Monday, June 23, 2008

Blogging More Than a Marketing Tactic

"It seems like every company has a blog section of its own, and is also interested in what the blogosphere is saying about it," said Paul Verna, senior analyst at eMarketer.

Word-of-mouth is still a powerful marketing tactic, and since influential bloggers are so effective at spreading the word about their likes and dislikes, blogger demographics continue to matter. So, excluding major businesses and splogs, who blogs now?

Although most researchers have noted a young skew to the blog audience, a BIGresearch study found that the average age of adult bloggers is actually 37.6. (see chart on left)

A Deloitte & Touche study of blog usage by age found a direct relationship: the younger the user, the more likely he or she was to read or keep a blog on a weekly basis. For example, 55% of millennials (ages 13 to 24) surveyed read a blog, and the percentages declined for every age cohort in the study until reaching just 16% for matures (ages 61 to 75).

Similarly, 35% of millennials kept a blog, whereas only 1% of matures did. The age groups in between—Generation X (ages 25 to 41) and baby boomers (ages 42 to 60)—fell between those two extremes.

With regard to the ethnicity of US adult bloggers, BIGresearch found that 69.7% were white, 20% were Hispanic, 12.2% were African-American and 3.7% were Asian. These percentages were essentially in line with the US Census Bureau's most recent estimates of the demographic breakdown of the US population, allowing for differences in methodologies, mixed-race respondents and overlap between Hispanics and individuals of other ethnicities.

Once a haven for techies, there are now blogs for everything from celebrity gossip to political commentary to the most mundane personal minutiae. By 2012, more than 145 million people—or 67% of the US Internet population—will be reading blogs at least once per month.

The number of people creating blogs in the US will also grow, reaching 34.7 million people by 2012—16% of the Internet population. By contrast, there were some 22.6 million US bloggers in 2007, a number that correlates to 12% of Internet users.

Buoyed by these massive levels of consumer engagement, US blog advertising will reach $746 million in 2012, up from $283 million in 2007.

Payment Card Reporting = Bad Idea?

Payment-Card Reporting Nonsense...Another expensively bad idea from congressional Democrats.
By Phil Kerpen

Last week the House Ways and Means Committee marked up the so-called Alternative Minimum Tax Relief Act of 2008. As expected, the Democrats are proposing several permanent tax hikes in exchange for a provision to protect the middle class from the unintended consequences of the AMT. What wasn’t expected was
the addition of a nasty new regulation.

The bill now includes a $30.98 billion capital-gains tax increase on the carried interest of general partners in investment partnerships and a $13.57 billion income-tax hike for oil companies. Basis reporting, which would require financial firms to report capital-gains basis information to the IRS, was thankfully not included in the bill.

However, payment-card reporting was. This is real bad news.

Payment-card reporting would require banks and other providers of merchant account services to report credit- and debit-card payments to the IRS. All credit-card sales essentially would be pre-audited, with detailed sales information given to the government.

The idea is to stop tax cheats, although the effectiveness of such a system is far from clear. Meanwhile, this new regulatory burden will cost credit-card networks, banks, and other payment systems in terms of time, money, and personnel. These costs will necessarily be passed on to businesses and retailers in the form of higher credit-card fees, and to consumers in the form of higher prices.

With tens of millions of payment-card transactions taking place each day, the amount of information reported to the IRS in this new scheme will dwarf anything that exists today. The collection, transmission, and storage of such a massive amount of personal data also raises serious concerns about privacy and security, particularly for the many smaller businesses that use Social Security numbers as tax ID numbers.

The Center for Democracy and Technology
has explained that payment-card reporting will undo the standard practice of deleting personal information once it has served its purpose. Considering the rising incidence of online identity theft, this is a particularly bad idea.

Making matters worse, payment-card processors will be deputized by the IRS not only to collect personal data, but to collect money, too.

Under backup withholding provisions of the bill, if a processor is unable to verify a merchant’s taxpayer ID number, the processor will be required to withhold 28 percent of that merchant’s gross transactions. Any smaller merchant caught in this net will suffer a cash-flow nightmare.Ironically, this big-government scheme is certain to elevate spending — the cost of building and maintaining a database of such vast scope would be considerable — with no guarantee that tax cheats will be caught and tax revenues will be recovered.

Companies that cheat on their taxes by underreporting income typically fail to report cash transactions, not the credit-card transactions that are clearly documented and would be available during an audit.And how will analyzing credit-card transactions allow the IRS to successfully identify companies for the purposes of auditing? The IRS has not demonstrated this.
Most likely, this program will result in unjustified and unnecessary audits.Payment-card reporting is another expensive bad idea from House Democrats. American taxpayers can only hope this extortion attempt fails, and that Congress passes AMT relief in a clean bill with no tax and regulatory hikes.

— Phil Kerpen is policy director for Americans for Prosperity.

Disqus for ePayment News