Cashing Out: Week of July 17th – 23rd 2011 in Online Marketing News

A good week for California and Minnesota affiliates

The Performance Marketing Association (PMA) reported July 19 on two legal victories for affiliates facing possible affiliate nexus tax legislation in the states in which they operate.

Requiring the collection of taxes for sales made online, the nexus tax has already impacted affiliates in states where it has been enacted, with businesses choosing to terminate affiliate programs rather than subject themselves to taxation.

In February, Minnesota Governor Mark Dayton had recommended that a nexus tax be included in the state budget. But this week, the Special Session Tax Bill was released and it failed to include such a tax. Furthermore, the PMA noted an affiliate nexus tax can no longer be added to the budget, declaring the proposed legislation “dead in Minnesota.”

Approved at the end of June, California’s state budget included nexus tax legislation, and ReveNews reported last week on Amazon’s efforts to reverse it. The company has been calling for a referendum on the implementation of the tax, which would see California citizens vote on the legislation.

The referendum has now been approved by the California Attorney General and Secretary of State. Provided Amazon can gather 504,000 voter signatures in support of the referendum by the end of September, the law will at least be halted until it can go to a vote on the next election ballot. That would probably be some time next summer.

However, even if voters do choose to cancel the law, it is possible for similar legislation to be proposed within the following year or two. So the future of California affiliates is still far from secure.

CBS signs content licensing deal with Amazon

After Netflix’s decision last week to raise the price of their DVD rental service, it was only a matter of time before its competitors came forward offering incentives for customers to switch from the service.

Bloomberg reported July 20 on a deal that will see Amazon streaming 2,000 episodes of CBS shows to its Amazon Prime subscribers.

The non-exclusive licensing agreement, which includes popular shows like Medium and Numb3rs, will increase Amazon’s library of films and television shows to 8,000. That doesn’t quite rival Netflix’s 20,000 titles available for streaming. But the consumer backlash that erupted around Netflix’s price hike has been enough on its own to turn many users away from the service.

Those same dissatisfied customers might not need much of a push to take advantage of Amazon’s new offering, especially considering that Amazon Prime subscribers won’t be charged any extra for the service.

After more than 10 years, Wal-Mart shares data

After over a decade, Wal-Mart has decided to finally begin sharing sales data again with major market research companies like Nielsen and SymphonyIRI.

The agreement, announced July 21, will give the Nielsen access to scanner data from both Wal-Mart and Sam’s Club stores, an arrangement that could be beneficial on both sides. A similar deal with SymphonyIRI is in the works.

While Wal-Mart will be able to use Nielsen’s data and tools to gain customer insights, and learn about consumer trends, the advantage for market research companies is obvious.

With a net revenue of over $400 billion dollars in its most recent year, and over 100 million weekly customers, Wal-Mart is the forerunner of consumer spending, and their data is essential to market research firms’ understanding of the retail industry.

As AdAge’s Jack Neff notes, “The move will eliminate a gaping black hole in consumer packaged-goods sales data that research firms and marketers have had to work around for years using consumer panel data and advanced modeling.”

Mobile ad spending could surpass that of TV ads, says agency authority

According to Paul Gelb, Mobile Practice Lead at marketing agency Razorfish, “mobile ad spend will overtake television” within the next few years.

In a July 19 interview with AdWeek, the agency big-shot gave reasons for this bold prediction, citing the fact that “there are over three times the number of mobile subscribers as there are TV subscribers,” adding that mobile’s engagement rates are higher, and that “globally, it’s the most adopted technology and media channel in history.”

Gelb’s argument seems to be supported by the findings of a study cited by Econsultancy, which claims:

“Smartphone users are watching television at the same time as surfing the internet on their mobile devices,” and that ads generally targeted to TV viewers might be better off targeted to mobile users.

Despite these grandiose claims, not everyone is convinced. As Econsultancy put it, “TV ads are liked by consumers and work just as well today as they did 15 years ago.”

Meanwhile, the figures for mobile ad spend run contrary to Gelb’s predictions. According to JP Morgan, mobile ad spend for 2011 is expected to reach $1 billion, while $59 billion was spent on TV ads in the U.S. last year.

AmEx and Facebook partner on daily deals app

A July 18 TechCrunch article detailed a new collaboration between Faceook and American Express that will build on either company’s existing presence in the daily deals industry.

Now, with the new app Link, Like, Love, users will be able to link their credit card directly to their Facebook profile and receive offers targeted to them based on things they or their friends have liked on Facebook.

The elegance of the service lies in the fact that users won’t have to deal with coupons or pre-purchasing. Instead, deals are purchased with their AmEx card and businesses are credited. Even Groupon and LivingSocial have to work around the problem of deal redemption, whereas deals purchased through the new Facebook/AmEx app simplify the process for both the consumer and the merchant.

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Promoted Tweets: Branding opportunity or invasive marketing?

Microblogging site Twitter is now attempting to catch up with other social networks like Facebook to up its commercial value by allowing advertising on its platform. Promoted Trends and Promoted Accounts have already been around for quite some time. Now, Twitter has now come up with another platform for brands to advertise on Twitter, called Promoted Tweets.

As Twitter’s website reveals, “Promoted Tweets are a new form of advertising unique to Twitter that enable you to speak to users that don’t currently follow your account. Promoted Tweets are regular Tweets that are amplified to a broader audience.”

They start as regular tweets to followers and can be ‘promoted’ after the tweets is sent out. This will make the tweet feature on the top of all searches on the site for the keywords in the tweet.

Offered on a Cost-per-Engagement (CPE) basis, the Promoted Tweets feature for businesses, is a less subtle way of advertising on the platform. Unlike Promoted Trends and Accounts, the Promoted Tweets, will be more likely to be noticed as they would rest at the top of the timeline as Twitter says, “They appear as content in search results, not alongside them.”

Leveraging the opportunity
Many media, entertainment, food and beverages brands have already established a strong presence on Twitter and used it as an effective engagement medium with their followers. How would this new feature be useful for brands in the social media marketing plans?

While some agency heads think it is a great opportunity, they also advise wise use of the tweets by brands to prevent them being taken as invasive marketing techniques.

Kanika Mathur, President, Digitas India, believes it to be a good tool to employ and said, “Promoted Tweets give brands access to another channel of reaching out to the social media audiences.”

Vineet Gupta, Managing Partner, 22feet Communications, said, “It is good to finally see a tool from Twitter to allow advertising opportunities. But it is too early to say which way it will go.”

A word of caution
“However promoted tweets should be used wisely by brands as endorsing a brand by retweeting is a much more personal interaction as opposed to simply ‘Liking’ a page. The consumers won’t pass around the tweet if they are not convinced enough about the intentions of the brand”, she added.

It is also important for brands to effectively use the tweets to their advantage. As Gupta, said, “What is important to take into account is that how these tweets would be relevant to the brand category and how relevantly brands optimize their use. They can be used by say for restaurants to promote their new menu, or by companies to promote their new products. They can also be a good way to get feedback. But it all depends on how effectively they are used.”

Max Hegerman, President, Tribal DDB, points out that Twitter as a social network is a place which is fairly non-intrusive in their users activity, as it is used as a place where users communicate with friends and family. He said, “The introduction of these tweets might be construed invasive and as cluttering user’s timeline, which might lead to a backlash for Twitter. But they can be used by agencies strategically, by targeting users incredibly and appropriately, and making them specific.”

Not everyone sees it as a good initiative by Twitter as the best opportunity available for brands. Rajagopal Menon, Director, Games2win.com, said, “Twitter has been experimenting with Promoted Tweets (brands pay to have a their tweet show up at the top of search result pages), Promoted Trends and Promoted Accounts. As long as it stays off consumer’s stream of tweets its bearable for the consumer – it is worth noting that when Twitter promoted brand messages in a bar at the top of the official Twitter iPhone app, it was derisively called the Dickbar by consumers.”

Vivek Bhargava, CEO, Communicate 2, does not believe it has much branding opportunity and said, “I don’t think it is the most effective move by Twitter. It has a few advantages that it would probably reach out to more audiences. But then it would come under interruption marketing, and in the number of tweets in the timeline, it can easily be missed as well. So I do not feel it has a branding potential. It looks as a desperate ploy by Twitter to monetize its activities.”

Menon also believes that this kind of intrusive marketing technique can cause backlash from the followers. He said, “I think consumers are going to react violently to this obtrusive messaging. In my opinion, brands should avoid this because the consumer backlash is going to be violent.”

“Interrupting consumer activity is fine in TV and newspapers because consumers have become habituated to it. In social media, there are better, more subtle and effective ways to engage with consumers rather than in the face obstructive advertising. Best examples of this in the Indian context are Hippo and Tata DoCoMo. These brands use the medium brilliantly by engaging with consumers AND performing the brand objective – be it marketing or CRM,” he added.

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