Internet Outsider

What Mortgage Crisis? Financial Ads Keep Pouring Online.

From Silicon Alley Insider: We've argued that the mortgage crisis is likely to trigger a slowdown in online ads that could have ugly repercussions. One of the many counter-arguments is that even as the home loan business blows up, both mortgage companies and other financial advertisers will continue to pour money into web advertising -- because they need to keep lending money and because it's cheaper to attract customers online than anywhere else.

Well, a new report from Nielsen/NetRatings on U.S. Web advertising appears to support the more sanguine thesis. In July, four mortgage/financial advertisers showed up on Nielsen's list of the top 10 Web advertisers (PDF). All four show up in the August list released today, and three of the four increased their ad budgets -- including imploding Countrywide Financial, which increased its ad spend from $34.8 million to $35.4 million. 

So are we wrong about the risk the mortgage crisis represents for the Web advertising business? We hope so. But we're not abandoning the gloomy thesis just yet.  Countrywide's implosion did not begin until mid-August, when Merrill Lynch downgraded the stock to SELL and Countrywide sucked down an emergency $11.5 billion on its credit lines.  (And it wasn't until last week that the company began firing employees). The month-to-month rate of growth of Countrywide's online ads (per Nielsen) slowed in August, with a $30 to $35 million jump from June to July, which could be the first sign of a change in trend.  Lastly, we continue to worry less about what has happened than about what is yet to come.  But all that said, Nielsen's August report certainly did not provide additional cause for alarm.

Related:
Will Mortgage Woes Spread To Online Ads?
Will The Mortgage Crisis Hurt Web Ads? Looks That Way.
How Bad Could Mortgage Mess Get For GOOG, YHOO, RATE

What Went Wrong At Backfence?

Mark Potts knows, but won't say. Or more accurately, the cofounder of the community website network, which burnt $3 million in less than two years before folding this summer, won't give up the good stuff. He's citing "private business matters involved that we've chosen not to discuss." Yet he's happy to post about general lessons learned on his Recovering Journalist blog. A lot of this is boilerplate that could apply to any new business - startups are hard, keep costs down - and some is pretty much Web 2.0 cant at this point - it's a conversation, engage your community - but still worth reading. One promising note for any community-oriented, ad-supported startups out there - Potts says selling ads wasn't really a problem. But just for argument's sake, if we really are embracing communities here, and we really are in an age of transparency, I look forward to reading postmortems from SAS Investors, Omidyar Networks and other investors who sunk money into the venture. Anyone?

Edelman: Pop-Ups Artificially Inflating Internet Traffic Stats

Internet-sleaze detective Ben Edelman has published a new study showing that "forced visits" triggered by unwanted pop-up ads may significantly increase reported traffic statistics at many sites.  Because traffic statistics are important for business and investment decisions, this artificial traffic may be helping some companies win business/investors at the expense of others.  To anyone who has ever had his or her screen littered with unwanted pop-up ads, the practice is obviously sleazy.  At public companies that report traffic statistics, it might even be construed as securities fraud.

A "forced visit" occurs when a pop-over or pop-under for a third-party site automatically launches when you are visiting an unrelated site.  As Edelman shows, such ads can eventually count as a "visit" to the advertiser's site, even if your only interaction with the pop-up is to delete it.  Using screen shots, Edelman details how such ads produce traffic for even big companies like Orbitz (Away.com) and Bolt.com.  Edelman estimates that, at sites that use such tactics, "forced visits" could account for a third to a half of all traffic. 

This practice presumably does not affect traffic numbers at sites that don't use pop-up ads, such as Yahoo and Google (so it doesn't explain the ongoing discrepancy between site-reported traffic stats and Nielsen/Comscore traffic stats).  It probably does inflate such companies' advertising revenue, though: Sites that buy pop-ups/traffic need somewhere to find future "visitors."

Given the recent regulatory focus on spyware and inflated newspaper subscription numbers, it is reasonable to assume that regulators will eventually focus on such "forced visits."  As Edelman suggests, in the wake of YouTube and other high-profile emerging-company acquisitions, Internet companies have an incentive to pump up traffic statistics.  The smart ones will carefully weigh this incentive with the threat of future fraud charges, hellish publicity, and fines. 

Who Will Get Blessing/Curse of "Best Company of the Year"?

Watchmojo wonders which lucky entrant will be chosen as the "Best Internet Company of the Year."  As with Time's "Person of the Year," earning this distinction isn't always a blessing: Some previous winners (Google, Cisco...) have gone on to greatness.  Others (Netscape, Altavista) have just gone to zero.

JJ: There are no strong candidates right now but I have my eye on Craigslist, Facebook, LinkedIn, and possibly Aquantive as 2007 breakout stars.  (I would have included AKAM if earnings were a blowout yesterday).

Previous Winners:

1994: AOL.com

1995: Netscape

1996: Altavista

1997: eBay

1998: Yahoo!

1999: Amazon.com

2000: Lycos

2001: Napster

2002: Google

2003: Cisco

2004: Skype

2005: MySpace

2006: YouTube