The marketing industry was rocked in 2010 by an influx of significant events that changed the way we do business. The following list is my picks for the 6 Events that Shifted the Online Marketing Landscape in 2010.
1) Net Neutrality and the FCC’s rulings
Net Neutrality isn’t sexy enough to stay in the foreground of topics that merit discussion in the general population at large, or the marketing industry in particular. Often described in dry, technical language, the layman’s (aka the voter) understanding is vague, especially since little air time or print space has been devoted to educating the masses. The idea of nefarious companies “choking” off access to the internet seems about as real as a James Bond plot. Even within the online community raising awareness or creating dialogue has been difficult. As Amber Naslund, Director of Community for Radian6, pointed out:
“I think it’s a conversation that the social media community really hasn’t adopted, which is unfortunate. The tech community has been talking about [Net Neutrality] for years but I think the social media community…[is] not as interested as getting into the ’nitty-gritty’ of technological implications.”
In retrospect, that makes Steve Rubel’s, SVP/Director of Insights for Edelman Digital, quip at Blogworld ’09 during his fireside chat with Guy Kawaski all the more telling: “Net Neutrality? I’m sure the government will take care of it.”
Perhaps Steve was prescient because the Federal Communications Commission (FCC) fumbled to do just that on December 21, 2010. FCC Chairman Julius Genachowski, was all air and hyperbole when he announced that, “For the first time we’ll have enforceable rules of the road to preserve Internet freedom and openness.” He also added that the FCC would “fulfill its historic role as a cop on the beat.”
Of course the FCC is the kind of cop that doesn’t pay much attention to their beat and needed to be spurred to duty by the likes of Verizon and Google. Verizon’s official response to the FCC ruling was telling:
“This assertion of authority without solid statutory underpinnings will yield continued uncertainty for industry, innovators, and investors. In the long run, that is harmful to consumers and the nation.”
Maybe that’s because, according to Wired, Verizon has a different model in mind (see satirical graphic, above right, from net neutrality advocates). What does this all have to do with marketing? Think of it as a case of ”he who controls access controls the market.” And then think of the cost of your ad buy premiums going up. Still too vague? Thank goodness for Michael Ciarlo and TheOpenInter.net for helping provide a visual.
2) FTC Privacy Initiatives
If it’s not one misguided attempt by government to regulate it’s another. Spurred by fears over the insidiousness of behavioral tracking the Federal Trade Commission (FTC) issued a document with the snappy title, “A Preliminary FTC Staff Report on Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers.” The document carried a ticking time bomb in the form of a mechanism that the FTC likened to “a persistent setting on consumers’ browsers – so consumers can choose whether to allow the collection of data regarding their online searching and browsing activities.”
David Goldman, of CNNMoney.com, predicted the guidelines had the potential to “cripple” Google and Facebook since their service models are built on the ability to track consumers. Google and Facebook would not be the only victims of a blanket “Do Not Track” ruling. As the New York Times suggests a “Do Not Track” system:
“Would cause major harm to the companies like online advertising networks, small and midsize publishers and technology companies like Yahoo that earn a large percentage of their revenue from advertising that is tailored to users based on the sites they have visited.”
The Internet Advertising Bureau was quick to claim that its “Self-Regulatory Program for Online Behavioral Advertising” policy already addresses this issue. This policy was born in response to the FTC’s not-so-veiled threat of “Police Yourselves or We Will Do It for You.” Of course, as consumer watchdogs groups point out, the IAB’s “self-regulation” policy is unlikely to work amidst a coalition of marketers all competing for their share of a projected $51–$72 billion piece of the pie.
Ironically, as Adam Thierer at The Technology Liberation Front observes, “depending on how it’s implemented, a ‘Do Not Track’ mechanism could potentially require individuals to surrender more personal information about themselves to companies or the government for purposes of authentication and enforcement of the rule.”
For the moment the industry has to wait and see just how the FTC will move to enforce its new framework.
3) Facebook Launches Places and Deals
Mark Zuckerberg seems to have a talent for co-opting good ideas, so it should have come as no surprise when Facebook moved to take over the concept (heck they even took out a patent) of check-in and location-based services (LBS). Think of SXSW as the catalyst. As Foursquare and Gowalla were stealing the buzz with their Austin street fight, it’s easy to imagine the world’s youngest billionaire and crew thinking to themselves: “We could own that space.”
Thanks to a deal with Localeze, Facebook rolled out Facebook Places fully loaded with 14 million business records. The deal also gave Facebook access to all TomTom GPS users. And that’s just the tip of the iceberg, as AdAge pointed out:
“Foursquare and Gowalla combined have just a few million users. Facebook has north of half a billion. When Facebook gets into a market, they bring everyone. Literally, everyone.”
Of course condemning Foursquare and Gowalla to mediocrity was just a bonus. As the New York Times easily guessed, “Facebook’s long-term goal with Places appears to be to capture the largely untapped advertising opportunity that local and small businesses offer.” The real game all along for Facebook was to tap into the estimated $100 billion market for local advertising. With a one-two combination it set out to do just that, launching Facebook Deals as a follow-up with 20,000 local business offers plus national advertisers like McDonald’s and the Gap.
Facebook is hopeful that Deals will make its horribly performing ad platform more attractive to marketers. At a measly 56 cent average CPM, Facebook will need some help to reach the full potential of the local market category. All they’ll have to do is outmaneuver Google.
4) In a Google Instant
It wasn’t enough for them to get us all caffeinated; they had to go and make it Instant. In theory we should be thanking the Google “Time Lords” because they are graciously giving us 2-5 seconds back with every search.
But we’re an ungrateful lot, as evidenced by the various examples of Google Instant on Fail Blog and by this guy. Beyond the amusing fails of Google’s algorithms were the fears of the potential impact on advertisers and their CTRs. Early data from Marin Software alleviated some of those fears showing that the drop in CTR seems to be offset by the increase in clicks.
The question is whether those clicks are really relevant or just end users being overly susceptible to Google’s suggestions. Many a search agency will be doing postmortems on their Q4 search efforts to help answer that question.
5) Congress Kills Data-Pass Billing
Greater than Michael Arrington’s hate of ruthless Super-Angel cabals is his self-righteous disgust for scammers. Unlike the ”I didn’t get an invite to dinner“ debacle, Arrington’s suspicions of social gaming scammers, whom he christened Scamville, were on the money. His suspicions coincided last year with the discovery of post-transaction or data-pass scams run by many big-brand merchants.
Data-pass billing was a thriving market, much larger than anyone imagined, with $1.4 billion dollars in ill-gotten gains, to be exact. Approximately 30 million consumers were taken in by schemes, according to Senate documents. It wasn’t just gaming companies like Zynga, Playfish, and Playdom suckering consumers on Facebook to gain virtual cows; it was household names like Expedia, Orbitz, Buy.com, Fandango, and FTD that leveraged post-transaction providers like Affinion and Vertrue.
At the heart of the scam, a company passes a consumer’s credit card information to another company who then charges a subscription based solely on the input of an email address. This would be considered an ”opt-in“ to the subscription. Other than virtual goods scenarios in games, consumers were sucked into subscriptions during checkout. The scammers claimed it was the consumers fault for not reading the fine print; they even had the gall to lobby Congress to protect their ”right.”
Public pressure and congressional scrutiny quickly made them change their tune. Sensing the inevitable, Affinion issued a release through the U.S. Senate Committee on Commerce, Science, and Transportation in January, stating it would require the full input of the consumer’s 16 digit credit card number to enroll in loyalty programs. Many others quickly followed suit just to get out of the crosshairs of folks like Senator Jay Rockefeller . Visa sealed the deal by changing the requirements for its users, too.
The final blow in this round was delivered by Rockefeller in the form of the splashily titled ”Restore Online Shoppers’ Confidence Act,” making violators subject to sanction by the FTC. For marketers this ”not technically illegal” and very profitable well dried up. The impact on a lot of players was interesting. Classmates.com is a good example. Their revenue decreased 14 percent after the new rules were implemented, in spite of a 9 percent net increase in paid accounts.
Post-Scamville players, like Zynga and Offerpal, may have cleaned up, but malware is no less prevalent on Facebook. The rules around data-pass transactions may have changed, but the scammers by nature are slick. According to BitDefender, an estimated 20 percent of Facebook users are exposed to malicious posts in the news feeds of their friends, including account hijackings and further infections through wall posts. Maybe Michael can take that on next.
6) Finally! The Year of Mobile Has Arrived
Maybe you blinked. The long promised year of mobile arrived a bit early. No, the marketing dollars haven’t rained down as promised. However, astronaut’s check ins from orbit (take that Facebook Places!) is a signal that LBS services have started to mature and be adopted by the mainstream. This is in no small part due to the popularity of smartphones and the advertising war between Android devices and the iPhone.
Late last year, Verizon launched an estimated $100 million yearlong marketing blitz for Droid. Android’s total share rocketed up 5.7%, dethroning the iPhone as the fastest-growing mobile platform. Droid’s 28% market share is still behind Blackberry’s 36% share according to MarketWatch and that’s with Blackberry inexplicably failing to put up a real fight.
Beyond smartphones, mobile’s arrival is also connected to the advertising war between the Amazon Kindle, Apple’s iPad, and every other eReader…er tablet. Amazon struck digital gold selling a reported 8 million devices in 2010. Can any other company claim that? Well, Apple likely will since iPad numbers are estimated to hit 10 million devices. But that’s small potatoes if Goldman Sachs forecasts are accurate with the firm projecting 54.7 million tablets sold in 2011 (at least 37 million of those will be iPads).
Consumers have become wired in multiple ways and that adoption will lead to advertising revenue. Google and Apple’s respective acquisitions of AdMob and Quattro Wireless are the harbingers that real money, in terms of advertising dollars, is about to come into play. With 500 billion app downloads in 2010 there’s certainly proof of concept:
Adaptations are necessary to survival. This past year reinforced this concept for the marketing industry in many ways, whether it’s adapting to legislation or to curve balls that technology or consumer whim throw at the industry. Concepts like privacy and net neutrality require education not simply within the industry but to outside counterparts and consumers to stem the influx of well-meaning, but ill-designed legislation. The mobile boom along with the increasing integration of smart products (not just devices) will only increase the rate of change and the need adapt faster to stay in the game.
A key to marketing online is staying nimble and adapting to changes...