica.com	x
24	astrology.com			x
25	smartmoney.com	no change