According to research by the Interactive Advertising Bureau and PricewaterhousCoopers, Internet advertising revenue neared $5.5 billion in the third quarter, a 1.7% improvement over second quarter.

“While all segments of the media industry have experienced declines, online advertising remains resilient and is once again showing signs of growth,” said David Silverman, a partner at PricewaterhouseCoopers.

However, to rain on the parade a bit, third-quarter’s revenue is still a 5.4% decline year over year.

But, according to Reuters, French advertising firm Publicis Chairman Maurice Levy said that “the second quarter will be the toughest quarter, with an improvement coming in the second half of the year.” This from the man, according to Paid Content, who in December had predicted that the recession would stop any advertising upsurge until at least 2010.

Publicis, the world’s third largest ad group by revenue, posted a 4.4 percent fall in first-quarter underlying sales last month and Levy said the second quarter would be worse than the first. But he also said the company will be able to beat what is considered an ad market average that is expected to see a drop of between seven and eight percent this year.

Sales at U.S. retailers fell 1.1 percent in March, snapping two months of increases and hitting a wide range of stocks such as Macy’s Inc., which slumped nearly 8 percent, and energy companies like Exxon Mobil Corp, down nearly 2 percent.

“We are still struggling to make serious headway with the economy,” said Paul Nolte, director of investments at Hinsdale Associates in Hinsdale, Illinois. “Its going to put people a little bit more on (the) defensive.”

Goldman Sachs (GS.N) posted a much higher-than-expected first-quarter profit boosting bank stocks, but said it planned a $5 billion common share sale to help pay back government funds, sending its shares down more than 5 percent.

Healthcare group Johnson & Johnson reported first quarter earnings of $1.26 per share compared with a Reuters estimate of $1.22, and said it sees 2009 pre-tax margins improving. The company’s shares rose 1.8 percent to $52.09.

The Dow Jones industrial average .DJI dropped 47.63 points, or 0.59 percent, to 8,010.18. The Standard & Poor’s 500 Index .SPX fell 3.77 points, or 0.44 percent, to 854.96. The Nasdaq Composite Index .IXIC lost 5.17 points, or 0.31 percent, to 1,648.14.

U.S. stock markets have enjoyed a five-week rally spurred by optimism on the economy and the financial sector, which lifted the S&P 500 26 percent from a bear market closing low on March 9. The S&P remains down around 8 percent on the start of the year.

Wal-Mart shares fell 1.1 percent to $50.95 after the retail sales data, which indicated subdued consumer spending amid rising unemployment. Macy’s fell 7.9 percent to $11.90, while the S&P Retail Index .RLX lost 2.5 percent.

Citigroup shares traded up 15.5 percent to $4.39 in, while Bank of America rose 2.8 percent to $11.30. Goldman Sachs fell 5.3 percent to $123.24. Its equity issue is priced at $123 per share.

Chipmaker Intel is set to kick off tech earnings season after the market closes, with results eyed closely for guidance on the semiconductor market.Intel shares were up more than 1 percent at $16.17.

REUTERS GROUP – Reporting by Edward Krudy; Editing by Theodore d’Afflisio.

His Gawker Media, which includes Gawker, Gizmodo and Jalopnik, drew in nearly 300 million pageviews, some 34 percent over last February’s level, according to a memo at Romensko, and for the year to March, it could be fifth up over last winter. Denton said an improved comment section and the big ad units that take over the sites were some of the reasons for its success.

Small publishers such as Gawker Media are doing well, it seems, because they target niche markets and keep costs low. Start-up websites such as SB Nation, Seeking Alpha Ltd. and HealthCentral Network Inc., which create and aggregate content about topics like sports, business and health, are recording sharp gains in visitors and revenue, according to the WSJ. Some are also landing distribution partnerships with big media brands eager for cheap content during the recession.

The number of visitors to sports Web site SB Nation, for instance, rose 15 percent from December to a total of 3.4 million in January, according to the company, even as unique visitors to the category of sports sites tracked by comScore Inc. fell 2 percent. SB Nation launched a partnership with Yahoo Inc.’s Yahoo Sports last week and has signed another deal with Gannett Co.’s USA Today.

“Consumer engagement is shifting toward niche-content experiences,” Andrew Braccia, a partner at venture-capital firm Accel Partners, told the WSJ. Braccia, who sits on the board of SB Nation, added that “Three to five years from now, people will no longer be drawing a distinction between traditional forms of publishing and what we know as blogs today.”

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Financial experts are predicting that this economic downturn will last longer than most recent economic slumps. With thousands losing their jobs and more job cuts expected in the near future, consumers are being much more selective about what they buy and in many cases they are buying less.

The economy’s impact on consumer purchasing decisions has been both drastic and dramatic. In fact, it has reshaped the way that many marketers operate. Marketers spending smarter with fewer dollars. The tightening economy means that advertisers now compete for fewer consumer dollars. Data indicates they may also be competing for those consumer dollars with fewer marketing dollars.

According to a recent study of 2,000 senior marketing professionals conducted by the Marketing Executives Networking Group (MENG) (referenced in Marketing Daily) over half of the marketers surveyed indicated that they will have a smaller marketing budget this year.

Other studies agree with the MENG find that marketing budgets are being decreased. Adweek references an Interpublic Magna finding that media spending in the United States fell from $279.6 billion in 2007 to $270.8 billion in 2008. And, 2009 media spending figures are expected to be even lower.

The tightening economy and tightening advertising budgets mean that today’s media purchasing decision makers want to see results with the limited dollars that they have to spend. They are no longer willing to buy media time or placement on the prospect of nebulous future benefits. They want to see a return on investment and they want to see it quickly.

For the best results, smart marketers are turning to online media. Where are the marketing budgets going to be spent? They will be spent on those media channels that marketers believe to be the most effective.

Another study, conducted by Dartran Media, a leading digital marketing technology company, may have some of the answers. Perhaps not surprisingly, the Dartran media study shows that marketers believe online media is now the most effective media in terms of performance. Over 80 percent of those surveyed indicated that email advertising performed best. Search marketing was not too far behind with over 56 percent of the marketers indicating that it was a top performer.

The Dartran Media study confirms other findings that online media channels are more effective than traditional media. In fact, a 2008 study from Interpublic Magna (referenced in MediaPost News) shows that social media is the fastest growing online media channel.

Traditional media channels are hurting. It is no secret that traditional media is hurting. The news is filled with stories of the struggles of local and national newspapers. A number of local television and radio stations are also in trouble. A 2008 New York Times story called 2008 the worst year for ad revenue for newspapers.

If the statistics from the Dartan Media study are any indication, 2009 will not be much better. Over half of the respondents in that study said that their spending on offline media would either decrease or remain stagnant. In fact, during these rough economic times traditional media may not deliver the needed “bang for the buck.”

What happens when traditional advertisers pull their television ads? A sudden empty slot in the television station’s lineup is created. If that empty slot is not filled immediately, it could mean dead air. Rather than have dead air, many stations are turning to ready-made direct response infomercials, even during prime time.

Infomercials are a bargain for the savvy marketer because an infomercial can be run for a fraction of the cost of a regular advertisement. A recent New York Times article quoted one marketer as saying that “she often paid as little as 5 percent of what a general advertiser would” to air a short-form infomercial, which is typically :60 or :120 in length. That is a cost savings of 95%!

Smart marketers will react to changes and adjust. It is possible for a smart marketer to succeed in today’s changed economy. The successful marketer will look for the media channel that is the most effective in reaching and persuading customers. Right now, traditional media channels are failing to deliver while online media channels are expected to increase in effectiveness.

The smart marketer will also look for advertising bargains in traditional media channels, such as infomercials. Infomercials offer the smart marketer an unprecedented access to the prime time audience at a bargain rate.

The successful marketers of 2009 will also devise and implement accurate measurements of return on investment. They will design their marketing strategy accordingly, revising and changing their approach whenever the data indicates that a particular strategy is no longer effective. Smarter marketing is definitely the wave of the future – and many of us, with the right preparation and foresight, are poised to benefit – even in these tough economic times.

The sites racked up 27 percent more unique visits and 42 percent more total playing time in December 2008 than in December 2007, according to comScore. Overall Internet traffic grew only 4 percent over the same period, the research company said.

“comScore’s measurements highlight the ongoing shift from high-cost, console-based gaming toward free, browser-based alternatives,” said Paul Verna, eMarketer senior analyst. “This trend has been underway for some time, but the economic crisis has accelerated it. Given current economic and consumer behavior patterns, we expect to see ad-supported, casual games continue on an upward trajectory in 2009.”

In 2008, MTV Networks surveyed free online gamers regarding the types of advertising they were willing to accept in exchange for playing such games. Banner ads and advertiser-sponsored games got the highest responses.

comScore also found that the total number of display ad views in the online gaming category grew 29 percent from November 2007 to November 2008, to 8.6 billion. This increase is attributed primarily to the growing number of advertising-exposed unique visitors to the category, which were up 30 percent over the same period.

The average consumer’s exposure remained relatively constant at 127 ad views in November 2008. The survey also found the number of display ads per page viewed declined 17 percent.

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REUTERS

The world’s largest advertising company said fourth quarter income fell to $271 million, or 88 cents a share, surpassing the 82-cents-a-share average analyst forecast, according to Reuters Estimates. A year ago, it posted income of $313.9 million, or 96 cents a share.

Omnicom, parent company of agencies such as BBDO Worldwide and DDB Worldwide, typically gets a boost in the fourth quarter from advertisers using up excess budget on special events before the year end.

But analysts have said that sort of spending likely crashed with the economy last year, taking a bite out of quarterly revenue across the advertising industry.

At Omnicom, revenue fell 7 percent to $3.37 billion, but also came in slightly stronger than Wall Street expectations of $3.36 billion. Organic revenue, a closely watched industry benchmark that excludes foreign currency impact and recent acquisitions, dropped 2.3 percent.

Omnicom’s client list includes such corporate titans as Anheuser-Busch Cos Inc BUD.N and McDonald’s Corp (MCD.N), as well as the troubled automaker Chrysler. Concerns that major clients, especially Chrysler, would scale back spending caused Omnicom to move ahead with dramatic cost-cutting plans late last year, sources have said.

The sources said that across its agencies, Omnicom cut between between 2,800 to 3,500 positions out of a total of about 70,000. Shares of Omnicom are down about 38 percent in the last year.

Reuters Group

Reporting by Paul Thomasch.

The two sectors added 800 jobs, bringing their employment, about 82,200, to its highest level since 2002, according to an AdAge analysis of Bureau of Labor Statistics. The U.S. advertising and media industry had slashed 18,700 jobs in December, bringing industry job losses in this recession to 65,100. The ad industry employed 1.59 million people as of December.

Ad agencies last year cut 6,000 jobs, or 3.2 percent of staff, and graphic-design firms eliminated 7,400 jobs, or 9.9 percent. Marketing-consulting employment, though, rose by 2,200, or 1.4 percent and public-relations agencies added 1,200 jobs, or 2.4 percent.

Media companies eliminated 41,000 U.S. jobs from the time the recession began in December 2007. Advertising/marketing-services firms cut 24,100 jobs. In percentage terms, the ad industry is faring worse than the overall U.S. employment market, which has lost 2.6% of jobs since the start of recession.

In a survey by the Chief Marketing Officer Council, 58 percent of 480 executives said their companies do not compensate employees or executives based on customer loyalty, satisfaction improvements or analytics. Nearly 40 percent said their companies have no programs in place to track or spread positive word-of-mouth among customers. In addition, only 29 percent said their companies rate highly in their ability handle and resolve customer problems or complaints.

“Customer experience is one of the most critical determinants of brand strength and business growth. Yet, most organizations and senior marketers suffer from major blind spots and gaps in the way they interact, handle and respond to customer issues or problems,” said CMO Council executive director Donovan Neale-May. “CMOs must assume ownership for the customer experience and establish enterprise-wide measures and disciplines to ensure continuous improvement. We are missing a major opportunity to turn customer pain into competitive gain at every touch point through better use of web and contact center technologies and processes.”

Sponsored by Satmetrix, the study reveals critical deficiencies in the way companies measure, optimize and leverage customer experience to drive loyalty, improve brand value and increase business performance and growth, including:

- Insufficient availability and aggregation of real-time customer experience data across touch points that should be shared across the organization

- Poor use of customer interactions to collect insights and intelligence or maximize up-sell and advocacy opportunities
Lack of Internet processes and systems to track online word of mouth and drive customer advocacy

- Intermittent or deficient monitoring of customer experience that fails to provide true and timely insights into problems and opportunities

- Too few compensation programs tied to customer experience, loyalty and satisfaction gains

Customer listening, learning and leveling are critical qualities that need to be part of an institutionalized corporate culture, notes the CMO Council. But the survey shows most companies don’t use these opportunities to drive company-wide performance improvement and business growth. Instead, most companies treat customer interactions around service situations and incidents only as a problem that needs quick resolution.

The rest of the survey is here.

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Job cuts in the technology sector have trailed other industries until recent weeks. Now they are coming fast and furious as the economic downturn grips the Valley, the strip of land in northern California that is home to household names like Google Inc and Amazon.com Inc units.

Tech giants like Intel Corp and Microsoft Corp are laying off thousands of employees, while start-up companies are firing in smaller numbers as they struggle to survive with fewer customers and venture capital dollars.

And this is just the start, analysts say, expecting thousands more to lose their jobs this year as the recession forces the industry to slash marketing and capital spending.

“Organizations are saying, ‘What is the absolute nuclear winter? Let’s plan for that,’” said Adam Charlson, senior partner at executive search firm Korn/Ferry International Inc, who works closely with the recruitment divisions of top tech firms. “What you’re seeing now is organizations putting those plans into reality.”

Last year, Silicon Valley lost 11,700 jobs, according to Steve Levy, senior economist at the Center for the Continuing Study of the California Economy. The number is small compared to the 200,000 jobs lost after the dotcom bubble burst in 2000, but that is because the 2008 numbers don’t reflect recent layoffs yet, he said.

“The headline is that the recession has hit Silicon Valley,” Levy said. As a result, he said he was “substantially revising downward” employment predictions for 2009.

California’s jobless rate hit a 14-year high of 9.3 percent in December, significantly above the national average of 7.2 percent, according to state officials.

ONCE BITTEN, TWICE PREPARED

Some analysts said they are reading the mass layoffs as preemptive acts by tech companies. When the last recession hit, tech companies were too slow in cutting costs and laying off workers, said Andy Miedler, a senior technology analyst at Edward Jones.

But not this time, he said. “Layoffs and cost-cutting are unfortunate, but companies have to make tough decisions in a rough economy to preserve their own financial position.”

Mark Cannice, a professor of entrepreneurship at the University of San Francisco, said Silicon Valley has been “inoculated to some degree” after the dotcom bust.

“Many firms didn’t survive …. The ones that survived are much more efficient and resilient and were funded on sounder business models,” said Cannice, who publishes a quarterly Silicon Valley Venture Capitalist Confidence Index.

But he said Valley companies are not entirely immune — especially venture capital-funded start-ups. As large companies like Microsoft and Google cut back on spending, start-ups that supply them with software and other IT could run into trouble.

With venture capital funding falling 71 percent in the fourth quarter of 2008 from a year ago, start-ups could be forced to fold up if they can’t sustain their business and investors cannot fund them any longer.

But mass layoffs in the tech sector need not necessarily be all doom and gloom. They could actually boost innovation as laid-off engineers, scientists and other highly skilled individuals decide to pursue their own ideas.

Calling it “forced” entrepreneurship, Cannice said he was optimistic that the current layoffs would “unleash the next wave of creative, thoughtful entrepreneurs.”

Layoffs in the traditional tech sector could also spur employment in the alternative energy sector, recruiters said.

Neil Sims, managing director of executive search firm Boyden’s technology practice group, said the so-called “cleantech” sector — which employs environmentally friendly technologies — will continue to grow and offer jobs.

“It’s not that the sky has fallen entirely,” he said.

Reuters Group

Reporting by Anupreeta Das

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