It was growth in the online sector that helped to slow down the negative downtrend. Online ad revenues grew by 5 percent since last year. But across the whole industry, online ads only accounted for $730 million, while print ads earned $6 billion. It is a relatively small piece of the pie, but important nonetheless.

While the news is welcomed by the newspaper industry, the numbers speak for themselves. Newspaper ad revenues have dropped a precipitous 46% since four years ago. But somehow the industry still has hope that ad revenues will level out. In a statement by AP they said, “Although newspapers are still hurting, the first-quarter trend offered the latest sign that the misery may not last much longer. The industry’s year-over-year declines in ad revenue have eased in each of the last three quarters.”

John Sturm, NAA President and CEO from Scarborough Research firm also stated that “nearly 100 million adults continue to read a print newspaper every day and 168 million adults read a newspaper in print or online in the past week. In addition, the latest Nielsen Online data found that newspaper websites attracted a record 74.4 million unique visitors per month on average in the first quarter of 2010 – more than one-third (37 percent) of all Internet users.”

These are the kind of stats have helped increase overall confidence as the industry waits with eager longing to regain the stability that kept the newspaper advertising industry afloat years ago.

via Star News Online

But, why would shoppers spend money on the same offers that were promoted just one week earlier? According to Diana Slyampak of internet retailer, ChooseDirect.com, “…people were biding their time and waiting to see if there would be a better deal.” She continues, “I guess they figured they missed out on it Cyber Monday, came back and saw we had the same sale going and just jumped on it.”

According to Chad White, research director at e-mail marketing service provider Responsys, this Cyber Monday II tactic isn’t completely a new idea. In fact, last year, a numerous retailers began repeat promotions of Cyber Monday sales the following Monday, just as others do the same with Black Friday by offering the same deals every Friday from the day after Thanksgiving until Christmas. “Cyber Monday has been highly successful the past couple of years so retailers are looking to leverage the Cyber Monday brand to boost sales on other day,” White says.

via InternetRetailer

Stores which have been open for at least a year witnessed a 2.6 percent increase in sales from a year ago, said the International Council of Shopping Centers and Goldman Sachs Group Inc., in a recent statement. However, speculation remains that consumers are waiting to make their purchases, possibly causing “…a last-minute surge in holiday-gift searching in the final days ahead of Christmas,” said Michael Niemira, chief economist of ICSC.

With the national unemployment rate reaching a 26-year high of 10.2 percent this October, retailers are hopeful that an slightly improving labor market will spur consumers to spend in the last month of the holiday shopping season. Traditionally, this period accounts for one-third of annual revenue. According to Neimira, total sales could show a slightly better increase (2%) percent this December, than the one-percent improvement predicted a year ago. With consumer spending making up more than two-thirds of the U.S. economy, comparable-store sales will be considered the strongest measure of results.

via  Inyoung Hwang @ Bloomberg

Greg Hintz: My background is more financial than technical as I have a degree in Economics, am a Chartered Financial Analysis charter holder, and began my working career at Goldman Sachs. That being said I love technology and the Internet, and consider myself a closet technology geek.

My first professional exposure to e-commerce came while running SEM campaigns in the Mortgage space for a comparison shopping engine in 2003. In 2004 I moved to Yahoo! working for three years on the Business Operations team in the Search group. Having spent four years in Search, I decided to learn the Graphical Advertising space by taking a role as the head of Operations Finance for the Entertainment BU at Yahoo! based in Santa Monica. From there I moved into the General Manager Role of Yahoo! Shopping in January of 2008. Given the empirical nature of running a comparison shopping engine I believe my financial background has really helped me in my current role.

2. And for those few that might not be familiar, with Yahoo! Shopping’s interface or the user experience – how would you describe how the site functions and why consumers and e-tailers would want to be part of it?

GH: On Yahoo! Shopping, users can search, browse and compare prices between millions of products from tens of thousands of merchants. Our user experience makes it simple to narrow down this comprehensive selection by grouping the products into more than a thousand categories with millions of different product attributes. Whether you like your jeans skinny or boot cut, or your camera to be point and shoot or SLR, it’s easy to find the right product for you. When users have found the right product they can read reviews from users and experts, compare prices, and find which merchants have coupons or free shipping.

For e-tailers, Yahoo! shopping provides access to the largest audience of shoppers in the comparison shopping space – we’re the #1 comparison shopping site with more than 21 millions users per month. Yahoo! Shopping is the focal point for users across the Yahoo! network throughout the holiday season. Not only is the audience large, but it is well qualified. Users who come to the site with the intent to purchase, and when they click through to our advertisers they represent highly qualified leads. Whether advertisers want to drive immediate sales, or want to build their brand through graphical ads, Yahoo! Shopping is an essential place to advertise during the holiday season and throughout the rest of the year.

3. Are there factors that set Yahoo! Shopping apart from other online shopping communities and comparison sites?

GH: There are several factors that make Yahoo! Shopping one of the best places on the Internet to shop. In the early stages of shopping we provide more information for users. We have integrated the largest selection of “how to buy” articles into our categories, so users can read from trusted sources ranging from “Consumer Reports” to “Good Housekeeping”, which features to look for and which to avoid.

When users are doing their search we provide more attributes to narrow choices down than on other sites, including options such as the ability to narrow clothing and furniture by color.

Finally, when you’ve narrowed your choices down, Yahoo! Shopping is simply the best place on the internet to find a deal. We have integrated the most comprehensive selection of coupons with our core shopping experience so it’s easy to save money once you’ve found the right product.

4. So with all of that said, what do you believe Yahoo! Shopping’s role is in the shopping space?

GH: We are aware that people visit a number of different places when they shop, but we believe that Yahoo! Shopping is an essential place people should visit during their shopping experience. It’s a great place to get information and read reviews, it’s a great place to quickly narrow down your choices from millions of products and tens of thousands of merchants, but most importantly during these tough economic times, it’s the best place on the internet to save money.

5. In what ways is Yahoo! Shopping promoted, and – in this highly competitive industry/market – what is the most difficult part about creating new customers? What about retaining existing customers?

GH: Yahoo! Shopping is predominately promoted through online marketing channels, but we also benefit from the hundreds of millions of people who visit the Yahoo! network every day. When it comes to online shopping, people tend to visit numerous sites before making a purchase. We retain customers by providing the value proposition that you can read reviews and articles, find top brands, brick-and-mortar stores, as well as, your mom-and-pop shops right here on our site. And with our new deals and coupons site, Yahoo! Deals (http://deals.yahoo.com), people want to check back every day to take advantage of our exclusive daily deals.

6. With risk over-simplifying, how would you summarize this last calendar year?

GH: Given the state of the economy, the last 12 months have been extremely interesting in the e-commerce space. Some major trends have developed including increased sophistication of online shoppers, continued focus on deals/discounts/coupons, and finally a renewed focus on ROI maximization from e-tailers. We spent a lot of time over the past 12 months improving the User Interface and Narrowing Functionality of our site to meet the needs of increasingly sophisticated online shoppers. We see our users spending more time searching and then refining that search while on our site. As our users lives become busier they are looking for the most efficient way to save time and money by comparison shopping online.

Additionally, we launched Yahoo! Deals to address the needs of our users to save money given the current economic climate. Coupon usage and searches for online deals have spiked over the past couple of years as consumers look to find ways to stretch their paychecks further. Yahoo! Deals is the first website to provide daily deals, online coupons, grocery coupons, local coupons, store circulars and exclusive deals all in one place. Usage of Yahoo! Deals has grown dramatically since its launch as saving money by shopping online becomes a core part of consumer behavior.

Finally, our merchant partners have responded to the rocky economy by lowering prices to help drive sales. This in turn has caused our merchant partners to put more of a focus on ROI maximization. A little over a year ago Yahoo! Shopping Product Submit launched a bidded marketplace in an effort to help merchants focus on their most profitable categories and thus maximize their ROI. We continue to focus on ways to improve this very important metric in an effort to help e-tailers ride out this current economic slump.

7. What new tools or services have Yahoo! Shopping employed in the last year, in response to the recession?

GH: Yahoo! Deals is one great example of how we responded to the recession. It is the most comprehensive deals aggregation site on the internet. The site features exclusive daily deals on products ranging from video games, to clothing, to products for the home. The site features the largest selection of coupons available including online, local, and grocery coupons. The site also features other ways to save including weekly ads for stores in your neighborhood, personalized deals, and even a cheap gas finder. To make it simple to sort though all of these options we include the ability to search all of our deals, and save items for later.

Because we know how important comparison shopping is to consumers now, we also recently launched an iPhone app to help those consumers do their research on the go. Putting the capabilities of Yahoo! Shopping into the hands of consumers in the shopping context is extremely powerful. In the past, making comparison shopping conveniently available while people are shopping was not really possible. But now it’s a reality with the advent of true hand held computing in devices like the iPhone. In our app, shoppers can read and save detailed product information, compare the best prices and the get read reviews wherever they are. We’re very interested to see how the mobile landscape develops and are excited to be part of it.

8. E-tailers hype up Cyber Monday as the online equivalent of Black Friday, but does research indicate that this is the case? What has Yahoo!’s experience with this recent phenomenon?

GH: Generally speaking, yes — we do see spikes in traffic on Cyber Monday. But Yahoo! did some new research that showed that the Friday after Thanksgiving is becoming the new “Cyber Monday.”

The report showed that not only is Cyber Monday still a top online shopping day, but that the traditional offline shopping day Black Friday also proved to be a significant day for online sales conversions. In fact, online retailers experienced a greater percentage increase in conversions on Black Friday than they did on Cyber Monday.

We have some research here:

http://www.yadvertisingblog.com/blog/2009/10/12/black-friday-is-the-new-cyber-monday/

9. What do you think can be expected from shoppers – and from e-tailers – this holiday season?

GH: I hate to sound like a broken record, but the current economic climate is really driving consumer behavior this shopping season. Based on our internal data it is clear that holiday shopping started much earlier this year than previous years. Additionally, our Yahoo! Deals traffic has spiked as our users try to save money while shopping online. Based on these two data points, my opinion is that our consumers want to buy the same number of gifts this year as prior years, but have much less money to spend. As such, they are looking for cost savings aggressively and using comparison shopping websites as a tool to accomplish this.

10. Is there anything else you would like to add?

GH: One final interesting data point is that retail inventory levels are expected to drop significantly year over year. Specifically, Comscore mentioned that container shipment orders from retailers in the US are down 14% vs. last year. At the same time, consumers were trained last year to expect massive sales at retailers during the holiday shopping season. These trends could lead to a game of chicken between consumers and retailers this holiday season:

• Because of lower inventory levels, retailers may hold prices steady. However, as the shopping season wears on if consumers continue to wait for sales before buying retailers may blink and massively cut prices, which would be a big win for consumers, and a big loss for retailers.

• Alternatively, if consumers notice the hot products this holiday season are not available due to the lower inventory levels they may buy without waiting for huge discounts, which would be a big win for retailers, and a big loss for consumers.

In either case, shoppers who buy online, or simply pre-shop online and then buy in stores will win this holiday shopping season due to the time and money saving offered by comparison shopping engines and other e-commerce sites. I am really excited to watch this shopping season play out and look forward to continued growth in e-commerce in the years ahead!

Greg Hintz is the General Manager at Yahoo! Shopping.

Alfred Lin: I met Tony Hsieh (CEO of Zappos) during our college days. He was the consummate entrepreneur. He and Sanjay Madan, one of Tony’s roommates, took over the grill in our dorm. The tradition was that students would run the grill at nights and serve burgers, fries and shakes. Tony had the idea to put a pizza oven in the grill because he thought it would be higher margin. I had a large college rooming group and so I would go downstairs each night to buy a few pies and I took it upstairs and sold it by the slice. Tony often says that’s why I am the COO/CFO of Zappos.

It wasn’t all that glamorous. I made money purely by accident. All I wanted was to recover the costs of the pizzas. After all, these were my college roommates, but quarters were a prized possession in college because we needed quarters for laundry, video games, vending machines. So instead of paying me $1.25 or $1.50 per slice, I got $2 per slice. I made a pretty good profit with virtually no risk.

After college, Tony and Sanjay started a company called LinkExchange. I joined a year later as VP of Finance after Sequoia Capital invested about $3 million in the company. Seventeen or 18 months later, LinkExchange was sold to Microsoft for $265 million. Sequoia made 17x or 18x in 17 to 18 months.

Tony and I wanted to figure out how to replicate the really fun and early times of a startup. With backing from friends and family of LinkExchange, we started Venture Frogs, a $27 million angel investment fund and an incubator. We invested in about 27 companies. Initially, Zappos was just one of the companies we invested in. Over time, both Tony and I got more and more involved with Zappos because it was the most promising company in our portfolio. We also discovered we enjoyed building business way more than investing in them.

Two. Zappos has been around for 10 years, and started out slowly at first if I remember correctly. When did Zappos became the No 1 e-commerce site for footwear? And what was that realization like for a relatively new company?

Alfred Lin: Yes, Zappos started in 1999. We grew extremely quickly given how little capital we raised to build a relatively capital intensive business where we need to invest in distribution centers and inventory. Today, we have about $180 million in inventory at cost. Relatively early in the company’s existence, we knew we were “the web’s largest shoe store”. In fact that was our tag line for a while, but as soon as we achieved that tag line, we were already moving onto something bigger. We wanted to be a service company that just happens to sell clothing, shoes, bags, and accessories. One of the many things we do is to constantly expand our vision over time.

Three. Most of us have seen the Zappos branded shoe trays at various Airport security check-thrus and they are definitely clever. What has been the response from this, and what are some of the metrics -if any- you use to measure the success of these viral campaigns?

Alfred Lin: The response has been great. We get lots of emails and comments about how creative it was that we were the first to start advertising in the security trays that and how creative the ads were. We do measure ROI on the security trays and they have a pretty decent ROI, although it is still mostly a branding campaign. It’s pretty hard to get someone to respond immediately to an advertisement while they are rushing through a security line with their laptop in the tray.

Four. What is your favorite thing about working at Zappos?

Alfred Lin: My favorite thing about Zappos is the company culture and the people of the company. We are all friends and family here. We all work long hours so having friends and family at work makes it that much more fun and enjoyable.

Five. When you ask people how they found out about Zappos, what do they say? What do they say about their experience?

Alfred Lin: The vast majority of them say that a friend, family member or coworker told them about Zappos. We believe in providing great service to our customers and creating a WOW experience for them because we believe in the power of word of mouth. Our customers are our most powerful advertisers.

Six. How has the ways in which Zappos advertises online changed over the years? What are some ways that the company has changed with the changing trends, and the changing economy?

Alfred Lin: It hasn’t really changed for us. We have always focused any advertising on an ROI basis. We are willing to try and test any vehicle. We redirect money from advertising vehicles that have below average ROI to vehicles with higher ROI. It is as simple (and as complicate) as that.

Seven. How did the Amazon deal come about? Has there been a change in the corporate culture since Amazon purchased Zappos? Has anything else changed significantly?

Alfred Lin: We have kept in touch with Amazon over time. It came about very naturally. We want to continue to build our culture, our brand and our business. We came to an agreement that would allow us to do that this time and made sense for both parties.

Eight. I know Zappos is very open about the premium they place on customer satisfaction. Would you say creating what you guys refer to as the ‘wow’ factor has been the single-most important factor in the brand’s success?

Alfred Lin: The single most important factor in our brand’s success is our culture. The importance of culture comes from a very simple philosophy. You can’t have happy customers without having happy employees, and you can’t have happy employees without creating a culture and a work environment that employees want to belong to and help build. Tony says that brand and culture are two sides of the same coin. So it is important to get all employees aligned to the culture and live, breathe and inspire the culture of the company. You can find many brands that are larger than life and larger than what you might expect the brand to be from the company’s size of revenue, profit, organization, etc. because the employees live that brand.

Nine. I have to ask this one: Zappos is famous for offering new hires $2000 to quit on the spot. The premise is, if they take the money, then they were never that interested in the job in the first place – and, as such would not have made a good Zappos employee in the first place. Have you ever experienced any strange or unusual stories about this, or how often do people take the money?

Alfred Lin: Yes, we believe if you can be convinced to take the money and run, you aren’t that committed to Zappos. We want to weed out the uncommitted as quickly as possible. That is why we make the offer. A very small percentage of people take the offer and that suggests to us that the offer maybe too low. If you are really good at interviewing and judging people, you might be right 60% to 70% of the time. That still means you are wrong 30% to 40% of the time.

10. Is there anything else you’d like to add?

Nope. Thanks for interviewing me.

Frank D’Angelo, founder and partner of CL&S, the ad agency behind a few of the original banner ads, wrote on Adage.com yesterday that one of the first banners obtained an astonishing 78% click-through rate. But click-through rates have declined since then, and so have banner ads’ relevance. ComScore claims that only a mere 8% of all Internet users account for 85% of all banner ad click-throughs. What’s more, these ‘clickers’ tend to be from lower income levels, and generally have less education than other web users..

This at first came as dire news to publishers who have been convinced over the past 15 years that click-through rates were a strong metric for determining whether or not users were engaging with their ads. But to Carlson, perhaps the death of the click and the banner is welcomed news. If nothing else, it is encouraging publishers to re-evaluate what actually makes a good online ad. Carlson isn’t disappointed. He says, “let’s face it, the banner is a lousy form of advertising.” The following are his major reasons why banner ads are losing out, or are no longer relevant:

• They can’t tell a story.
• They can’t be engaging without being interrupting and obnoxious.
• They’re scalable, but doesn’t feel “premium” in the way the back of a magazine can.
• They’re dependent on clicks.
• They’re loaded with baggage from the Web’s early spam-infested days

via Nicholas Carlson @ Business Insider

According to Learmonth, soon every Twitter update will be indexed in real-time. But, unlike Twitter’s search engine, Bing will assign a value to tweets attempting to bring to light those with the most valuable information. Tweets that contain links, and tweets from high-follower users will receive a higher value than those tweets that say something like “that sucks”, said Yusuf Mehdi of Yahoo! Additionally, viral news topics that overwhelms the service on a daily basis will be filtered accordingly.

The plan to index Twitter and Facebook into search results has been a long time coming. The difficulty, however, will be determining relevancy of search results. According to Kevin Lee, CEO of search marketing firm Didit, “Google and Bing have different systems for determining relevancy in ‘standard’ search results, so it will be interesting to watch how their different systems adapt to weeding relevant results from irrelevant results and spam for real-time information.”

The real question is whether or not this will increase adoption for Twitter which has grown rapidly in the U.S. but as of late has last some traction. Steve Rubel, senior VP-insights for Edelman Digital, is nothing short of skeptical. “It can boost its traffic, but the reality is that I believe Twitter may be peaking in terms of users,” he stated. “The media monsoon has brought a ton of new users in, but fundamentally I believe that everyone who wants to publicly tweet is already doing so.”

via Michael Learmonth @ Adage

Additionally, Meeker notes that recent growth of mobile web has a lot to do with the strengthening state of the tech sector. This is not only because mobile web signals a new computing cycle, but that it should eventually be 10 times the size as desktop internet – and, this is expected to happen sooner than most can imagine. Meeker adds that the explosive growth rates of Wi-Fi, GPS, 3G, Bluetooth – during in a recession, nonetheless – are further indicators of a burgeoning mobile web, and a strong tech sector that is set to rebound, and grow even stronger.

According to Siegler, other key points from Meeker’s presentation include:

• Location-based services are the “secret sauce” of what makes the mobile web interesting.
• The iPhone/iPod touch is the fastest growing piece of hardware the world has ever seen.
• And usage share versus market share of the iPhone is incredible, meaning it will only grow.
• Facebook is becoming the multimedia repository, and it will allow you to do so much.
• Companies absolutely need to be on board with the mobile web. They have some time, but they need to act

Below are the slides from Meekers presntation, via TechCrunch

via MG Siegler @ TechCrunch

According to this article, which quotes an unnamed PriceGrabber spokesperson: “Shoppers this year really want to make sure they’re getting the best value, the best deal and the right product for them.” The caveat however, is that that one-third of shoppers plan to purchase fewer gifts this year than they did in previous years; 53% plan to spend less than a year ago.

This echoes recent findings by the National Retail Federation, that other signs of increased consumer caution are on the horizon. According to a recent NRF survey, U.S. consumers are expected to spend an average of $682.74 on holiday shopping this year, the weakest total since 2003, and equal to a 3.2% decrease from last year. Additionally, over 65% of consumers say the current state of the economy will impact their shopping plans. The result is an increased focus on bargains, with more than half of all shoppers surveyed claiming that sales and discounts (43%) or everyday low prices (13%) will be the most important factor when making decisions about where to make purchases this year. Other factors, such as selections (21%), quality (12%), convenience (5%) and customer service (4%) will be less important than they once were.

But, there is another issue which may prove difficult for e-tailers: shipping costs. According to PriceGrabber, 20% of customers surveyed in their report, claimed that they would only make an online purchase if free shipping was offered. This, could be a substantial reason why the total number of those planning to make online purchases is expected to drop from 80% last year, to 78%.

PriceGrabber conducted its online survey of 2,018 U.S. consumers from September 24 to October 12. BIGResearch conducted the NRF survey of 8,431 consumers from September 30 to October 7.

via InternetRetailer

Hasseldahl cites Craig Moffett of Sanford Bernstein, in purporting this ad is most likely a sign that discussions broke down between Apple and Verizon over a CDMA version of the iPhone. Moffett also speculates that this may be Verizon’s way of turning up the pressure on Apple; or, maybe that Verizon has already turned its back on the iPhone entirely. The latter would of course be welcomed news to AT&T who is rumored to be coming to the end of its exclusive agreement for the iPhone in the U.S. In any event, it will be interesting to see this story play out as we near the release of the much-anticipated smart phone.