ImaginativePRO Blog

INTERNET ADVERTISING SURPASSES TV ADVERTISING IN THE UK

Record £1.75bn online spend makes UK first major economy to spend more on web ads than TV, says IAB.

IAB figures show that of the total £1.75bn spent on internet advertising, £1.05bn, or 60%, was spent on search advertising on websites including Google.

The UK has become the first major economy where advertisers spend more on internet advertising than on television advertising, with a record £1.75bn online spend in the first six months of the year.

The milestone marks a watershed for the embattled TV industry, the leading ad medium in the UK for almost half a century. It has taken the internet little more than a decade to become the biggest advertising sector in the UK.

UK advertisers spent £1.75bn on internet advertising in the six months to the end of June, a 4.6% year-on-year increase, according to a report by the Internet Advertising Bureau and PricewaterhouseCoopers. To put this in perspective, in 1998, when the IAB first measured internet advertising, just £19.4m was spent online.

The internet now accounts for 23.5% of all advertising money spent in the UK, while TV ad spend accounts for 21.9% of marketing budgets.

The IAB originally predicted that internet ad spend would overtake TV at the end of 2009; however, the crippling advertising recession accelerated this by six months. TV advertising fell about 17% year on year in the first half, to about £1.6bn, according to the report.

The IAB's figures show that of the total of £1.75bn spent on internet advertising, £1.05bn, or 60%, was spent on search advertising on websites including Google, up 6.8% year on year.

Online classified advertising grew by 10.6% year on year to £385m, about 22% of total internet ad spend. But online display advertising, such as banners on websites, fell by 5.2% year on year, to £316.5m. This was an 18% share of all internet ad spend.

The ray of light within the online display ad sector was the nascent, but rapidly growing, online video advertising sector. The IAB estimated that this sector grew by close to 300% year on year, to almost £12m.

Thinkbox, the UK TV marketing body, has taken exception to the IAB's figures, arguing that the internet is now mature and diverse and it is inaccurate to collate all the figures as if it is one single medium.

"It is interesting but meaningless to sweep all the money spent on every aspect of online marketing into one big figure and celebrate it," said Lindsey Clay, marketing director at Thinkbox. "Online marketing spend is made up of many things, including email, classified ads, display ads (including online TV advertising) and, overwhelmingly, search marketing. They should be judged individually."

Guy Phillipson, the chief executive of the IAB, reckoned that there is still significant growth potential left in the internet ad market.

"We could absolutely see it grow to being a 30% medium [of share of ad spend], to go past £4bn to even £5bn annually," he said. "Online display advertising has plenty of room for growth."

Despite the seemingly inexorable rise of internet ad spend, a closer examination of the IAB's figures show that the recession has had an impact. In the first quarter £920m was spent on online advertising, representing 8.6% year-on-year growth. However, in the second quarter, spend fell almost £100m to £832m, representing only a 1.1% increase on the amount spent in the same period last year.

Adam Smith, futures director at WPP's combined media operation Group M, argued that the internet's share of total UK ad spend could be close to its peak.

Smith cited factors such as the increasing share of time that users spend on social networking websites, which have not attracted huge advertising spend, and the increasing saturation of internet penetration in the UK as potential limiting factors. "This day was bound to arrive, as the internet has been attracting a huge long tail of advertisers that have not advertised before doing completely new things," he said. "It is a memorable event. However, it is a bit simplistic to make this comparison [and] it is always possible that internet's share [of total UK ad spend] could go backwards if TV has a good year."

The UK is not the first country where internet ad spend has overtaken TV spend, Denmark reached the milestone about six months ago. But it is the first major economy to do so.

COMMENTARY:  That's quite impressive that online advertising spending has overtaken television ad spending in the the UK. The UK's online advertising year-on-year growth numbers, 6.8% for digital display ads and 300% for video (wow), are truly impressive.  As I recall, the UK is one of the biggest markets for online video sharing, so it doesn't surprise me that online video ads have taken off so explosively.  Online has a long way to go before it overtakes television here in the U.S.

Courtesy of an article dated September 30, 2009 appearing in Guardian.co.uk

 

JUDGE OVERTURNS UNILOC'S RECORD PATENT INFRINGEMENT WIN OVER MICROSOFT

A district judge has abolished a high-profile, $388 million award against Microsoft and ruled that the company did not infringe a patent held by software maker Uniloc.

Download Tuesday's judgment (PDF)

The judgment, signed Tuesday by Judge William Smith of the U.S. District Court for the District of Rhode Island, overturns an April jury verdict that slapped Microsoft with the largest patent award on record.

"We are pleased that the court has vacated the jury verdict and entered judgment in favor of Microsoft," spokesman Kevin Kutz said Tuesday.

The case has spanned six years and numerous courts. Irvine, Calif.-based Uniloc USA, and its Singapore-based parent company, filed the lawsuit in Rhode Island in September 2003, alleging Microsoft used its patented technology for software activation.

Download the judge's order, in which he explains the case and gives his reasoning for reversing the jury's verdict (PDF)

The technology in question included the use of a software activation key to keep users from installing licensed software on more than one computer. Uniloc initially sought $560 million in damages and said Microsoft deployed the technology in Windows XP and Office.

In October 2007, the Rhode Island court ruled in Microsoft's favor. Uniloc appealed to the U.S. District Court for the Federal Circuit, and in 2008 the Federal Circuit affirmed the lower court's ruling but required it to re-examine part of the case.

In April 2009, a jury found that Microsoft willfully infringed Uniloc's patent (No. 5,490,216). The ruling required Microsoft to pay a patent-law record $388 million in damages to Uniloc, and attracted international media attention.

Tuesday's judgment upended that ruling.

In a statement, Uniloc CEO Brad Davis said the company plans to appeal again.

"We are disappointed by the decision the trial judge has made to overturn the jury's unanimous verdict in Uniloc's patent infringement case against Microsoft," Davis said in a statement sent to seattlepi.com. "We believe that the jury's verdict in April was thoughtful, well reasoned and supported by the evidence presented. Since the patent status remains unchanged, Uniloc will continue to protect its intellectual property and appeal the Judge's decision to override the jury's verdict to the US Court of Appeals. We are confident that Uniloc

COMMENTARY:  I was really hoping that UniLoc had won this lawsuit.  I bet Steven Balmer is clicking his heels and dancingin the halls of Microsoft HQ.  But this is American justice.  Big is good, and the more lawyers you can throw into this case, and I can bet you Microsoft had dozens of them, that they were able to have the original judgement overturned. 

Courtesy of an article dated September 30, 2009 appearing in Seattle PI Blog

TWO-THIRDS OF AMERICANS OBJECT TO ONLINE TRACKING

ABOUT two-thirds of Americans object to online tracking by advertisers — and that number rises once they learn the different ways marketers are following their online movements, according to a new survey from professors at the University of Pennsylvania and the University of California Berkeley. 

 

Kyle Cassidy

 

Joseph Turow, lead author of a study on consumers’ feelings about online tracking, said, “The most important thing is to bring the public into the picture, which is not going on right now.”

Multimedia

 

Americans Opposed to Tailored Ads

The professors say they believe the study, scheduled for release on Wednesday, is the first independent, nationally representative telephone survey on behavioral advertising.

The topic may be technical, but it has become a hot political issue. Privacy advocates are telling Congress and the Federal Trade Commission that tracking of online activities by Web sites and advertisers has gone too far, and the lawmakers seem to be listening. Representative Rick Boucher, Democrat of Virginia,wrote an article for The Hill last week that he planned to introduce privacy legislation. And David Vladeck, head of consumer protection for the F.T.C., has signaled that he will examine data privacy issues closely.

Marketers are arguing that advertising supports free online content. Major advertising trade groups proposed in July some measures that they hoped would fend off regulation, like a clear notice to consumers when they were being tracked.

The data in this area, however, has been largely limited to company-financed research or Internet-based research, which survey experts say they believe is not representative of all Americans. So the study — among the first independent surveys to examine this issue — has attracted widespread interest.

“This research is going to ignite an intense debate on both sides of the Atlantic on what the appropriate policy should be,” said Jeffrey Chester, executive director of the privacy group Center for Digital Democracy, which did not work on the study.

The study’s authors hired a survey company to conduct interviews with 1,000 adult Internet users. The interview, which lasted about 20 minutes, included questions like “Please tell me whether or not you want the Web sites you visit to give you discounts that are tailored to your interests.” The results were later adjusted to reflect Census Bureau patterns in categories like sex, age, population density and telephone usage.

Tailored ads in general did not appeal to 66 percent of respondents. Then the respondents were told about different ways companies tailor ads: by following what someone does on the company’s site, on other sites and in offline places like stores.

The respondents’ aversion to tailored ads increased once they learned about targeting methods. In addition to the original 66 percent that said tailored ads were “not O.K.,” an additional 7 percent said such ads were not O.K. when they were tracked on the site. An additional 18 percent said it was not O.K. when they were tracked via other Web sites, and an additional 20 percent said it was not O.K. when they were tracked offline.

The survey company also asked about customized discounts and customized news. Fifty-one percent of respondents said that tailored discounts were O.K., and 58 percent said that customized news was fine.

On the advertising question, there was not a big difference between age groups. Marketers often use teenagers’ behavior on Facebook as anecdotal evidence that they do not mind handing over information. But 55 percent of respondents from 18 to 24 objected to tailored advertising.

“We sometimes think that the younger adults in the United States don’t care about this stuff, and I would suggest that’s an exaggeration,” said Joseph Turow, lead author of the study and a professor of communication at the Annenberg School for Communication at the University of Pennsylvania. His co-authors are professors at Berkeley’s law school and at the Annenberg Public Policy Center at the University of Pennsylvania.

The survey also asked nine true-or-false questions about privacy laws to see how knowledgeable Americans were about protection, including “If a Web site has a privacy policy, it means that the site cannot share information about you with other companies, unless you give the Web site your permission.” (The correct answer is “false.”) On only one question, regarding sweepstakes, was answered correctly by more than half of respondents.

Finally, the survey sought opinions on laws regarding tracking, asking if there should be a law that gave people the right to know everything a Web site knew about them. Sixty-nine percent of respondents said yes. Respondents also overwhelmingly supported a hypothetical law that required Web sites and advertising companies to delete all information about an individual upon request; 92 percent endorsed it.

“I don’t think that behavioral targeting is something that we should eliminate, but I do think that we’re at a cusp of a new era, and the kinds of information that companies share and have today is nothing like we’ll see 10 years from now,” Professor Turow said. He said he would like “a regime in which people feel they have control over the data that marketers collect about them. The most important thing is to bring the public into the picture, which is not going on right now.”

Stuart P. Ingis, a partner at the law firm Venable who represents the industry trade groups’ self-regulation coalition, said that the industry was taking steps to explain to consumers how behavioral targeting worked.

“The more people understand the practices and how the data is actually being used, that’s when the concerns disappear,” he said. Just because many Americans are not in favor of something does not mean it should be banned, he said, citing negative feelings about taxes.

But Mr. Chester, whose group is part of a privacy coalition calling for Congressional action, said the survey would be helpful. “This research gives the F.T.C. and Congress a political green light to go ahead and enact effective, but reasonable, rules and policies,” he said.

COMMENTARY:  As I indicated in my previous post (see below), I am a strong proponent of a citizens right to privacy as provided in the U.S. Constitution.  As a consultant for online clients, I can understand the value in gathering information about your customers in order to provide them better service, an enjoyable online experience and market to them more effectively. 

The dilemna faced by marketers is that most consumers do not know that they are being tracked.  The problem starts when a consumer registers on a website.  This is the first stage in the marketer's data gathering process.  The consumer is also at fault, as most of them fail to read the fine print contained in the website owner's Terms of Service (TOS) which typically gives them permisson to download a unique identifier or "cookie" that is saved on your hard disk that is used in identifying the consumer and tracking their online behaviors, and that information can be very useful in accomplishing their marketing initiatives. 

It is the "all or nothing" mentality that I am opposed to. If consumers say that they DON'T accept the website's terms of service, you're registration is rejected and you are not permitted access to the site.  A consumer should have the absolute right to reject the terms of service by having the option not to be tracked for their online behavioral preferences. Some advertisers are allowing those who register on their site to voluntarily opt-out of the website owner's mailing list.  Website owners are very sneaky and nearly all of them provide a way to opt-out, but this notice is is usually in very small text, and is very easy to overlook.  Sneaky, sneaky, sneaky.

All of this is probably not going to in dear me with future prospective clients whose web business model depends on tracking our online behaviors.  I openly accept this risk.  I don't have a problem with this per se, so long as the consumer gives his consent.

Courtesy of an article dated September 29, 2009 appearing in The New York Times     

SOFTWARE POLICES EMPLOYEES' TWITTER, FACEBOOK, LINKEDIN POSTS

Applies the same content monitoring, archiving rules to social networks as cover email and instant messaging.

How to let traders, salespeople, customer service reps and investment bankers use social networking in a beneficial way (to attract customers, fix problems, share tips, collaborate, etc.) and be certain that confidential information about the firm will not be leaked, that no employee will ever post an inappropriate comment on a social network, and that no rule will ever be broken (for instance, FINRA's rule requiring customer communications to be monitored and archived) — is a challenge to compliance and risk managers on Wall Street.

One answer to this challenge is being offered today by FaceTime, a provider of compliance and security software for Web 2.0 applications and "unified communications" (integrations of voice, instant messaging, video and web conferencing linked together by presence awareness software). Its Unified Security Gateway 3.0 combines content monitoring, management and security of Web 2.0 applications such as social networking, instant messaging, and unified communications, with URL filtering, malware and Web antivirus protection.

One large Wall Street client recently told Kailash Ambwani, CEO of FaceTime, "Our compliance group has said Facebook and Twitter are electronic communications and they need to be brought under compliance or blocked." Yet blocking is not the preferred tactic, Ambwani says, because firms are under grass-roots pressure from employees such as financial advisers to allow social networking.

More than 600 financial services companies have employees who have Twitter accounts, Ambwani says. Another large financial services client has several thousand financial advisers in the field who would like to use Facebook and Twitter, he says, for three reasons: First, the leads they get through Faceboook convert into customers at a much higher rate than normal leads. "That makes sense because in our sales process, we find our reps get a higher response when they reach out to their LinkedIn or Facebook networks than when they cold call companies," Ambwani says. Second, the financial advisers catering to a 30-40 year old demographic want to come across as innovative and embracing these technologies. Third, providing social network platforms is helpful in recruiting young MBAs who have grown up with the technology.

On the other hand, FINRA considers employees' tweets or posts about a company to be advertisements, according to Ambwani. "They have to be archived and monitored just like any other ad," he says.

The Facetime software lets companies set rules for employees' use of more than 900 social networking sites and internal communications tools and for the archiving of that information. For instance, one policy might stipulate that research analysts can't communicate with traders. Another might block anyone at the company from typing a customer's Social Security number into a social networking site. A third might call for archiving Twitter exchanges between sales reps and customers. The Facetime product also protects against malware that tends to be distributed over popular social networking sites.

Pricing for the monitoring, security and archiving platform starts at $9,200.

COMMENTARY:  When I first read this article I was absolutely appalled.

It is my opinion that an employer has NO right to know what goes on in our private lives. This kind of intrusion into our private lives, the monitoriting of our posts on social networking sites, is in direct violation of our right to privacy and freedom of speech, both protected under the Constitution. 

I an still miffed that our email and web surfing activities are monitored by employers.  Employees have been fired over this issue.  And we are all aware that the FBI, NSA and CIA are already monitoring telephone calls, intercepting the email and other forms of communication used by individuals under investigation for terrorist activities and other crimes.  I support the latter, but they better damn sure that the policing organization obtains a wiretap authorization from the court and that the person being monitored has committed a crime.

Just what the hell are employees afraid of?  So long as I do not violate established company policies and disclose confidential information, employees have a right to interact and connect with others through social networks, and those posts, even if they are critical of an employer or certain employees are protected. 

I have read that employees have been summarily fired for posting comments about their political and religious beliefs, looking for employment or complaints about employers.  Maybe employers should treat their employees with greater respect and kindness and a lot of this would not be happening.     

Google, Facebook and the cellular service providers can track our whereabouts.  Just how far will this intrusion into our private lives go?  Even worst, will this information be used to spy on us, will the data about our everyday activities be sold to marketers?  I am really worried about this, and all Americans should be as well.

Courtesy of an article dated September 30, 2009 appearing in Wall Street & Technology

   

NAVY'S FUTURE COMMAND CENTER LOOKS JUST LIKE STAR TREK ENTERPRISE

A research lab inside the U.S. Navy tasked with dreaming up the future of the armed force has been busy working on a new command center design. It's suitably high tech--and is undeniably influenced by Star Trek.

The room was dreamed up at the Space and Naval Warfare Systems Center Pacific (SPAWAR), a unit tasked with creating an "unfair advantage" over enemy forces in future conflicts by tackling things like network-enabled warfare and management, systems design and so on. For months they've been working on the Command Center of the Future, in an attempt to modernize the traditional massive command centers, which are packed with desks and equipment.

That created several challenges for the designers to tackle, and they could have pulled inspiration from plenty of war rooms that already exist. But the SPAWARs team-members appear to have borrowed at least a few ideas from Jean-Luc Picard's Enterprise NCC-1701D. Check out the comparison images below:

The CCoF has a giant 135-inch viewscreen....

With modern systems, the key decision makers needn't be in the same room--teleconferencing, media feeds and computer equipment are laced throughout the room. Enterprise's Observation Lounge, in particular, bears a striking resemblance to the CCoF:

The design of systems like the CCoF is hugely important, and a much over-looked aspect of military research, as the media tends to focus on more whiz-bang stuff like rail-guns and lasers. The CCoF will undoubtedly play a serious role in the management of future conflict situations...it's just that the sci-fi references are so plain.

If you're still in doubt, check this out: Soon the CCoF's control screens will be multi-touch enabled. All we need now is for someone to dream up an operating system like the Enterprise's LCARS, and our future military commanders could start thinking about wearing a little more spandex. 

COMMENTARY:  I wonder what the Navy's new command center will cost tax payers.

Courtesy of an article dated September 29, 2009 appearing in Fast Company

TOP 20 HOTTEST TOYS FOR THE 2009 HOLIDAY SEASON

Sept. 29 (Bloomberg) -- Elmo Tickle Hands, a Transformer that becomes a truck, and a DVD game based on the film “Twilight” may be among the best-selling gifts this holiday season as toymakers seek to attract parents shopping on budgets.

Mattel's $29.99 Elmo hands, which emit sounds and phrases from the popular Sesame Street character, and Hasbro's $44.99 Optimus Prime from the movie “Transformers: Revenge of the Fallen” were among the “Hot 20” chosen by the Toy Insider, a consumer shopping guide being released today. Half of the toys retail for $30 or less and all are under $100.

Mattel, Hasbro and other toymakers that make at least a third of their annual revenue from the fourth quarter, offered toys for less than $20 last holiday season to lure parents grappling with tighter budgets. This year parents again will look for bargains, and manufacturers have responded with lower prices, said Jonathan Samet, the Toy Insider’s publisher.

“Gift givers this year are going to be very sensitive about the money they allocate toward their holiday shopping,” said Samet, who is based in New York and has worked in the toy industry for 26 years. Even if the economy improves, “I still think that parents are going to be more sensitive to what they spend.”

Last year’s “Hot 20” list included Hasbro’s Furreal Friends Biscuit, an animatronic puppy that lies down and moves its head. The puppy retailed for about $179, the only item on last year’s list to top $100, Samet said.

Promoting Toys

Retailers are also looking for ways to boost revenue after last year’s holiday shopping season was the worst in four decades. Toys “R” Us will open more than 80 temporary locations across the country starting next month as well as more than 260 temporary stores within Babies “R” Us locations.

Wal-Mart, the world’s largest retailer, has featured a “Family Night Center” in its stores this month to help customers find ideas and savings on games for families. Sears Holdings Corp., the biggest U.S. department-store company, started selling toys in August through 20 in-store toy shops.

U.S. toy sales through August dropped 2 percent to $10.3 billion from $10.4 billion a year earlier, according to NPD Group Inc., a Port Washington-based researcher. In 2008, toy sales fell 3 percent to $21.6 billion, according to NPD data.

Robotic Hamsters

Toy sales may decline about 1 percent this holiday season, according to Gerrick Johnson, a toy analyst at BMO Capital Markets in New York.

“It’s still going to be weak, but I would be surprised if the decline is bigger than it was last year,” Johnson said, citing retailers’ efforts to boost toy sales.

Zhu Zhu Pets, robotic hamsters that sell for as little at $9.99, may be the hot product this year, he said. Zhu Zhu Pets are currently sold out on the Web sites of Wayne, New Jersey- based Toys “R” Us and Bentonville, Arkansas-based Wal-Mart.

Toys based on movie and television properties will be popular this holiday, Samet said. In addition to the Optimus Prime toy, a “Force Trainer” tied to the Star Wars series, and the “Twilight Scene It?” DVD game are on the “Hot 20” list.

Toys that connect to virtual worlds on the Internet have become more popular as children have been introduced to technology at an earlier age, Samet said. Spin Master’s “Liv Dolls” and Leapfrog Enterprises Inc.’s “My Pal Scout & My Pal Violet,” which can be customized online, are among products on the Toy Insider’s list.

The fourth annual Toy Insider will be published Oct. 22 in the November issue of Hearst Corp.’s Redbook magazine. Toymakers don’t pay for their products to appear on the list, Samet said.

Mattel, based in El Segundo, California, rose 12 cents to $18.08 yesterday in Nasdaq Stock Market trading. Pawtucket, Rhode Island-based Hasbro advanced 2 cents to $27.20 on the New York Stock Exchange.

The Toy Insider’s “Hot 20” Toys for the 2009 Holiday Season

0-2 Years
Elmo Tickle Hands - Mattel’s Fisher-Price
Mega Bloks Play ‘N Go Table - Mega Brands
My Pal Scout & My Pal Violet - Leapfrog
Tonka Chuck My Talking Truck - Hasbro’s Tonka

3-5 Years
1-2-3 Stomp! - Wild Planet
Liv Dolls - Spin Master
Rocky the Robot Truck - Matchbox
Tightrope Terror - Jakks Pacific
Transformers Revenge of the Fallen Optimus Prime - Hasbro
Zippity Learning System - Leapfrog

6-8 Years
Air Hogs Zero Gravity Laser - Spin Master
Bakugan 7 in 1 Maxus Dragonoid - Spin Master
Battle Strikers Turbo Tops Tournament Set - Mega Brands
Girl Gourmet Sweets Candy Jewel Factory - Jakks Pacific
Moxie Girlz - MGA Entertainment
Printies Design Studio Kits - Techno Source

9+ Years
Power Miners Titanium Command Rig - Lego
Star Wars The Force Trainer - Uncle Milton
Style Six Silk Screener - Jakks Pacific
Twilight Scene It? The DVD Game: Deluxe Edition - Screenlife

Source: The Toy Insider - www.thetoyinsider.com

Courtesy of an article dated September 29, 2009 appearing in Bloomberg

BOOKSELLER BORDERS TO OFFER FREE WIFI SERVICE

ANN ARBOR, Mich. – Bookseller Borders Group Inc. said Tuesday it signed a deal with Verizon Communications Inc. to provide free WiFi service in "virtually all" of its more than 500 stores around the country.

The service is expected to be available by mid-October.

Borders shares slid 3 cents to close at $3.27.

COMMENTARY:  Borders is having serious financial problems as book readership delines so adding free WIFI service may impact revenues slightly, but will this be sufficient?  I assume that Seattle's Best coffee shops, the specialty coffee chain that is located in Borders stores will be offering the WIFI. 

Courtesy of an article dated September 29, 2009 appearing in Yahoo! News

STARTUP APPBANK MAKES IT EASIER TO DEVELOP APPLICATIONS FOR FACEBOOK

AppBank Wants to Help You Cash In on Facebook Apps

AppBank, a Seattle-based startup, today is launching a free application in beta that lets people without coding skills build their own Facebook apps, such as a quiz or game, in four steps — and earn a cut of the revenue from ads placed within them. The company provides a database of statistics and tutorials on its web site to help people manage and modify their applications in order to attract users and ultimately, pocket more cash.

We’ve written previously about Sweb Apps, a startup whose web site lets small- and medium-sized businesses create their own iPhone apps for the rapidly growing iTunes App Store. AppBank takes a similar approach, but it could face obstacles as it tries to attract app creators, because the excitement around building new applications or Facebook has died down since the social network opened its API to outside developers. Though Facebook has an audience of 300 million, AppBank may find more success if it turns to Twitter, which is the new darling for app developers.

AppBank lets you select what type of app you want to make, write up the questions you want to include in it — even embed a YouTube video within it. AppBank’s web site has a dashboard that provides detailed statistics derived from Facebook about the app’s performance, including where in the U.S. and the world it’s most popular and how many friends people who access it have. It also includes metrics about the app’s financial performance, including how much it’s earning per day or week.

To help its app creators make money, AppBank places banner ads from networks such as Rock You and sponsor advertisements from companies like Netflix within apps. How much money an app’s creator receives is determined by the number of users the app draws and what the CPM on the ads placed within it is. Some of the most popular apps created by AppBank users have garnered $700-$1,000 a month, according to the company.

AppBank has been profitable since its launch in April, according to CEO Fred Hsu, who cited low overhead and a rise in social networks CPMs. It won’t, therefore, be looking for funding anytime soon. Hsu further claimed that some 8 million people have so far accessed Facebook apps created using AppBank’s technology, and said the company aims to augment that number to 50 million by the end of this year.

COMMENTARY:  Interesting.  Very, very interesting.   300 million Facebook members.  That's a big number.  I think the whole point of AppBank is to target the non-programmer.   Guess what?  That's me.  I am definitely going to look into AppBank first chance I get and develop some Facebook apps, if it is as easy as they claim.  If AppBank can develop a similar application for developing iPhone apps, now that would be something.

 

The success of several desktop do-in-yourself software applications development programs (Frontpage, Access, Pagemaker, Publisher, etc.) is a growing trend.  I can see the day when everybody can develop applications for just about anything. 

 

Courtesy of an article dated September 29, 2009 appearing in GIGAOM  

 

 

BREAKFAST CATERING A GROWING TREND AND ON THE INCREASE

(Sept. 28, 2009) As the lingering recession prompts consumers to be more cautious with their dining dollars, restaurant chains are waking up to the opportunities of breakfast catering.

While breakfast has emerged as an increasingly lucrative daypart, some operators find morning catering can help them recoup revenues lost as businesses cut back on lunch spending. Observers say customers often can stretch their food dollars further on less expensive, but higher-margin menu items such as eggs, pastries and coffee.

“Catering is an often overlooked revenue stream for many restaurants,” said Aaron D. Allen, founder and chief executive of Quantified Marketing Group, a consultancy based in Orlando, Fla. “Breakfast catering is therefore even more overlooked, since it’s a niche of catering and requires some specialization.”

He added, “The profits can be tremendous in catering and even higher with breakfast because of the menu.”

The list of operators crowing about the incremental income found in breakfast catering is growing. Salsarita’s Fresh Cantina of Charlotte, N.C., in August made a breakfast-catering program available to its entire 80-unit system. Bruegger’s Enterprises Inc. of Burlington, Vt., which operates the 300-unit bagel chain, plans to test breakfast catering this fall in its Minnesota market. And Camille’s Sidewalk Café of Tulsa, Okla., recently enhanced its 12-year-old breakfast-catering program by giving it a more healthful spin.

Given the ongoing recession, breakfast catering can be a powerful marketing tool, Allen said.

“As budgets tighten, one should be aware that often the price per person for breakfast will be significantly lower to the person/company hiring the caterer than would be catering in lunch or dinner, yet the impact and appreciation of the group being catered is just as high,” he said. “So, if you want to do something nice for your employees and turn to catering, why not start their day off right with breakfast–and save money over a lunch catering?”

Salsarita’s Paul Mangiamele recently expanded breakfast catering after a test run.

Paul Mangiamele, chief executive of Salsarita’s Fresh Cantina, said his company recently expanded catering beyond lunch and dinner after testing its acceptance. “We do it in stores where it makes sense,” he said.

“We had been in the catering space, but it had mostly been lunches and dinners and special events,” Mangiamele said. “But breakfast catering for our type of food, which holds heat well and travels well and has a good presentation and is diverse in flavor profile, is being widely received.”

He noted that breakfast catering is not appropriate for all stores, but “where it’s attractive for the trade area, we’ve seen it gain up to 10 to 12 percent of our sales mix very rapidly.”

There’s also room to capitalize on the country’s growing health consciousness, said Quantified’s Allen.

“Right now coffee, bagel and doughnut places take the lion’s share of the breakfast daypart catering/takeout business,” he said. “As Americans are becoming more conscious of nutrition, this poses an opportunity for caterers going after breakfast with more healthful options.”

Camille Rutkauskas, co-founder and president of Beautiful Brands International of Tulsa, Okla., said she is seeing the shift toward such nutrition awareness in breakfast catering at the 85-unit Camille’s Sidewalk Café chain.

“We’re seeing the protein portion of breakfast catering growing,” Rutkauskas said. “It used to be a lot of danishes and sweets. Now we’re doing very well with our breakfast wraps because of the eggs. Definitely consumers are much more educated about the health aspects of delivered food. They want healthy options like fresh fruits, egg-white omelets and cholesterol-free options. The consumer today is highly educated and really looking to have a choice.… If you don’t have the healthy option, they will go elsewhere.”

Breakfast makes up about 20 percent to 30 percent of Camille’s catering sales, she said, and that has held steady since Camille’s opened its first location in Tulsa in 1997. The size of catered parties range from 10 to thousands for breakfast catering, she said, noting, however, that typically the size ranges from 15 to 25 people.

“The system that works for us is trays in breakfast catering,” she said. “For morning functions, they like the set up of the tray rather than a box, which is typical for lunch.”

Catering also provides a good opportunity for upselling, she said.

“If somebody is just getting breakfast muffins or a danish tray, it’s not that profitable,” Rutkauskas said. “But if you can upsell the customer to coffee service and fruit sides, it’s definitely more profitable. If we have our staff and catering managers trained at the store level, then they can handle it and upsell.”

Operators considering a breakfast-catering program do face some obstacles, said Allen.

“Challenges are mostly found in adapting menus, issues with hold-times and prep, and the potential of neglecting an existing core market chasing a new market,” he said. “These are all easy enough to overcome with proper planning and execution. It’s an issue of proper marketing, operational execution and positioning.”

A good program can appeal to consumers in several ways, he added.

“Two things aren’t going away anytime soon: the recession and the noise around nutrition,” Allen said. “A well-executed breakfast-catering program can address both of these issues while picking up strong streams of incremental revenue and profits."

COMMENTARY:  Panera Bread is an excellent example of capitalizing on the growing trend towards breakfast catering.  I love Panera Bread and go there often because of their freshly baked breads, pastries, breakfast and lunch menu items.  I know first hand that breakfast catering represents a significant piece of Panera Bread's business, although I don't now how much, but it must be a lot given the number of bags and boxes of goodies being picked up or delivered by Panera Bread to corporate offices, conventions and special events. 

Quality and convenience is very important if a foodservice establishment is to succeed in breakfast catering.  Panera Bread has clearly understood this from the start, and inspite of their higher prices, has been very successful (See my previous articles about Panera Bread) in spite of the recession.

Courtesy of an article dated September 28, 2009 appearing in Nation's Restaurant News

THE COFFEE WAR BETWEEN MCD'S AND STARBUCKS REACH EUROPE

The Left Bank café is furnished with sleek wood paneling and leather armchairs. Patrons sip espresso from china cups and nibble on croissants and pastries. So what are those golden arches doing on the sign outside the door?

McCafe was first introduced in Australia in 1993.

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The coffee shop on Paris' rue Linois is one of 200 "McCafés" McDonald's is opening in Europe this year. By yearend, McDonald's hopes to have some 1,100 of the cafés across Europe. The cafés are located inside existing restaurants but with a separate counter, comfy furnishings, and nary a Big Mac in sight. Next year, the company plans 200 more, with an eye toward becoming "the No. 1 coffee seller in Europe," says Jerome Tafani, the company's chief financial officer for the region.

That's a grande order. Starbucks is currently Europe's top coffee chain with nearly 1,200 stores. But McDonald's strategy of opening McCafés in existing franchises gives it a leg up over the Seattle-based java king. A stand-alone Starbucks in Europe requires an investment of $350,000-plus, at least triple what a McCafé costs, says Jeffrey Young, managing director of London management consultancy Allegra Strategies. "McDonald's finally woke up and smelled the coffee," says Young. "With the number of outlets it already has in place, it can take Starbucks head-on."

McDonald's is rushing to grab market share where Starbucks has hesitated. While Starbucks continues to avoid Italy, for instance, McDonald's opened its first Italian McCafé in Milan in 2005. Today it has 65 of them across the country. And McDonald's is undercutting Starbucks on price. At McCafés in Paris, an espresso costs $2.50 (€1.70), vs. $2.80 (€1.90) at Starbucks.

That's not to say you'll find McCafés everywhere. In Britain, where Starbucks has 700-plus stores, McDonald's has no plans for McCafés. And while all 13,900 U.S. McDonald's outlets now sell McCafé coffees, the company isn't building separate café sections there, either. Since 70 percent of orders come from the drive-through window, franchisees don't want to install a second counter. But in Europe, where fast food is a bit slower than across the Atlantic, fewer than half of McDonald's orders are to-go.

NOTE: TO READ THE REMAINDER OF THIS ARTICLE CLICK ON THE LINK BELOW.

COMMENTARY:  I love these coffee wars, don't you.  Starbuck's recent announcement that it will close 1,000 non-performing stores is a clear indication that McD's has robbed a lot of market share from Starbuck's.  The announcement that McD's is expanding their McCafe concept in Europe does not surprise me.  McD's has a huge global presence, especially in Europe.  They command a lot of foot traffic, and Starbuck's is just going to get killed. 

Europe is experiencing the effects of the recession, and consumers are looking for value at an affordable price.  McD's offers them consistent quality, quick service, great tasting food and now McCafe's.  If I were going to put my money, it will be McD's.

Courtesy of an article dated September 28, 2009 appearing in ABC News