The Deal of the . . . Week

Usually I haven’t commented on media deals. There are just too many of them, and other blogs such as PaidContent.org track them on a daily basis. But one deal this week I believe may be the forerunner of changes in the lineup of major media players.

As you may have seen, Fox Interactive Media, which oversees the Internet business operations of News Corp., signed a $900 million deal with Google to be the exclusive search partner and contextual ad sales provider for FIM, including MySpace.com, fox.com and foxnews.com. Google will pay a guaranteed minimum of $900 million over three years subject to Fox meeting certain traffic and other commitments.

PaidContent.org reported (Aug. 8) the deal does not involve video at this point but Fox “will have talks with Google on future opportunities.”

As MarketWatch’s Bambi Francisco wrote, it will be interesting to see the extent to which Google personalizes searches on MySpace. “Now, personal information and search information may actually merge.”

MarketWatch reported Fox had been negotiating with the four major search engines—Google, Yahoo, Microsoft’s MSN and Ask.com—to find the high bidder. I would look for more deals between media companies and the other three search engines before the end of the year.

Advertising Insights

Two Ad Age articles this week suggest advertising isn’t escaping the shakeup in other parts of the media world

Consulting firm McKinsey & Co., in a study on media proliferation, is saying traditional TV advertising will be only one-third as effective in 2010 as it was in 1990. Ad Age says the report “assumes a 15% decrease in buying power driving by cost-per-thousand rate increases; a 23% decline in ads viewed due to switching off; a 9% loss of attention in ads due to increased multitasking and a 37% decrease in message impact due to saturation.

The report points to a 50% drop in viewers over the last decade while real ad spending on prime-time broadcast TV has increased by about 40%--advertisers paying much more for less, a trend in radio and print as well.

One change needed, according to McKinsey director Tom French, “CMOs have to step up to a larger role and question a host of historical assumptions of how marketing works. They have to continue to build rich, robust and proprietary customer insights, but they have to do it from a bunch more sources.”

In the second article, a review of “What Sticks: Why Most Advertising Fails and How to Guarantee Yours Succeeds,” ad industry veterans Rex Briggs and Greg Stuart suggest 37% of advertising spending is wasted.

One major flaw: marketers’ failure to define success for campaigns at the outset. “Of the 36 marketers the authors researched, only two—P&G and Cingular—had a clear definition of success for each marketing effort at the outset, Mr. Briggs said in an interview,” according to Ad Age.

Blog Explosion

Technorati, the blog-tracking site, reports that each day 175,000 new blogs are created worldwide. That’s just over two new blogs per second. Technorati founder and CEO Dave Sifry has been tracking the blogosphere since November 2002, and he reports the number of blogs is doubling about every six months or about 100 times since he started counting.

English is most popular language (39%), and Japanese is next (31%). Chinese accounts for 12% so there’s lots of room for growth there. Splogs (spam blogs) makes up about 8% of the new blogs.

Not surprisingly news events have a major effect of blog postings. The daily average of 1.6 million posts jumped to 2.5 million with the outbreak of fighting between Israel and Hezbollah, according to Technorati.

Technorati Links with the Associated Press

Technorati is strengthening its ties with the news world, connecting bloggers at the 440 AP member newspapers that subscribe to the Hosted Custom News product. Technorati blogger Peter Hirshberg says, “Increasingly what the blogosphere says about a news story becomes part of a more complete story, lending diverse perspectives and often expert commentary.”

AP papers will get a module featuring the “Top Five Most Blogged About” AP articles, and Hirshberg writes, “Additionally, when readers click on an AP article, Technorati will deliver ‘Who’s Blogging About’ that article.”