Gawker: valleywag, search marketing

IAC's Citysearch faces class-action lawsuit over click fraud

Nicholas Carlson — Wed, 28 May 2008 13:00:00 EDT

Los Angeles-based law firm Kabateck Brown Kellner filed a class action suit against IAC property Citysearch, alleging the site charges pay-per-click advertisers for fraudulent clicks. The firm has won similar cases against Yahoo and Google. All the major search firms now belong to anti-click fraud coalitions and make lots of nice noises about the problem. Truth is, click fraud isn't much of one. As Google CEO Eric Schmidt explained during an unguarded moment a couple years ago, click fraud will never be that much of a problem because if fraudulent clicks devalue the worth of click for an advertiser, that advertiser can always pay less per click.

Microsoft's online chief: "Paid search is getting more credit than it deserves"

Nicholas Carlson — Wed, 28 May 2008 10:00:00 EDT

Microsoft CEO Steve Ballmer believes the online advertising market will reach $40 billion this year and grow to $80 billion by 2010. Last year, Microsoft earned only $2 billion from it. Google claimed $8 billion. This disparity upsets Ballmer and so he's put his man Kevin Johnson to the task of remedying the situation. Since most of Google's revenues come from search marketing, Johnson's first plan is to acquire more search queries for Microsoft. Hence the bid to acquire Yahoo, or at least its search business. But Johnson knows more search queries for Microsoft won't unseat Google alone, and so his second step is convince advertisers that Google's search advertising isn't worth all the money they spend on it. To make that argument, Johnson will rely on a tool Microsoft acquired when it purchased aQuantive last year: engagement mapping, a system that will tell vendors which ads consumers saw on the Web before they purchased a product.

The idea is that engagement mapping will convince advertisers that the ads consumers saw before they searched actually led to the purchase of their products, not the search ad that took the consumer to the vendor's online store. "We think paid search is getting more credit than it deserves," Johnson told Fortune. He hopes engagement mapping will convince advertisers to spend less on search and more on types of advertising Google doesn't have completely locked up.

This is a misconception of what search advertising is. It's not "brand advertising" meant to convince consumers to purchase a product. It's a way to make sure a product is highly visible when consumers are looking for it, no matter how they decided to look for it. If a series of ads on content sites convinced a consumer to purchase a product, that product's vendor better be the top search ad when that convinced consumer goes searching for it.

The good news? Engagement mapping — an effective way to tell how well a brand advertising campaign is working — won't erode the power of search, but it will take money from less measurable TV, radio and print advertising. The bad news? From the top, Microsoft may be too obsessed with Google to notice.

Icahn hates Microsoft-Yahoo nonmerger

Nicholas Carlson — Mon, 19 May 2008 13:00:00 EDT

Corporate raider Carl Icahn, who has purchased 4.3 percent of Yahoo and proposed a new slate of directors for its board, hates Microsoft's latest plan to purchase Yahoo's search marketing business or otherwise partner with Yahoo to gain control of it. "Microsoft is trying to get the milk without buying the cow, and if you look at Icahn's history, he has never been used that way," one of Icahn's secret stooges told CNBC. "He does not want to see Yahoo pushed into some joint venture with Microsoft and is not going to be used to push Yahoo into it." Icahn and like-minded shareholders favoring a Microsoft-Yahoo merger control at least 29 percent of Yahoo. They do not, however, control Microsoft.

Microsoft's internal memo on Yahoo

Nicholas Carlson — Mon, 19 May 2008 12:20:00 EDT

Microsoft platforms and services president Kevin Johnson addressed employees in an internal memo over the weekend to discuss Yahoo and Microsoft's online strategy. The 11-word version : "We are not where we want to be. Hear more Wednesday." For the superfluous details, see our 100-word version, or, for the gluttons for repetition and passive voice among you, Johnson's entire email, both below:

We are considering a transaction with Yahoo!, not a full acquisition, but we reserve the right to reconsider that alternative. We are not where we want to be. We are better with algorithmic search and we are investing to differentiate in vertical experiences. Hear more Wednesday. Actions we are taking: With search, we are ready to throttle up distribution initiatives. We are building new releases of Windows, Windows Live, Windows Mobile, Internet Explorer, Search and MSN with an eye towards optimizing and unifying. Fix our online branding-Our brands are fragmented and confusing. we need to clarify. In display advertising, we will increase engineering resources. Build on our strengths in Europe. Expand strategic partnerships. Pursue small, targeted acquisitions.

The full email:

From: Kevin Johnson
Sent: Sunday, May 18, 2008 1:30 PM
To: Platforms & Services Division
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:

Consolidate ad platform and win in display
Innovate and disrupt in search
Deliver end-to-end user experiences across PC, phone, and Web

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 percent, 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:

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 four years on search has established a solid foundation to build upon.
Win targeted distribution-With this release of search, we are now ready to throttle up broader distribution initiatives.

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.

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.
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.

Build on our strengths in Europe-As measured by comScore in March, our online business in Europe is doing well. We have over three times the page view volume and nearly seven 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.

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.

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.

Regards,

Kevin Johnson l President Microsoft Platforms & Services Division

Report: Microsoft wants to buy Yahoo's search business

Nicholas Carlson — Mon, 19 May 2008 08:08:39 EDT

Over the weekend, Microsoft said it "raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo." Sources told Kara Swisher that the alternative deal is an acquisition or partnership to give Microsoft control over Yahoo's search marketing business. Yahoo would keep everything else — notably its display advertising business — and Microsoft would control 30 percent of the search market. Perhaps more importantly to Microsoft, it would prevent Google from controlling more than 80 percent of the market with its own Yahoo deal. In its statement, copied below, Microsoft said it reserves the right to change its mind about the deal. We are utterly unsurprised.

In light of developments since the withdrawal of the Microsoft proposal to acquire Yahoo! Inc., Microsoft announced that it is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business. Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo! Microsoft is not proposing to make a new bid to acquire all of Yahoo! at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties. There of course can be no assurance that any transaction will result from these discussions.

Brand advertisers want to use search, but not by paying for clicks

Nicholas Carlson — Wed, 16 Apr 2008 12:40:00 EDT

Why does online advertising only account for about 6 percent of Madison Avenue's total spend? In part, because packaged-goods advertisers — such as Procter & Gamble, with its $1 billion per year ad budget — don't spend much on search marketing. But during a panel at the Ad:tech conference in San Francisco, Andrea Redniss, SVP at agency Optimedia, said one way Google and Yahoo could get more of that packaged goods advertising money is to sell search marketing as a response and measurement tool for offline media campaigns. What does that mean?

Advertisers want to know how and if consumers are reacting to new TV commercials. One way to tell would be to watch for how and whether consumers are searching online using product names, slogans or ad copy. The hold-up? Sales teams for both Yahoo and Google aren't laying claim to the money advertisers are willing to spend on that notion yet because, according to Redniss, they're too stuck on hawking pay-per-click advertising.