Echoing the trends we’ve been reporting on here at the Aplus.net Blog recently — namely, that online advertising continues to increase despite, and possibly even because of, the sluggish state of the overall economy — a report issued earlier this month by the Interactive Advertising Bureau (IAB) states that online advertising has increased by more than 15 percent in the first half of 2008 (as compared to the same period in 2007).

The report, conducted independently by PricewaterhouseCoopers, covers the first six months of 2008. It reveals that Internet advertising revenues for these months were $11.5 billion, “setting yet another new half-year record that represents a 15.2 percent increase over the first half of 2007.”

Search and Display-related advertising continue to set records. Search revenues totaled almost $5.1 billion for the first six months of 2008, up 24 percent from the $4.1 billion for the same period in 2007. Display-related advertising totaled close to $3.8 billion for first six months of 2008, compared to the $3.2 billion reported for the same period in 2007, showing about a 19% increase. Display-related advertising includes Display Banner ads, Rich Media, Digital Video, and Sponsorship.

“Interactive advertising continues to demonstrate year over year growth as marketers and consumers increase their embrace of digital media,” said Randall Rothenberg, president and CEO of the IAB. “The essentially flat performance we see quarter to quarter reflects in part cyclical advertising trends. Compared to the trajectory in other media and in the general economy, interactive has outperformed because it delivers a level of accountability unmatched by any other advertising medium.”

Although this data is from the first half of 2008, when the current financial crisis wasn’t as severe as it is today, the basic conclusion is firmly in line with recent trends: As the economy weakens, and uncertainty grows, consumers are embracing online shopping more than ever because of the time and money it saves over traditional forms of shopping. (Indeed, it’s not much of a stretch to see some validation of this theory in the recent string of major brick-and-mortar store liquidations such as Mervyns and Shoe Pavilion.)

We are at a historic time, when basic human behavior is shifting in major ways. With this being the case, now is absolutely the time to get serious about your online business, if you haven’t already done so.

The IAB, or Interactive Advertising Bureau, is an advertising business group that represents hundreds of “leading interactive companies that actively engage in and support the sale of interactive advertising.” Click here to visit the IAB’s official website. To view the report quoted above, click here.

Next month, ICANN (The Internet Corporation for Assigned Names and Numbers, the organization that largely controls the world of domain names and registries) will be holding a forum in Cairo, Egypt to determine whether or not to add more new top-level domain names to those currently offered.

A top-level domain (TLD) is the term for the basic suffixes that all domain names must have, such as .com, .net, and .org. Since the introduction of newer TLDs such as .info a few years ago, there has been a renewed interest in domain name activity and speculation.

This news comes on top of a huge announcement this summer that ICANN will also be expanding TLDs to include customized, brand name-oriented names — .nike, for example, or .disney could become viable TLDs under the proposed new rules that may go into effect as early as next year.

All such plans to expand the range of available TLDs have drawn criticism. Some say that the wider variety of TLDs mean that online branding is getting watered down. Since there are so many new options, it’s hard to tell just which is the most legitimate. Are companies supposed to buy new domain names in each new TLD as it becomes available? If they don’t, what are the risks of someone else snatching it up?

ICANN defends its plans, claiming that it’s trying to provide online businesses with an increased number of options: “It’s an expansion in Internet real estate so that people have got more choices in the kind of searches they do,” said Paul Levins, vice president of corporate affairs for ICANN (as quoted in the Orlando Sentinel last week).

Yet, with these new customized domains likely costing at least $100,000, it’s not at all clear what kind of advantages they’re going to offer in the long run; and it seems apparent that smaller companies will have a harder time becoming competitive under the new rules of the online business game.

More from the Orlando Sentinel:

Supporters say the move will make browsing the Internet more intuitive and also give companies a new way to reinforce their brand names. But others warn that it could confuse consumers and become a headache for companies that may not want to purchase a bunch of new domains.

Besides the obvious benefit of a company such as Disney being able to direct visitors to a URL such as “parks.Disney” instead of the current “Disney.com/parks,” the expansion of domain names could benefit geographic regions.

For instance, if the .orlando domain were established by the city government or an economic-development group, it could streamline searching for local services by having a directory of plumbers listed at “plumbers.orlando,” or a list of swimming pools at “pools.orlando.” Businesses licensed by the city also could be granted a .orlando address. …

And since it won’t be a first-come, first-served basis, businesses and individuals will have a better shot at getting their desired Web addresses than they did during the first Internet gold rush. …

Levins said applicants will have to pay at least $100,000 to apply and will have to prove that if they are granted a top-level domain, they are capable of then selling Web addresses within that domain … .

“This is no $6 exercise,” said Levins, adding that an independent board will oversee the process. “Running a top-level domain is actually a big business.”

Palage said cities and special-interest groups such as the National Rifle Association or the University of Florida Alumni Association could see the biggest benefit from having their own top-level domains because it’s similar to offering specialty license plates with that group’s name on them.

“[If I am a business,] I want a .orlando because I want to associate with my customers to show I am a member of the local community,” Palage said.

A spokeswoman for the Walt Disney Co. said the company is aware of the new domain-name plan but would not comment.

Palage said many companies aren’t pleased with the new domains because it means that after years spending time and money to protect their brands with the existing domains, they’re going to have to do it again.

The law firm Cash Klemchuck Powers Taylor LLP also envisions negative outcomes resulting from these changes. From a news release issued by that firm:

“ICANN’s goal is to give end-users more choice in their presence on the Internet and stimulate competition,” said Darin M. Klemchuk. “However, critics have compared the introduction of new domains with the printing of money: the value of your current registration is decreased because of possible brand dilution and public confusion, while the cost of protecting one’s brand increases.”

ICANN encourages users to avoid registering gTLDs that are confusingly similar to an already existing gTLD in order to prevent confusion in the marketplace. The introduction of new gTLDs will increase the open avenues for registering confusingly similar variations of brand names. ICANN encourages applicants to adopt curative measures, such as Uniform Dispute Resolution Policy (UDRP), to cure such confusion. Additional preventative measures include the registration of many domain names. “With the multiplication of top level domain registrations, businesses will experience difficulty in policing their brands online and will likely incur substantial costs,” noted Mr. Klemchuk. “This expansion of domain names will also make phishing schemes more prevalent. All of this will require businesses to be more vigilant and proactive in protecting their online brands.”

Read “Explosion of New Domain Names Presents Risks for Online Brands” here. Read “What’s in a dot.com name … ” in the Orlando Sentinel here.

Late in September, the state of Kentucky issued a court order to the registrars for 141 domain names, announcing that the domains would be seized by the state. The justification? These domain names were allegedly associated with websites that promoted or directly engaged in online gambling.

Online gambling was effectively made illegal in the U.S. with 2006’s Unlawful Internet Gambling Enforcement Act (UIGEA). However, there’s been a great deal of argument over just how far that law goes. Lawmakers are sparring over the exact wording of the bill, which effectively places the burden of enforcement on the shoulders of financial institutions, rather than the government itself. In any case, Kentucky’s action goes considerably beyond the scope of the law.

Furthermore, most of the seized domain names — which included large, well-known companies such as PokerStars and Bodog — are based in the United Kingdom, with no assets or formal operations in North America.

The case has generated a huge amount of controversy. However, it’s understandable if you haven’t heard about it, considering the relative lack of attention it’s received in the mainstream media. Considering it’s essentially a case of international property seizure (a situation with enormous implications) it’s so far garnered a surprisingly low profile from the American press — with the following exception. Last week, the Washington Post finally weighed in with its overview of the situation:

An effort by the state of Kentucky to seize more than 140 online gambling Web site names is raising novel legal questions about the physical location of digital property and the reach of local and regional governments on the global Internet.

Last month, a Kentucky circuit court judge granted a request by the governor to have 141 Web site names used by online gaming operations transferred to the state’s control. The action was filed by a Chicago law firm on behalf of Gov. Steve Beshear (D), who was elected in part on the strength of a promise to bring casino gambling to the state.

The domains include some of the most popular online gaming sites on the Internet, including UltimateBet.com and FullTiltPoker.com. According to the state, residents spend roughly $170 million each year gambling at online casinos, potentially taxable revenue that might otherwise have been spent at the state’s own gaming operations, which include regulated betting on horse racing and bingo.
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Attorneys for the state convinced Judge Thomas Wingate that the gambling Web site names were tangible “gambling devices” that could be seized under Kentucky’s gaming statutes. Wingate’s order compels the entities that manage the registration of those domains, known as domain registrars, to transfer control over the Web sites to the state.

Jennifer Brislin, spokeswoman for the Kentucky justice department, said the state is seeking unspecified damages from the casinos, but that its primary goal is to force the Web sites to block Kentucky residents from visiting them. She said the majority of the registrars affected by the judge’s order had “locked” the domains in question to prevent them from being transferred to another registrar pending the outcome of the case.

“We think it creates a tremendous disadvantage for our legitimate, licensed and taxed gaming interests, and there are some damages that are due to the commonwealth as a result,” Brislin said.

Opponents of the decision say the Kentucky has no legal authority to seize the casino Web site names, as neither the individuals who registered the Web sites nor the registrars themselves are physically located there. All of the online casinos are operated outside of the United States. Many online gaming companies are lobbying on Capitol Hill to be legalized, regulated and taxed in the United States, which would allow them to market to U.S. consumers.

Bret Fausett, a domain name expert and attorney with the Los Angeles law firm Adorno, Yoss, Alvarado & Smith, notes that Kentucky’s gaming regulations were written long before the advent of the commercial Internet, and make no mention of virtual casinos.

“This is a little bit like if the Home Shopping TV network was accused of fraud, and Kentucky decided to seize the show’s cameras and set even though HSN’s real location is nowhere near the state,” Fausett said.

What do you think? Is Kentucky overstepping its jurisdiction here, or is this action justified in light of UIGEA? Do you think a state can legitimately seize international property, or is this a mistake that’s only going to hurt America’s international trade? Weigh in and let us know.

View the state’s original court order, including a complete list of all the seized domain names, here.

Writing in ComputerWorld, author John Brandon explains why the recent turmoil in America’s (and the world’s) financial markets doesn’t necessarily amount to a slowdown in the Internet business sector. In fact, it may point to special opportunities for the online entrepreneurs who have the means and the initiative to seize the advantages at hand.

Mr. Brandon cites some pretty compelling evidence in his argument:

The new dotcom era is long on innovative and compelling ideas - things that make you want to keep using the site regardless of the weakening economy. People will want to edit photos online at Picnik. They will want to store data on Box.net. If anything, these services might actually gain traction during a poor economy because people are looking for alternatives and maybe some fresh ideas.

In the first dotcom crisis, there were inventory problems, e-commerce nightmares, technological issues - everyone was learning the ropes. Sticky sites like FaceBook, where we have started using as a prime storage place for photos and an historical record of our written communication, will thrive. For example, I know someone who no longer uses an e-mail account, she only uses FaceBook because everyone she knows and wants to communicate with is using the service.

Digg, even in such a calamitous economy, just got funding. Web 2.0 sites are still popping up like flies at a picnic. And, most of them are small and can scale easily and quickly.

Now, it is not all calm and serene in Web 2.0 land. I see companies such as Amazon having to go lean and mean soon, even though I just bought a pile of songs on their MP3 service. I think what really hurts them is that, for the most part, they sell stuff online and people do not have the money to spend. Sites in a very competitive market - let’s say Zoho - have a major challenge because they can’t just throw money at problems like building up an image through advertising. The bigger the Web 2.0 company, the more they need to keep pumping life into the brand, whereas smaller sites can remain relatively secure financially with a small and growing fanbase.

Sure, most of us aren’t managing large, international companies like Facebook. But the point is, the incredible popularity of these companies represents a major shift in how people behave. Over the past few years, the Internet has changed the way that millions of people communicate, do business, and shop. They’ve found that it’s far less expensive and far more convenient to do these things online than via the more traditional means of interaction (which almost always involves gasoline and time spent traveling around town).

So, an economic downturn in the traditional sense may well mean more online activity and shopping, instead of less. Of course, as always, your mileage will vary, depending on what kind of business you have, and how it’s marketed. But remember, positive thinking, combined with a smart look at where the markets are going, could ensure that you and your business not only come out on top, but also take full advantage of unique growth and expansion opportunities that you may never see again.

Right now, it’s more important than ever to speak to your customers with authority and with an optimistic, forward-looking tone. If you can confidently position your website as a reliable, unwavering resource during these unsteady times, you just may find your site hits and traffic growing like never before.

Read “Writing for Can dotcoms avoid another bubble burst?” here.

A news release was issued earlier this month stating that online retailing remains a “bright spot amid a struggling economy.”

“Online retailers are expecting average annual growth this year of 25%, and 35% say they expect to perform better than initially expected through the first half of next year,” states the article, which can be found on  Internet Retailer, a news website dedicated to following the ins and outs of the online commerce industry.

The story cited a recent nationwide poll of 125 retailers, stating that “Five percent of respondents said they believe their online businesses will perform substantially better than expected during the coming 12 months, 30% said slightly better than expected, 33% the same as expected, and 32% slightly worse than expected.”

Retailers reported positive trends in conversion rates and profitability, though many still face challenges in selling across channels including the web, stores and catalogs, the study says.

81% of respondents said their e-commerce business was profitable in 2007, and 75% said e-commerce was more profitable in 2007 than in 2006.

Many retailers are still struggling to increase sales by integrating order and inventory systems and coordinating marketing and merchandising efforts across channels, the report says. The report notes that many retailers continue to operate each retail channel as a separate silo and have not been able to justify investments in multi-channel systems. 51% of respondents indicated, however, that their online customers are active in at least one other retail channel.

Since it follows recent trends pretty closely, this news doesn’t come as a big surprise, perhaps, but it’s good to have the strength of online selling reaffirmed yet again — especially in the face of the recent dramatic ups and downs that the American and world economies have been going through. Internet commerce’s complete domination of the way shoppers worldwide find products and spend their money has never been more dramatic. And, as times get tougher, the ease and inexpensive nature of online shopping is looking better and better for everyone.

Read the original article here. The report from Shop.org referenced in the article can be found here. (It’s not free, unfortunately.)