Microsoft has found a partner - or you could say 50 million of them.  Earlier this week Microsoft Corp. wined and dined Facebook, offering an enticing $240 million for a 1.6%stake in the company.  Facebook obliged and a budding romance was born.  Or is it?  While Facebook may have made Microsoft weak in the knees, Bill Gates and co. may soon look for a fast escape.  

While the amount Microsoft paid for their 1.6% stake translates to Facebook being valued at $15 billion, several people are left wondering why.  Broken down, Facebook’s valuation would make each one of the 50 million users worth about $375.00.  The site continues to grow however, claiming it adds 200,000 new accounts everyday.  Facebook also claims to be the ‘New Web’, the place where users communicate in complete privacy and will eventually use in lieu of major search engines.  

Consider just over a year ago, Facebook execs turned down a $750 million offer, which many critics touted as hubris and industry naivety.  The Facebook crew wanted $2 billion at the time,  a number deemed excessive for such a young company.   Facebook rapidly grows however, iaveraging 34 million page views per month, a figure that will likely catch up to MySpace’s 68 million visits per month.  It’s also a figure that can make advertisers foam at the mouth - so Microsoft hopes.

What does Microsoft gain exactly?  Facebook published the following press release on its site: Microsoft is now the “exclusive third-party advertising platform partner for Facebook, and will begin to sell advertising for Facebook internationally in addition to the United States.”  Furthermore, Facebook claims 60% of its users are outside the US.

Microsoft’s current social site, Windows Live Spaces, currently only draws about 8 million visitors a month.  While Facebook undoubtedly provides fertile advertising ground, the site demographics must be considered.  Nearly half of Facebook users are college-age or younger.  And while most users are in college, this is not a time in most peoples’ lives when money is disposable - or had at all.  Sure - the advertisements will be noted, but who’s going to take action?

Another dealbreaker is that international online advertising draws only a third of what’s earned in the U.S.  (approximately $300 million versus $900 million respectively). 

In any event, the short-term looks appealing for both companies as Microsoft posted a 27% increase in quarterly profit and Facebook continues to double its user base every six months.

As the third quarter culminates with some pretty paltry numbers, which we’d like to blame on the destitute housing market and subprime catastrophes, talk of recession consumed the media.  Add to the mix, retail auto and energy companies all fell short of impressing Wall Street enthusiasts, leaving many looking for signs of economic life.  Amidst the dismal report there was one, shining beacon of hope - and gargantuan profit.  Google Inc. exceeded analyst expectations, raising $4.23 billion in third quarter revenues and last closed at $639.62 a share (as of October 18th).   

Google aced its third quarter report card with a boost from simple text ads, which contributed to the company’s 47% rise in profit.  Timely acquisitions including the purchase of Postini Inc., a one stop shop that hosts all electronic communication, coupled by plans to purchase online ad giant DoubleClick provided fuel for Google’s fire. 

Will other online advertising companies feel the glow from Google’s radiant halo? While Yahoo! and eBay would prefer to have Google-like numbers, both companies reported third quarter profits that exceeded all forecasted expectations, and perhaps even their own.  And what about those not-so-gigantic online ad companies?  How are they expected to fare in the coming months and are expectations and potential earnings on the rise due in part to Google’s success? 

While the current online ad market is described as ‘dicey’, larger online firms including Yahoo!, Microsoft, Google, and even AOL, have been paying in the hundreds of millions and even billions for smaller ad agencies.  Despite the big three’s impressive 3Q reports, online advertising as a whole continues to report mixed results on Wall Street. What does this mean in terms of fourth quarter expectations?

The same as traditional advertisers are impacted by external economic conditions, online advertising is too.  In any downtrodden economy, advertising dollars are the first to go.  A weakened US dollar doesn’t help either.  Online advertising has proven to deliver new and innovative ways to advertise, giving investors a valid reason to, well, invest.  Consider video, blogs, in-text and non-intrusive ways of advertising are all relatively new methods of monetizing messages to the masses.  Innovative strategies such as these are reasons why businesses choose to advertise online versus in a newspapers or similar medium.

No market is a stable one and there are even Google naysayers who feel the company’s reached its peak and will encounter severe challenges (like a realistic competitor) in the near future.  One item to watch: Google’s pending purchase of DoubleClick may motivate other agency buyouts. 

The “feet on the street” Yellow Page ad strategy sprints to the internet.  While small business owners typically use traditional advertising methods to reach customers, a slew of web companies are taking the ”feet on the street” mentality and encouraging local brick and mortars to post internet yellow-page ads instead.  These companies see local internet search advertisements as the online solution to offline purchases. 

These web companies may be on to something as research firm, Kelsey Group, estimates spending for online business ads will rocket to $4.9 billion a year by 2011.  The same firm estimated the Yellow Pages industry is valued near $136 billion worldwide. That figure though, includes international sales in addition to online revenue.  Considering current online yellow page ads took in $1.9 billion this year while online ads in general grew 27%, the future looks bright. 

What exactly do these local search market entrepreneurs do?  ReachLocal Inc., an advertising company sepcializing in local internet campaigns, claim to minmize the compelxities associated with local Internet advertising.  According to the company, 6.8 billion searches were performed in a single month, of which 43% were aimed at finding local merchants.  The company manages local search engine advertising campaigns for their small business customers, who often do not have the time or know-how to oversee the venture.  An October 10, 2007 Los Angeles Times article reported companies such as ReachLocal and much larger established corporations including AT&T (who control Yellowpages.com) see market shares galore as consumers go to major search engines like Google, Yahoo!, MSN, and AOL to locate local businesses.

At this point in time, companies mananging small business online search advertisiment stick mainly to text ads that appear to the side of search engine results pages.  A trend is emerging however, as local business ads become increasingly visually dynamic, similar to other forms of online advertisments that use video and audio to attract eyeballs.

Despite our reliance on online communication, face to face contact will always be an effective way to market a business’ product or service.  Several online companies are aware of this and have become dedicated patrons of conventions and trade shows.  And amongst those attendees, many will attest that garnering booth traffic and obtaining qualified leads is an artform all in itself. 

Here are a few booth traffic tricks that will up the ante on your next exhibition experience.  And by ‘tricks’ we mean veteran marketing strategies applied to the unique booth environment and tailored for productivity and success. 

Two of the first tasks occur before you leave the office.  Pre-registering puts your company’s name on a list that could potentially appear before thousands of eyes.  Didn’t you scour the same list for recognizable names?  You can guarantee others will do the same and it’s probably the simplest way to get your name out there.  After registering, why not let other attendees know - especially those in your target audience?  A simple press release will do, detailing when and where you’ll be.  

Next up - booth design.  Sure it would be cool and memorable to have white tigers lounging in your booth space, but, before your call Roy or Ringling, determine if A), they’ll compliment and promote your company’s brand, B) will they motivate or deter people from stopping to chat, and C) do they reveal what exactly your company does?  Successful booth design generally involves a clean, professional look whose colors and logos coincide with your company’s.  Signage should be obvious as well and relay, in a nutshell, what your company is all about. 

Keep in mind people want something to take away from your booth.  Marketing literature works great including brochures, media kits, clever newsletters directed at your target audience.  Online companies can get especially creative as many are on the cusp of new technologies and communication devices.  Some companies even bring their own lead forms to shows and have them ready to pass out at a moment’s notice. 

While design and marketing materials are important, it’s the booth staff that will do the talking and make or break a potential lead.  It’s important for booth staff to know their objectives ahead of time in addition to anticipating what questions will be asked.  Staffs often need motivating as well.  Those assigned for booth duty may find motivation in the form of incentives including a letter of recognition or cash prize.  And for some reason, toys are always memorable as well.  Just make sure they include contact information.

The show doesn’t stop when the lights go out and convention doors are locked.  All that hard work will leave you with piles of business cards and names to follow up with.  It can’t be stressed how important it is to follow up with the right people in a matter of days.  Convention memory is fleeting and chances are people will forget names, companies, booth designs and even incredibly cool gizmos within a week or so.

A successful booth can mean huge sales even in the form of landing that one big account.  Mind the details and be merry with all those in attendance and watch for wonderful opportunities to come.

Economic analysts expect internet advertising to surpass newspapers as the most common and money-generating type of advertising within the next three years.  In short, newspaper ads are static, while online advertisements are dynamic and hit almost every major sensory note.  The question posed here is whether or not an entirely new set of advertising ethics should apply to online ads.  In the book, Fables of Abundance: A Cultural History of Advertising in America, author Jackson Lears recounted a J. Walter Thompson Agency pitch where an employee proclaimed, “Advertising is a non-moral force, like electricity, which not only illumninates but electrocutes.  Its worth to civilization depends on how it is used.”

The ethical question often presented to online advertisers is how much control should they possess over a user’s online experience?  Angela Gunn tackled this topic in her article, ‘Pop-ups are Perilous’ for Consumerwebwatch.com.  Her issues were wtih pop-ups, kick-throughs, and full-size browser ads that hold users captive until an action is performed.  Gunn suggested online advertising practices were going to far, employing click strategies to dupe users for monetary gain.

As video advertisements become more prevalent on sites, it’s not uncommon for users to sit through minutes of online commercials before they’re able to see the content they originally went on the site to see.  Websites within websites, talking cartoons, and biased blogs are only a few new types of online advertisements hitting computer screens.  New methods of online advertising means more money, and at the same time, innovation and progression. 

Back in 1998, the International Code Council, or ICC, created a set of voluntary guidelines specifically for online advertising.  The rules included a ‘User’s Rights’ section that claimed unsolicited messages should not be sent to those not requesting them in the first place, in addition to other recommended stipulations.  While pop-ups shoot that guideline in the foot, there are other suggestions, including ones that protect children, and suppress pornographic, racist, and violent content, online advertisers can adhere to while still taking advantage of the internet’s open marketplace.

The argument is two-fold as online advertising is commerce and still relatively new compared to other traditional forms of advertising.  In addition, advertising is not only becoming more omnipresent online, it’s changing experiences everywhere including the movie theatre (Mountain Dew commercials in addition to other force patrons to sit through before they get to the ‘real’ ads), gas stations and grocery stores that feature video commercials, and now even cell phones.  The online community is rather vigilante though and quick to jump on the morally inappropriate and altogether bogus - think Lonely Girl.

It can be argued that there is a need for a moral force in online advertising where user experience takes precedence over other aspects like making money.  As the competition for eyeballs increases though, advertisers will be required to pay increased amounts to consumer expectations and make the necessary efforts to meet them.