Guvera, a place for advertisers to give away music

After SpiralFrog's collapse and Qtrax's repeated misfires, I'm skeptical about any online music service that says it will give away advertiser-supported downloads. But Guvera, an Australian start-up launched by former advertising executive Claes Loberg, is different enough to make me think it might actually work.

Admittedly, I also liked Uplister, Echo and dozens of other ill-fated online music services. But Guvera, which is expected to announce a licensing deal this morning with Universal Music Group, has at least one thing going for it that SpiralFrog didn't and Qtrax has yet to demonstrate: a model that's friendly not just to consumers, but also to advertisers.

Google bets big on mobile advertising in $750-million acquisition of AdMob

Google Inc. has shown which way it believes the winds are blowing by forking over $750 million for mobile advertising firm AdMob, one of the Web giant's largest acquisitions to date. 

As AdMob itself has described, the volume and effectiveness of mobile advertising has been skyrocketing over the last several years as more advanced smartphones have caught on, making it easier to deliver more kinds of graphical and text-based advertising to phone-toting consumers.

In a recent report, AdMob said that the number of mobile ads it served had increased nearly 540% from September 2007, to 10.2 billion per month from 1.6 billion.  

As mobile phones morph further into pocket Internet devices, and consumers grow accustomed to performing online functions like search, gaming and instant messaging on their handsets, opportunities for advertising companies like Google will grow rapidly, analysts expect. 

Google says the number of searches performed by smartphone users has increased by a factor of five over the last two years, led primarily by iPhone users and owners of Google Android phones. At least a dozen new Google-powered phones, such as last week's launch of Verizon's Droid, are expected to be released in the coming year.  

Google also says that marketer spending on mobile advertising is growing at 30% annually.

AdMob was founded in 2006 by Omar Hamoui, a Web entrepreneur looking to generate traffic for his mobile-based website. The company has taken funding from venture firms such as Sequoia Capital, Accel Partners and Northgate, and the company's clients have included Ford, Coca-Cola, Electronic Arts and Paramount Pictures.

Google, which already owns a major stake in mobile advertising with its DoubleClick Mobile unit, said it expects regulatory scrutiny of the AdMob deal but hopes the pact will be approved within a matter a months.

-- David Sarno

Web ads that learn from you [Updated]

This might surprise you, but the holy grail for many online advertisers is to make an ad that people actually like. Based on the current state of the banner ad economy, that might not seem like the case.

Thanks to the simple addition of thumbs up and thumbs down buttons on many websites, advertisers are finally getting a sense of how enjoyable (or annoying) their ads are.

The Internet has long provided a measurement of how effective an ad is -- that is how many times it was clicked versus how often it was shown, a metric called click-through rate. But that's based simply on how loud and flashy a banner can be in order to attract a reader's attention.

A click doesn't necessarily convert to a purchase, or "conversion" as they call it, nor are visitors guaranteed to associate the product positively. If an ad mimics a virus alert, it might get clicked out of fear or urgency but won't elicit a pleasant reaction once users realize they were duped.

Many social networking sites, including Facebook, Digg, Reddit and StumbleUpon, are beginning to shift toward a subjective ad model. Initial results from allowing users to rate ads have been mostly positive. The success may be inspiring a trend, as advertisers throughout the Web seem to be toning down on annoying ads.

One of the boldest implementations is Digg Ads, which publicly launched in August and has tested exceptionally well, according to Mike Maser, Digg's chief strategy officer.

The new sponsored posts appear in the main content space and look almost identical (save for a thin gray line and small "sponsored by" text) to user-submitted news stories. Whereas an isolated graphic ad on Digg gets about eight clicks out of every 10,000 impressions, Digg Ads are pulling click-through rates of 2% to 3%.

"The results were astounding to us," Maser said. The advertisers are "writing copy and headlines in a way that's almost as if you'd want to share it with someone."

Microsoft partners with Pasadena's OpenX to share online advertising technology

Microsoft Corp. and OpenX Technologies Inc., a Pasadena-based Web advertising firm, have brokered a deal to mutually promote their ad-selling technologies and share customers.

Under the deal, OpenX will offer some of Microsoft's online advertising products to its own customer base of more than 150,000 websites, which collectively serve 300 billion ads per month.  Microsoft will also refer individual business customers to OpenX, which designs custom advertising products for paying clients.

Most of the software offered by 3-year-old OpenX is based on open source technology and has become an attractive option to smaller websites, which can install the OpenX advertising platform for free and begin to make revenue from selling ad space.

Microsoft touted the partnership as an early step into a more diverse and flexible online advertising market.

"Partnering with OpenX for us is emblematic of a desire to accelerate an open ecosystem," said Maggie Finch, manager of Microsoft's business publishing group.  "We want to provide multiple choices and options for publishers of all sizes."

OpenX's technologies allow website owners to efficiently find advertising targeted to their readers. The company's competitors include Google's DoubleClick and Microsoft's aQuantive division, now called Microsoft Advertising.

The companies did not disclose the specific financial terms of the multi-year deal, stressing that it was primarily a way to cross-promote advertising products. Microsoft, however, said there would be no revenue shared as part of the agreement.

"It's the beginning of a partnership," said OpenX chief executive Tim Cadogan, a former advertising executive at Yahoo Inc., with which Microsoft signed a major search advertising deal earlier this year.  "I think it's a good legitimization of what we're doing and hopefully kicks us up to another level in terms of industry awareness."

Corrected, 3:00 p.m.: An earlier version of this post said the OpenX plaftorm served 3 billion ads per month.  The actual number is 300 billion.

-- David Sarno

Microsoft dumps 'Family Guy' variety show

Seth MacFarlane. Credit: FOX One.

It was pretty exciting and edgy when Microsoft Corp. said it would team with "Family Guy" creator Seth MacFarlane on a variety show airing next month.

The software giant was going to be the only advertiser on the show and would collaborate with MacFarlane and his partner in laughs, Alex Borstein. The pair would write jokes and skits into the show that would promote Microsoft's latest operating system, Windows 7, which came out last week.

Now comes word that Microsoft has pulled out. Apparently "the content was not a good fit," according to a statement the company e-mailed out this afternoon:

We initially chose to participate in the Seth and Alex variety show based on the audience composition and creative humor of Family Guy, but after reviewing an early version of the variety show it became clear that the content was not a fit with the Windows brand.  We continue to have a good partnership with FOX, Seth MacFarlane and Alex Borstein and are working with them in other areas.  We continue to believe in the value of brand integrations and partnerships between brands, media companies and talent.

The show will go on, Microsoft said, but without help from Redmond. Maybe Jerry Seinfeld is as edgy as Bill Gates wants to get.

-- Dan Fost

ReachLocal, with 146,050% growth in five years, tops Deloitte's Fast 500 list

Zorik Gordon, chief executive and founder of Woodland Hills-based ReachLocal, which topped the list for the fastest-growing technology companies, in a photo from October 2007. Credit: Mel Melcon / Los Angeles Times.

Deloitte's Technology Fast 500 rankings were released today, showing the fastest-growing technology, media telecommunications, life sciences and clean technology companies in the United States.

The top 10 companies on the list posted an average revenue growth rate of 53,798% over a five-year period beginning in 2004, and primarily fell in the biotechnology/pharmaceutical and communications/networking categories.

Topping the list was Woodland Hills-based ReachLocal, whose revenue jumped from $100,000 in 2004 to $146.7 million by end of fiscal 2008, or a 146,050% growth rate. It is the only Internet company to take the top spot since Google received the honor in 2004. (The majority of the companies on the list belong to the software sector.)

ReachLocal "brings order to the fragmented Internet by connecting advertisers, publishers, and creative solutions providers together on one platform," according to the company's website.

Zorik Gordon, 37, founded the company in 2004 after dropping out of dental school and working for two Internet start-up companies. His goal was to "democratize Internet advertising" by disseminating elite technology, marketing and advertising tools to small businesses.

ReachLocal has more than 500 Internet marketing consultants who can track clicks, impressions and phone calls and advise businesses on making marketing improvements. The company then helps place small business on various Web platforms and increase their searchability on major search engines.

"We bring tier one advertising technology that's had been only available to top companies down to a historic group of people that could never access these tools and technologies," Gordon said.

-- Melissa Rohlin

Microsoft and Windows 7: A Family Guy affair

Seth MacFarlane and friends. Credit: Fox ONE.

Microsoft is trying a new spin on an old method to promote its new Windows 7 operating system this fall.

Taking its inspiration from the old Texaco Star Theater -- television's first big hit, in the 1950s, with Milton Berle hosting a variety show and becoming a fixture in U.S. living rooms -- the computer giant is teaming with "Family Guy" creator Seth MacFarlane to sponsor a variety show to air on the Fox network on Nov. 8. 

The show will run without commercials, and instead promises to feature "unique Windows 7-branded programming that blends seamlessly with show content." Although Microsoft would not give away any specific songs or gags, look for MacFarlane and his “Family Guy” co-star Alex Borstein to offer up jokes, songs and cartoons that include clever references to Windows, and maybe even Microsoft's PC guy.

Gayle Troberman, Microsoft's general manager of advertising, said MacFarlane offers what is so rare these days: an opportunity for a mass marketer like Microsoft to appeal to a wide mix of demographics.

In addition, Troberman said, the diversity of the variety show -- mixing comedy, music, animation and live entertainment -- represents "a great opportunity for us to integrate the brand in a fresh and interesting way. It brings to life the power of what Windows can do for consumers."

The show, which has a working title of “Family Guy Presents: Seth & Alex’s Almost Live Comedy Show,” is scheduled to air Sunday, Nov. 8, at 8:30 p.m. EDT and PDT. Although producers clearly have to tread carefully in the world of product placement,  viewers may be growing more comfortable with the concept and may even prefer these intrusions to commercial breaks.

Troberman wouldn't say what Microsoft was paying for the privilege, but Fast Company reported last year that "Family Guy" charged $200,000 for a 30-second spot. Since Microsoft is taking the whole 30-minute show, it's probably spending a pretty penny.

Still, Microsoft has to be careful. While about the only thing Troberman could remember about Texaco Star Theater was the sponsor, Microsoft doesn't even get its name in the title of MacFarlane's show. But at least it will probably keep other names out of the show -- like Microsoft rivals Apple and Google, who distributed MacFarlane's "Cavalcade of Comedy" online.

-- Dan Fost

Internet ad spending continues slide

The recession continued to cut into companies’ resources as Internet advertising spending in the U.S. fell more than 5% in the second quarter, according to a report released today.

It is the second consecutive quarterly drop in online advertising, according to the Interactive Advertising Bureau and PricewaterhouseCoopers quarterly report. This is the first time since the dot-com bust in 2002 that online ad spending has dipped for two consecutive quarters compared with the same quarters of the previous year.

From April to June this year, 5.4 billion was spent on online ads -- down 5.3% from a year earlier, when advertisers spent $5.8 billion.

Despite the drop in numbers, online advertising is doing well considering the economic climate, said Randall Rothenberg, president and chief executive of the Interactive Advertising Bureau.

“We are in one of the most difficult economic slumps in decades. Interactive is one of the advertising sectors that has been least affected,” Rothenberg said. “As the economy improves, we’re confident that brands will devote an even greater share of their budgets to reaching consumers as they make interactive media a larger part of their lives.”

-- W.J. Hennigan

Bloggers must now disclose if they got paid to write a review

This sculpture outside FTC headquarters is called "Man Controlling Trade." It was done in 1942, long before bloggers. Credit: FTC.

A blogger who reviews a product -- but leaves out the fact that he or she got a payment, high-value gift or free vacation to write the review -- could run afoul of new federal regulations on advertising.

The blogger rules, announced today by the Federal Trade Commission, are part of revisions to the agency's Guides Concerning the Use of Endorsements and Testimonials in Advertising.

The last time these guides were revised was in 1980, and of course back then there was no such thing as a blogger.

But bloggers are mentioned several times in the 81-page revisions. "The post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement," said the agency in a release. "Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service."

A blogger can, however, accept a free sample of a product for review purposes without disclosure, "provided that the product itself does not have such a high value that would make its receipt material (e.g., a car)," according to the revised rules.

There's nothing in the rules that specifies how the disclosure must be made. "That's left up to the endorser," said Richard Cleland, assistant director of the FTC's division of advertising practices. "It can be a banner, part of the review. The only requirement is that it be clear and conspicuous."

The new rules go into effect Dec. 1.

There are no penalties directly associated with violating the rules. But if a blogger constantly breaks them, the FTC could seek a cease-and-desist order.

If a blogger is thus ordered but continues to break the rules, it can run into real money. The fine for violating an order is up to $11,000 per incident.

-- David Colker (who was not paid by the FTC to write this post)

Facebook retires once-embarrassing Beacon advertising system

Facebook is closing the book on Beacon, an early advertising experiment that got the upstart social network in big trouble with users in 2007. 

Back then, Facebook quietly launched the service, which recorded user activities on non-Facebook sites and then reported them to users' friends. 

In the most famous instance, a Facebook user complained that he had ordered a diamond ring for his wife from Overstock.com and that Facebook had ruined the surprise by reporting the purchase to all his friends -- and his wife, too.

The endeavor quickly turned into what "60 Minutes" called "a full-blown PR disaster ... including petitions and bloggers writing obituaries" for the company. 

In that same "60 Minutes" segment from early 2008, CEO Mark Zuckerberg said that Beacon and the company's advertising plans "might take some work for us to get this exactly right" and that "this is something we think is going to be a really good thing."

But the company is no longer maintaining that position. Beacon, it says, will be shut down as part of a class-action settlement. The suit was filed against Blockbuster and Facebook last year, accusing the video rental company of violating user privacy by disseminating customer rental information to users' Facebook friends -- via Beacon.

In addition to decommissioning Beacon, Facebook will also donate $9.5 million to establish a foundation that will focus on online privacy and safety concerns.

-- David Sarno