Google's new web audience measurement service is intended to help advertisers identify the best places to buy online ads by providing them data on which web sites their target audiences visit. The goal is to connect advertisers and publishers and provide them with demographics and usage patterns of target audiences. The service is available to select parties at the moment but it is expect to be freely available to anyone shortly.
Presently, ad buyers use services such as comScore, Nielson, Hitwise, Compete.com and Quantcast to analyze audience usage patterns to allocate their media spend. Everyone of these services uses a different methodolgy to gauge usage and their results vary greatly. Ad buyers spend alot of money on these services for the data that they provide.
According to the WSJ, some ad executives are leery about placing even more power in the Google's hands. "For an advertiser, the last thing you want to do is to have your adviser be the same person you are spending your money with," says Sarah Fay, chief executive of Aegis North America, the media-buying giant owned by Aegis Group of the U.K.
Some ad executives say they are concerned that Google could use the data it compiles about their campaigns to make a business pitch to a competitor. They imagine a scenario in which the biggest online advertiser in a category is running its campaign through Google's ad-serving systems. Not only would Google be helping that marketer deliver ads to particular web sites; it would also be capturing data about which Web sites and types of ads work best. Advertising executives fear that Google could then resell that same intelligence to competitors.
Google's new tool could bring more efficiency to the process of buying online ads, ad executives say. Google already has one of the dominant systems for online ad-serving, which helps Web publishers manage their advertising sales and serve up ads each time a consumer opens one of their Web pages. The Web-audience data could be combined with the ad-serving system, so that advertisers would be able to find out whether they would reach the right audience before they committed to placing an ad. Existing ad-serving systems don't currently provide detailed Web-audience data about the sites where they place ads. By giving away the new tool, Google could presumably attract more ad business and shake up the web audience measurement business.
Ad executives weren't the only ones nervous. Today comScore's stock dropped 22% on the announcement of Google Ad Planner.
Online advertising revenues reached $5.8 billion for the first quarter of 2008 which represents a 18.2 percent increase over the same period in 2007 reports the IAB.
“We continue to experience significant growth and vitality in interactive marketing, media and advertising,” said Randall Rothenberg, president and CEO of the IAB. “We expect growth to continue, as consumers spend more and more time online, and marketers find more – and more innovative – ways to reach them through digital media.”
“The fundamentals of interactive advertising spend continues to be positive and I would expect to see continued growth in the future.” said David Silverman, partner, Assurance, PricewaterhouseCoopers “The cyclical fourth quarter to first quarter drop in traditional media advertising spend, combined with an overall economic slowdown, resulted in a not so unexpected first quarter slowdown in the growth of online advertising".
In light of the flurry of activity around sites creating their own ad networks, like Healthline did today, we decided to provide a break down of the top ad networks as reported by comScore, which measures the actual delivery of ads within online ad networks. The break down highlights both the breadth of reach for the top ad networks and the emergence of a series of audience-specific niche ad networks.
“Ad networks have become integral components to the online advertising industry over the past several years by helping aggregate audiences for the purposes of delivering impressions to a broad array of Internet users,” said Jeff Hackett, comScore vice president. “The increasing ability of many ad networks to target and deliver ads either behaviorally or demographically is enabling a more efficient expression of ad dollars and an improved return on advertisers’ online marketing investment.”
Top 15 Ad Networks Each of the top 15 ad networks delivered ads to at least half of the total U.S. Internet audience in March, making them very effective reach-building vehicles for advertisers. Platform-A, the AOL ad network that combines Advertising.com, Quigo and Tacoda, served ads to 170 million U.S. Internet users in March, representing 91 percent of the total U.S. online population, to rank as the top ad network. On a stand-alone basis, Advertising.com would rank as the top ad network with a reach of more than 167 million Internet users. Yahoo! Network ranked second with a reach of 160 million, followed by Google Ad Network (152 million) and Specific Media (140 million).
Top 15 Ad Networks March 2008 Total U.S. – Home/Work/University Locations
Visitors (000) Reach % Total Internet: Total Audience 188,010 100.0 Platform-A* (AOL) 170,537 90.7 Yahoo! Network 160,336 85.3 Google Ad Network 152,048 80.9 Specific Media 145,554 77.4 ValueClick Networks 140,091 74.5 Tribal Fusion 135,640 72.1 Casale Media Network 129,399 68.8 DRIVEpm (Microsoft) 124,333 66.1 adconion media group 117,469 62.5 interCLICK 108,818 57.9 Traffic Marketplace 105,420 56.1 Collective Media 100,151 53.3 24/7 Real Media 94,525 50.3 ADSDAQ by ContextWeb 94,459 50.2 Burst Media 93,291 49.6
*Includes Advertising.com, which reached 167.5 million visitors in March 2008.
Niche Ad Networks Emerge As ad networks have expanded their reach and influence online, a new crop of ad networks has surfaced to serve specific demographic and behavioral target segments through both the traditional ad network model and more innovative ad-targeting mechanisms. While the overall reach of these niche ad networks is eclipsed by the more generalized ad networks, their ability to precision-target niche audiences helps advertisers reduce wasted ad impressions.
Audience-Specific Targeting One example of a behaviorally targeted ad network is Snap Shots Network, which delivers ads to users of Snap.com’s Snap Shots. The network reached more than 18 million U.S. Internet users in March. Widgetbucks Network delivers contextually relevant ads through a widget, and joined the ad networks ranking in March with a reach of 9.5 million, while NeoEdge Game Network, which delivers ads through games, had a reach of nearly 1 million. Other ad networks on this list target specific audience segments, such as HispanoClick by Batanga (Hispanics), Indieclick (young influencers or “tastemakers”) and The Heavy Men’s Network (men).
Selected Niche Ad Networks March 2008 Total U.S. – Home/Work/University Locations
Visitors (000) Reach % Total Internet: Total Audience 188,010 100.0 Snap Shots Network 18,556 9.9 AdOn Network 16,825 8.9 GoFish Networks 9,865 5.2 Widgetbucks Network 9,622 5.1 HispanoClick by Batanga 8,370 4.5 Indieclick 6,885 3.7 The Heavy Men's Network 3,379 1.8 NeoEdge Game Network 911 0.5
Networks for Different Objectives “The reality is that advertisers have different objectives with their online campaigns,” added Mr. Hackett. “While some are focused on broadening the reach of their brand, others prefer a more focused approach that can deliver a higher frequency. The emergence of these niche ad networks represents an evolution for the online advertising industry that is giving advertisers more precise targeting and better control of their online campaigns.”
Interested in sharing your thoughts on Online Advertising and related topics can do so in groups section.
Healthline is the latest company to launch an ad network. The network will allow the health care advertisers to reach consumers in a far more targeted way. Healthline reaches 10 million unique users through publishers including AARP, Self.com, Meriam Webster and US News and World Report and will use it Semantic Taxonomy to enable ad targeting.
According to a recent Nielsen//Netratings report, health advertising networks deliver about 9 million impressions each month. Rather than selling a generic ad on several different networks, it makes sense to target a specific ad to a health network to test how consumers respond.
What makes a health ad network a good fit for many marketers? First and foremost, the fact that health websites deliver very engaged user bases. Consumers visiting health websites are looking for very specific information about health problems, health medications or treatment options. Contextually targeting your ad to this consumer base could greatly increase the ROI of campaigns reports BizReport.com.
The answer is simple. First, create a Facebook application; next, all you need is one person to like it, then their friends find out and it spreads and soon you will be making $500,000 a month. What's the catch? It could you up to 2 week to start making $500,000 a month. That is what Chamath Palihapitiya, the company's vice president of marketing told attendees at a conference two weeks ago. He went on to disclose that about 33 percent of Facebook application developers reported profits of up to $500,000 a month. At last count there were 200,000 developers evaluating the Facebook platform.
He said Facebook's platform is turning the company into a sort of "cable company" for the internet and this plumbing is creating huge opportunities for entrepreneurial plumbers who are willing to work with the pipes of Facebook's application platform. He said, "all you need is one person to like it, one person to be an advocate of it, and then their friends find out and engage in that."
Sounds too good to be true? We set out to investigate. We spoke to over 30 Facebook app developers and nothing could be further from the truth. But first for the premise to be even plausible we did a quick calculation and the numbers don't add up. Facebook would have to payout $3.3 billion monthly on revenue of $15 million a month. Even if 1 percent of the developers made $500,000 per month, then Facebook would still be paying $15 million more than they take in. Here is how we got the number.
Individual vs. Professional Developers Of the Top 10 Facebook applications, perhaps the Top 3 have apps that make $500,000 a month or more, however, these entities have also raised in excess of $15 million each. These are companies are Slide and Rock You which are under tremendous pressure to increase revenues. So much so that they are starting to compete with the very same advertisers that advertise on Facebooks. They are staffed by digital-ad sales executives that used to be with Google, Yahoo, AOL and other ad agencies. While there are opportunities for individual app developers on Facebook the odds favor the professional developers that have the ability to move inventory in mass across many verticals.
Confessions Of A Facebook Developer The low barriers to entry and dreams of quick riches has led to a flood of Facebook applications. One developer that I spoke with invested $150,000 in 3 Facebook apps and has made approximately $2,000 in three months. His advice is "Don't develop unless: you're a student and want to build an app to learn and add to your resume. Or, you have a particular vertical expertise that you can leverage to an off-facebook site". Facebook's users say that it has become a platform for "spam", and the measures taken by Facebook to prevent this has made it more difficult for applications to achieve viral growth.
The Hype Has Worn Off According to Jesse Farmer of Adonomics, a site that tracks Facebook applications, the hype has worn off for application developers. He says, "the activity level of the Facebook forums is a fraction of what it was at the beginning of 2008". In April, there were 51% fewer daily posts, 29% fewer daily signups, 44% fewer daily threads, 27% fewer active users and 47% fewer highly active users than there were in January. In fact, the valuation of the professional developers has dropped considerably since we started working on this story despite the fact that they have more installs and or more users. Figures is green mean an increase and red are a decrease.
Facebook needs developers to continue to buy the hype so that they can keep developing apps for free and continue to build the user base. Facebook depends on them to justify its high paper valuation. Recently, the company raised another $100 million, which the company stated was for servers for hosting the apps developers were building. Other sources said a large chuck of the funds were used to settle with Facebook's original founder. Many developers we spoke with said app fatigue has set in and adoption rates are dropping. Maybe $100 million worth of servers will end up on eBay or Craigslist soon.
Meanwhile, Farmer has some advice for developers dreaming of making $500,000 a month in 2 weeks. He said, "It boils down to this: investing most of your man-hours into Facebook at this point in time is a mistake. The potential return on that investment, a year after launch, is a fraction of what it once was. And the fact that Facebook continues to change the rules and selectively break them for their own benefit means the risk is comparatively higher".
Percentage Network Television Cable Television Local Television National Magazines Internet Local Newspapers Syndicated Television Local Radio Hispanic Television Network Radio National Newspapers National Sunday Supplement Coupons Local Magazines
Note: Internet spending estimates are from AdRelevance. All others from Nielsen Monitor-Plus. Different methodologies employed by each company may lead to disproportionate comparisons. Source: MarketingCharts.com
Yet another social network is shutting down. This time is it Verizon's social network. The social network which let users write blogs, post photos, and discuss in forums, will close June 16, 2008. The existing social network on the Verizon website will be moved over to the Verizon page on Facebook. Verizon jumped into social networking like many other companies, thinking it would be easy. They even branded it as "Join The Conversation" however they soon realized that branded social network wasn’t worth the effort and they are moving to where the conversation is.
In January, Conde Nast folded its social network called Flip into a Facebook app less than a year after launching. Flip was a social network for teen girls. Conde's strategy was to get teen girls to migrate to Flip from Facebook and soon Conde discovered that they did not stand a chance said Sarah Chubb, its president. "If you're a teenage girl, all your friends are already there. And every friend you might want to have but haven't met yet is already there," she says. "What is possibly going to make you go somewhere else?"
When it comes to monetization of social networks even the pros are having a hard time. How hard you ask - MySpace and all of the other FIM properties say saw Q3 revenue drop to $210 million from $233 million in Q2. This is despite experiencing strong growth. Also, about 30 percent of MySpace's revenue comes from a 3-year guaranteed deal from Google, which Google is losing money on. We have some words of wisdom from Sergey.
Source: Google Conference Call - Sergey Brin Speaking
We have had a challenge ... with social networking inventory as a whole and some of the monetization work we were doing there didn’t pan.
We’re running lots of experi- ments. We had some significant improvements but as I said, some of the things we were working on in Q4 didn’t really pan out and there were some disappointments there.
...I don’t think we have the killer best way to advertise and monetize the social networks yet.
I hope to be able to report more progress in the future ...
Advertising giant WPP has acquired a stake in Yield Software, a service that helps marketers shift their ad spend from traditional media to online advertising, reports MediaPost. The services allows marketers to "optimize" their budgets across various online ad platforms, provides landing page optimization, organic search optimization (SEO) and paid search (SEM).
In February, WPP rival Publicis partnered with Rapt to form Rapt Information Services with the intent of making online ad buying more transparent across various ad platforms. A month later, Rapt was purchased by Microsoft. Interested in sharing your thoughts on Online Advertising and related topics can do so in groups section.
SaaS has become the new buzz word at least on the web operations side of things. So much so that there is now a SaaS product for online advertising reports Marketing Vox. The service developed by Theorem Analytics enables media planners or account managers to upload various data and filter it through customized templates and formulas. Reports can be converted to HTML, Excel or other formats. Interested in learning or sharing your thoughts and on SaaS, you can do so in the SaaS group.
Barack Obama's campaign spent $3.5 million on web advertising between January and April. Of that $2.8 million was spent on Google according to Federal Election Commission filings by Obama for America.
It is estimated that as much as $3 billion could be spent by political campaigns on all forms of advertising. The Obama campaign deployed a mix of pay for performance and display ads on Yahoo, Specific Media, Pulse360, Microsoft's DrivePM, AOL's Quigo and CNN. Spending for other candidates were not available.
Below is a break down of publicly available spending related to online advertising and media strategy for Barack Obama and Hillary Clinton. See also: Barack Spends $1 Million On Google.
Spending Category Barack Obama Hillary Clinton Google $2,941,500 $67,000 Yahoo $350,500 $9,186 Yahoo Right Media $23,560 $0 Yahoo Pulse $36,500 $0 Microsoft $67,500 $0 Facebook $26,000 $0 AOL $25,000 $0 Broadband Enterprises $80,000 $0 CNN.com $24,000 $0 Politico $36,000 $0 Gothamist $2,800 $0 Web Consultants $93,162 $0 Ad Consultant - Howard Wolfson n/a $997,000 Media Strategist - Mandy Grunwald n/a $2,540,000 Pollster - Mark Penn n/a $3,800,000 Direct Mail - Mark Penn n/a $10,000,000
Google CEO Eric Schmidt, interviewed in Germany, offered several insights into the future as Google sees it. Here are some standout items from that interview. Schmidt quotes are in italics:
There is still a lot of revenue in search - as we get the technology better or as we can do more targeted ads. There is no limit for search marketing. People assume that there is a limit, but we have many more ideas about technology.
.... mobile will be a larger business than the PC-Web. But it will take a few years.
On Google's investment in the Wimax initiative to bring broadband outside of the phone carriers: We are concerned that the carriers in the United States might close off the network.
MySpace did not monetize as well as we thought. We have a lot of traffic, a lot of page views, but it is harder than we thought to get our ad network to work with social networks.
On the Yahoo Search talks:
It is true that we have been talking with Yahoo, but we don't have a deal to announce.
On Businesses in Germany who are upset with some Google approaches:
We are always trying to look from the perspectives of the end-users and if they are served well, we are not looking at it from the publisher perspective.
As Google continues to drive online innovation and activity more than any other company, Schmidt remains a key global player - in fact arguably the most important global player - in the entire industry.
Twitter has raised $15 million in venture capital giving the social communication and microblogging phenomenon a market valuation of $80 million. Given the exploding popularity of the website, especially among the digital elite, this value would seem pretty modest compared to recent market activity like the purchase of CNET by CBS for $1.8 billion or Google's purchase of YouTube last year for 1.6 billion. Om Malik broke the Twitter Venture Capital Story yesterday.
This is no billion dollar deal but $80 million is still real money despite the fact that Twitter has yet to show much if any potential to turn a buck - as far as I know they still have close to zero revenue despite a year of high popularity. Jason Calacanis isn't worried about that though. He sees Twitter as a potential *billion* dollar company based on a future user base of 100 million and the potential to make money in three ways: Paid subscriptions for a more robust service, SMS messaging ads, and very infrequent ads in the actual conversation stream.
These are good ideas but the fact Twitter has not yet deployed them is to me a sign that users (and those potential advertisers) may not view advertising favorably given Twitter's uptime challenges. More importantly I think the 100 million user number is very optimistic. Twitter's appeal to those who are online most of their waking hours won't transfer to the mass market as dramatically as Jason seems to think. As a regular Twitter user I like the service, but I think like many others I'm starting to experience fatigue with a service that can almost drown you with noise as you look for the few gems of a signal.
While online advertising overall continues to grow explosively, a new report from eMarketer (as well as common sense) suggests that there are many challenges in the Social Network advertising arena.
Debra Aho Williamson, senior analyst specializing in social networking at eMarketer said:
“Tapping into consumers’ conversations and spreading brand awareness virally has proven more challenging than companies originally thought.”
Challenging indeed. As we have noted here at WebGuild several times nobody has found the holy grail of Social Networking: Good monetization of user bases and spectacular page view traffic.
eMarketer has revised its worldwide social network ad spending estimates, now projecting that advertisers will spend £1 billion on social networks worldwide in 2008, rising to only £2.2 billion in 2011. The previous figure for 2011 was £2.4 billion.Source
Will Facebook, Myspace, YouTube, or others find better ways to make money from social networking? Yes this is likely but I think *no future advertising* will rival the profits that have flowed mostly to Google from pay per click ads which are the best monetization scheme ever invented for a publishing entity.
So far advertisers are happy because pay per click generally outperforms offline media and many other forms of online advertising, though eventually advertisers will demand pay for performance campaigns. I predict this will be the beginning of the stabilization of online advertising because the accountability will shift powerfully to the publishers who will be held more directly accountable for effective campaigns.
In the meantime a lot of money will continue to flow offline and online to ineffective campaigns where effectiveness is rarely measured or poorly measured, and often measured by the very agencies who are entrusted with the online advertising dollars.
For those of you trying to figure out where Microsoft is headed or trying to head here is another memo. This time from Satya Nadella, VP Search for Microsoft. On Monday we published Kevin Johnson's email to employees on Microsoft's Key Initiatives.
The explosive growth of online advertising and online activity is threatening the print publishing industry dramatically, and this study from TV Week showing dramatic declines in TV viewership from last year are another indication that TV is in trouble as well.
Both print and broadcast television count on advertising to keep afloat. Subscription costs for print publications often only cover their printing, shipping, and mailing costs where the advertising is the gravy that feeds the profit margins. For television advertising is the key to the castle as well, and as overall TV viewership declines and niche networking (such as the Food Channel) continues to grow broadcast TV could soon enter the same type of death spiral we've seen with some print publications.
When the fixed costs of a network or a publication approach the ad revenues you've got trouble, and without cost cutting you'll be out of the game soon. It's not realistic for networks or publications to think they can win back advertising share from the online world. In fact they must expect to continue to lose market share to online advertising until a balance is reached in their respective ROIs. This balance is likely years away, and in the meantime it is not clear many traditional media outlets will survive long enough through cost cutting or media mergers to see the light of that day.
From: Kevin Johnson Sent: Sunday, May 18, 2008 1:30 PM To: Platforms & Services Division; APSP FTE - Adv & Pub Solutions Platform; Employees.all.corp.adf@main.corp; Employees.all.adf@main.corp Subject: Online Services Strategy Update
We have been executing against the core strategy I first presented at our Financial Analyst Meeting in July 2007 to go after the growing opportunity in online services and advertising. Four pillars have formed the basis of our strategy:
1. Consolidate ad platform and win in display 2. Innovate and disrupt in search 3. Deliver end-to-end user experiences across PC, phone, and web 4. Reinvent portal and social media experiences
We have many options that support acceleration of our strategy. As announced earlier today, we are also considering new alternatives for a transaction with Yahoo! which do not involve a full acquisition. At this time, we have not made a new bid to acquire all of Yahoo!, but we reserve the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo!, shareholders of Yahoo! or Microsoft, or with other third parties.
Regardless of the outcome of any new discussions, it is important that we continue to move forward to strengthen our online services business. The fact is that we are not where we want to be in this business yet and we've been in this position longer than we'd all like. To that end, we will be accelerating elements of our core strategy, and breaking ground in new areas.
On Tuesday, Brian McAndrews is hosting advance08, our annual advertising conference here in Redmond. Over 400 leaders from across the media, technology and advertising landscape will be here for two days to engage in dialogue on industry trends and opportunities. These leaders are some of our closest partners in the digital transformation of the advertising industry, and they recognize the increasingly important role Microsoft plays in this transformation.
We are very excited to have these customers and partners on campus.
Brian's keynote will highlight our unique position in the advertising industry. It's amazing to see how far we've come with the aQuantive acquisition in differentiating our advertising platform. This foundation is paying off, with Q3 advertising revenue growth of nearly 40%, a rate that has accelerated over the past two quarters while growth rates at Google, Yahoo and AOL have slowed.
On Wednesday, we will be announcing a major new initiative that our search teams have been driving. We are getting better and better with our core algorithmic search, and at the same time, we are investing to differentiate in vertical experiences and to disrupt the current model. You'll hear more about our plans Wednesday.
advance08 will underscore our commitment to search and online advertising, and you'll continue to see announcements demonstrating our progress in this space. Earlier this week, I spoke to leaders across our online services business about our core strategy, the importance of acceleration and a set of actions we are taking, including:
1. Innovate and disrupt in search - We will disclose some elements of our plans with this week's release of search and sharpen our focus on user experience and business model innovation. The work we have done over the last 4 years on search has established a solid foundation to build upon. 2. Win targeted distribution - With this release of search, we are now ready to throttle up broader distribution initiatives. 3. Reinvent portal and deliver new experiences across PC, phone and web - We are building our new releases of Windows 7, Windows Live wave 3, Windows Mobile 7, Internet Explorer 8, Search and MSN with an eye towards optimizing and unifying experiences and scenarios. 4. Fix our online branding - Our brands are fragmented and confusing today, and we recognize a need to clarify and align our online branding. We are now driving forward to address this opportunity. 5. Win in display advertising - We have an advantage in tools, agency assets/relationships and a team laser-focused on capturing the display ad platform opportunity. As we build from a position of strength, we will increase engineering resources to drive even more innovation. 6. Build on our strengths in Europe - As measured by comScore in March, our online business in Europe is doing well. We have over 3 times the page view volume and nearly 7 times the minutes of usage compared to Yahoo!, and 68% reach to internet users throughout Europe. We will double down on our investments in Europe and expand on this strong position. 7. Expand strategic partnerships - In addition to our organic innovation agenda, we will expand strategic partnerships that increase inventory on our display ad platform, enable new paradigms in search and accelerate growth in key geographies. 8. Pursue small, targeted acquisitions - Looking forward, we will focus on small, targeted acquisitions that support our work in search, complement our value in the ad platform and help us grow scale in key geographies. Recent acquisitions including Rapt and YaData are examples of these types of acquisitions.
The PSD leadership team is actively working on the FY09 budget, including resources and investments to support the actions above. Additional elements of our work will be revealed in the coming weeks, leading to our Financial Analyst Meeting in July where I will share more details on our strategy and business/financial outlook.
As we move forward, I want to remind everyone that we are well positioned to compete. We have some of the industry's best assets on our side: technical and business talent, global scale, a culture of self-criticism and tenaciousness, a healthy balance sheet and an unparalleled product portfolio. It's time for us to seize the opportunity.
Thanks again for your continued leadership and focus on our business. If you have any feedback or thoughts, please feel free to send me mail.
Blog Maverick - Mark Cuban has added his voice to the chorus on beating Google. Cuban presents a plausible argument. He argues that in essence, its no different that any other content aggregation play. Its paying for content. Here it is:
Is there anything more fun than sitting around, growing your hair, drinking a Bud while listening to Jethro Tull and pondering how to change the balance of power in the search world and unseat Google?
Better search? Too subjective. Better monetization? After the fact. Better User Interface? Will we know it when we see it? A new and different search? Semantic? Human powered? We won't know till we know.
But what about the Google Index, all the websites that are indexed by Google? What is it worth to be in the Google Index? What would you, as a website owner require in order to remove your site from the Google Index and no longer be available when someone does a google search?
It should just be a matter of dollars and cents and sense, shouldn't it?
How many websites would have to recuse themselves from the Google Index before Google Search was negatively impacted? Mahalo.com thinks it needs to support the 25K most common search terms in order to be successful. What would happen if MicroSoft or Yahoo or a MicroHoo went to the 5 top results for the top 25K searches and paid them to leave the Google Index?
A theoretical maximum of 125K sites, but with overlap, probably closer to 100K or less, times how much per site on average?
The math starts to get interesting. At $1,000 per site average times 100K sites, thats only $1 Billion Dollars. The distribution would obviously favor the larger sites, so of that billion dollars, would the top 1K sites take 500K each and the remaining 99K split the rest?
Given the stakes, why stop at $1 Billion Dollars? Would the top 1k most visited sites take a cool $1mm each, plus a committment from MicroSoft or Yahoo to drive traffic through their search engines to more than make up for the lost Google Traffic. After all, once consumers realized that Google no longer had valid search results for the top 25K searchs, that traffic would most likely go to MicroSoft and Yahoo.
And why we are at it, why not require that these 100k sites switch from Googles Publisher Network to Yahoo's or MicroSofts? It would start to earn back the $1 Billion paid out very quickly.
On top of that, in order to grease the skids even further, why not issue advertising credits to the sites that switched off Google? Its soft dollars, that would sweeten the pot and drive more traffic.
IN essence, its no different that any other content aggregation play. Its paying for content. But, it would take some big ones to go for it and see if it worked. However, without question, every search engine has some number of core sites, that when removed from its index, destabilizes the value of its search.
The question is how many? What would it cost to get that number of sites to turn Google off and stay off, and would the traffic created as users switch from Google more than compensate for the cost?
Or would Google recognize the risk and jump in and offer more to websites to stay?
Microsoft's proposed bid for Yahoo was its fastest way to gain the scale necessary to compete against Google for online advertising dollars. Even before pulling the Yahoo offer, the company he had begun laying the groundwork for a strategy to compete with Google in online advertising. Microsoft CEO Steve Ballmer is convinced that online advertising is crucial to its future. So much so that he sees online advertising making up as much as 25% of the company’s business within a few years. Google generates approximately US$ 22 billion versus Microsoft's US$ 3.3 billion from online advertising.
Consumers and businesses increasingly are switching from desktop software like Microsoft's to free online services that do the same things. "We are absolutely committed to be the leading player in that endeavor," Ballmer told employees at a recent gathering.
Google dominates the market, taking in 77% of the revenues from search advertising where as Microsoft has 5% of U.S. search revenue, according to search marketing firm Efficient Frontier. Acquiring Yahoo would not have given Microsoft the revenue nor the search market share it is seeking for, as Yahoo's strength is in display advertising not search advertising.
Microsoft Seven Times Bigger Than Google In Display Ads Microsoft's share of the display advertising market is already about 7 times larger than Google's. Although the display market is smaller than search, it's expected to grow faster over the next few years because of a surge in video ads. Market research firm IDC figures that by 2012 the display market will double, to $15.1 billion; revenue from search will reach $17.6 billion.
Microsoft makes money in the display business in two ways. It sells ads on its own popular web sites, such as MSN and Hotmail, and it acts as a broker by placing ads on other companies' web sites and then splitting the revenue with them much like Google's Adsense Program. Smaller web sites use Microsoft because they don't have a salesforce to call on advertisers and ad agencies. And even large players like media giant Viacom have found that letting Microsoft sell some of the space on sites like Comedy Central and MTV can lead to higher revenues. "They can achieve better monetization than we can on our own," says Viacom CEO Phillipe Dauman.
It's All About Display Microsoft's new pitch is that, in display advertising, the company has the most sophisticated technology of any company. It can help advertisers precisely target display ads and assess the value of ads even when web surfers don't click on them. Microsoft is also making the case that search advertising, Google's gold mine, is overrated. Soon the company, it plans to introduce new ad technology that it says will demonstrate that to advertisers. "We're going to win with this strategy," said Keith Lorizio, Microsoft's advertising manager. More>
Google has filed a patent application for "Targeted Video Advertising" with the USPTO, for "a computer-implemented method of providing targeted video promotional material".
The process being patented includes transmitting a promotional item for display on a video terminal, monitoring a viewer's interactions with particular advertisements, such as skipping advertisements and presenting advertisements determined to be similar to those that the user has watched and less like those the user has skipped. The "Targeted Video Advertising" patent application suggests it may go into set-top boxes.
The patent also covers the following user behavior patterns:
1) "Users may be allowed to skip particular commercials, but required to watch or accept a set number of commercials in order to watch a program. The required number may be, for example, a set integer, such as 11 commercials."
2) "The system…may also require the user to fully watch at least four promotions before the program will continue."
3) "The profile includes some demographic information of the user, such as income, age, and gender. This information may be obtained when the user registers for the video service."
4) "A commercial with the interactive format is an advertisement that requires user interaction to be completed (e.g., a survey)."
Although one should maintain a healthy skepticism of the values given to many of the companies listed in Adnomics extensive review of Facebook applications, the site offers great insight into the Facebook development landscape as it shows how many users and how many installs for thousands of applications.
Top of the pile is Slide.com, the most successful widget builder for Facebook that started as a photo application with enormous exposure across Facebook. Slide has already enjoyed investment of about $75 million and a spectacular market valuation of over half a billion dollars, actually far more than the $322 million valuation given to them by Adnomics which appears based more on metrics than market forces.
Newspapers are in trouble, and things keep getting worse. With circulation dropping and currently at the same level as 1946 (!), papers sold per capita are at a fraction of former levels. The death spiral could become fairly dramatic since newspapers have a lot of fixed costs and many are already losing money. Unlike internet enterprises, papers cannot easily scale back expenses as advertising revenues flow online. This will likely lead to continued consolidation of local papers and probably will become a death knell for many others.
Adify, the white-label online ad network, has been acquired by Cox Enterprises, for about $300 million reports paidContent.org.
Adify is a self-service ad network for web sites interested in developing their own ad network. The service allows a publisher to negotiate ad rates, and to reject an advertiser if wanted, with Adify taking in about 20 percent of the revenues in. Clients include Guardian, Forbes.com, NBC WeatherPlus, Martha Stewart Living Omnimedia and others.
Adify had raised a total of $27 million in funding and made about $7 million in revenues in 2007.
Morgan Stanley has made available their Internet Trends report for 2008. The 72 page report covers: 1) Usage Patterns 2) Social Networking 3) Widgetization 4) Measureability 5) Monetization 6) Facebook Apps 7) Online Ad Spend 8) Online Video 9) Mobile Outlook 10) Emerging Trends 11) Recession Impact
Inside Facebook has pulled together an excellent post noting the claimed CPMs by several Facebook developers for their Facebook Applications.
Here are the numbers:
$0.60 CPM with Social Media
$1.50 CPM with VideoEgg
$0.27 CPM with Cubics, down from $0.43 earlier this month
$0.40 CPM with Cubics
$4.78 eCPM with Social Media [? This is so out of line with the others I think great skepticism is called for here]
$0.50 CPM each with AdSense, FB Exchange, Social Media, and RockYou (and by combining 2 units on a page is making $1.00 CPM)
$0.125 CPM with Lookery ($0.25 with 2 ads above the fold)
$0.10 CPM with Cubics, down from $0.43
$0.04 CPM with AdSense
Note especially that last very sad Adsense CPM of $0.04 That's four cents per *thousand* impressions, hardly something you'd want to write home to your angel funders about. Clearly few if anybody has found the recipe for great monetization of the social networking experience - that is unless you count the amazing ability of companies like Facebook and Ning to garner investment capital based on huge company valuations.
Another issue that is not yet well resolved is the simply enormous discrepancy between these sad CPMs and those that are charged to many advertisers. It's still common to see advertising rates of $30 CPM and even more for highly targeted websites. Clearly advertisers see a lot more value in targeting than simple numbers, and based on the limited data to date it does appear that social network advertising is conspicuously inferior to other forms of ads.
Yet are the targeted website CPMs of over 500 times what most of these Facebook developers are seeing sustainable for the long term?
The Valley is indeed a small place. On Sunday I was at Brian Solis's party where the who's who or the glitteratti of tech converged. I was speaking with Jean Sini, co-founder of Activeweave and as I started to ask him indepth questions about this company he became silent. I finally asked him "What would the exit strategy for Activeweave look like?", he responded "I am not even thinking about". Oddly enough I received an email from him yesterday and the next thing I know is that Activeweave is being acquired by BuzzLogic which is a social media software company.
Cyber Security sleuths Dan Kaminsky and Jason Larsen have found significant security vulnerabilities in some affiliations that large ISPs have with ad serving companies. The Washington Post reports on their recent findings:
ISPs like Earthlink, Qwest and Verizon have outsourced at least portions of their ad-serving technology to BareFruit, a London-based company that specializes in helping ISPs monetize wayward Web searches. The trouble is that until late this week, BareFruit's ad servers were vulnerable to what Kaminsky called a "trivial to find and exploit" vulnerability that would make it simple for fraudsters to trick users of those ISPs into visiting malicious Web sites that appear to be located at trusted sites.
More broadly this security issue raises questions about whether thoses with access to our online informaiton and online activity details are protecting us responsibly enough. The US Government, Google, Yahoo, MSN and others collect extensive details about search activity, email content, and more. Even the issue of who owns your data is not resolved to any reasonable degree. The value of this data increases as data mining and advertising targeting techniques improve so the online community is well advised to clarify many of these data ownership and data stewardship issues immediately, because the Pandora's box of personal information opens wider every day.
ad:tech is set to roll into town April 15-17. The conference will feature the heavy hitter in the digital ad industry and Digg's Kevin Rose is set to deliver one of the keynotes. This year's conference will focus on four core areas;
1) Performance Marketing 2) Emerging Platforms 3) Media and Branding 4) Exchange Series
I found the itinerary builder very interesting. It is a simple interface that incorporates AJAX that allows conference attendees to customize their itinerary, save it to their account and print it as well.
The conference will also feature an awards show recognizing the top 25 web properties in the various digital marketing categories. The awards show is sold out but you can still get an expo pass here.
Yahoo and AOL are in discussions to combine their web operations reports the WSJ. The move is aimed at thwarting Microsoft's bid to acquire Yahoo.
The terms being discussed between AOL would fold into Yahoo and make a cash investment in return for about 20% of the combined entity. The deal which does not include AOL's dial-up access business values AOL at about $10 billion. Yahoo would use the AOL cash investment and put up additional funds to buy back several billion dollars worth of its own stock at a price somewhere in the middle of the range between $30 and $40 a share reports the WSJ.
Yahoo said it plans to carry search advertising from Google as part of a test that could lead to a broader partnership reports the WSJ. The two-week trial, which will be limited to U.S. traffic and no more than 3% of Yahoo's Web search queries, is designed for the two sides to evaluate the revenue potential of a broader search ad outsourcing arrangement. Yahoo already had been in negotiations to outsource its Web-search advertising in Europe to Google since last year, say people familiar with the matter.
Citigroup Global Markets analyst Mark Mahaney estimates that Yahoo could boost its cash flow more than 25% annually by outsourcing all its search advertising to Google. Some investors have called for Yahoo to abandon its own search advertising system as a quick way to boost its revenue. Analysts predict that outsourcing its search ads to Google would boost Yahoo's cash flow, since Google's system generates significantly more revenue for each search query than Yahoo does. Under such an arrangement, Yahoo would likely garner a majority of the revenue and Google keep the rest as a commission.
In a press release, Yahoo said "the testing does not necessarily mean that Yahoo will join the AdSense for Search program or that any further commercial relationship with Google will result. " Yahoo CEO Jerry Yang has previously said "We believe having a principal position in both search and display advertising is critical to creating...long-term shareholder value".
In spite of the slowing economy, online retail sales is expected to rise 16.6% in 2008 to $204B in line with 2007 growth rate according to Forrester Research. Nearly all retail categories are expected to be beneficiaries but the biggest online beneficiaries are apparel which is expected to rise by $3.9 billion, or 17%, computers up $3.2 billion, or 15%, and autos up $2.5 billion, or 15%. Of course, although e-tailing is gaining in popularity, it still accounts for less than 5% of the overall retail market in the U.S. And, they are not necessarily new stores but sale transfers from bricks-and-mortar stores.
Forrester expects that retailers will focus their online marketing dollars in paid search and email where efficacy can be more easily tracked. The Forrester report estimates that the "average online retailer spends $300,000 annually to send 77 emails a year to each customer. That works out to an average cost of $7 per order". Search engine marketing costs about $0.50 per click which is about $8.47 per click in revenue.
On the consumer side, this is being attrubuted to the convenience of online shopping and high gas prices. For companies, the overall slowing economy is forcing companies to cutback and streamline their ad spend.
Web advertising stimulates off-line sales and in most cases, online campaigns increase sales more at advertisers’ retail cash registers than on their websites, according to a report by comScore.
The data was gathered by observing the behaviors and purchase patterns of over two million people that had installed comScore's tracking software on their PCs. The conclusion was that online advertising influences consumers' behavior
A study conducted for a retailer with more than $15 billion in annual revenues (most from their store) revealed that U.S. sales increased by 40% online and by 50% off-line among people exposed to an online search ads and display-ads.
The study also found that people tend to respond "with their wallets" more to search ads than to display ads. Search ads are text advertising that appear on search engines based on a search query and only appear after a user has searched for that term. They are generally more costly per impression than are display ads. The study concludes that using both types of ads in one campaign increases sales more than the two, added together, do in separate campaigns.
OpenX, the open-source ad server startup, has hired Tim Cadogan, Yahoo's senior vice president for search marketing as its CEO reports AllThingsD. OpenX gives web publishers an alternative to Google Adsense to monetize the traffic on their web site.
“With open-source software, there is a lot of potential for business disruption and to open up the market,” You have not really seen open-source models really applied to the ad space until now…but there is a big business in giving publishers a really robust offering and a platform where they can also share what they build.”
A European Commission advisory body on data protection has said that search engines should delete data held about their users within six months reports the BBC.
The proposed rule specifieds that "Search engine providers must delete or irreversibly anonymise personal data once they no longer serve the specified and legitimate purpose they were collected for."
Google and Yahoo anonymise user data after 18 months and MSN does the same after 13 months. The body said search companies were not "clear enough" on their data protection policy and the recommendation is likely to be accepted by the European Commission and could possibly lead to a clash with search companies. The recommendation could have broader implications such as getting user consent before serving them personalized advertisements.
Peter Fleischer, Google's global privacy counsel, said in a statement: "Google takes privacy incredibly seriously; protecting our users' privacy is at the heart of all our products. It is the reason we were the first company to commit to anonymising our search logs, and also why we dramatically shortened our preference cookie lifetime."
Search engines presently collect and store information every search query such as search term, IP address, browser type, time, and number of clicks. The search engines say this information it required to better serve the user. The advisory body said search engine providers had "insufficiently explained" why they were storing and processing personal data to their users and that personal data of users should not be stored or processed "beyond providing search results". The report also said search engines did not need to gather additional personal data, beyond the IP address of a machine being used, in order to deliver basic search results and advertisements.
The advisory body said, "Search engine providers mention many different purposes for the processing, it is not clear to what extent data are reprocessed for another purpose that is incompatible with the purpose for which they were originally collected". Thus search engines should not use personally identifiable data to improve their services or for accountancy purposes. Nor should personal data stored for security purposes be used to improve services and if search engines enriched personal data about users from third parties they could be breaking the law unless customers had given explicit consent. It said users should have the right to access, inspect and correct all the personal data about themselves held by search engines, including their profiles and search history.
The report issued a set of obligations to search engines firms, including:
Search engines should get informed consent from users if they correlate personal data across different services, such as desktop search
Search engine providers must delete or anonymise (in an irreversible and efficient way) personal data once they are no longer necessary for the purpose for which they were collected
Personal data should not be held by search engines for longer than six months
In case search engine providers retain personal data longer than six months, they must demonstrate comprehensively that it is strictly necessary for the service
It is not necessary to collect additional personal data from individual users in order to be able to perform the service of delivering search results and advertisements
If search engine providers use cookies, their lifetime should be no longer than demonstrably necessary
Search engine providers must give users clear and intelligible information about their identity and location and about the data they intend to collect store or transmit, as well as the purpose for which they are collected
Google announced plans to sell Performics, DoublClick's search marketing division, that helps marketers place ads on search engines.“It is clear to us that we do not want to be in the search engine marketing business. At Google, maintaining objectivity in both search and advertising is paramount to our mission and core to the trust we ask from our users.” wrote Tom Phillips, Director of DoubleClick Integration on the official Google blog.
Rajiv Parikh, CEO of Position2, a full service search marketing company said that the Performics sale was a good move on Google's part as it removes a significant competitive roadblock many in the industry had to compete with.
Ellen Siminoff, Chairwoman of Efficient Frontier, a search marketing software vendor said, "Google’s job is to get paid as much as possible for the ads that appear on its pages. If you are a search marketing agency, your goal is to get the most for your customers’ money.”
Google's newest employees learned on April fool's day that they would no longer have a job. The employess today were assured that it was not a joke but real. Vanity Fair reports that "DoubleClickers’ heads are rolling left and right. Hopefully, Google’s generous severance package—two months pay with an additional two months if you sign a non-compete agreement—will keep them from jumping out the window. Google’s suggestion? Take two months vacation and don’t even think about it. Or start looking now."
It is rumored that the entire DoubleClick finance department will be let go. DoubleClick’s U.S. workforce of about 1,500 will be reduced by 300. In a statement, the company said: “Since our acquisition of DoubleClick closed on March 11, we have been working to match and align DoubleClick employees in the U.S. with our organizational plan for the business. As with many mergers, this review has resulted in a reduction in headcount at the acquired company.”
Video search engine Blinkx is launching its own Internet TV service called BBTV. Viewers will be able to surf the web within full-screen video, as well as jump around using keyword search for specific dialog. This is was something Blinkx Founder & CTO, Suranga Chandratillake has hinted to me way back at one of the WebGuild events.
According to Blinkx the service harnesses their core speech recognition video transcription technology to offer searchability and clickable subtitles that point to web pages. This allows advertisements to be targeted to certain keywords in BBTV, similar to the text ad overlay used in video by their AdHoc ad network.
The service runs on a peer-to-peer network has signed up indie films from Dogwoof Pictures, Gateway Films and Playboy Networks.
Yahoo has launched a web site called Shine targeted at women between ages 25 and 54. The site brings together content from other smaller sections of Yahoo, with original content and syndication deals with the likes of Conde Nast, Hearst, Rodale, Time Inc and others. The content will be focused in nine specific categories: Fashion & Beauty, Food, Healthy Living, Work & Money, Love and Relationships, Parenting, At Home, Entertainment & Culture, and Astrology.
Yahoo reports 40 million women come to the their web site each month and Shine presents an opportunity to serve targeted content that is of interest to women and presents a lucrative opportunity for advertisers looking to connect with women.
Shine competes with site like of iVillage, Glam Media and Sugar Publishing among others.
While US social networks are waiting on advertisers to shifting their ad spending their way.Tencent, a Chinese internet portal which operates QQ.com is not banking on advertising. The company reported revenues of $523 million and an operating profit of $224 million. About 60% of the revenue came from services like games, virtual currency called QQ coin (which is fake currency paid for with real money), an additional 21% came from mobile services like ringtones and only 13% came from online advertising. QQ.com is reported to have over 300 million active accounts. Yes you heard that right. That is 8 times the size of Facebook or the same size as the US population.
Facebook on the other hand posted revenues of $150 million in revenue for 2007. The company has raised over $400 million and there is growing nervousness over its valuation and its ability to monetize its user base. Bebo, which was purchased by AOL for $850 million had revenues of just $5 million. MySpace purchased by News Corp. for $560 million is projected to haul in $1 billion this year.
US online social network ad spending is predicted to near $1.6 billion this year according to a survey by eMarketer. The figure includes all forms of advertising appearing on social network sites, including branded campaigns as well as search, video, local advertising and ads delivered via ad networks. According to the survey 29% planned to spend over $2 million, 11% planned to spend between $1 - $2 million, 26% planned to spend up to $1 million and 34% planned to spend less than $300,000.
Breakdown of Online Social Network Planned Marketing Spend by Marketers and Marketing Agencies - March 2008
Spending Amount Percentage $2,000,000 and over 29% $1,000,000 - $2,000,000 11% $300,000 - $999,999 26% $300,000 and less 34%
"At those amounts, social network spending may still be categorized as experimental for many marketers. As in many other developing advertising markets, much of the spending on social networks is driven by leading-edge marketers who are willing to take risks," said Debra Aho Williamson, senior analyst at eMarketer.
Earlier this week Daya Baran discussed the amazing difference in the online advertising strategies of the Clinton and Obama campaigns, with Obama spending one million dollars on Google advertising in February, Clinton a paltry $67,000
Today, Brian Stelter at the New York Times is noting another example of how "tuned in" the Obama campaign appears to be to social media. In the this article Stelter follows the success of a video posted online of an Obama speech that got marginal mainstream coverage, but was a huge online success as it was passed along, linked to, and viewed by millions of mostly young voters. He makes this important observation about the impact of social media:
In one sense, this social filter is simply a technological version of the oldest tool in politics: word of mouth. Although the internet has always been more about people than about technology, the new simplicity and ubiquity of social networking tools is allowing everybody to participate where in the fairly recent past only a relative handful of the technologically adept or adventurous dared to actively engage with others online. This flood of new online socializers has led to the launch of hundreds of companies - many of which are likely to fail, but some of which have already brought untold riches to the creators.
Obama's campaign immediately recognized and leveraged the power of the new media where it is not clear yet that the Clinton campaign really understands this social networking aspect of the political landscape. Perhaps Clinton thinks that because the demographic match is not as tight as with Obama's younger crowd their marketing money is better spent offline, but this decision to ignore the legions of voters who socialize online may come at a very high cost.
Comscore will soon release their report of Google advertising activity for February and Silicon Alley Insider says they already have the numbers that show Google with 515 million US paid clicks in February, up 3% year over year. Unfortunately for Google a gain of only 3% is not very impressive on the surface and is also somewhat misleading because we had 29 days in February this year, which means that ad clicks at Google were flat on a year to year comparison.
The market did not take this click report very well, and Google has fallen over 3% in after hours trading, though tomorrow's trades will tell the full tale of how this information will be incorporated into Google's share price which will open at about $444 tomorrow due to the after hours trading corrections to the close today at $458. This is not as low as the $412 Google has traded at recently but well off Google's 52 week high of $747.
Lacking from these reports however are the revenues obtained from these clicks. Better optimization can yield higher revenues from the same number of clicks, and major changes recently were implemented by Google, effectively elimating many ads that Google felt did not meet their new "quality scores" which reflected higher advertising standards. Thus it is possible that this new approach could actually lead to a "better than expected" revenue outcome for Q1 without more clicks. That said, if the advertising market as a whole is flattening out, Google will be very hard pressed to continue their amazing revenue growth. It is not clear if the current stock price on GOOG fully reflects the pessimism many analysts have expressed about online advertising in the next few years.
Barack Obama's campaign spent $1 million on Google for the month of February 2008 versus $67,000 for Hillary Clinton, according to filings with the Federal Election Commission.
Barack's also outspent Clinton on social networking sites and other web properties. Barack spent more on new media than Clinton who spent heavily on old media. Barack raised $45 million online in February versus $30 million for Clinton. Here is a break down of their media related expenditure for 2008 up to today from the best available public sources.
Spending Category Barack Obama Hillary Clinton Google $1,000,000 $67,000 Yahoo Web Ads $99,341 $9,186 Yahoo Search Ads $58,000 $0 Facebook $4,900 $0 Web Consultants $93,162 $0 Ad Consultant n/a $997,000 Media Consultant n/a $2,540,000
Google has finally figured out a way to pay for the YouTube acquisition. Video ads, have started appearing on Google's search results page according to a report from Digital Inspiration. Video ads from AT&T appeared on the Google search page for the keyword “phone” - the video clip remains hidden until you click the “Watch Commercial” link. You then get to see the video in a neat drop-down video player. Google is possibly charging higher rates for the video ads since it is served only on-demand when requested by the user. Though these video ads appear with other CPC ads on Google search results, the advertiser will pay when users click to see the video, even if they never click through to the advertiser’s site.
That is the billion dollar question being asked by ad executives everywhere according to a report by Ad Age. They are finally realizing that no one pays attention to online banner ads. Banner ads offer web publishers a means to monetize their traffic but the report questions how long it can last. Advertisers will realize that they are not getting the bang for their buck as they hoped and will find alternative ways to achieve their goals than banner ads. TechDirt suggests that Advertising Is Content and Content Is Advertising and offers the following recommendations for "brand" marketers who are starting to worry about the effectiveness of banner ads.
1. The captive audience is dead. There is no captive audience online. Everyone surfing the web has billions of choices on what they can be viewing, and they don't want to be viewing intrusive and annoying ads. They'll either ignore them, block them or go elsewhere. 2. Advertising is content. You can't think of ads as separate things any more. Without a captive audience, there's no such thing as "advertising" any more. It's just content. And it needs to be good/interesting/relevant content if you want to get anyone to pay attention to it. 3. Content is advertising. Might sound like a repeat of the point above, and in some ways it is -- but it's highlighting the flip side. Any content is advertising. It's advertising something. Techdirt content "advertises" our business even if you don't realize it. Every bit of content advertises something, whether on purpose or not. 4. Content needs to be useful/engaging/interesting. This simply ties all of that together. If you want anyone to pay attention to your content (which is advertising something, whether on purpose or not) it needs to be compelling and engaging.
In a move that may have a lot of significance in the online advertising industry ESPN has decided to shun lower priced and sometimes questionably relevant network advertising where the placements are created by algorithms that try to match remnant advertising space with advertisers and publishers.
ESPN appears to be reacting to concerns that running this type of ad may dilute their brand as well as support the "commoditization" of advertising, fearing that the huge pools of many advertisers getting matched with huge pools of publishers will result in much lower cost per ad for premium publishers like ESPN.
The online advertising industry that is the key driver of much of the power and change on the internet. For example about 97% of Google's total revenues are derived from online advertising with about 35-40% of that total coming from Google's revenue sharing relationships with other publishers.
ESPN is encouraging other premium publishers to join them in what amounts to an advertising power play where premium publishers may come to demand higher rates for advertising. Although this play may succeed temporarily in driving up ad rates for some sites, the success of Google's mathematically derived ad distribution network both for publishers and for advertisers is an indication of how computers may match up advertising better than humans.
The old and new worlds of online advertising are at odds. The old want to protect traditional, direct selling of premium content brands and the new want to move inventory via automated algorithms. This is making the traditional sellers nervous. Online ad networks aggregate inventory across thousands of smaller web sites and offer publishers an alternative to monetize their web sites. Sites like ESPN and others are starting to see networks as profiting on their brand investments, user data, threatening their relationships with marketers and think using networks devalues the power of content.
The sites like ESPN have cut ties with Specific Media and several other ad networks saying that ad selling that relies heavily on arbitrage and algorithms is not for them. "We're heading down a path where it no longer suits our business needs to work with ad networks," said Eric Johnson, Vice President, Multimedia Sales, ESPN.
Sources say that Turner's digital ad sales wing is rumored to be considering a similar move. "Turner, like a lot of media companies, is currently reviewing all of its media practices, and ad networks are certainly a part of that process," said Walker Jacobs, SVP of Turner Entertainment New Media Ad Sales.
"Not all inventory is created equal," said Peter Naylor, SVP, Digital Media Sales, NBC Universal. He said, iVillage's Horoscope section generates a lot of traffic but doesn't attract many endemic advertisers and thus has to use ad networks to monetize the traffic. More>>
Apple has a new Mac vs. PC ad on NYTimes.com doing a comparison of operating systems (Vista and Leopard).
From a technology stand point it's very cool and innovative - that shouldn't be surprising coming from Apple. The skyscraper on the right automatically plays a video when you land on the NY Times homepage. The "PC Guy" realizes that there's bad press on the Vista OS in the top banner so he does an "Emergency Banner Refresh" to update the ad (this is the cool and innovative part - the top banner and the side skyscraper banner are tied together and the top banner actually refreshes on queue to show a new ad).
Although it's a cool ad I think it's a little annoying and it's not inline with the whole "Web 2.0" movement of being integrated versus interruptive. I actually don't like when the ads play automatically. When I visit the NY Times website I'm there to get a news update. If the ad were related to what was on the page it wouldn't be as annoying - for example if I were reading an article about operating systems I would likely value what Mr. PC and Mr. Mac had to say but if I'm going to the site for an update about the elections its just distracting.
Now this is Apple and the cool factor lets them get away with more but I'm interested to find out how the general public reacts to this type of advertising.
Interesting comment by David Hallerman, senior analyst at eMarketer
"Several elements unique to the Internet will support continued US ad spending growth even if other media falter."
"The greater ability to measure ads online will likely encourage marketers with reduced budgets," Mr. Hallerman said. "Those same marketers are finding that the audiences they need to target are spending more of their media time on the Web."
Search will account for the largest portion of online ad spending in 2008, at 40%. That percentage will decrease slightly through 2012, when it will account for 37.3% of US online ad spending. Conversely, spending on rich media and video advertising is set to grow as a percentage of online ad spending, rising to 18.5% in 2012 from 10.2% in 2008.
Bear Stearns analyst Alexia Quadrani said US ad spending would increase 4% in 2008, up from an estimated 3.3% in 2007. Ms. Quadrani said that, despite fears about the economy, marketers still have reason to spend on advertising. "Many marketers face an extremely competitive landscape with products that aren't very different from those of rivals. They also have raised prices and need to advertise to get consumers to continue to buy their goods."
Yell has started to play against Google at its own game. Yell is an online advertising syndication which allows florists, caterers and funeral directors that use its online listings to extend their reach to other websites.
Yell will charge the small and medium-sized businesses an annual fee for the service. Partner sites will receive a share of the revenues, calculated on a pay-per-click basis just like Google Adsense. "If you think about Google, a lot of their traffic comes from other sites," says John Condron, chief executive. "This is nothing new."
Half-a-dozen partners, including the Manchester Evening News and Multimap, have tested the system, in which relevant listings appear in a Yell-branded "capsule" on their sites. Yell will be contextually or geographically relevant to their users.
eBay (EBAY) unveiled the eBay Partner Network, a new global affiliate program for publishers driving traffic to eBay. The affiliate network will be in-house, designed to more fully align the programs across eBay’s global properties and give affiliates expanded access to revenue opportunities across its platforms. Previous eBay's affiliate program was run by ValueClick (VCLK), whose shares a taking a big today. ValueClick in a full service integrated online marketing company.
“Affiliate partners are central to eBay’s ongoing strategy of improving the user experience and increasing engagement,” said Matt Ackley, vice president of Internet marketing at eBay. “The new eBay Partner Network will allow us to have a direct relationship with our affiliates, innovate faster and deliver new products and tools in a more timely and efficient manner, providing new revenue opportunities for our affiliates and creating a more streamlined user experience for our buyers and sellers.”
Google's adwords and adsense pay per click juggernauts appear to be sucking the life out of old media says stock watcher Henry Blodget, author of the Silicon Alley Insider technology stock blog.
Blodget noted that online advertising is flowing online at a "frantic" rate, and Google captured twice as much of the new revenue as its closest three competitors combined.
Where offline advertising increased by about a billion from 2006 to 2007, online ad spending increased 4 billion with Google scooping up a whopping $2.7 billion of that $4 billion increased spend. As Blodget notes about a third of Google's revenues are from its relationships with publishers who use Adsense to run Google ads on their own properties, so some of that 2.7 billion is shared with the tens of thousands of large and small publishers in Google's advertising stable.
Google's powerful dominance in the online advertising space will be enhanced with the DoubleClick acquistion, although it remains to be seen if Google can monetize display advertising as successfully as it has monetized per click advertising -in many ways revolutionizing the industry with the success of the pay per click model. Ironically Google was not the inventor of this pay per click model that is rapidly making Google the most successful technology company in history.
Most credit the invention of the pay per click ad to Bill Gross and his startup GoTo.com which was soon renamed to Overture.com in a Disney trademark dispute and then Overture was acquired by Yahoo.
U.S. District Judge Louis Stanton denied Viacom's (VIAb) request to amend its complaint against Google to add a claim for punitive damages. The judge said that common law punitive damages cannot be recovered under the Copyright Act.
Viacom has files a $1 billion frivolous lawsuit against Google's YouTube which is an online video sharing service. Eric Schmidt has previously said that, "Viacom is a company built on lawsuits ... look at their history". Schmidt also pointed to the fact that Viacom was currently being run by a former general counsel of the company, Philippe Dauman. The company founder has gone on record saying "We have engaged in a lot of litigation at Viacom, of which I have been a primary mover."
Litigation has become the cornerstone of Viacom's business model. Viacom is getting squeezed by content producers and distributors. The traditional distrubtion channel for Viacom's product is shrinking. Users' are moving to more targeted and personalized mediums on the internet eg. YouTube. Technology has lowered the cost of production of content and there is more choice that ever and more competition for eyeballs. Viacom's is still operating under an old production and distribution structure which is bleeding the company. So the easiest thing to do is to blank others for your problems. Frankly, Viacom should be happy that users' are keeping its products alive by putting it on YouTube and introducing it to new audiences, who might end up watching it on TV thanks to YouTube.
I met with AOL's (TWX) EVP Curt Viebranz not long ago and now I learn that he is fired. He was appointed the new President of Platform A four weeks ago. Platform A in an umbrella group under which AOL's advertising properties are organized. Curt was previously President of TACODA, a behavioral targeting ad network. Here is a list of their advertising acquisitions to date:
* Feb 2008, Buy.At, online affiliate marketing network * Feb 2008, Goowy, widget creator * July 2007, TACODA, behavioral targeting ad network * May 2007, ADTECH AG, ad-serving and e-mail marketing network * May 2007, Third Screen Media, mobile ad serving * May 2006, LightningCast, streaming video/audio ad serving * June 2004, Advertising.com, direct-response network
We have been told that Curt was fired by AOL's COO, Ron Grant, because Ron wanted Curt to commit to revenue growth that Curt did not believe was possible given the rapid deterioration of AOL's owned-and-operated properties. We have been told that Curt told Ron he could not deliver Ron's numbers, and Ron sacked him.
We have also been told that the initial Platform A concept was poorly defined and that Curt was essentially destined to fail. Lastly--in contrast to the assertion above--we have been told that Curt was not fired because of revenue targets but because Ron had lost faith in his ability to rapidly and smoothly integrate multiple companies into Platform A (Translation: In Ron's eyes, Curt was incompetent).
Our understanding is that Curt is and was well-respected within Time Warner and is considered a strong executive. One source believes the numbers Ron wants to achieve are very aggressive--accounting neither for the deteriorating economy nor the decline in value of AOL's general portal advertising inventory. The source says revenue at AOL's owned-and-operated properties (a.k.a., the portal) is falling off a cliff, and that the relatively small revenue at Platform A cannot offset this.
Compete.com's report on Top Social Networking Sites for February 2008 shows Fubar.com was the fastest growning social networking site. The site has grown 3,272,217% in 12 months. As a result of this report the site is getting tremendous publicity and the founders/operators are knocking on the doors of venture capitalists using the Compete report and others as validation.
Fubar.com launched as Lostcherry.com in 2006. The site ramped up to about 200,000 users by October and then changed the name to Cherrytap.com. After changing the name to Cherrytap.com the company embarked on a public relations campaign promoting Cherrytap.com as a new site that grew from zero to 200,000 users instantly.
Later, Cherrytap.com changed its name to Fubar.com. Fubar’s founder/operators have again embarked on a campaign promoting the site to venture capitalists and PR agencies saying Fubar.com is a new site that has grown from zero to 200,000 users.
Hopefully no VC will put money into this and tell us that it is the next MySpace killer. Facebook was touted as a MySpace killer after Benchmark poured money into the company. Eventually they discovered that they would need a ton more money to compete with MySpace. Then it was spun in such a way that Microsoft fell for it and invested $240M last year. See: Ballmer - Facebook Not A Mistake
Thanks to a WebGuild member Val D'Souza, CEO, PictureTrail for pointing this out.
AOL plans to launch up to 30 web sites to appeal to a larger audience and attract more advertisers. The plan is launch the sites by the end of 2008 in order to increase its online advertising presence.
Last year, AOL introduced 20 to 30 sites new sites such as "Asylum,'' a men's lifestyle site, and music site "Spinner'' to go after niche interests within broader categories. , said Bill Wilson, executive vice president of programming. He declined to say what kinds of AOL is planning to start this year.
In 2007, as AOL shifted its focus to ad sales to make up for declines in the internet dial-up business, leading to a 32% drop in AOL's fourth-quarter revenue.
The chart shows billings for Avenue A | Razorfish from 2004 - 2007. Community and entertainment verticals experienced very strong growth. I can only conclude that the money is going to social networking, video sharing, photo sharing and other new media sites.
Category 2004 2007Change Community $10,951,355 $55,017,416 502% Entertainment $10,987,200 $51,584,513 469% Business $ 2,433,608 $14,194,838 583%
TNS, a world leader in market information and insight, announced that it has agreed to acquire Compete.com for a total of US$150 million. An initial cash payment of US$75 million will be made upon closing and the remainder will be payable upon performance targets being met over several years.
Compete.com provides online traffic metrics about web sites very much like Alexa.com, comScore and Hitwise - which was acquired last year by Experian for US$240 million.
Compete conducts continuous analysis of internet clickstream data from close to 2 million people received from its own panel and from internet service providers. They uses proprietary data methodologies to normalise this data, making it representative of the entire US online market place. This information is used to measure how consumers consider, engage with and buy a client’s products or services online, relative to those of its competition. This ability to analyse online behaviour before a purchase is made enables Compete to advise clients on how to target online communications to individual consumers, to influence both their online and offline purchasing behaviour. It specialises in the telecoms, media, automotive, travel, financial services and online search.
As internet usage and e-retailing increases, clickstream data is expected to become a significant information source around which market research and analysis is based. Recent estimates suggest that the US market in which Compete operates will grow from $325 million in 2007 to $500 million in 2009.
Compete.com won the award for the "Best Content Search Engine" at Searchnomics 2007.
Bill Gates will today announce the launch of Search Server 2008 to rival Google's Search Appliance. The software allows users to search files and documents inside their corporate network. However unlikely the expensive Google Appliance which is a box with software, Microsoft will offer the service as a free software download. Yes, you heard that right! No hardware, no packaged software. It will be a web offering featuring online administration, reporting and provisioning features.
Essentially, Microsoft is beating Google at it own game with this web offering. Today's announcement targets Google's weak spot - Enterprise. It is also interesting to note that for the Search Server Microsoft's has adopted Google's traditional sales model, that does not require customers to buy expensive hardware, lock-ins and Google has adopted Microsoft's style tactics with the Google Appliance.
All Paths Lead To Search Couple of weeks ago Microsoft announced the purchase of FAST Search, an enterprise search specialist. The thinking is that if customers start using Microsoft's search products on their network they might start using Microsoft's internet search and advertising products.
Last week, Google announced a web site publishing tool called Google Sites for enterprise users to set up and run their team collaboration similar to SharePoint, which allows workers to share documents and plan projects on secure web sites.
If Microsoft gets traction on the enterprise side and that translates to search traffic on Live.com and ad dollars on adCenter. Then Microsoft would have made inroads into Google's lucrative advertising empire. Google will not sit on the side lines either. Operation Google has begun - the search war is under way.
Glam Media and Adconion Media plan to announce today the completion of new funding reports the Wall Street Journal. Investors have been pouring money into online ad networks that sell ads that appear on third party web sites as advertisers are looking for ways to reach target audiences.
Glam, based in Brisbane, Calif., has raised $65 million from investors to date. Glam plans to use the funding to expand its international operations and network of partner sites and to acquire other sites and advertising technology. The company is targeting revenue of $100 million this year and it is estimated to be valued at around $500 million, say sources. Glam displays ads own its own sites and on the web sites that are part of its ad network. The ads are targeted at women on topics such as style, entertainment and fashion. It also sells ads on more than 450 partner sites such as stylebakery.com and Premiere.com. According to comScore Glam reached 25 million U.S. users in January.
"Display advertising is a good area for investment because it's outpacing all other forms of traditional television and print ads as well as other areas of digital advertising in growth rates," says Samir Arora, Glam's chairman and chief executive.
Adconion, a U.K. based online ad network plans to announce that it has closed an $80 million investment. Adconion plans to use 25% of its new funding to expand its U.S. operations, 50% to invest in new technology and the rest for acquisitions. Founded in 2004, Adconion works with ad agencies and advertisers to sell ads that appear on about 350 Web publishers' sites, including the Drudge Report, Sony's video site Crackle, and Demand Media. According to comScore, the network of web sites where Adconion brokers ads reached 98.74 million unique U.S. visitors in January, or 53.4% of the U.S. Internet audience.
According to Click Forensics, click fraud rates for content networks grew to 28.3% in Q4 2007. In other words 28 cents from every dollar went to fraud. What this report is saying is 28.3% of (PPC) providers and publishers revenue/profits are attributed to fraud. I found it disturbing that the rate was so high and if concerned that advertisers could use the information to take legal action against pay-per-click (PPC) providers and publishers to reclaim their ad spend. So I set out to clarify it.
I asked Click Forensics CEO Tom Cuthbert if he could provide me more information about the sample and ad spend size. A company spokesman responded "Our data is derived from a statistically significant sample of live PPC campaigns from the 4,000 advertisers, agencies publishers. We do not share data on the spend size. However, our advertisers include top ten financial services, retail and travel companies as well as smaller businesses. It is representative of the search advertising industry as a whole and crosses multiple search engines and publisher networks."
"In 2007 we saw a significant jump in the industry average click fraud rate when compared with the average rate for 2006," said Tom Cuthbert, president and CEO of Click Forensics. "As the FBI and USAToday have reported, fraudsters are using more sophisticated means to perpetrate click fraud, including infiltrating mom-and-pop e-commerce sites. As a result it's more important than ever before for advertisers, publishers, ad networks and search engines to cooperate and share data in order to stem what's on target to be an even worse problem in 2008."
Some of key findings from the report include:
The overall industry average click fraud rate rose to 16.6 percent for Q4 2007. That's up from the 14.2 percent click fraud rate for the same quarter in 2006 and 16.2 percent for Q3 2007.
The average click fraud rate of PPC advertisements appearing on search engine content networks, including Google AdSense and the Yahoo Publisher Network, was 28.3 percent in Q4 2007. That’s up from the 19.2 percent average click fraud rate for the same quarter in 2006 and 28.1 percent for Q3 2007.
The 2007 industry average click fraud rate grew by 15 percent over the industry average click fraud rate for 2006.
Q4 2007 click fraud traffic from botnets was 15 percent higher than click fraud traffic from botnets in Q3 2007.
In Q4 2007, the greatest percentage of click fraud originating from countries outside North America came from India (4.3 percent) Germany (3.9 percent) and South Korea (3.7 percent).
Microsoft's bid for Yahoo is all about online advertising. Steve Ballmer, Microsoft's CEO has said that in a few years online advertising will account for as much as 25% of Microsoft's revenue. Ballmer is hoping that acquiring Yahoo will help Microsoft catch up to Google. However, acquiring Yahoo will not give Microsoft the revenue nor the search market share it is seeking for, as Yahoo's strength is in display advertising not search advertising.
Microsoft Seven Times Bigger Than Google Microsoft's share of the display advertising market is already about 7 times larger than Google's. Yet, Microsoft's online business racked up a loss of $248 million during the quarter ending in December 2007. Microsoft and Yahoo combined will have a market share of about 25% versus Google's 1%.
Where The Money Is Google accounted for 65.98% of U.S. searches, while Yahoo and Microsoft combined accounted for 27.84% of U.S. searches in January 2008. It is search advertising that is propelling Google. The revenue that Microsoft is seeking is in search advertising not in display advertising which the Yahoo purchase brings.
Focus On Search Microsoft should be looking to really acquire Yahoo's search and related advertising business as that is where the growth is. Display is experience some softness in pricing as more and more and networks spring up daily targeting niche verticals. However, in the long run Microsoft should benefit for Yahoo technologies and properties that are strong in display as that is where users will be hanging out. Further Microsoft's relationships with Facebook and Digg should add to this. Hence that is why Google is busy working on applications and initiatives such as Open Social that will keep users hooked on Google.
AOL’s continues to build out advertising unit announcing two more purchases recently. Its advertising unit beat expectations when earnings were reported while operating income for its subscriber unit dropped 70% due to the sale of its internet access business in Great Britain and France.
Last week Time Warner's new CEO Jeff Bewkes, announced the company is looking at possibly shedding the traditional dial-up business, the company's cable unit and possibly spinning off its advertising business.
The company is organizing all their advertising divisions into a single unit to better compete with Google, Microsoft, Yahoo and ad networks such as Facebook and MySpace. The former CEO of TACODA, Curt Viebranz, will head the division. Here is a list of their advertising acquisitions to date:
* Feb 2008, Buy.At, online affiliate marketing network * Feb 2008, Goowy, widget creator * July 2007, TACODA, behavioral targeting ad network * May 2007, ADTECH AG, ad-serving and e-mail marketing network * May 2007, Third Screen Media, mobile ad serving * May 2006, LightningCast, streaming video/audio ad serving * June 2004, Advertising.com, direct-response network Potential suitors for the dial-up unit could be AT&T and Comcast for the cable business which includes TNT, TBS and others. No ideas what happens to CNN. Possibly it gets folded into its new advertising unit as a publisher.Bewkes, said that Microsoft’s Yahoo bid “demonstrates the value” of AOL, since Yahoo is a competitor of AOL.
Here are the Top 10 online advertisers for January 2008. Estimated spending reflects CPM-based advertising online, and excludes search-based advertising, paid fee services, performance-based campaigns, sponsorships, barters, partnership advertising, advertorials, promotions and email. Impressions reported exclude house ads, which are ads that run on an advertiser’s own or related property, and co-branding relationships. Data supplied by Nielsen Online AdRelevance and chart by Marketingcharts.
Here is the latest online ad spending breakdown, by industry, as of January of 2008 from Nielsen Online AdRelevance. This chart does not include paid or performance based advertising.
Google's share of the U.S. online advertising market dropped to 23.7% from 24.2% in the third quarter reports IDC.
Online advertising is made up of primarily display and paid. Google still maintains a dominant position in paid advertising. However, display advertising is experiencing tremendous growth as brand advertisers are shifting their ad spend from traditional media to the web because that's where the audience is.
That is why Google is busy releasing applications and services daily, partnering and acquiring properties that engage audiences so that they can get a bigger share of the display ad dollars.
Yahoo is acquiring Maven Networks for US$160 million. Maven, is an online video ad insertion company. Their clients include Fox News, CBS Sports, Hearst, The Financial Times and Gannett.
Maven’s technology identifies the right moment during a video to show a specific ad. Yahoo will integrate the technology in video as clickable ads, interactive ads and short clips. According to Yahoo these formats have proved far more effective than preroll ads, which are ads that appear before the content the viewer is trying to see.
“We really see this deal with Maven as creating one of the most robust video platforms in the industry,” said Hilary Schneider, an executive vice president who oversees Yahoo’s network of advertisers and publishers.
Online advertising accounted for about $US775 million of the US$20 billion spent on online advertising in the United States in 2007 reports eMarketer.
The Russian online advertising market doubled again in 2007 to US$369 million and is expected to reach $685 million in 2008.
Search and contextual advertising accounted for US$210 million or 57% of total spending while display (banner) advertising spending was US$159 million or 43%.
The combined revenues of two largest Russian internet companies Yandex and Rambler is expected to reach US$232 million in 2007, or 63% of the Russian internet advertising market. It’s estimated that Google earned US$10 million in Russia in 2007 that is less than 3% of the total advertising market and about 5% of contextual advertising market.
Top online advertisers comprised the following industries: 1) mobile communications - Beeline, Megafon, MTS 2) automotive - Nissan, Toyota, Peugeot, Volvo 3) mobile phones - Nokia 4) consumer goods - Wrigley, P&G 5) technology - Intel, IBM, Microsoft 6) telecommunications - Comstar 7) retail - Eldorado, M-Video, Evroset, Technosila 8) financial services - Citibank, Maxwell
In display advertising spending automotive accounted for 25% of the total spending, consumer good companies 18%, telecommunications and financial services companies 11%.
Andy Beal recently wrote that Google's stock is far from the $2000 a share predicted by Henry Blodget publisher of InternetOutsider. After missing analyst estimates and the announcement of the Microsoft - Yahoo takeover (predicted here), Google's shares (GOOG) have been hit very hard. Larry Page, Sergey Brin, Eric Schmidt and Ram Shriram who own majority of the Class B shares (which control the company) have seen the fortunes drop by US$16 Billion collectively. The Microsoft Yahoo overture shows Google's vulnerability. Over 90% of the company's revenue comes from search advertising. If I ran Google, I would have used the high share value as cheap currency to make acquisitions of web products, tools and services companies that litter Silicon Valley to transition to a provider of multiple web offerings and reduce the dependence on a single revenue stream. Google's market value has dropped US$70 Billion from it's peak - that is a lot of acquisitions.
Google's fourth quarter earnings missed Wall Street estimates, sending the stock crashing after hours.
According to Thomson Financial, Google's fourth quarter revenue came in at $4.83 billion, which was up 51% from a year ago. After advertising sales costs revenue came in at $3.39 billion, below the $3.45 billion analysts had expected.
"We're very pleased with our performance this quarter," said Eric Schmidt, CEO of Google. "It reflects strong momentum in our core business, growing receptivity to our new business initiatives, and improved discipline in managing our operating expenses."
Google's closest rival Yahoo! also disappointed Wall Street when fourth quarter net income fell 23% from a year ago. Microsoft a laggard in the space is gaining some traction with users and this might give a lift to their search advertising unit adCenter. Which in turn would increase the pressure on keyword pricing which will ultimately affect the earnings outlook for Google and Yahoo!
Marketers are still trying to apply old rules to the new game. Thinking online video ads can be approached like TV ads is a mistake. In fact, a recent study noted that half of all respondents stopped watching online videos once they encountered in-stream advertisements (I know I would have done the same). Expecting viewers to sit through a 15-30 second commercial before getting to the actual content is not realistic in the online world. Heck, people don't even like watching commercials on TV and thanks to DVRs 53% of people don’t have to.
As with everything 2.0 there are some marketers that do this better than others -- those who are experimenting with using just a corner of the screen or placing the ads in separate screens all together are headed in the right direction. I think that there is a place for online video advertisements but we need stop thinking it's just a new kind of TV and come to the boardroom with a fresh new approach. The focus needs to be about making the ads relevant and non-disruptive.
Ok, we know that Twitter has been revolutionary and its growth has been exponential like a dream Web 2.0 app with its unique idea of restricting message length and centering them around the question "What are you doing?". Also, now that they have a nicely working (though sometimes a bit shaky) platform with useful third party apps, I am sure they are looking at some way to monetize it. But how do you monetize it? For instance, putting up advertisments in their empty space on the right is an option. However, to this straightforward approach therein lies a problem, as I noted before too. People on a Twitter page would be looking for info on what their friends are doing and not interested in related content that is ads. So, even though simple ads would work, they won't be too profitable. To think about this problem, we need to consider that what are the assets of Twitter. The assets, of value, presently is the technology or their platform and users who are using it. So, monetizing that has to be done using these assets.
Users send and receive twits via mobile phones or the Twitter interface. So, it would be a good idea to send like every 10th-20th, some nth twit a targeted advertisment. Users can receive them as SMS on their mobiles. These advertisments would be contextual or targeted i.e. based on twits that are generated by that particular user. In essence, it is similar to how Facebook has placed advertisments in feeds of friends that each user receives. These ads are where twitter sends ads to users. There can, however, be a similar model where advertisers are treated as users. Then, behind the screen, users interested in a particular area will be made follower of these advertisers thus receiving twits from them. Another similar model is where advertisers are charged in the order of, for instance $5, for sending a message to some thousand users. Note that here all that is proposed is sending advertising twits to users.
Another way is that they offer their technology to businesses which have a need for sending messages. For instance, providing the infrastructure when businesses and companies need to send updates like appointments over a secure channel. Or pages like Companies'/Bands' blogs where updates about their products/services are put up and people can follow them. That is, charging for micro-blogs. Now, as posted here, Evan Williams, Twitter founder says:
"Two more-straightforward ideas:1) Ads on the site. We have a little AdSense on there now, but we haven't really tried. As the traffic grows, some tasteful sponsorships might be sellable. 2) Charging companies who are using it for marketing or other commercial purposes. If an organization finds Twitter to be a valuable communication tool with their customers/constituents/etc -- especially if we're sending lots of SMS's for them, which cost us money -- it seems viable to make an offering around that."
People are thinking about viable and effective advertising models for Web 2.0 websites/social services. The same problem is faced by Facebook and it would be interesting to see which generic approach succeeds.
Last year when I met Terry Semel, Yahoo’s CEO, and asked him if a Yahoo takeover by Microsoft was inevitable, he looked at me as if he had swallowed a frog. This week at CES, Joe Hunkins asked David Filo, Yahoo’s co-Founder, the same question and if he had met with Bill Gates, Microsoft’s Chairman & Founder, to which Filo responded he had not. However, the evidence seems to be mounting to the contrary and rumor mills are gathering speed. Is this all baseless? Let's examine.
Microsoft, which is a distant third in the search market has outwardly stated that it has ambitions to be the leader in the domain. According to the latest Hitwise report of U.S. Searches (Dec 2007), Google continues to dominant with a 65.98% share, Yahoo follows with 20.88%, and Microsoft lags behind with 7.04%.
Microsoft’s Reality There is simply no way Microsoft can close this gap organically. Hence, Microsoft has been coming at it from all angles such as the Facebook investment, which I thought a mistake (this week Bruce Jaffe, Chief Acquisition Officer, Microsoft left the company), the acquisition of Fast Search & Transfer this week and aQuantive earlier this year. The company was so eager to respond to Google’s foray into text to speech service 1-800-GOOG-411 that they spent a US$1 Billion to purchase Tellme. Tellme is a really a call center automation service not a text to speech service based on a web crawl as 1-800-GOOG-411.
The bottom line is Microsoft needs a major boost in search traffic to flow through its search property LIVE.com to challenge Google’s lead. The quickest and only way to achieve this would be an outright acquisition of Yahoo. This would give Microsoft 28% of the U.S. search market share, which is still less than 50% of Google’s U.S. search market share, but sufficient enoughto be considered a formidable competitor.
Yahoo!’s Reality Yahoo shares are trading near 52-week lows, giving it a market capitalization of approximately $31 Billion. However, this does not include the value of Yahoo’s investments such as Yahoo Japan, Alibaba.com and Alibaba Group. According to Valleywag, Yahoo Japan, of which Yahoo owns a third, is worth $25 Billion, putting Yahoo's stake in it at nearly $9 Billion. Alibaba.com, a Chinese e-commerce company in which Yahoo directly owns a 10% stake, is worth approximately $17 Billion, putting Yahoo's stake at about $1.7 Billion. Yahoo also own a 40% stake in Alibaba.com's parent company, Alibaba Group, which runs Yahoo China, which has an estimated of $8 Billion and $16 Billion. Yahoo has other investments like G-Market.
Based on the above calculation the combined value of Yahoo’s investments add up to over US$15 Billion. The current valuation of Yahoo based on the Nasdaq listing does not fully reflect Yahoo’s investments, which if realized would give Yahoo a valuation upwards of US$45 Billion.
Right Timing Microsoft would be wise to take a run at Yahoo at the current valuation, acquire the traffic to fuel Microsoft’s search and advertising properties, become a formidable competitor to Google and possibly make realize a 50% return on its investment just by unearthing the full value of Yahoo’s investments.
The New Yorker has a great but lengthy article on Google's expanding lobbying efforts in Washington, D.C. and why it has become a necessity. According to Alan Davidson, Google’s senior policy counsel, “The political brand was very weak. Because we were not here to define it, it was being defined by our enemies.” He paused a moment, and added, “ ‘Enemy’ is a strong word. It was being defined by our competitors.” More >>
In December 2005, Google invested $1 Billion for 5% of AOL as part of a search and advertising partnership. The terms also gave Google the right to force Time Warner, parent of AOL, to conduct an AOL IPO or buy AOL's stake back at "fair market value" as of July 1, 2008.
Beginning on July 1, 2008, we will have certain rights to require HoldCo to register the HoldCo interests held by us for sale in a public offering. If we exercise this right, Time Warner will have the right to purchase our interests for cash or shares of Time Warner stock based on an appraised fair market value of our equity interest in HoldCo in lieu of conducting an initial public offering.
At the time of the investment, AOL was valued at $20 billion. Industry sources estimate AOL’s valuation to be approximately $10-$15 billion today (same as Facebook’s paper value). If that is correct, it represents a realized loss of $500 million for Google on its investment.
However, Google is probably in no hurry to dispose of the investment, especially when Google's search deal with AOL is still generating revenue. I would assume by July 2008, sufficient cash would have flowed through to Google to make up for the paper loss. More importantly the deal has enabled Google to lock up valuable search and search ad market share on a huge property. What is that worth? We all know what Microsoft paid Facebook for a taste of that.
It also puts Google is a position of strength when it comes to renegotiating the deal if the current valuation holds. I would also assume that Time Warner would be happy to sell more of AOL to Google because it puts more money in their coffers.
An AOL break-up or IPO would be likely if Google wanted to sell its stake – which does not make sense because it puts a large chunk of search and search ads market share up for grabs. However, a senior officer of AOL told me that some layoffs are still pending and that many AOL employees are praying for an IPO so that they can start feeling Googley.
The champagne is flowing at Google on news that the Google DoubleClick acquisition has been cleared by the FCC.
Others were howling and praying, proclaiming the end of the world was nearing and hoping that the EU would see it differently.
Google is the leader in online text based advertising and the DoubleClick purchase would help it get a foot hold in display adverting. Online ad spending is projected to reach $21.4 billion this year, according to research group eMarketer, surpassing the $20.5 billion radio advertising market for the first time. EMarketer expects online ad spending to nearly double to $42 billion in 2011.
Microsoft will start delivering contextual ads, which are based on what the user is viewing, for CNBC.com later this month. Microsoft has struck similar advertising syndication deals with Digg, a site that lets readers recommend articles to others, and social networking site Facebook.
Microsoft AdCenter will handle the text-based ads and display ads will be handled by a combination of aQuantive. CNBC will manage multi-media sales in-house, some of which span the broadcast and web properties.
CNBC.com draws 2.6 million visitors a month, many of whom, according to Microsoft, represent a "high-quality" audience that advertisers are eager to reach.
Securing advertising syndication deals allows Microsoft to offer advertisers a wider pool of internet sites for ad delivery. It is part of Microsoft's push to gain ground on Google and Yahoo in the $40 billion market for Web advertising.
If you have been following the news recently, you would have caught the outcry from Facebook users and MoveOn.org regarding Facebook's integration of users actions onto third party sites via a news feed. However, they made some changes which turned out to not be enough. Another incident is the protests which arose against Gmail for using the content of users' emails to target ads. Users felt that their emails were no longer private as they should have been. These examples are just some specific cases of conflict that we may see again in future - that of targeted advertisements versus privacy.
Targeted advertisements and personalized services are not just fads; they will be a part of the future. This is because if we take the example of targeting, it benefits each party involved. Targeted advertising is more profitable for advertisers. Publishers can offer richer advertising based services; and for users, ads will mean sometimes useful information that they get with services instead of unwanted intrusions that they are presently. The aim of personalization is to make advertisements useful for consumers. However, the recent protests against these moves are simply because of the fact that user's information is being used for targeting and personalization but without the consent of those users. Facebook's beacon did not ask users whether they would like to opt in; they could opt out, but by default, Facebook had the right to use the information about all users' activities. This assumption by companies like Facebook, that they could use information regarding users' activities without asking their consent is what has led to the protest. What companies need to realize is that they need to respect user's privacy. Or in other words, what we need is a mechanism which gives users complete control over how and by whom information about them is used. One such effort is Vendor Relationship Management or VRM.
As the name suggests, this project aims to give some power to users in handling their transactions with businesses. Presently, through CRM, the responsibility is in the hands of vendors to manage their relationship with consumers. But since the web has enabled an easy connection between companies and users and it is on users to handle their own information, VRM may soon turn out to be quite a viable model. As written on home page of VRM project: "The goal of VRM is to improve the relationship between Demand and Supply by providing new and better ways for the former to relate to the latter. In a larger sense, VRM immodestly intends to improve markets and their mechanisms by equipping customers to be independent leaders and not just captive followers in their relationships with vendors and other parties on the supply side of the marketplace."
What VRM or a VRM-like approach will offer is firstly, an identity to users; and secondly, control over their personal information. This idea is presently in the conceptualization phase and much work needs to be done here and it also presents an entrepreneurial opportunity. What I can think of is a platform where service providers can target consumers according to information they choose to make public and where consumers can also search for providers which are offering solutions to the problems they are facing. Such a platform will make it easier for consumers and service providers to connect with each other in a mutually beneficial way rather then using the present method of intrusive advertising.
Microsoft unveiled new tools and an accreditation program to help advertisers improve the quality of their search advertising campaigns and help optimize web sites for Live Search.
1) adCenter which is similar to Google Adwords now has a Add-in for Excel 2007. It will enable adCenter customers to easily research keywords to help them reach and capture the right audience with their paid search advertising campaigns. Users of the adCenter can now rapidly build keyword lists and plan keyword strategy based on a variety of attributes including relevance, historical cost information and projected volume, and manipulate the data in the easy-to-use Excel format. The tool will help advertisers quickly understand keyword popularity and trends and gain valuable insight about demographic and localization information of actual queries.
"The adCenter Add-in for Excel raises the bar for search- and data-driven marketing tools. The ease of use with Excel and vast amount of keyword data are all extremely valuable for the online marketer," said Jeffrey Pruitt, executive vice president of Corporate Partnerships at iCrossing. "This product helps unlock the true power of search data, providing access to more data than any other engine, enabling increased understanding of consumer behavior and intent. Within minutes of using this tool, a savvy marketer will be able to discover new information to help drive more successful, consumer-driven campaign strategies."
Data accessible via the adCenter Add-in comes from Microsoft's Keyword Services Platform (KSP), a revolutionary set of Web service application programming interfaces related to keyword technologies, including keyword recommendation, forecasting, categorization and monetization. The adCenter Add-in, which will be available Jan. 8, 2008, provides easy access to the tremendous amount of data available through the KSP and is the latest technology from Microsoft adCenter Labs to be fully integrated into adCenter following customer trial and feedback.
2) Webmaster Center is a portal specifically designed for webmasters and search engine optimizers. It provides all the necessary resources to optimize a Web site for achieving the highest possible algorithmic or "organic" listing on Live Search. This includes information about how Live Search crawls and indexes site pages; site map creation and submission; statistics about Web sites currently indexed by Live Search; consolidated content submission guidelines; and new content and community resources.
3) adExcellence program provides agencies and advertisers with the opportunity to become certified adCenter experts similar to the Google Adwords Certification. The program offers more than 20 free training modules and a fee-based examination, providing users with the ability to demonstrate to their customers and prospects that they are fully trained and proficient in using adCenter. Accredited members will be listed in the adExcellence Membership Directory and will receive an adExcellence logo for use on their Web sites and marketing collateral.
Google just announced that it will apply to bid for wireless spectrum in a January FCC auction. Google will bid on a chunk of the airwaves that can be used to provide mobile phone and Internet services. "The spectrum in question has powerful propagation properties. It will give customers the right to use any application on any mobile device", said Ram Shriram, Google's Founding Member and Board Member.
"We believe it's important to put our money where our principles are," Chairman and Chief Executive Eric Schmidt said in a press release. "Consumers deserve more competition and innovation than they have in today's wireless world. No matter which bidder ultimately prevails, the real winners of this auction are American consumers who likely will see more choices than ever before in how they access the Internet."
Network Solutions has come up with a clever way to promote your web site to 30 million visitors a month for a $1.
The service enables you to place an ad inside your own whois record. Instead of just displaying contact information and your address you can now place whatever text you want inside the record. The service called “Enhanced Business Listing” allows website owners to place more descriptive text inside their whois record. When anyone looked up the whois record they would see your opening sales pitch before they even approach you about buying your domain.
Enhanced Business Listing is the complete opposite of their Whois Privacy service which is designed to protect your website information from anyone looking up your whois record.
What would be a more valuable service would be if they verified information about your company and put that in the whois. Such as, Registered Doctor in New York City. If the registrar could authenticate claims I can guarantee Search Engines would use those authenticated claims and boost the sites in their index based on those claims. Now that would be an enhanced whois service", said Jay Westerdal of DomainTool.
The Nasdaq (Nasdaq:NDAQ) today announced it has launched the NASDAQ Internet Index (Nasdaq:QNET). The Index is a new benchmark designed to track the performance of companies engaged in a broad range of internet-related services such as:
1) internet access providers 2) internet search engines 3) web hosting 4) website design 5) internet retail commerce
"The NASDAQ Internet Index is comprised of securities of companies that are at the forefront of internet technology. They are leading innovators in providing faster internet access, creating more intuitive e-commerce experiences, and developing the second generation Web," said NASDAQ Senior Vice President Steven Bloom.
However, they NASDAQ did not provide a break down of the index composition. Many in internet industry have relied on Google (Nasdaq:GOOG) to be a proxy of the internet industry. Why not! Google operates:
1) the largest search engine 2) the largest online advertising network 3) the largest online video site 4) the third largest social networking site 5) one of the largest payment flow services, email and mapping services
Soon Google will be a big player in: 6) mobile applications 7) productivity applications 8) online storage services (other than email)
There’s much that marketers can be doing right now to ensure a smooth and successful holiday marketing campaign, and email is an easy channel to plan ahead for.
Top tips for polishing your holiday email marketing campaign include:
2. Prepare an auto-responder for those periods when you may be too busy to create new content..
3. Promote your gift cards, which are proving to be a very popular gift option this year.
4. Increase convenience by providing easy web-to-store deliveries or entice users in to their local store.
5. Ramp up relevancy – your customers will be inundated with emails over the next few weeks, so make sure yours are relevant, targeted and relate to any historical shopping data you may have on each customer.
6. Keep your delivery dates clear or consider a delivery countdown clock to ensure your customers won’t be disappointed or caught unawares.
7. Offer free shipping, most of the big online stores are offering free or heavily discounted shipping rates.
8. Concisely categorize your products so consumers can go straight to the items they are looking for, i.e. Gifts for Her, Gifts for Pets, Gifts for Teens.
9. Include a call to action in every email, whether it be to update their personal information, download a new brochure, view a special offer or enter a competition.
10. Last, but not least, check your email deliverability to ensure your messages aren’t being deleted before they even get to your customer’s inbox.
Online retail sales for Cyber Monday, the Monday after Thanksgiving and the online version of the traditional in-store Black Friday, is being watched with anticipation. Cyber Monday sales in 2005 were $608 M, a 26% increase from 2005 according to comScore. Online retailers are pulling out the stops on promotional activities such as email campaigns, free shipping, and one-day only sales. Cyber Monday specials are up from 43% two years ago according to BizRate Research. The convenience of online shopping, high gas prices, and crowd aversion are some of the reasons why some shoppers might opt instead for making their purchases online. Overall, Black Friday sales were good and are sending a signal of a stronger than expected holiday shopping season.
Yahoo Inc. has added 17 more newspapers to its group of online publishing partners, bringing its total number to about 415 dailies and another 140 weeklies.
The program integrates the online help-wanted classified advertising listing of newspapers with Yahoo's online job search database HotJobs with spproximately 377 papers already using the service. Yahoo lets newspapers add job listings to its HotJobs database at a wholesale rate, while newspapers can charge higher prices to advertisers for help-wanted ads that they also upload to HotJobs.
For newspapers, linking their online recruitment ads with HotJobs is seen as a way to hold on to more advertising dollars amid competition from Internet rivals like Craigslist. Other newspapers have linked up with Monster Worldwide Inc. in online classified ads or are part of CareerBuilder, a joint venture owned by the three largest newspaper publishers, Gannett Co., Tribune Co. and McClatchy Co.
Newspapers in the Yahoo consortium will also have the option of signing up for a system run by Yahoo that will serve advertising to Web viewers, but that won't be operational until 2008, Lloyd said. Members of the newspaper group can also share news headlines with Yahoo and have Yahoo become the search provider for their Web sites.
Gokul Rajaram, a key Googler involved with the launch of Google Adsense has left the building.
AdSense has revolutionized web publishing by turning blogs and content sites into profitable businesses. Adsense allows web site publishers to run relevant ads on their web sites. It is one of Google's most profitable ventures to date.
Gokul has left to start his own company. “I have some ideas on the consumer Internet side, I have some experience and financial security, so the time felt right” he said.
“When we started AdSense, it was just me and four engineers. The night before we launched, Sergey spent five hours with me testing the system and pointing out bugs” said Gokul. Recently, another Googler Benjamin Ling emailed me to say that he was leaving for Facebook. Not too long ago Bret Taylor who was one of the key people behind Google Maps left to start his own company.
Facebook's idea of inserting ads into user profiles and sending it to their network of friends could be illegal in the State of New York. The program allows corporations to set up Facebook pages where visitors who take certain actions can thereby trigger the sending of a “Social Ad” to their network of friends. Here is Facebook’s own explanation:
The NY Times is reporting that, Facebook’s Social Ad platform may be illegal in New York under a 100 year old privacy law that states that “any person whose name, portrait, picture, or voice is used within this state for advertising purposes or for the purposes of trade without the written consent first obtained” can sue for damages, and doing so is a criminal misdemeanor.
William McGeveran, a professor at the University of Minnesota Law School said users can sue advertisers who use their names and images without permission under a common law principle. He quotes from the law:
"One who appropriates to his own use or benefit the name or likeness of another is subject to liability to the other for an invasion of his privacy."
This is similar to the international ad campaign run by Virgin Mobile where a 16-year-old girl's photo was taken from Flickr without her consent. Virgin Mobile has been hit with a law suit over the incident however the company maintains that the use of the photo is lawful and fits with Virgin’s image.Now imagine this scenario playing out with hundreds, thousands and maybe even millions of Facebook users. Soon Facebook will be buried in so much legal trouble. Hey, maybe Facebook could turn this into a business model. Why not Viacom's has built a successful business on litigation. Wow! what will the new Facebook valuation be?
Two articles this week suggest how tough it’s becoming to turn a buck in the print media world. Jeff Jarvis at BuzzMachine and founder of eWeek, notes in “Whither Mags”, that major print efforts require a huge capital outlay before they can even hope to be profitable, and that the current high risk associated with print publications means we probably won’t see nearly as many new big magazine efforts.
Even more ominous for the future of the newspaper industry was the New York Times report showing circulation declines almost across the board for US Newspapers. The NYT Article “More Readers Trading Newspapers for Websites” has a great graphic showing how circulation has fallen at most newspapers since last year with an average drop of 2.4%.
Given the relatively thin profit margins at many papers and the fact many costs are fixed this does not bode well at all for the future of newspapers. The future of news is a far more complex question and I think the answer is not knowable at this time. Blogs are picking up some of the journalistic slack, but I’m not convinced they can pick up all of it. With subscription based news models in decline it is simply not clear that heavily capitalized news efforts can survive - let alone thrive - in the changing news landscape.
MarketWatch is reporting that a group of Republicans in the U.S. House of Representatives called for a hearing on Google's planned merger with DoubleClick.
House members Dennis Hastert, Charles Pickering and Cliff Stearns sent a letter to Bobby Rush, a Democrat and chairman of the subcommittee on commerce, trade and consumer protection, calling for a "rigorous examination" of privacy issues related to the planned merger, "as soon as practicable."
The Republican House members said the hearing is needed to examine the "enormous privacy implications" related to combining Google's database of users' search queries with DoubleClick's "online user behavioral profile" database. More>>
The deal values Facebook at US$15 Billion, and analysts have always maintained that Microsoft paid a steep price for a start-up that was deriving most of its revenue from an ad deal (with Microsoft) in which Microsoft was losing money on.
With the launch of OpenSocial last week the valuation seems senseless. Facebook is now trapped, trapped and trapped. They are trapped by Microsoft in their ad deal, their valuation has trapped them and it getting hard to recruit new employees and their closed system is no longer as attractive to developers who can develop applications for the open web via open standards.
Ballmer said "We want to succeed in the online advertising space". But at what cost?
According to a recent article in Newsweek, many start-ups and up-and-coming players are in the pipeline chipping away at Google's search dominance. In some countries Google apparently barely registers on the search engine radar. Google has less than 2 percent of the search engine market in South Korea. Naver, the country’s most popular search engine, receives 100 million queries each day and over half of the population of 48 million has used it at some point. The site has been around for 5 years and has amassed a huge database of questions and answers to draw upon, 70 million at the last count. More>>
The tech world's theatrical performance ended yesterday with Microsoft getting the girl and the girl getting a "public" valuation.
For Microsoft this is about search, advertising, and Google. For Facebook, it is about MySpace and Google.
Microsoft, out-Googled on all fronts, desperately needs to stay in the game. The company needs a vehicle to move ad inventory and is willing to pay to achieve this. More importantly, to be perceived as out-Googling Google.
Facebook, desperate to catch up with MySpace needs a partner with deep pockets to finance the endeavor. Facebook has always been envious of the Google/MySpace deal and has been unsuccessful at cutting a similar deal with Google. Facebook saw this as an opportunity to get cheap money to catch up to MySpace and show Google that it, too, is a valuable property to cut a special deal with. Hence, the fixation on valuation.
This is personal. It is a marriage of convenience. Microsoft and Facebook need each other for their own ulterior motives. The two actors carefully orchestrated this and played it out publicly to get maximum exposure in order to advance their own interests.
This deal expands Microsoft's advertising deal with Facebook internationally. Google does not need Facebook for international exposure as Google's Orkut is already king internationally. If anything, Google would be interested in the U.S. portion which Mircosoft has with Facebook through to 2011.
The financial terms of the deal have not been disclosed but I suspect the deal is similar to the Google/MySpace deal. The $240 million investment will accrue in the form of a payout as part of advertising deal. Microsoft would have given the money for no equity simply to secure the international rights. Microsoft is not paying for it, the advertisers are. However, Microsoft must be thrilled to get 1.6% of Facebook for $240 million and have advertisers pay for it. So for Microsoft, valuation is irrelevant. Valuation is everything to Facebook. The company plans to use the valuation metric to present itself as bigger than it is to attract larger advertisers and create a self-fulfilling prophecy.
Microsoft secured first right of refusal on any advertising related financing Facebook does in the initial agreement. Facebook knew that and used that to extort more money from Microsoft. This is a case where Facebook and Microsoft used each other to achieve their objectives. Next they will be using your data to do the same.
Last Wednesday, the WebGuild held its monthly event on the "Next Generation of Social Networking" featuring Jonathan Abrams, Founder & CEO of Socializr & Freindster fame, Jia Shen, CTO of Rock You, and Sundeep Ahuja, Founder of Appfuels. It was a highly social event - well attended and high energy.
If you missed it, the video of this event will be available in about a week. View photos.
It is time for a reality check. Look deeper and you will see that Facebook is in bigger trouble than it appears. The company needs all the hype and buzz as a distraction from reality and creating a frenzy to rope investors before it becomes apparent.
1) Facebook is a closed system. That is how it began and that is what it is today. The company is embracing "openness" (semi openness) at this moment because it needs more users, to increase traffic and be more attractive to advertisers. If the company was not in this weak position they not be embracing "openness".
2) Most of Facebooks's revenue comes from its exclusive advertising deal with Microsoft which runs through 2011. This is a money losing deal for Microsoft and hugely profitable one for Facebook. When Facebook signed the deal it made all the sense in the world. However, today as Facebook's traffic increases and with more money to hire engineers (thanks to Microsoft), Facebook feels they can better monetize its user base. The issue however is that Microsoft controls Facebook's advertising inventory and platform. The earliest chance Facebook will get to test its system publicly is in 2011. In the meantime Facebook keeps falling behind and thus the huge urgency to raise lots of money to buy out of the Microsoft deal.
3) Microsoft's interest in Facebook is purely to move ad inventory. For Microsoft, this is about catching up with Google, being perceived as web savvy, relevant, increasing search and advertising market share. The lock that Microsoft has on Facebook gives Microsoft CEO Steve Ballmer the confidence to call Facebook a "fad" a tactic deployed to disinterest potential investors from driving up the price as Microsoft maintains "first rights of refusal" in future investments in Facebook. That is why, Facebook is creating all this buzz in the hopes of finding a white knight that is willing to pay a handsome sum much richer than Microsoft is willing to and sufficient enough to buy out of deal with Microsoft.
Intel is asking its partners participating in the "Intel Inside" advertising program to shift more of their advertising dollars online and minimize it in traditional media like television and print.
According to Intel executives, consumers are turning more and more to the online media when they consider buying products like computers and other digital products. "In the last year, there appears to be an acceleration of attitude-forming, opinion-forming, online, instead of in the traditional media, and we have to respond appropriately", said Sean Maloney, EVP Marketing at Intel.
A survey of how consumers were influenced in their buying decisions undertaken this year by Intel showed that "three or four out of the top five sources have something to do with the online media," including search engines, blogs and Web sites, Maloney said.
"TV, print, can play a role," he added, "but once you're researching a purchase, we need to engage with you in a deeper way."
The program spends hundreds of million annually and beginning in 2008, Intel will require companies that take part in the program spend a minimum of 35% of the money that Intel provides to them on online marketing.
Some of the companies participating in Intel's program are Dell, Hewlett-Packard, IBM, Lenovo, Sony and Toshiba.
Mike Abary, SVP Marketing Sony said "Some of the "Intel inside" co-op ads Sony is running appear will appear on YouTube.
Google (NASDAQ: GOOG) shares have broken past the $600 mark as the search engine juggernaut continues to capture more sales from companies shifting advertising to the web.
The web advertising market in the U.S. is expected to grow 29% this year to $21.7 billion and then more than double by 2011. Search advertising is estimated to account for about 40% of that, according to EMarketer Inc
Google has 64% of the US search volume, followed by Yahoo at 22.88% and Mircosoft at 6.59% according to Hitwise. Google is expanding its reach to other platforms such as mobile and online video via YouTube to capture more real estate on the web to further entrench its dominance in web advertising.
Last week Google started delivering ads on YouTube and the company is also testing ads on mobile. The company is also seeking to capture a slice of the online display advertising market via the purchase of DoubleClick.
Google is parlaying its lead in search into other areas of online advertising such as social networks and personalization. iGoogle, is the company's fastest growing web property. It enables users to built a customized web page by integrating data feeds and widgets. Widgets are a fast growing piece of the web display advertising market.
The company also operates Orkut, the world's second largest social networking web site only to MySpace (Hi5 is 3rd, Facebook it 4th). However, most of Orkut's users are based in Brazil and India. If the company can increase the adoption of Orkut in the US they stand to benefit from the ad dollars shifting from the Web 1.0 likes Yahoo to the Web 2.0 web sites.
Al Jazeera and Google signed a commercial agreement last week to share advertising revenue on th Al Jazeera's YouTube channel.
Al Jazeera, the world's 5th most popular brand, sees YouTube as an efficient platform to distribute their content and monetize it on non Televisions mediums. Al Jazeera الجزيرة, which means "The Peninsula" in Arabic, is a television network headquartered in Doha, Qatar. Initially launched as an Arabic news and current affairs satellite TV channel it has since expanded into a network with several outlets, including the internet and specialty TV channels in multiple languages, and in several regions of the world.
Online advertising is one sure way to monetize traffic on a web site as Google has proven with AdWords and AdSense. Adsense being the most successful "widget" ever. Over the last few months many companies have sprung in every vertical to capitalize on ad dollars moving online. The
Besides Google, there are alternatives such as Yahoo Publisher, Microsoft adCenter and even Nokia has ambitions of challenging Google via the purchase of Enpocket.
Start-ups like Tumri, Widgetbucks, Proximic and many others have rolled out products that compete with AdSense in defined verticals, thus claiming better targeting and potentially more revenue. These products allow bloggers and web site publishers to customize the kinds of items they want to appear in the widget (books, movies, computers, musical instruments). Others offer contextually dynamic ad widget that web site publishers can include on their web site for added value to readers and themselves.
A side from technical differentiation on how ads are matched and served. Do these alternatives help to better monetize your web traffic? For example WidgetBucks promises the equivalent of $3-$6 CPMs (cost per thousand views) versus the industry average of $2 CPMs.
Most of these widgets providers aggregate inventory via APIs from the likes of Amazon, Shopping.com, Target, Best Buy, Wal-Mart, Gap to name a few. If you publisher a web site in a narrow vertical you can easily integrate the feeds into your web site and keep all of the revenue as instead of splitting it with a widget provider.
However, if you have multiple data feeds from multiple providers it might require more integration, as well as staying on top of all the code updates and adminstrative requirements like collecting checks from multiple providers. Here is where the third party widget providers add value. Essentially for a revenue split they undertake the technical and administrative components on your behalf. Also, because they have volume that can negotiate better terms with the data providers. Eg. I do not know anyone who has received a check from Amazon.
All that said you are limited to the diversity and quality of the ad inventory that the third party widget provider. If your web site caters to a very narrow this could be a problem. That is where Google Adsense makes sense because Google has the depth and breath in inventory but the payout maybe less.
It might might make sense to have several providers or different providers on different pages. Some providers consider it a violation of their terms of service to have their ad widget run concurrent to other ad widgets. So if you publish a web site, it would make sense to examine all the different alternatives and choose what is best for your web site.
Google is using YouTube to post videos that explain how, when, and why they collect information about searches, and how you can protect your privacy while using our search engine.
In the first video, you can learn about some of the information collected eg. IP addresses, cookies, and search queries and how they this information is used to improve your search experience as well as prevent against fraud and other abuses.
Google's search algorithms are designed to take your personal preferences into account, including the things you search for and the sites you visit. They provided the example about the Louvre in Paris. You are more likely to get results about the French capital than about Paris Hilton.
In the second video the are offering a closer look at personalization and the privacy tools available when you choose to personalize your search. Personalization has been an area that raises concerns about privacy, and Google wants you to understand how they personalize search results while protecting your privacy with tools such as “pause” and “remove” buttons designed to help put you in control of personalization.
Disclaimer: The opinions expressed on the WebGuild Blog including posts, comments, and external links, are those of the individual
authors and not WebGuild's.
Google's new web audience measurement service is intended to help advertisers identify the best places to buy online ads by providing them data on which web sites their target audiences visit. The goal is to connect advertisers and publishers and provide them with demographics and usage patterns of target audiences. The service is available to select parties at the moment but it is expect to be freely available to anyone shortly.
Healthline is the latest company to launch an ad network. The network will allow the health care advertisers to reach consumers in a far more targeted way. Healthline reaches 10 million unique users through publishers including AARP, Self.com, Meriam Webster and US News and World Report and will use it 
While online advertising overall continues to grow explosively, a new report from eMarketer (as well as common sense) suggests that there are many challenges in the Social Network advertising arena.
Google has filed a patent application for "Targeted Video Advertising" with the 
The Valley is indeed a small place. On Sunday I was at Brian Solis's party where the who's who or the glitteratti of tech converged. I was speaking with Jean Sini, co-founder of 
The conference will also feature an 
Citigroup Global Markets analyst Mark Mahaney estimates that Yahoo could boost its cash flow more than 25% annually by outsourcing all its search advertising to Google. Some investors have called for Yahoo to abandon its own search advertising system as a quick way to boost its revenue. Analysts predict that outsourcing its search ads to Google would boost Yahoo's cash flow, since Google's system generates significantly more revenue for each search query than Yahoo does. Under such an arrangement, Yahoo would likely garner a majority of the revenue and Google keep the rest as a commission. 
Web advertising stimulates off-line sales and in most cases, online campaigns increase sales more at advertisers’ retail cash registers than on their websites, according to a report by 
A European Commission advisory body on data protection has said that search engines should delete data held about their users within six months reports the 
Video search engine 
Yahoo has launched a web site called 
While US social networks are waiting on advertisers to shifting their ad 
Google has finally figured out a way to pay for the YouTube acquisition. Video ads, have started appearing on Google's search results page according to a report from 
Interesting comment by David Hallerman, senior analyst at eMarketer
when it will account for 37.3% of US online ad spending. Conversely, spending on rich media and video advertising is set to grow as a percentage of online ad spending, rising to 18.5% in 2012 from 10.2% in 2008.
Yell has started to play against Google at its own game. Yell is an online advertising syndication which allows florists, caterers and funeral directors that use its online listings to extend their reach to other websites.
Yell will charge the small and medium-sized businesses an annual fee for the service. Partner sites will receive a share of the revenues, calculated on a pay-per-click basis just like Google Adsense. "If you think about Google, a lot of their traffic comes from other sites," says John Condron, chief executive. "This is nothing new."
eBay (EBAY) unveiled the 
I met with AOL's (TWX) EVP Curt Viebranz not long ago and now I learn that he is fired. He was appointed the new President of 
The champagne is flowing at Google on news that the Google DoubleClick 
Others were howling and praying, proclaiming the end of the world was nearing and hoping that the EU would see it differently.
1) 
Google will bid on a chunk of the airwaves that can be used to provide mobile phone and Internet services. "The spectrum in question has powerful propagation properties. It will give customers the right to use any application on any mobile device", said 
"We believe it's important to put our money where our principles are," Chairman and Chief Executive 
Online retail sales for Cyber Monday, the Monday after Thanksgiving and the online version of the traditional in-store Black Friday, is being watched with anticipation. Cyber Monday sales in 2005 were $608 M, a 26% increase from 2005 according to 
“When we started AdSense, it was just me and four engineers. The night before we launched, Sergey spent five hours with me testing the system and pointing out bugs” said Gokul. Recently, another Googler 
![[From left to right] Jia Shen, CTO, Rock You; Jonathan Abrams, Founder & CEO, Socializr & Friendster; Daya Baran, President, WebGuild; Sundeep Ahuja, Founder, Appfuels](http://www.webguild.org/images/social-network5.jpg)
Last Wednesday, the WebGuild held its monthly event on the "
It is time for a reality check. Look deeper and you will see that Facebook is in bigger trouble than it appears. The company needs all the 
Al Jazeera and Google signed a commercial agreement last week to share advertising revenue on th Al 
Online advertising is one sure way to monetize traffic on a web site as Google has proven with 
