Recession? What recession? The mood of Google and others in the online advertising business must be one of happy Snoopy-dancing glee, as the release of the Interactive Advertising Bureau (IAB) report showed big growth for 2007.

Keyword search advertising pulled in 41 percent of the 2007 market, with $8.8 billion arriving in the coffers of search ad companies. Display advertising, including sponsorships, rich media, and digital video, totaled 34 percent of last year’s market, at $7 billion.

“Despite the current state of economic uncertainty, 2007 was another record year and the 13th consecutive record quarter,” David Silverman, partner, Assurance, PricewaterhouseCoopers, said in a statement. “Interactive advertising is not just the future, it is the here and now.”

“Q4 2007 Internet advertising revenues hit $5.9 billion, representing historic revenues for a single quarter and a 24% increase over the same period in 2006,” IAB noted.

Classifieds picked up 16 percent of ad revenue in 2007, while lead generation grabbed 7 percent. Consumer related advertisers drove 55 percent of the revenue going to the industry, with the financial and computing industries following at 15 and 11 percent respectively.

    Google’s 2007 Year In Review

On the Google News Blog, Yaron Binur lists a number of improvements in several different areas.  One of the most important has to relate to better duplicate detection – there’s nothing like trying to sort through 168 articles when half of them are the same Reuters piece.

Another nice upgrade was the inclusion of videos.  In many cases, we’ve found it’s quicker and easier to just read about an event, but there’s sometimes no substitute for seeing a recording or simulation of whatever happened.

Hearing directly from experts and newsmakers is nice, too, but the enabling of comments on Google News seems to have had little effect.  Even if people mentioned in articles can have their say, it appears that few of them want to.

Ah, well – Google tried.  And to conclude his summary, Binur invited readers to "[p]lease keep telling us what you think about our new features, and what new features would really make you happy."

1. Quality Score

This is always a favourite for discussion given that it has such an impact on campaign performance. It’s also complex and therefore susceptible to misinterpretation. Brad Geddes does a good job of explaining quality score.

2. New Adwords features – Top Ad Placement

The one that caused the biggest debate ahead of implementation would have to be the changes to the formula for top ad placement. Bloggers and forumites jumped on the idea that it would unfairly drive adwords costs up. Most commentators didn’t even bother to read the announcement properly or stop and think about it but jumped on the bandwagon once the consensus of opinion was reached. I’ve seen hardly any feedback since it was launched.

3. Most Maligned Adwords Feature – Expanded Broad Match

Expanded broad match would have to win the prize for the most hated feature. Here are a couple of “expanded match is EVIL” forum threads.

4. SEO versus PPC

The best posts on this were those describing how they work well together rather than one being better than the other but maybe I’m biased. Here’s a recent post from Dave Naylor with an example of organic and ppc working well together.

5. Pricing Models

How you charge for PPC services is always a favourite for debate. Alan Rimm-Kaufman shared his agency’s model and rates in a bid to open up the secrecy about pricing and structure.

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If a recession is on the way to the US economy, shoppers didn’t worry about it too much. From November 1 to December 31 of 2007, people spent 19 percent more than they did for the same period in 2006.

A comScore tally of the shopping season found the biggest uptick in spending came as consumers sought video games and accessories. At a gain of 129 percent from 2006, purchases more than doubled while people desperately sought the underproduced Nintendo Wii, as well as competing products from Sony and Microsoft.

Though business was good for the holidays, it could have been better. "Ultimately, the softness in the growth of online retail sales during the first ten days of November proved difficult to overcome and prevented the season’s growth rate from reaching our forecast of 20 percent," comScore Chairman Gian Fulgoni said in a statement.

"However, the period between Thanksgiving and Christmas – another measure of the strength of the holiday season – experienced a healthier 21-percent growth rate."

December 10th, the so-called Green Monday as eBay dubbed it, proved worth its nickname. Buyers plunked down $881 million, followed by $819 million on Tuesday, December 11th. Thursday, December 6th, was the only other day to surpass the $800 million mark, with $803 million flowing to online retailers that day.

Vertical search and niche social networks didn’t take off

Well, there were many copycats, but not a lot of breakthrough players. Vertical search? Only if Google’s integration of Universal Search counts.  Niche networks? Though I predicted the beginning of this era, very little has happened. People are still flocking to the broad-appeal social networks, but that still could change.

RSS didn’t go mainstream

A significant portion of the tech elite predicted this would be the year RSS went mainstream. And, well, it really didn’t, despite Vista, which people are ditching in favor of a return to their beloved Windows XP. Ask anybody not closely  following developments on the Web if they know what an RSS feed is. Bet you’ll be surprised at how few have heard of one. But that too, may change in the coming year. You know, again.

Yahoo didn’t buy Feedburner (or Facebook)

Several industry observers noted that somebody, probably Google, would buy Feedburner. And that’s exactly what happened, perhaps another sign that RSS is on the brink once again. 

Online video didn’t prove to be a moneymaker

Blinkx and Brightcove, MetaCafe and DailyMotion all made headway in 2007, but all anybody talks about in regard to online video is YouTube, which possibly may have nailed down the right balance of user-generated content and monetization. But definitive success remains to be seen. Bandwidth costs are a bit of a concern, too. Who knows? Maybe Hulu will strike it rich?

GOOG didn’t split or slow down

Google didn’t split, but is also didn’t reach $1,000 per share as some predicted. But there’s always next year, and hovering around $700 is not too shabby.

Candidates still didn’t answer questions

At the end of 2006 the term "YouTube Presidency" was already being tossed around. And sure enough, 2007 saw the first YouTube debates for both Democrat and Republican frontrunners. That means that YouTube not only became vital for the expansion of user-generated content, but also as an agent for social change. But candidates still dodged tough questions like they were playing full-contact lawn darts. 

SecondLife didn’t get a second wind

SecondLife seemed unstoppable in 2006, and for part of 2007, spawning its own currency and legal philosophies. Companies began experimenting with building their own SecondLife areas, and thieves and vandals ran amok, too. At the end of 2007, who’s still talking about it? Hardly anybody, and the virtual tumbleweeds seem to be increasing as members seem to spending less and less time there  — their initial infatuation wearing thin. Jury’s still out though. The site has seen some positive growth, just the not the explosive growth everyone was counting on. 

Widgets didn’t falter

Widgets certainly did explode onto the scene in 2007. After Facebook opened up its platform to developers, the applications began pouring in. And then Facebook users started virtual food fights. Sophisticated usage or not, you have to chalk one up for the success of widgets in social networking.

Google didn’t bust the office block

When people are uninstalling Vista and replacing it with Windows XP, you might expect any competing office product to gain ground against Microsoft Office, too. Everybody oohed and ahed over Google’s new presentation offering, but then went right on using PowerPoint. Because that’s what you use for presentations, everybody knows it. Google gets an ‘A’ for effort and for presenting alternatives, but as Microsoft is learning with Vista, the public seems rather reluctant to change the status quo.

Unless it’s for Apple products, that is.

AdCenter and Panama didn’t catch AdSense

Nobody, contrary to predictions that MSN AdCenter and Yahoo’s Panama would gain ground against AdWords and AdSense, really put up a much of a fight against Google. Google continues to gain search share and search advertising dollars while its two biggest competitors still struggle to keep up.

People didn’t switch to Windows Live

Windows Live, Windows What? That’s different from MSN how? No one really knows or cares that much outside of Redmond, unless they actually kept Vista and didn’t switch the default search to Google.

Google didn’t release an operating system (again)

No, there’s still no traditional operating system from Google to compete with Microsoft and Apple. But there is Android, which Google is developing for mobile phones, so there may finally be some vindication for those who’ve been waiting now for years. 

People didn’t abandon their TV sets

Internet TV? Well, not quite yet, though TV made prodigious use of Internet content. Baby-steps have been made toward the transition with releases like AppleTV, network websites and mini-shows for the web. Verizon and AT&T are both banking on television over fiber connections. The vast majority still get their TV from broadcast, cable, or satellite, but the winds of change are a-blowin’.

VoIP didn’t take over everything.

In fact, eBay wrote off Skype as overvalued and Vonage was sued by everybody within arm’s reach. 2007 wasn’t so great for VoIP, but who knows about 2008? Maybe, maybe.

The pageview didn’t die

The pageview, as a metric, hasn’t died. It may not be as strong as it once was with new measures like user engagement or new formats like AJAX becoming more popular, but the pageview is still used for many business models, especially those selling advertising. Eyeballs are still eyeballs.

Newspapers didn’t die, either

But they might be sick. There’s still a generational split when it comes to where people prefer to get their news, but even that appears to be dwindling. The younger crowd no doubt prefers digital formats while the older crowd, which still clings to email too, likes the morning paper and a cup of coffee.

Google didn’t settle with Viacom

When Google acquired YouTube late in 2006, their was a resounding chorus that Google just bought itself a world of copyright problems. Sure enough, Viacom slapped them with a billion-dollar lawsuit which still hasn’t been settled despite Google’s effort to be more vigilant about fighting copyright infringement. YouTube’s still the best place to find anything you might have missed on MTV.

The Web 2.0 bubble didn’t burst.

Yahoo CEO Terry Semel didn’t cut it

And neither did Yahoo, for that matter. Semel is out, and Yahoo is, well, still a distant second.

AOL didn’t have another privacy gaffe

But Facebook did. John Battelle nailed it when he predicted another privacy fiasco on the AOL search query level. Facebook Beacon is the big winner at being the big loser.

The iPhone didn’t bring the mobile web to everybody

Despite the drooling, ecstatic reception of the iPhone, mobile Internet still has a ways to go in the US. The technology is the starting point, just like with the iPod, but to continue, access to the mobile web needs to become cheaper. As soon as Verizon and AT&T stop liking money so much, (or when Google busts the block) expect the mobile web to really explode. 

A major newspaper didn’t fold up its print division in favor of online publishing.

But magazine InfoWorld did, and the San Francisco Chronicle cited a growing online news market as the chief catalyst for laying off a large portion of its news staff.

HD-DVD didn’t win

In the HD-DVD/Blu-ray format war, nobody’s won yet. And there may not be a winner, either.

The NYT and the WSJ didn’t stay snooty

The New York Times decided content wants to be free and opened up its Times Select articles to the online world. And then, the Wall Street Journal opened up, too. A trend? Seems that way. 

Digital rights management didn’t get anywhere

DRM didn’t get much love, even from record companies. Three major record labels announced they were getting rid of DRM.

The Democrats didn’t do much of anything

The Democrats didn’t really do anything about Net Neutrality or other web-related policies. They talked about it, made threats, wrote letters, but never managed to get legislation out the door. Maybe next year, if not too distracted by the elections again.

The Web did not come to a grinding halt

The Internet didn’t crash because of video. They predicted it for 2007, and are still predicting it for 2008 and beyond, but gridlock didn’t happen, and as more and more bandwidth is added and fiber expands, it’s probably not going to happen.

Amazon’s stock didn’t crash

It more than doubled instead. Though an analyst noted that "AMZN is a stock that continues to live on borrowed time," when it was at $38.50, two months later, it’s selling at $95. 
 

"[W]e revamped the look of our ad formats and introduced ad placements to let you promote your site to potential advertisers," noted Arlene Lee.  "The new Manage Ads feature gave you the ability to make changes to your ad units directly in your account and quickly experiment with optimizations."

She then continued, "In addition, we launched such features as video units, AdSense for mobile content, and referrals 2.0 to bring in new revenue streams for your site.  Still others like the Allowed Sites list and the recently announced Ad Review Center were inspired by your requests for more control over your ads and your account."

And that wraps up some of the most disparate changes, since most of the remainders can be lumped under the heading "languages."  Yet, as Google translated various services and sites into Hebrew, Arabic, and Russian, these upgrades can hardly be considered all of a kind, either.

Google AdSense hasn’t gotten off to too quick of a start in 2008 – unlike Facebook, it has yet to unveil any fresh differences.  Still, we think we can allow the AdSense team a few days off, and as always, will be ready to report the results of what they do in the future.

Other winners include national magazines, national Sunday supplements, "outdoor," national cable TV, and Spanish-language TV, according to Nielsen.  The increases in these categories ranged from 7.7 percent (national magazines) to 0.5 percent (Spanish-language TV), but when millions of dollars are involved, those small numbers are still pretty impressive.

Indeed, a lot of categories weren’t so fortunate in 2007.  Spot TV markets saw decreases in spending, and so did network TV.  Spot and network radio suffered the same fate.  The biggest losers, though, were newspapers – advertising spending on national newspapers dropped by 5.2 percent, while spending on local newspapers went down by 7.4 percent.

As for other trends, MarketingVox reports, "Eight out of the top 10 advertisers decreased budgets.  General Motors continues to show the largest decline."

Judging from these developments, 2008 doesn’t look like it’ll be too kind to most marketers.  Still, those in the online field should do well, and data from the last quarter of 2007 will help us better understand where we’re heading.

Ask.com says they didn’t “sanitize” the list—as evidenced by including #3:

1. MySpace
2. Dictionary
3. Google
4. Themes
5. Area Codes
6. Cars
7. Weather
8. Games
9. Song Lyrics
10. Movies

And when they say they don’t sanitize it, they mean they didn’t take out porn terms, either. Odd . . . I could’ve sworn that the premise behind their big ad push this year was that Ask was a good way to find porn. . . .

Does it seem a little strange to anyone else how extremely generic these searches are? Other than MySpace and Google, what are these people looking for? “Themes”? The weather all over the entire world? Every movie ever made? Come on.

A few other interesting gems from their many lists: Ron Paul is the seventh most popular presidential candidate after Barack Obama, Hillary Clinton, Fred Thompson, John Edwards, Mitt Romney and John McCain—but don’t worry, Paulites. He’s still beating Rudy Giuliani, Mike Huckabee and Dennis Kucinich.

Also interesting? No mention of Britney Spears anywhere. For once.

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Quick Facts 

• MySpace.com is #1 social networking site in the US, with nearly 57.4 million unique visitors last month.
• Google’s Blogger rests is #1 for blog site rankings with 33.6 million visitors and 49% more than last year with 33.6 visitors in November.
• #2 social networking site, Facebook is keeping double digit growth rates compared to last year. The number of visitors is nearly 22.0 million – 89 percent higher compared to MySpace visitors which rose just 7 percent year over year.
• WordPress, the #2 blogging platform grew 310 percent from last year with 12 million visitors, — up from 2.9 million last year. #3 is Type Pad, which grew — 22 percent from last year with 11.0 million visitors in Nov.

Here’s a chart that shows last month’s comparison of the top blog sites. Blogger is far ahead but WordPress and Thatsfit (a health-oriented blog) are growing very quickly. Judging from this social networking sites are topping out more than blogs. There is positive growth for all but Xanga.

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The survey found that 3.6 million adults lost money in phishing attacks in the 12 months ending August 2007, as compared with 2.3 million who did so the previous year. Phishing attacks were more successful in 2007 than they were in the past two years. Of those who received phishing emails in 2007, 3.3 percent said they lost money because of the attack, compared with 2.3 percent who lost money in 2006, and 2.9 percent who did so in 2006.

"Phishing attacks are becoming more surreptitious and are often designed to drop malware that steals user credentials and sensitive information from consumer desktops," said Avivah Litan, vice president and distinguished analyst at Gartner.

"Anti-phishing detection and prevention solutions are available but not utilized widely enough to stop the damage. These must be deployed and combined with solutions that also proactively detect and stop malware-based attacks."

The average dollar loss per attack decreased to $866 from $1,244 lost on average in 2006(with a median loss of $200 in 2007), but because there were more victims, $3.2 billion was lost to phishing in 2007. A small bit of positive news is the amounts people were able to recover also increased. Around 1.6 million adults recovered 64 percent of their losses in 2007, up from 54 percent that 1.5 million adults recovered in 2006.

Forty-seven percent of people who lost money to phishing attacks said a debit or check card had been the payment method used when they lost money or had unauthorized charges made on their accounts. This was followed by 32 percent who said a credit card was the payment method, and 24 percent who listed a bank account as the method.

"Criminals have stepped up attacks on debit card and bank accounts, where back-end fraud detection systems are traditionally weaker than they are with credit card accounts," Ms. Litan said.

"Fraud detection and authentication systems deployed widely in online banking in response to FFIEC banking regulator guidance are already a step behind fraudsters’ latest techniques and must be updated to guard against browser hijackings, "man in the middle," and other hidden malware-based attacks often delivered to users through phishing e-mails."