CROWN MEDIA HOLDINGS, OWNER OF the Hallmark Channel, widened its losses for the fourth quarter of 2007 some 24% to $37.5 million. The downward numbers were primarily attributed to selling expenses, which increased to $21.6 million, due to bonus and legal expenses. However, for the full year, Crown Media narrowed its net loss–now at $159 million versus $389 million in 2006.

Advertising sales continue to improve, growing 21% to $63 million. Subscriber fee revenues still lagged behind ad revenues in growth and total dollars, only inching up 3% during the period to $6.4 million.

For the full year, Crown Media’s total revenues climbed 17% to $234.4 million. Yearly ad revenue growth was at 18% to $206.2 million, while subscriber fees climbed 12% to $27.8 million.

Recently, Hallmark Channel has made deals with three major TV distributors–Comcast Corp., Time Warner, and DirecTV–to improve their subscriber revenue positions. At bigger cable network groups, total advertiser and subscriber revenue is nearly the same, or with ad revenues slightly more than subscriber revenue.

Crown Media noted that Hallmark’s ratings have grown to where it is the eighth-best-rated cable network among 69 ad-supported networks in prime time with a 1.2 household rating. For the year, Hallmark subscribers grew by 12%, or 9.3 million, to 83.9 million.

Next month, Hallmark will launch the Hallmark Movie Channel in high definition.

In other news, Crown Media CEO Henry Schleiff told industry analysts during the company’s earnings conference call that the Hallmark Channel was no longer for sale.

Two and a half years ago, Crown Media had been actively looking for a buyer for the Hallmark Channel. Although the active process ended in 2006, Schleiff had been informally looking into possible merger/partnership deals since then, including Time Warner.

He told analysts the company’s focus is on running the business in the best interests of the shareholders and the company.

FORGET ABOUT TESCO, WHOLE FOODS and Trader Joe’s. The average American supermarket may have a new nemesis–food inflation that’s moving faster than a speeding bullet.

As American tastes have moved upmarket, virtually every chain has responded, adding everything from organic private-label products to high-end prepared foods. In fact, you can buy a $40 bottle of wine or fresh-made lobster bisque just about anywhere. But there’s some evidence that ever-upscaling supermarkets may be in a precarious position in the months ahead, as shoppers grapple with rapid price hikes in all kinds of food.

While rising fuel prices may get more headlines, the U.S. Department of Agriculture’s Economic Research Service says the Consumer Price Index for all foods (both at home and in restaurants) jumped 4% between 2006 and 2007, the highest annual increase since 1990. And it forecasts an additional rise of 3 to 4% this year.

“Everyone’s still gotta eat,” says David J. Livingston, a supermarket consultant in Pewaukee, Wisc. “But stores are going to have to adjust to people trading down.” And it’s not that people will eat less, he says. “Even with gas prices rising, people aren’t consuming less–they’re just making other adjustments. They’ll do the same for food,” he says, for example, buying more private-label products.

One beneficiary has already been the warehouse store sector, with such chains as BJ’s Wholesale Club, Costco, and Wal-Mart’s Sam’s Clubs all posting solid gains in same-store sales in recent months. “People who are watching their money will start buying more in bulk,” he says.

On the other hand, lower-income shoppers can’t afford that luxury. “If you’ve lost your job, you can’t go to a warehouse and spend $400 on bulk purchases,” he says, pointing out that dollar-stores that sell food items are also faring much better than mainstream supermarkets.

The chains that are the most vulnerable, he says, “are that middle-of-the-road, plain vanilla supermarket,” he says, such as Safeway and Publix. “It’s an hourglass economy,” he says. “There’s room at the high end and at the low end, but in the middle, they are just getting squeezed tighter and tighter.”

Kroger, for example, posted a decline in fourth-quarter profits on Wednesday, to $322.9 million, from $384.8 million in the same period a year ago. Sales, however, were strong, with same-store sales climbing increased 8.2% with fuel and 5.3% without fuel.

Overall, though, some experts predict that America’s taste for finer foods will help stores ride out the storm. “Many of these retailers appeal to aspirational shoppers–people who aren’t really quite upper-income, but aspire to those tastes,” says Frank Badillo, a senior economist at TNS Retail Forward, a Columbus, Ohio-based retail consulting firm. “And those people may ratchet back their spending. But there should be enough sustained demand among the highest-income shoppers.”

Still, he adds, it won’t be painless. Take Whole Foods, which even its most loyal fans sometimes refer to as “Whole Paycheck.” “With these prices,” says Badillo, “even they are going to feel some fall off.”

JUST AS MARKETERS HAVE BECOME used to building paid-search into their media plans, a new study from a leading search agency finds that it’s time for the next wave: Making bigger investments in “natural” searches.

“In most cases, natural and paid search campaigns perform better together than they do separately,” reports Oneupweb, an integrated online marketing company based in Traverse City, Mich. “Greater awareness of a Web site created by a paid ad can lead to more natural traffic. In similar fashion, people are logically more likely to click on a paid promotional ad of marketers they recognize, such as those they’ve encountered during a natural search.”

A key reason that search strategies are evolving, says Tim Kauffold, Oneupweb’s director of business development, is money. “One of the things that surprises marketers–particularly those who have been using the media for several years–is how the costs are rising. They think, ‘Why doesn’t the same dollar buy me the same volume it used to?’ But there are really big inflation numbers with cost-per-click. It’s still a great avenue, but as more folks jump in, costs are going higher.”

As a result, marketers are now looking for ways to make sure their products and brands occur more frequently in natural searches, a process that can require a considerable investment in Web sites. Target, he says, is a company that has done especially well with this strategy.)

Still, he says, “this swing back to natural search optimization isn’t easy, since so many people have gotten used to how measurable paid search is. Paid search is a media buy, and natural search optimization is an investment in the site itself, and that can take some time–maybe even a few months–to see results.”

And search ads have always appealed to marketers because they’re so easy to track. “Because it’s much more measurable than traditional media, pay-per-click advertising is assessed and refined more easily. Ads are created faster and more inexpensively, and can respond to changing market conditions more quickly,” he says. And the lower cost of search advertising, compared to other media, makes it an especially appealing way for companies to wade into new markets and product categories.

It’s also clear, at least for the short term, that paid-search advertising will continue to grow, and grow quickly. For one thing, not only is Internet usage and penetration up, searching is America’s favorite way to use the Internet. In December, reports comScore, Americans searched 9.6 billion times–up 15% from the previous year. Overall, there were 113 billion searches during 2007.

And while a slowing of growth is inevitable, he says, he expects that the increased use of mobile computing devices will drive growth in the short term. “The business traveler, with the Treo and the BlackBerry, has been a factor for years. But now, the iPhone, and Google’s Android–whenever that gets going–will all push the Web to more mobile searchers, who don’t have to be sitting at their computers to hunt for things.”

Currently, search advertising accounts for 48% of all Internet advertising, he says. (Emarketer estimates that in 2008, U.S. online ad spending will reach $27.5 billion.)

Google continues to be “the 500-pound gorilla,” the report says, with 66% of the global search market. Yahoo is next, with 21% share of the market, followed by Microsoft, with just over 5%.

Tanya Irwin | Source: Online Media Daily

The people at Time Inc. have launched MyHomeIdeas.com, a home and garden portal featuring original content, plus material from magazines including Cottage Living, Coastal Living, Southern Living, Southern Accents and Sunset as well as Oxmoor House books.

The portal includes 60 in-house staffers with expertise in design, décor, architecture and landscaping who share their knowledge on the site. MyHomeIdeas.com offers decorating basics, interior design trends, how-to videos, step-by-step instructions for home and gardening projects, virtual tours, new products, “before and after” images, resources, polls and blogs.

by Tameka Kee | Source: Online Media Daily

FRESH OFF A WEEK OF doubts about the resilience of Google’s paid and natural search value proposition, one of the giant’s top engineering brass aimed to still the hearts of financial types feeling antsy over declining ad clicks and a slumping economy.

“If an advertiser knows that they’ll make five dollars by spending one dollar, the chance is high that they’ll spend it,” said Alan Eustace, senior vice president of engineering & research at Google. “We’ve stressed measurability and providing a clear return on investment since we started our advertising business–and the growth of paid search shows that advertisers have bought into that. That’s what will help us in times like these.”

Eustace addressed attendees at the Morgan Stanley Technology Conference in Dana Point, Calif. on Monday, acknowledging that as a relatively young company, Google hadn’t experienced a true recession–and that the market would have to, in a sense, “wait and see” what future performance would look like.

But Eustace said that there were factors that made Google more resilient than other ad providers in the industry. In addition to attracting advertisers from across verticals, “our business is geographically diversified across the world in fast-growing, medium and stable markets,” Eustace said.

As for the declining clicks–most recently reported by comScore, but also by Google itself, during its fourth-quarter 2007 earnings release–Eustace reiterated that the decrease stemmed from algorithmic improvements on the ad-serving end, as well as the reduction of clickable space for AdSense ads.

“It would have been easy for us to avoid making those kinds of changes, or just increase the number of ads,” Eustace said. “But we made choices to reduce the number of advertisers and decrease accidental clicks, because the changes deliver better information to users and make them click more in the long run.”

Eustace added that while clicks had decreased, advertiser conversion rates were much higher–partly due to the giant’s requirements that many advertisers improve their ads’ landing pages. “It’s a shared revenue stream between us and the advertisers, so they’ve been equally motivated to improve the user experience,” he added.

When it comes to organic search, Eustace said that the market is still very competitive. “If a bigger, better alternative came out, people would use it,” he said. “So our engineers are not feeling fat, dumb and happy because we feel like we don’t have to work at search. Competition could come from anywhere, and we work hard because we need to meet user expectations.”

by Mark Walsh | Source: Online Media Daily

 ADDING A NEW CATEGORY TO its index of Internet activity, the Online Publishers Association found that community sites–including social networks such as Facebook and MySpace–account for only 7.5% of time spent online.

That puts community sites ahead of search (5%), but well below content (42.7%), communications (28.7%), and commerce sites (16.1%) in time spent. The OPA defines the community category as Web sites and applications that combine user-generated content with communications to foster relationships among their members.

“The addition of Community reflects the increasing popularity of sites such as MySpace and Facebook that don’t clearly fit into a single existing (Internet Activity Index) category, said OPA President Pam Horan. Even so, adding social networking sites to the mix hardly displaced content as king when it comes to monopolizing users’ time online.

Separately, Web measurement firm HitWise estimates that social networking sites and other online forums, such as Craigslist, accounted for 9.3% of U.S. Internet traffic in February. Social networks alone made up almost 6% of traffic.

While still small, advertising on social sites is growing rapidly. In its recently released 2008 Digital Outlook Report, Avenue A|Razorfish identified entertainment and community sites as the two fastest-growing ad categories last year, with the latter growing more than 50% to $55 million.

CHARLESTON, W.Va. – Dairy Queen is facing a dilly of a problem — a rebellion against the revamping of restaurants by a growing number of mostly mom-and-pop franchise owners.

Claiming that DQ is forcing them to increase the size of restaurants or add table service under the threat of losing their franchises, owner associations with members in 10 states are now suing the chain.

The lawsuit contends Dairy Queen is trying to force franchise owners to spend between $275,000 and $450,000 to remodel stores to adhere to an unproven concept — one that will cost more to operate, double staffing requirements, and cut into profits.

“No one should have to make this conversion that is quite expensive unless they want to,” Caruso says. “If the DQ Grill & Chill concept was such a promising new concept, then the free market would solve this problem.”

That hasn’t happened, according to the lawsuit.

As of December 2006, the complaint says, just 105 Grill & Chill restaurants had opened in the United States. Some have performed poorly, and two have closed.

Read the full story at MSNBC >>

SEARS HOLDINGS, IN THE MIDST of a search for a new CEO, reported its fourth-quarter and full-year results, and things are getting tougher for the Hoffman Estates, Ill.-based company.

Net income plunged to $426 million from $811 million in the same quarter a year ago. The company was hit hard not just by declining sales, but also eroding margins, as it continued to mark down prices in an effort to tempt consumers.

Comparable-store sales declined 4.5% in the quarter, with sales at Sears’ U.S. stores slipping 4% and Kmart falling 5.2%. For the year, domestic comparable store sales dropped 4% at Sears, and 4.7% at Kmart.

“Our fourth-quarter and full-year results continued to be negatively impacted by the worsening economic conditions faced by both our customers and competitors, as well as increased markdowns taken to clear excess inventory,” the company says.

by Tameka Kee | Source: Online Media Daily

EMPLOYERS SEE SOCIAL NETWORKING SITES as one of the most promising channels for finding new hires, and 61% anticipate spending more of their recruitment budgets on sites like Facebook this year, according to a new report from Classified Intelligence, LLC.

Business networking sites like LinkedIn and employee referral programs followed closely behind, with 55% of employers saying they will allocate more dollars to them in 2008–while roughly the same amount said that they plan to spend less on print. Altamonte Springs, Fla.-based Classified Intelligence partnered with ERE Media Inc., an online recruitment community, to survey more than 170 recruiters in late 2007.

“Newspapers have a very difficult challenge trying to provide new tools for recruiters,” said Peter M. Zollman, founding principal of Classified Intelligence. And as employers continue to shift their dollars away from print, they’re willing to experiment and be creative–even using virtual worlds to find candidates, Zollman said. “Our research even shows online job sites don’t fare as well as they used to,” he said.

Indeed, just 35% of employers said that they plan to increase their spending on sites like Monster and CareerBuilder, down slightly from 2007. Some 14% said that they will decrease spending on those sites this year–a shift being driven by a glut of poor-quality candidates and a one-size-fits-all mindset, according to Connie Thompson, managing editor at Classified Intelligence.

“Recruiters want to target specific types of candidates, rather than sift through a plethora of resumes from candidates who don’t come anywhere near meeting their needs,” Thompson said. “That’s why the niche sites are faring a bit better. We believe that in eight to 10 years, niche sites of all types–verticals and local–will be much more important than general-purpose recruitment sites, and those will have developed their own multiple niches.”

Video recruitment tools–including Web-based interviews via submission sites like Video Job Shop–were gaining traction, she said. “It’s certainly an area to watch over the next year,” Thompson said. “The report shows several examples of recruiters who experienced a tremendous increase in quality response through the use of video.”

As for the virtual worlds, Thompson said they deserved a mention because this was the first year that multiple employers said they planned on using platforms like There.com and Second Life for recruitment. “We don’t know how serious they are, but it does show that recruitment is moving in a new direction,” she said.

Source: Online Media Daily

MORE THAN HALF OF THOSE who visited the Web sites of Barack Obama, Mike Huckabee and Ron Paul had a more favorable view of the presidential candidates after viewing their sites.

By contrast, only 36% thought better of Hillary Clinton based on her campaign site, according to a study by marketing research firm RelevantView. Presumptive Republican nominee John McCain finished in between, with 44% improving their view of him after visiting his site.

The results were based on a February survey of 780 people self-identified as Democrats, Republicans or Independents and RelevantView’s online behavioral tracking technology. Respondents were asked about candidates’ stands on the Iraq war, health care, taxes and spending, and immigration before and after visiting their sites.