Morgan Stanley’s Meeker Sees Online Ad Boom

Dot-com “Queen of the Net” Mary Meeker will tell today’s Web 2.0 Summit that Internet advertising will reach $50 billion and mobile commerce will outpace traditional e-commerce

By Olga Kharif

(Bloomberg) — Mary Meeker will predict a $50 billion online advertising boom in an address at the annual Web 2.0 Summit in San Francisco today. The Morgan Stanley analyst will say as well that mobile commerce may gain market share faster than traditional online retailing.

Meeker, 51, is back in demand. She was called “Queen of the Net” by Barron’s in 1998, only to see her star dim as technology stocks plunged and regulators said securities firms used biased research to lure banking business. These days, investors are scouring her research anew for would-be Web winners.

“We are trying to invest in the kinds of companies she’ll mention in her reports,” investor Marc Andreessen said in an interview.

Andreessen’s venture firm, Andreessen Horowitz LLC, has bought stakes in Meeker-favored companies including Skype Technologies SA and Zynga Game Network Inc.

“She is becoming Mary Meeker 2.0,” said Bing Gordon, a partner at venture capital firm Kleiner Perkins Caufield & Byers. Gordon said Meeker’s research helped persuade his firm to “do more mobile, bigger and faster.” In March, Kleiner Perkins said it will double its iFund to $200 million. The investment pool backs startups that create applications for Apple Inc.’s handheld devices, such as the iPhone and the iPad.

Bloomberg LP, the parent company of Bloomberg News, is an investor in Andreessen Horowitz.

Meeker gained renown in the 1990s for predictions on Internet growth and her bullish calls on Web companies, including EBay Inc., Inc. and America Online Inc.

Tech Bust

Then came the dot-com bust in 2000. The Nasdaq lost 78 percent of its value in less than three years. In 2001, Fortune published a story titled, “Where Mary Meeker Went Wrong.” In 2003, after the U.S. Securities and Exchange Commission accused Morgan Stanley and other financial services firms of skewed analysis, the companies settled for $1.4 billion.

Meeker fared better than analysts such as Henry Blodget, formerly of Merrill Lynch & Co., who was fined and banned for life from the securities industry; the SEC didn’t accuse Meeker of wrongdoing. Still, then-New York Attorney General Eliot Spitzer, who led the probe by state and federal authorities, said Morgan Stanley failed to supervise its analysts, including Meeker, and said the company inadequately managed conflicts of interest between its research and investment-banking divisions.

“She may have a second act, which is never an easy thing to do on Wall Street,” said Tom Taulli, an independent researcher on initial public offerings. “But she is going to have to prove herself. And it’s very difficult: You are associated with that brand.”

Digging for Data

Meeker says the brickbats flung her way haven’t altered the way she carries out research. She said Morgan Stanley’s “The Internet Report” in 1995 contended that most companies fail.

“To be a successful analyst, one has to dig deep for data,” Meeker said in an interview. The report “was thoughtful about the growth of the Internet, yet cautious about investments.”

Meeker, a managing director who leads Morgan Stanley’s technology research, spends much of her time these days thinking about the Web in the iPhone age. In 2012, smartphone shipments will exceed those of personal computers, she contends.

“It’s the fastest-ramping technology transformation the world has ever seen,” Meeker said. “I’ve been of the view for years that the mobile Internet was the next big thing.”

U.S. consumers spend 28 percent of their media time online, yet only 13 percent of ad spending goes to the Internet. That creates a $50 billion online advertising “global opportunity,” according to a draft of Meeker’s Web 2.0 presentation.

Mobile Commerce

Another prediction: Mobile commerce may grab retail spending share “much faster” than traditional e-commerce, she says. That’s because wireless connections enable impulse purchases, and location-based services let merchants deliver coupons and offers to users when they’re most likely to spend.


YouTube Stars Brands Love

November 9, 2010

YouTube Stars Brands Love

Nov 7, 2010

– Brian Morrissey, Adweek

The dirty secret of cable TV is audience numbers are often pitifully small, with many programs drawing under 100,000 viewers. That’s not the case for a select group of YouTube creators.

This cadre of stars is no longer toiling away in Internet obscurity in the hopes of breaking into TV. Instead, they are raking in six-figure ad revenue deals from Google, commanding up to $20,000 a pop for branded videos and even dabbling in merchandising.

First and foremost, the top YouTubers have honed their craft over the past three or four years, building large and loyal audiences. Many of the top stars fall in the general entertainment category, doing offbeat skits. The most successful heavily incorporate audience interaction.
The numbers they draw can be staggering. Comic actor Shane Dawson averages nearly 1.5 million views per day, according to video analytics service TubeMogul, and has racked up 670 million views of his videos over two and a half years. The typical YouTube star will average 250,000 views per video. “On any given night or day or two, the top 10 YouTubers will have more views than any cable channel,” says Walter Sabo, a former ABC radio executive who started an Internet talent agency three years ago called HitViews.

Brands are taking notice. Google distributes more than $100,000 per year to “hundreds” of YouTube stars, according to Tom Pickett, online sales and operations director at YouTube. GE recently tapped 15 YouTubers to make a series of videos for its “Tag Your Green” campaign. In just three weeks, the videos have gotten more than 12 million views.

GE needed to get comfortable with only supplying the YouTubers with a theme and a few points to hit, says Jeffrey Kaufman, vp of strategic programming at Howcast, which organized the campaign. “They’ve been very cool about the fact that we need to loosen up a little bit and allow them to speak in their own voice.”


Subs: 917k
All-time views: 196m
Avg per day: 301k

Since she started posting to YouTube in 2006 as iJustine, Justine Ezarik has become a tour de force. Her videoblogging channel has nearly 1 million subscribers, attracting a loyal young audience. She’s done several brand videos that draw equally large audiences. TubeMogul estimates her brand integration views this year alone have generated more than 9 million views. Ezarik is a brand favorite for the gusto she puts in advertiser videos. Unlike some stars who will only include a product in passing, Ezarik goes beyond product placement to make the brand a co-star. Take her video last month for Mattel’s Video Girl Barbie. The three-minute clip shows off the product and directs to a Mattel contest. In a week, the video garnered more than 460,000 views and 2,000 comments.


Subs: 593k
All-time views: 73.7m
Avg per day: 120k

The North Carolina comedy duo Rhett & Link are more than amenable to advertising; they’re students of it. Rhett McLaughlin and Link Neal created a dozen tongue-in-cheek local spots for their “I Love Local Commercials” project. The effort was done on behalf of Microbilt, a small-business information service. McLaughlin and Neal are veterans of the Web video scene, active on YouTube since June 2006. They built a following via quirky videos that often take the form of music videos. “The Facebook Song,” released three years ago, skewers social networking. It hit a chord, drawing 6.7 million views. Thanks to “I Love Local Commercials” and work for GE, Dentyne and others, Rhett & Link have generated nearly 21 million views on brand videos.


Subs: 1.9m
All-time views: 537m
Avg per day: 1.4m

The comedic duo Ian Hecox and Anthony Padilla were early YouTube stars, joining the platform back in 2005. Thanks to its early start, Smosh became the No. 1 YouTube channel by 2007. (It’s now the No. 5 most subscribed of all time.) Smosh can regularly draw more than 1 million views for its short-skit videos with a young male demo increasingly hard to reach through traditional media. One of its most popular videos showed what would happen “if videogames were real.” The sheer size of its network makes Smosh an attractive outlet for advertisers. Smosh’s brand work has included a video for Kraft promoting its Kraft Singles Melt Downs product that drew 1.4 million views. For GE, Smosh created a series of four videos around its green theme that netted a total of 2.5 million views.


Subs: 1m
All-time views: 259m
Avg per day: 752k

This past February, Lancome introduced its latest spokesperson. Rather than an actress, it chose a 22-year-old who films cosmetics tutorials from her bedroom. Michelle Phan is the leader of a group of young women creating makeup videos. TubeMogul estimates they collectively average more than 1.2 million views per day. Phan’s tutorials evoke a New Age Bob Ross with soothing music in the background, her soft-spoken narration and text subtitles. In her breakout video, Phan showed how to recreate Lady Gaga’s look. The clip has been viewed more than 14 million times in 10 months. The content is ready-made for product integration, and she’s gone beyond Lancome to run videos for other brands. Phan shot a “Kissable Lips” video for Colgate that features its Wisp disposable toothbrush. It has gotten more than 2.5 million views since it debuted in May.


Subs: 957k
All-time views: 278.4m
Avg per day: 277K

Just over two years ago, Michael Buckley toiled as an admin at Live Nation. His side job making videos riffing on pop culture is now his main gig. The What the Buck? show offers sharp, funny commentary on pop culture, taking aim at celebrities like Justin Bieber, Miley Cyrus and Taylor Swift. His commentary comes in a breathless rapid-fire style. Buckley’s 2008 video lampooning Hollywood “skanks” like Lindsay Lohan, Paris Hilton and Cyrus has gotten more than 9.6 million views. The celebrity angle has made What the Buck? popular with entertainment companies. He’s promoted Melissa and Joey for ABC Family, Lie to Me for Fox and Victorious on Nickelodeon. The videos typically take the form of interviews with the stars or commentary with clips. All told, What the Buck? has generated 4.6 million views on branded videos.

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