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Razorfish Ad Report: Verticals Slide A Bit, As Portals Decline; Social Nets 'Flatten Out'

This story was written by David Kaplan.
It was only two years ago that Razorfish's Digital Outlook Report declared that portals were back from the dead. But as the last two years have shown, the resurrection was very short-lived. Razorfish's latest annual report based on its clients' spending habits indicate that growth in vertical placements' share of the spending pie slipped a bit to 35 percentcompared to 39 percent in 2007 while portals garnered only a 16 percent slice in 2008 versus the 19 percent share the year before. Still, outside the U.S., companies like Yahoo (NSDQ: YHOO) and MSN still have a reason to maintain their identification with portals, as portals' international share commands nearly 26 percent of all online ad spend.

For the U.S. market, moves like AOL's shift away from the umbrella model to the more decentralized angle employed by its MediaGlow programming unit appear to be validated by Razorfish's data. On an individual basis, the entertainment category is the strongest, which went from 18 percent growth in 2007 to 24 percent gains in ad spend last year. And while a number of major online media companies like Google (NSDQ: GOOG) ramped up their efforts in the health and wellness segment, advertisers did not respond as health went from 15 percent in 2006 to just 10 percent growth in 2008. More details on Razorfish's trends after the jump

Search is strong, but not immune: ROI is the watch-word for marketers right now and paid search went from 31 percent in 2007 to 36 percent in 2008. But expect search to be hit with budget cuts for the first time in recent memory, Sarah Baehr, Razorfish VP, media, told me in a conversation last week.

Social media flattens, but influence reigns: Spending in the community vertical appeared to "flatten out" last year, though it remains one of the top categories. Both MySpace and Facebook took 24 percent of the ad spend in the community segment. The two will likely maintain that rate this year. And so, Razorfish predicts "Your CEO will join Facebook" this year. The traditional C-Suite is finally responding to the pressure that social influencers have on their brands, and they're getting onboard, Baerh said.

Ad nets consolidate spending: The ad net category saw 62 percent of the its spending concentrated in the top five networks. That suggests that consolidation of ad spending is continuing to rely on a few hands; nevertheless, buyers are trying to find ways to diversify their buys. One way they're trying to do that is by directing more money to ad exchanges.

By David Kaplan

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