Facebook Refers 19% of Google's Uniques

RBC Capital Markets points out that 19% of Google's unique visitors are referred by Facebook, up from just 9% a year ago. Given current rates of growth, they also suggest that Facebook will overtake Google in terms of number of unique visitors by 2011-2012.

These two fairly amazing data points permit a couple of interesting conclusions:

A much higher proportion of referrals from Facebook go to Google rather than to Yahoo or Microsoft (who actually have a paid agreement with Facebook) which means that Facebook's growth is pushing Google's share of search higher than it would be otherwise.
If Facebook are seeking monetization, then a referral deal with Google seems like a good place to begin.
RBC concludes:

Facebook is actually positive and complementary for Google thus far, but that could change if Facebook's rapid growth trajectory continues on its current path, or if/when social media can find a business model and attract ad dollars from other online media.

At the very least, we think Facebook as the "starting point" for more and more users on the Internet could create some multiple compression for Google over time, if the momentum continues.

Using my secret-agent financial analyst decoder ring, I can tell you that "multiple compression for Google" in this context should be taken to read, "Google is paying MySpace $1 billion per year for perhaps 3% of Google's traffic. On that basis Facebook should be hitting Google up for $6 billion a year, no?"

Schmidt: Economy 'Pretty Dire', Google 'Not Immune' (GOOG)

Google (GOOG) CEO Eric Schmidt's gloomy comments on the economy aren't helping Google stock, which is down 3.2% after-hours. During a fireside chat with Mary Meeker at Morgan Stanley's tech conference, Schmidt said:

• The ecomomic situation is "pretty dire."
• Combination of everything "does not appear to have a current bottom."
• "Obviously will affect online advertising market."
• "Will eventually be reflected in CPCs and CPMs."
• "We are not immune."
• Google "better positioned," but ultimately, "the sort of real pain that is being felt by corporations worldwide will translate to our world."

Is this particularly surprising? No. But it's a sign that the worst is perhaps still to come, especially for Google.

Schmidt also said some interesting things about Twitter, calling it a "poor man's email system." And Google's "inactive" M&A game. And a few other topics, like display ads, which we'll break out into a separate post.

Live notes:

4:05 Music winding down.

4:06 Psych! More music. This might be one of those lunch presentations that starts a little later than its scheduled time. Will keep updating every few minutes until it starts.

4:07 Just heard a voice through the music. Perhaps starting soon?

4:09 At any rate, Google engineering VP Vic Gundotra was just on a panel about the mobile Internet. Pretty standard non-news type of panel, but lots of praise for Webkit. My live notes are here.

4:09 Starting! Going through standard disclaimer stuff.

4:10 Moved the schedule back 10 minutes. Eric has been in the building for 15!

4:11 Meeker: A lot of chatter that the search market has settled and done. What's your view? Obviously a lot of innovation ahead of us. Bug where we put a malware statement out for users, and in that time, Yahoo searches gained very quickly. Looks like people will move from one search engine to another for variety of reasons. Of course Microsoft is working hard to build a competitive search engine, and has recently leaked some details. Some new entrants trying to mix search with other things.

4:12 People said that about search 10 years ago, with a different company.

4:12 You worked with Sun w/ networked computer. Netbooks? This is all part of cloud computing. Whatever term you want to use. Let's use cloud computing. One of those changes that's going to happen whether people in ecosystem allow it or not. Rather than buying a piece of software for a client, javascript and ajax code comes to your browser. But it's a fact that we live on very high performance wireless broadband networks. To me, the more interesting question is: What can you do that you couldn't do before with cloud computing? IT systems are so slow at the rate at which they evolve. So stuck in systems, architecture, etc that they built. Opportunity to build whole new set of apps that cycle faster with IT.

4:14 Netbooks are the next generation of the small device that OLPC was trying to talk about. Particularly interesting is price point. Eventually it will make sense for operators to subsidize. Can make services and advertising revenue; today's aren't completely done; Linux could be big.

4:14 Search, financials, etc questions coming over. On search side, economy question. Query growth remained strong for a while, our data indicates still there. CPC has been declinng, was negative in last quarter Any trends you can update on how you play through a more difficult economic environment?

4:15 Economic situation pretty dire. Combination of what we've seen does not appear to have a bottom. People are using the Internet more. Obviously will affect online ad market because our systems are so tightly tuned. It will eventually be reflected in CPC, CPM. We are not immune to this. We may be better positioned from ad perspective, but ultimately the real pain felt by companies worldwide will sometime translate to our world.

4:17 Any data points positive? Every data point we have is obvious. Queries shifted from morgages to mortgage help to foreclosure help. Things you see on TV are really true. Areas most hit on online world are same in offine world: Travel, automobiles, financials, etc. Consumers are smart because they use the internet to look for discount trips, etc. From our perspective, aside from our perspective, running the businesses much more tightly, haven't fundamentally changed our strategic view. Trying to make profits from businesses we weren't trying to before.

4:18 Taken a position that the person should be the search. Your viewpoint, history, etc. (With your permission.)

4:19 We like to generate cash. A good metric in any situation is if you can grow profits in absolute basis, you're going to get through this. Patrick (CFO) is particularly good at doing business reviews. Going through systematically. During hypergrowth period, didn't have budgeting and esitmation systems in place we do now. Google managenent spends lots of time doing business reviews now. A lot of that coming. When we get past fear, advertisers understand notion of guaranteed sale.

4:20 What were learnings from P&G swap? Have been able to translate? CPG trying to figure out how to use the Internet. Many don't understand how to market inside online communities. Put people in their buildings, we put them in ours. We changed the way we market to consumer goods companies by talking to them not so much on traditional text queries, but how you can use targeted online ads within blogging communities, Facebook, those sorts of groups.

4:22 Consumers spend a lot of time online before they make purchase. Tend to join affinity groups. Diapers being obvious example.

4:22 Going to do employee swap with other companies. I don't want to talk about specifics, that's their data. But we like that model. Direct contact helps effect change.

4:24 Online continues to gain share. Worth trying to figure out when this will occur. Everyone sort of assuming that 2009 is tough year. What can we do now? Sales force goes in and says you need revenue now, here's how. Many people stuck with contracts with offline channels. Increasing willingness to try new systems in enterprise. We have a set of enterprise offerings and have been pleased with willingness for customers to now accelerate trials.

4:25 What does 2010 look like? Depends on what growth rate of recovery is going to look like.

4:25 Let's talk about music videos. You haven't monetized it yet. Selling music via Amazon and iTunes with some of most-used videos. How do you see both artists using that venue over next 1-2 years as they're dealing with their own contracts, and how do you see monetization of YouTube playing out?

4:26 YouTube is slowly getting monetization right. Taking us much longer than we had hoped. Always been concerned that aggreg monetization of online is not going to replace offline. Potential conundrum for video and movie industries. Music industry has this problem: In 1980s, self view was that they helped create MTV by giving them licenses to music videos "too cheaply." How do you compensate music industry for things that are promotional? Apple successfully has worked that out with iTunes. Very positive example. We need an analogous example of how music videos will work on the Internet. YouTube good with music videos, sports, humor. Working on longer form content and HD. If we can make even a small amount of profit, because of scale, can add up quickly.

4:28 Financial results for media companies is not good. Trajectory that local and broadcast TV is on is similar. Is it possible that group of players who have been standoff to YouTube may change their view given that economic situation is different? We understand their problem, critically dependent on them for professionally produced narrative. My view is you asked question in the wrong order. Right view is: What does future look like? And how do you adapt? Fact of the matter is that mobile devices is going to be majority of how people get information. Mobile power will keep increasing.

4:30 Highly personal, location, etc. Don't know how it'll be monetized. But products are getting built. Challenge and opportunities is to make money. But you won't get there by suing your users or by preventing that technology from happening. It's going to happen.

4:31 Mobile clearly will pass computer. Depends on growth rate of data capable mobile devices. Monetization of ads should be higher because better targeting. When you have powerful browser like iPhone, BlackBerry, Android -- people spend many more searches when they finally have a capable browser. So: What's new in technology sense? And development of new, open-source browser really creates new. How long does it take? A few years, but not a few decades.

4:33 Some of Android devices will look like phones; some not like phones. I think people in the room understand how platform businesses work; it's all about momentum.

4:34 Carriers are looking for new sources of data revenue. Some of carriers subsidizing other devices (like netbooks). Another new thing that will serve as accelerant.

4:35 With Japan, now partnerships with 2 of 3 mobile providers. Monetization is excellent. When you get it right, with right ad product and right search product on device, know that as a proof point. Now intending to replicate those sorts of deals. Obvious prize will be China. That's sort of the next really, really big one.

4:36 M&A pretty inactive right now.

4:37 Stimulus program? I have a very long and strong answer. In the interest of time: We benefit when our customers have jobs, that they buy stuff. Any solution that gets the middle class to feel more confident benefits Google, our advertising revenue, our customers and shareholders. Can debate the specifics. No one's ever done it before at this scale. With respect to how Google benefits beyond that; has $20 billion of payment subsidies and credits to build out more broadband. Also $20 billion in science funding, which will help lag with some new applications.

4:38 Always a danger when you have a Website that you temporarily overmonetize. Works for a quarter or two, then customers say heck, that's an ad page, and they move somewhere else. Google at "coverage level" of about a year ago. Within a range of what we've historically done. Social networking has a lot of pageviews, but don't monetize as well as text search. Where is next source of revenue? Next source is current business functioning better. Next and adjacent is a set of display businesses and an exchange being built from DoubleClick business. Display not uniform; Balkanized. By hand or poor quality spreadsheets in many cases; think we can work Google magic on that.

4:41 Thoughts on Twitter; evolves as real-time search engine, and haven't really responded there. How do you foresee that as a potential threat to Google? In favor of all these potential communication features. Just set up Google account on Twitter. Got character count wrong! 140, not 160! Poor man's email systems. They have aspects of an email system but don't have full offering. Do they fundamentally evolve as sort of a note phenomenon, or storage, identity, etc. Or do email systems evolve? In Google's case, we have a very successful IM product. Twitter's success is wonderful, shows you there are many ways to communicate, especially if you can do so publicly.

4:43 US likely to have quicker descent, quicker recovery. Also believe India and China effected, but to a lesser degree. What does it do for long-term capital structure of these economices? Talking about Japan's recession. Americans love their credit cards -- basically have to solve the credit problem, get jobs stable, housing crisis. When those things are done, reasonable bet that Americans will go back to what we do best, which is to spend money.

4:46 Confident that we're going to see some good things come out of it. American story is innovation. Etc.

4:48 What are 3 things that need to get done to get display to become part of business? First problem if you have a display property, multiple vendors building ad exchange. Heuristics are terrible. Standardization of ad formats. Need more. Especially around interactive and video ads. Future is an ad that brings you in, tells narrative. Best ads add real value. Video, story, narrative, etc. Third is construction of business relationship with large advertisers, which we're still working on.

4:50 If two competitors merge, how do you see potential impact if MSFT and YHOO come together? I don't know if that scenario will occur. We did best attempt to do deal with YHOO. Carol is a fine and able CEO. What do I really think will happen? The problem has to do with Microsoft's ability to use its Windows monopoly to restrict consumer choice. Anything MSFT will do are of concern. That's what we worry about. As long as technologies are competing on fair basis, that's great.

"All Marketers are Liars" - Seth Godin speaks at Google

Gap Widens in Online Advertising

Rivals Struggle to Catch Up to Google As Buyers Favor Search Ads Over Display

By JESSICA E. VASCELLARO
September 4, 2008

Spending on Internet advertising is climbing at a healthy clip -- rising 20% in the U.S. in the second quarter -- and growth forecasts are strong despite the weak economy. But that growth isn't being enjoyed by everyone.

The gap is widening between spending on simple search ads, Google Inc.'s core turf, and spending on flashier display ads, which companies such as Yahoo Inc. and Microsoft Corp. had hoped to use to gain ground on Google.

Faced with a slowing economy, advertisers are sticking to what they view as the safest way to reach online customers directly: the plain text ads that appear on search-result pages. Search-ad spending is on track to reach $10.4 billion this year, double what will be spent on display ads, according to research firm eMarketer.

That divergence of fortunes may be bad news for companies counting on a comeback for display ads, which ruled the Web in its early days. Though Yahoo and others say they have seen demand for these ads as they introduce technologies that better target the ads, they have been slow to regain favor.

CreditCards.com is typical. Jody Farmer, vice president of strategic marketing for the credit-card portal, says he has experimented with buying display ads. But as the economy tightens, the site, which spent $30 million on online marketing last year, is focusing on search ads. "We have to be a little more thoughtful about how we spend our money," he says.

The trend comes as Google rivals Yahoo, Microsoft and Time Warner Inc.'s AOL have invested billions of dollars in building and buying new display-ad technology to deliver more relevant and engaging ads to users on their sites and on the sites of other Web publishers. They hope to win back advertisers who have poured money into search ads.

Mark Scholz, global search manager for Hewlett-Packard Co.'s printer division, says that while his budget is relatively flat, he is spending more on search ads by pooling together funds from product groups eager for the extra lift they are accustomed to from search campaigns. "In the event there are budget cuts, I am one of the last ones they go after," he says.

Google, with more than 70% of the U.S. search-ad market, has much to gain from the trend. But the Mountain View, Calif., company also has made some big bets on the display business. Google is trying to tap brand advertisers to buy display ads on Google-owned properties such as YouTube and on other sites. Tighter display-ad budgets could hamper that expansion, which it fueled with its acquisition of DoubleClick last year for more than $3 billion.

The gap between Google and its rivals could widen as search grows faster than display. Search ads are forecast to represent 42% of overall U.S. online ad spending in 2008, according to eMarketer, up from 40% in 2007. Display is expected to stay flat, at about 21% of overall spending.

Google's rivals caution that there is a wide mix of display-advertising types and that some are performing well in the current environment. Spending on display ads is forecast to reach $5.2 billion this year, up from $4.5 billion in 2007.

Brad Goldberg, Microsoft's general manager of search, said the company has a number of advertising products for which the tough economic environment is a boon, including a new cash-back shopping search service.

Lynda Clarizio, executive vice president of AOL, says the company has the mix of ads that marketers are looking for in a downturn, even though it doesn't have a traditional search business.

A Yahoo spokesman says investments in new display technologies helped the company meet its financial goals in its most recent quarter, despite the tough economic environment. And he notes that Yahoo's U.S. search businesses is growing briskly as well.

There are signs that search may eventually take a hit too. John Aiken, managing director of research firm Majestic Research, says some smaller businesses have begun cutting back the number of keywords they are buying in recent months, although large marketers continue to spend freely. He says Google is "potentially stretching for dollars," noting that it has begun displaying more ads for some keywords.

Nick Fox, director of business product management at Google, says more ads may be showing up for some keywords because, as advertisers spend more on search, Google has more relevant ads to show. "We are not making any short-term trade-offs," Mr. Fox says.

Google Launches Affiliate Advertising Network, Courtesy of DoubleClick

Erick Schonfeld

36 comments »

Amazon, watch out. Earlier today, Google launched an affiliate ad network. Or, rather, it rebranded Performics, the affiliate ad network that came along with its purchase of DoubleClick, as the “Google Affiliate Network.” As with other affiliate networks such as Amazon’s, participating Website publishers get paid a fee for each referral that results in a sale. Existing advertisers include Bank of America, Barnes & Noble, Citi, Target, and Verizon.

The service isn’t yet integrated into Google AdSense (publishers and advertisers still have to set up separate accounts), but that would be a logical next step. An integration with AdSense could add a contextual element to the affiliate ads placed through the network. The more relevant Google can make those affiliate links, the more that consumers will actually click through and buy (in theory).

Google also continues to experiment with a pay-per-action advertising program, which is still in beta. At some point, it might make sense to consolidate that effort into the Google Affiliate Network as well.

Update: Google will actually be phasing out the PPA program at the end of August as part of the integration with DoubleClick. You can read more details at the blog post here.

Google: We are retiring the pay-per-action beta

We are retiring the pay-per-action beta

As part of Google's integration of DoubleClick, the DoubleClick Performics Affiliate network is now part of Google. To consolidate our offerings, we will be phasing out the AdWords pay-per-action beta in the last week of August 2008. As an alternative to pay-per-action advertising, Google offers two products that allow you to manage your advertising on a CPA (cost-per-acquisition) basis: the Conversion Optimizer and the Google Affiliate Network.

The Conversion Optimizer is an AdWords bidding feature that lets you specify a maximum CPA goal for ads on the Google search and content networks. It uses historical information about your campaign to automatically adjust your CPC bid for each auction to help you meet your CPA goal. In addition, the Conversion Optimizer is now supported in both the AdWords Editor and the AdWords API. You can learn more on the Conversion Optimizer homepage.

The Google Affiliate Network, previously known as DoubleClick Performics Affiliate, has been in operation since 1998. Through the network, advertisers can open their ads to all publishers in the network, or select specific publishers that match their criteria. You can set a CPA for your entire campaign or establish custom payment schedules for specific publishers -- such as a higher CPA for a particularly optimal placement. The Google Affiliate Network is currently a separate product from AdWords and AdSense. As with AdSense, publishers must apply and be accepted into the network.

If you're interested in learning more about the Google Affiliate Network, please visit our website.

Google Adding Social Features to iGoogle?

THIS IS VERY VERY SMART!!!!!

Read Write Web
Google hasn't said so, but Read Write Web's Josh Catone surmises that the Web giant aims to turn iGoogle, its start page, into a social network. Earlier this week, Google unveiled a new developer sandbox for the start page that includes support for its OpenSocial APIs, which Catone says "makes this officially the start of a trend we're seeing in start pages to get more social."

In its FAQ about the new iGoogle sandbox, Google suggests as much: "This is not the final network that will be used in iGoogle," the company writes about its "friends" section. "Users will have full control over who their friends are and will be able to easily modify their list of friends. Stay tuned for details."

RWW and other pubs have pushed the idea of social start pages for some time now. The homepage, a users' most visited page, is certainly a natural competitor for a social network; "Facebook is just launching their platform," Catone says in a previous post. For companies that provide souped-up start pages, like NetVibes and PageFlakes (which was recently acquired by LiveUniverse), adding social features is a logical next step. If Google really is adding social features to its start page competitor, don't be surprised if that sparks an industry wide trend. - Read the whole story...

A Google Reality Check

APRIL 3, 2008


David Hallerman, Senior Analyst

Last week, MarketWatch quoted comScore data showing a second straight month of slower growth in paid clicks for Google's main ad-serving business.

A note from Bank of America (BofA) analyst Brian Pitz pointed out that the comScore data showed a mere 3% growth in Google's paid clicks in February compared with the same month a year earlier.

MarketWatch also noted reduced growth in Google's paid clicks in January, again reported by comScore, and concluded that these results could cause concern about the company's economic health.

Pause for a reality check. Growth in US online ad spending is indeed slowing. However, let's remember that this means smaller increases but still increases. Slower growth is a world away from a fall.

It would be very hasty to infer from slower growth in the number of paid clicks that Google is in an economically weak position. Relative to the three other major portals, Google's position is one of great strength even with slightly reduced growth this year.

The paid click measurement is critical for Google because the company's business is dominated by search advertising services.

Looking at data from five key researchers reinforces confidence in Google's short-term prospects. There is a robust degree of consensus that US spending on search advertising will increase by more than 20%, despite a temporarily weak economy.

eMarketer's online ad spending projections factor in a US economic slowdown in 2008. Learn more in the US Online Advertising: Resilient in a Rough Economy report.

Selling Performics Search Marketing

4/02/2008 02:08:00 PM

Posted by Tom Phillips, Director, DoubleClick Integration

Since we closed the acquisition of DoubleClick on March 11, we’ve been immersed in integration planning for each of our products and business units. Recently we completed this process for the DoubleClick Performics businesses, and have decided to split them into two separately-run business units: Affiliate Marketing and Search Marketing.

It’s clear to us that we do not want to be in the search engine marketing business. Maintaining objectivity in both search and advertising is paramount to Google’s mission and core to the trust we ask from our users. For this reason, we plan to sell the Performics search marketing business to a third party. We believe this will allow us to maintain objectivity and the search marketing business to continue to grow and innovate and serve its customers. While we have not yet identified a buyer, we’ve received preliminary interest from a number of our current partners. Search Marketing will continue to run as a separate entity until the division is sold.

We plan to integrate the affiliate marketing business into existing Google operations, providing enhanced value and reach for our affiliate advertisers, and additional tools and monetization opportunities for our publishers. Together, we believe that we can continue to grow this business and deliver on the high expectations from partners.

Where it’s applicable in Europe, these plans and their implications for employees are subject to consultation with staff and employee representatives. During this transition, we will ensure that all affiliate and search marketing customers receive the same high level of service they have always experienced.

Google Sucks Life Out of Old Media: Check Out The 2007 Share Shift

Henry Blodget | March 14, 2008 10:32 AM

For the past few quarters, we've analyzed the amazing rate at which advertising spending is moving online. Now we're able to look at full-year 2007.

Specifically, we analyzed the change in US advertising revenue at 17 major media companies from 2006 and 2007. The companies included Google (GOOG), Yahoo (YHOO), Time Warner (TWX), Disney (DIS), Viacom (VIAB), CBS (CBS), and Clear Channel (CCO). The companies span all the major advertising sectors: Online, TV, Print, Radio, and Outdoor.

Highlights:

• Total US ad revenue across all 17 companies grew 9% from 2006 to 2007, from $53 billion to $58 billion

• Online ad revenue grew 28%, from $14 billion to $18 billion.

• Offline grew only 3%, from $39.5 billion to 40.6 billion. This was helped significantly by the inclusion of affiliate fees and (and global revenue) at CBS, Viacom, and News Corp.

• Online ad revenue grew by $4 billion.

• Offline ad revenue--in all other media--grew by $1 billion.

So advertising revenue is flowing online at a frantic rate. That's the whole story? No. Let's look at how that online revenue breaks down.

• Online ad revenue grew 28%, or $4 billion.

• Online ad revenue at Google grew 44%, or $2.7 billion.

• Online ad revenue at Yahoo, Microsoft, and AOL grew only 15%, or $1.3 billion.

• Google captured 2X as much revenue as its closest three competitors combined.

It is true that perhaps a third of Google's growth came from AdSense revenue, which is placed on third-party sites--so other companies are benefiting from this growth. But the growth on Google's properties alone still vastly exceeded the growth on AOL, Yahoo, and Microsoft.

Another fun stat:

• The year-over-year growth of revenue on Google.com (US)--approximately $2 billion--was more than twice as much the growth of ad revenue in all of the offline media companies in this sample combined. This is such an amazing fact that it bears repeating: A single media property, Google.com (US), grew by $2 billion. All the offline media properties owned by the 13 offline media companies above, meanwhile--all of them--grew by about $1 billion.

For supporting details, please see our SAI Advertising Share Shift spreadsheet. TechCrunch's Erick Schonfeld runs some cool graphics on the numbers.

See Also:
SAI Research Spreadsheet: The Great Ad Share Shift
Great Ad Share Shift: Q2 2007 vs Q2 2006
Google Sucks Even More Life Out of Old Media in Q3

Have People Stopped Clicking on Google Ads?

Or did a Web-traffic firm get the numbers wrong?

By Chris Wilson
Posted Monday, March 10, 2008, at 12:03 PM ET

---

On the morning of Feb. 26, the investment firm Bear Stearns sent out an alert (PDF) about some unwelcome news for Google. According to comScore, a leading Web-analytics company, the company's domestic paid clicks—that is, the number of times people in the United States clicked on a Google ad—were down 0.3 percent compared to last year and down 12 percent since October. By 7:16 a.m., former tech-securities analyst (and Slate contributor) Henry Blodget reported the news on Silicon Alley Insider under the headline "Google Disaster." As news of the comScore report circulated, Google got killed on Wall Street: The stock opened the day down $25 a share and continued to fall, sinking to an 11-month low of $464.19 before staging a modest comeback.

Wall Street's anti-Google stampede came despite some good news. The company's advertising numbers from the previous quarter were strong, particularly outside the U.S., and Bear Sterns also reported that Google has "healthy growth prospects that should lead to market share gains [and] a strong balance sheet." Nevertheless, investors were spooked by the idea that Web surfers had stopped clicking on text ads—perhaps a sign that even mighty Google wasn't immune from an economic slowdown. Wall Street, however, shouldn't have made such a leap. ComScore's click numbers, like so many stats about user behavior on the Web, are unreliable and opaque. Instead of using comScore reports to predict a tech company's future performance, an investor would be better off ignoring them.

ComScore is one of several firms in the United States that peddles statistics on Web traffic. It seems like it should be easy to get an exact count of how many people visit a Web site, click on an ad, and so forth. But as Slate's Paul Boutin has pointed out, these stats are a moving target. Analytics firms like Nielsen and comScore don't count every time a Web page gets accessed; rather, they extrapolate the numbers based on data from panelists who install the companies' tracking software. ComScore claims its panel includes more than 2 million people who are recruited either directly or through third-party software packages that offer services like virus protection and performance optimization. (The company terms this "researchware." Less charitable types call it "spyware.") The company takes the data it gets from these users and weights it according to demographics to draw a statistical portrait of traffic to individual sites. ComScore is, essentially, making an educated guess. Nobody except Google is keeping a tally of each individual click on the company's text ads.

Even though comScore's numbers are an estimate, they've been repeated as gospel with little discussion of margins of error—this despite the large psychological difference between a 0.3 percent decline and a small gain (or a bigger loss). Why did Wall Street respond so emphatically to comScore's numbers, ignoring the big-picture reassurances in Bear Sterns' report? One can certainly blame a jittery market on the watch for bad news as economic indicators everywhere are looking ugly. It's also probably fair to guess that crafty investors—guessing that less savvy investors will panic—would sell early in an attempt to make money off this skittishness. But it's impossible to avoid the conclusion that Wall Street types put way too much stock in the reliability of Web traffic stats, numbers that should not be used for day-to-day management of a portfolio.

After the public hubbub over its Google numbers, comScore released an analysis of the data on the site's blog. The post lists many caveats, including the possibility that the recent decline in clicks might have been the result of Google getting better at reducing "bad clicks"—accidental clicks by people who have no interest in the product being advertised. Many in the tech-blog community saw this response as comScore getting spooked by the fallout from its report or bending to pressure from Google. (A comScore spokesman told me there was no contact between Google and comScore executives between the time of the initial report and comScore's elaborations.) More likely, comScore was simply being realistic about the reliability—or maybe the unreliability—of its own data.

ComScore's numbers are particularly prone to error when making long-term comparisons, like the year-over-year comparison of Google's paid clicks. For one thing, the group of panelists that provided comScore's data in January 2007 isn't the same as the group from January 2008. We don't know how different the groups were because comScore doesn't release that data.

Like most companies that deal in Web statistics, comScore gives few specifics about its methodology. In order for investors and tech buffs to get a better sense of the accuracy of this data, firms like Nielsen and comScore have to become more transparent—something the Interactive Advertising Bureau, an umbrella organization for 300 companies involved in online advertising, has called on them to do. (For a great side-by-side comparison of how different Web analytics companies work—so far as we know—see this primer from the Web marketing firm Antezeta.)

Until Nielsen, comScore, and other analytics companies become committed to sharing their data and methodologies, personal fortunes and the fates of tech companies will depend on data that might not be anywhere close to accurate. Wall Street, at least, shouldn't be so willing to act on this kind of report.

Before public demand for better methodology is likely to mount, however, those whose personal fortunes rest on this data will have to understand that it is a methodology in the first place, not some universal registry of Web use data with a margin of error of zero. Next time you see a press release that says clicks are going up or down, take it for what it is: a guess—as far as we know.

Google Now Selling SEO Services Via Performics

from TechCrunch by Duncan Riley

As we reported yesterday, Google has now successfully acquired DoubleClick after receiving EU approval for the deal. While the focus has been rightly on display advertising, many have missed one part of the deal that will raise eyebrows: Google now owns SEO service Performics.

DoubleClick’s Performics offers search engine services that include “natural search solutions” such as “link building.” Some highlights from the Performics service

Our experts methodically optimize copy and content for each page to boost page rankings…

Addresses external ranking factors and new business opportunities

Now there is nothing wrong with what Performics offers; SEO and SEM are legitimate businesses. The catch is that Google is now offering paid services that promise improved search engine listings in Google itself, a 100% conflict of interest. Danny Sullivan at Search Engine Land calls for Google to divest itself of Performics, and it’s a call that should be supported.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Google Enters The Ad Management Game

from TechCrunch by Duncan Riley

Google has soft launched Google Ad Manager, an ad tool that allows publishers to manage ad placement on their sites.

The service primarily competes with OpenX (previously PHPAds then OpenAds). Users add their ad codes to Google Ad Manager then include the Ad Manager generated code on their sites. The service then tracks the page views and CTR on each ad unit, complete with statistics and the ability to geotarget or other break downs on each unit. Google Ad Manager also supports locally sold ads, for example Ad Manager like OpenAds supports direct sale advertising as well.

The key for Google is that Google Ad Manager offers Adsense units for fallback and remnant site inventory. The service supports formats including graphical display, video and text ads.

What isn’t immediately clear is whether the service can link into third party sites and provide dollar returns natively. The FAQ for the service says only that users can “Easily track ads from a third-party network, affiliate provider, or other URL you provide” and screenshots show dollar figures. If it does link in to third party providers for financial tracking, the service will also compete with startups like TechCrunch40 finalist Pubmatic.

OpenX is due to launch a hosted solution later this year, but despite $5 million in funding will find the market tough now the Google Borg has now entered the space. In terms of Google, the service looks appealing and when it eventually opens up will no doubt find a willing user base. It’s yet another example of Google knowing no bounds in its quest to know everything about every person and site.

(via WSJ, thx to Razvan Antonescu

Google's drop in paid clicks: Part of the grand plan

Posted by Richard Defendorf | Post a comment

After ComScore reported a recent decline in Google's paid clicks, the Net ratings service followed up, noting evidence that the drop was due to "Google's own quality initiatives that result in a reduction in the number of paid listings and, therefore, the opportunity for paid clicks to occur."

The reduction in listings, ComScore noted, was "offset by paid revenue per click."

On Monday, at a Bear Stearns media conference in Palm Beach, Fla., Tim Armstrong, Google's president of advertising and commerce in North America, offered essentially the same view on the matter.

As noted by ZDNet Editor in Chief Larry Dignan, Armstrong emphasized that the dip in paid clicks was intentional--part of a strategic plan designed to deliver better, more-precisely targeted ads. Thus, the market anxiety that hit Google's stock was, well, unjustified.

OK then, but Dignan also cites Armstrong's acknowledgment that "search is changing overall in general" and tends to reflect macroeconomic conditions--an acknowledgment, Dignan points out, that suggests Google isn't recession-proof.

Google also told conference attendees that it won't be developing its own content, that it will increase the number of videos and ads on YouTube, and that the company's system won't differentiate between search and display ads over time.

Google's general theme is to offer advertisers a complete dashboard with multiple forms of advertising. Armstrong also noted that Google will deliver ads on social networks via widgets and social-networking apps.

Follow the money: inside the Publicis/Google deal

By David Pasternack

A mind-meld between Google's geeky Ph.Ds and Madison Avenue's pony-tailed creative types could kick-start the next generation of advertising. Here's a look at what the deal might yield.

The ad biz rags have been abuzz with news that Google and French ad holding company giant Publicis have, for the past year, been conducting informal talks about how Google can help Publicis figure out how to create next-generation advertising.

Details of the alliance, "based on a shared vision of how new technologies can be used to improve advertising," were vague enough to stimulate a raft of speculation among the chattering classes. Was Google (which has repeatedly denied that it wants to disintermediate agencies) finally getting into the business via a Trojan Horse arrangement? Would Publicis use this leverage to cut out competing giants such as WPP, whose CEO Martin Sorrell has branded Google as a "frienemy?" What wild new ad units would result from the new synergies made possible from a mind-meld between Google's geeky PhDs and Madison Avenue's pony-tailed creative types?

Let's put this idle speculation aside and focus on the real meat of the deal, which (as is characteristic of everything that happens in the online ad business) is about money. Once you follow the money, everything about this deal makes sense. Here's why:

Time is money, and buying Google's media is too annoying
Despite the mythology that big ad agencies are populated exclusively with people who can't even figure out how to open their email messages, the truth is more complicated. The main reason that more ad dollars aren't flowing into digital is that digital is too hard to buy. If you wanted to reach a million people 10 years ago, you could execute this buy in less than 10 minutes with one phone call. To reach the same million people today, you'd have to have a team in place, which would have to spend a week planning, constructing and executing such a digital campaign.

The irony that digital marketing is labor-intensive hasn't been lost on ad agencies, and Google knows this. Unless it can make it much easier for agencies to buy big chunks of its media, agencies won't bother. Time is money, and ad agencies don’t want to spend time and money on projects whose internal management costs are higher than the cost of the media that's purchased.

Agencies won't buy Google's media without an agency discount
But there's a deeper problem with the way Google sells media than the fact that buying media from it is annoying: It's not profitable.

Every form of "traditional" media, including print, radio, TV and outdoor, has an agency discount associated with it. Agencies make a significant share of their earnings from the spread between wholesale and retail media prices -- except with Google and the other search engines. When buying this kind of media, agencies pay retail, even if they're buying millions of clicks a month. So at the end of the month they're faced with a truly rotten choice: either present their clients with a very high bill (retail price plus media management fee) or a bill without a markup (which means they're going out of pocket running the search campaign).

Given their druthers, agencies wouldn't touch search for this reason alone; those that do will do so as an accommodation, which they do grudgingly in order to keep other profitable parts of the client's business. If Google seriously wants agencies to pony up serious cash, it will have to cut them a break on price.

What will this deal yield?
Google will do two substantive things for Publicis: first, provide it an agency discount (which it will eventually have to open up to other competing ad agencies), and second, figure out some way to vastly simplify all the complicated decisions required to run digital campaigns. Both of these steps are easy to take and will likely be accomplished within a year.

Coming up with a "universal digital marketing dashboard" is a dream that tech-challenged marketers have had for years; the problem with such dashboards is that they're inherently unreliable, and inherently wasteful. They conceal the minutia, and the secret of running effective digital campaigns is to optimize all of the complicated moving parts, which means "working under the hood."

Beyond this, Google clearly has an agenda that it will be busy selling to Publicis, namely how to extract value from numerous expensive properties it has acquired over the years which, from a revenue perspective, have been either disappointing or abject failures. By this I mean YouTube, dMarc, and its various offline media initiatives. None of these have served Google's advertising system; perhaps one of Publicis' old media, pony-tailed creative types can tell Google how to fix them.

Google Master Plan

Google looks to click with ad companies

By Alex Woodson

Dec 5, 2007
NEW YORK -- Beyond DoubleClick, Google is looking for other advertising technology companies to partner with, a company executive said Tuesday.

Speaking at the UBS Global Media Conference in New York, Tim Armstrong, president of advertising and commerce at Google in North America, said his company remains interested in finding ways to connect online inventory to advertising solutions.

"We're exploring the ability to work in that space," Armstrong said. "There are other opportunities to work with companies in that space."

In April, Google said that it intends to pay $3.1 billion to acquire DoulebClick, a transaction that has come under scrutiny from the European Commission. Armstrong said that proposed purchase, which he expects to close, fits "very squarely" with Google's ad strategy and that it will continue to seek more opportunities.

Beyond these partnerships, Armstrong said Google is having success in moving beyond just online text advertising. He said the company has forged friendships with traditional advertising agencies; networks are excited by the company's efforts to track TV advertising, which for now is confined to EchoStar; and that Google is open to work with most companies in various partnerships.

"There are two or three companies that we're too competitive with to do business," Armstrong said. "But hopefully, over time, there will be none."

Google Reader Adds Recommendations And Drag & Drop

Google Reader Adds Recommendations And Drag & Drop

The Google Reader Blog announced that they have added two new features unique to Google Reader but not unique to many other RSS readers. The new features are "recommendations" and drag and drop capabilities.

Google recommendations can be found on the top right side of the Google Reader home page or via the directory page. It basically offers you suggested blogs based on what you have already subscribed to. Like I said above, many other RSS readers offer this capability.

Here are screen captures of my Google Reader Recommendations:

One problem: I have subscribed to several of my recommended blogs. Why is Google suggesting duplicate blogs? I suspect that the RSS feed URL I used to subscribe to those blogs are different. Yes, many blogs have multiple feed URLs.

Google's help center explains that the list is "automatically generated" by using "feeds you're already subscribed to, as well as information from your Web History, including your location."

Another feature new to Google Reader is the drag and drop capability. In fact, just yesterday morning I wanted to use that feature to move one of my subscriptions to a different folder and then as I tried it, I remembered that Bloglines had that capability but Google Reader did not.

Here is an example of me moving my Search Engine Land subscription to the top of this folder:

New Google AdSense API: User Gen Monetization Ho!

User generated content is hot - HOT! But if you're a UGC (yup, I'm using the acronym) site, like RateItAll, Facebook, YouTube, or MySpace, how do you incent your members to post more great stuff, so you can make more money? Well, Google is only too happy to help you out there. Word has leaked recently (Eric was first) that Google is (reportedly) working on a new API that will allow content sites to distribute AdSense earnings to individual members. RateItAll apparently blew the embargo by posting a release discussing this too early. From it:

Pioneering online community and social network RateItAll.com today announced that it had integrated Google AdSense into its service via an API in order to share advertising inventory with RateItAll members.

By leveraging the Google AdSense API, RateItAll has enabled its members to create Google AdSense accounts, earn cash for their content contributions, and track their earnings without ever leaving the RateItAll.com Web site.

As SEOLowdown notes, this could be huge for sites like YouTube. Emphasis on could be. But coupled with Video Adsense, once might imagine a pretty interesting mash up here.

To toss a bit of cold water here, however, I've never seen UGC sites as the least bit driven by money. They are driven by pride, the desire to be first, reputation, whuffie. But dollars? That often screws it all up. I guess we'll get to see soon enough...

OpenSocial opens new can of worms

By Caroline McCarthy
http://www.news.com/OpenSocial-opens-new-can-of-worms/2100-1038_3-6216300.html

Story last modified Wed Oct 31 13:57:13 PDT 2007

When Google announced that its new social-networking initiative would extend to any site that wanted to participate, the land grab for the social Web's attention just got a whole lot more intense.

In a move that was anticipated for weeks, Google has unveiled a set of application program interfaces (APIs) that allow third-party programmers to build widgets that take advantage of personal data and profile connections on a social-networking site. But instead of limiting the project to its own social-networking property, Orkut, Google has invited other sites along for the ride--including LinkedIn, Hi5, Plaxo, Ning, and Friendster.

The initiative, appropriately, is called "OpenSocial." It's a clear contrast to Facebook, the social-networking site that became the talk of the tech world when it announced the opening of its developer platform in May but has kept developer activity restricted to its own service (and has since signed an exclusive ad deal with Microsoft in exchange for an equity investment, likely snubbing Google in the process). When other social networks began to announce their own "platform strategies" this fall, concerns were raised that developers would have to create a completely new application for each site. That could prove inefficient and costly, especially for smaller developers working on a shoestring budget.

OpenSocial, should it prove successful, would change that entirely. "At its highest level, Google is a company that is dependent upon having a great Web platform," said Joe Kraus, Google's director of product management, in an interview with CNET News.com. "This announcement is about making the Web better."

Creators of third-party applications are understandably optimistic. "In a lot of ways this is the greatest thing that could've happened to us," said Ali Partovi, CEO of social music site iLike. "We've already been very successful with that strategy on Facebook, but then spreading to every other social network out there without an open standard would be much more expensive, harder to justify, and harder to prioritize."

Executives at the social networks participating in OpenSocial were equally enthused. "We're in a period of time when we're realizing that social Web stuff isn't just fun, it's really fundamental," said John McCrea, vice president of marketing at Plaxo. "What we're seeing in walled gardens like Facebook and MySpace is an attempt to create a Web operating system, so there's been all this talk over the past six months about platforms...By supporting these OpenSocial APIs, we can carve out real estate that can be populated with any sorts (of applications)."

Notably absent from OpenSocial is MySpace, which has announced early-stage plans for a developer platform strategy and already has its advertisements served by Google. "We would love MySpace to be a part of it," Google's Kraus said, but declined to say why the News Corp.-owned social-networking site--or Facebook, for that matter--is not part of the deal.

MySpace representatives declined to comment.

Multiple sources who spoke to CNET News.com both on and off the record hinted that we will, indeed, only see the tip of the OpenSocial iceberg when it's formally unveiled on Thursday night. The RSS technology behind Google Reader, for example, was rumored to be the engine behind a super-powered "social news feed" akin to Facebook's. But that's potentially on the way. "Orkut is the first customer of OpenSocial on the Google side," Kraus explained. "We think there are opportunities to make Gmail and iGoogle more social as well," he said, but declined to elaborate.

Even before OpenSocial launches, there's already plenty of speculation as to how else the program could expand from its initial incarnation. "Their missing element is social search," pointed out Gartner analyst Ray Valdes. "That's not part of the APIs right now and Google doesn't really have a social search engine in the same way that Facebook has."

Or Google could leverage its new partnerships with information-rich social media sites to boost its AdSense advertising program, especially considering that Facebook is planning to move into the sector. "All that information that they're getting from those social networks, they could use that for an upgraded model of AdSense," suggested AllFacebook blogger Nick O'Neill.

But as the OpenSocial overseer, working through partnerships rather than its usual strategy of acquisitions, Google might not have quite as much power as it's used to. "Partnerships can certainly be very efficient," said RedMonk analyst Stephen O'Grady, who specializes in open-source technology. "They can also be very challenging. You're trying to get a bunch of different firms with competing interests to try to go along. Coalitions of this sort can be problematic over time."

It could also mean some rather un-Googly red tape. The individual social-networking sites are responsible for getting their own arms of the project up and running, and exactly when that will happen is by no means clear. Friendster users, for example, won't see any OpenSocial widgets until at least the beginning of December, and LinkedIn representatives told CNET News.com that while developer activity will begin soon, the full presence of the new platform won't be felt until early 2008.

Now on News.com

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Additionally, some of the OpenSocial participants have not abandoned their existing in-house platform strategies. "We have our own developer program," Friendster Vice President of Marketing David Jones said. "(Developers) will be able to use either Friendster's platform or OpenSocial...We already have hundreds signed up for the Friendster developer program." Jones added that Friendster's own platform will launch on November 30, before its OpenSocial integration does.

Then there's the Curse of the Zombie (or Vampire, or Pirate). By opting into OpenSocial, a social-networking site may find itself at odds with users who find embeddable applications to be distracting at best and spam-worthy at worst. This is especially pertinent to sites like Plaxo and LinkedIn, which promote themselves as productivity tools rather than ways to "poke" your friends. "In some ways, any of these different attempts to mash up between a property and things created by a vibrant developer community does open Pandora's box," said Plaxo's McCrea. "I think certainly, the results to date for Facebook are mixed because of some of those overly viral applications."

Adam Nash, LinkedIn's senior director of product, emphasized that Google is allowing participating social networks to decide just how open they want their OpenSocial platforms to be. "(OpenSocial) doesn't change the fact that we truly have no interest in zombie biting and food fights on LinkedIn," he emphasized. "In order to be in the LinkedIn directory, we will have some set of standards."

"I can't say that there will be no risks here," McCrea said. "I think we're in an early phase of the social Web, and it's an experimental phase, so I think we'll be learning as we go."