Reports surfaced late last week that Google would buy a 5 percent stake in AOL for $1 billion--a move that solidifies the relationship between the two companies while dashing Microsoft's hopes of bolstering its fledgling search engine with AOL's traffic. The deal, if approved when the Time Warner board meets this week, means that Google will continue to power AOL's search engine for at least five more years; the pay-per-click revenue from those searches alone currently accounts for an estimated 11 percent of gross Google revenue. The deal also reportedly involves AOL selling ads to be displayed on publisher sites within Google's AdSense network. The combination of Google and AOL potentially creates an online advertising juggernaut. Last month, Google drew 85.5 million unique users and AOL drew 74.3 million uniques; combined, they far overshadow the previous leader, Yahoo!, which garnered 103.8 million uniques. The deal also thwarts Microsoft's hope that it could promote its search service by replacing Google at AOL. Currently, MSN Search lags far behind both Google and Yahoo! in market share. In October, Google accounted for 48 percent of all searches, followed by Yahoo! at 21.8 percent, and MSN a distant third, at 11.3 percent. Microsoft had been courting AOL since January, but news of the talks was kept secret until September, when the New York Post revealed the negotiations. After the account was published, Google reportedly also started courting the company. One source told OnlineMediaDaily that AOL insiders favored Google over Microsoft, because Google's culture appeared more similar to AOL's than did Microsoft's. The deal values AOL at $20 billion, which is on the high end of analysts' estimates. Time Warner's most recent stock filing showed $959 million in AOL ad revenues for the first nine months of the year--a 39 percent increase from 2004. AOL also collects revenues from its subscribers, currently numbering around 20 million, but the subscriber ranks are quickly diminishing as users migrate to broadband. The deal also requires Google to direct traffic to AOL and, in some fashion, to give prominence to AOL properties within the search results. But the exact shape that portion of the deal will take is unclear. The New York Times reported that Google agreed "to give AOL ads special placement on its site," but noted that such a move is inconsistent with Google's prior business plan. "Until now," wrote the Times, "Google prided itself on its auction system for ads, which treated small businesses on an equal footing with its largest customers." The Washington Post described that component of the deal in a more limited fashion, reporting that AOL will be able to "buy graphic ads that appear alongside the text-based ads Google traditionally has displayed to the right of its free search results." AOL's video service will also be promoted in Google's video search, according to both The Washington Post and The Wall Street Journal.
Nick Pahade, the executive vice president and managing director of WPP Group's Beyond Interactive, confirmed that he is exiting the agency to help launch a new venture at Publicis Groupe shortly after the first of the new year. The move, first reported by Adweek on Dec. 9, will involve working with Publicis Groupe Chief Innovation Officer Rishad Tobaccowala, according to a person familiar with the matter. Pahade declined to comment on the specifics of his new role other than to say, "I hope to have more specific news sometime in January. ...The opportunity is entirely new to the industry." Pahade was a co-founder of Beyond, which launched in 1995. The agency was acquired by WPP's Grey Global Group in 1999, and is now part of the holding company's Mediacom operation. Clients include MasterFoods, Warner Bros., Reebok, Hasbro, Cendant, and GlaxoSmithKline. Pahade was closely associated with emerging and new media initiatives at Beyond, including wireless/mobile applications, broadband video, and video gaming. "I have been fortunate to work with outstanding people at Beyond, as well as with clients who have brilliant foresight. My reason for leaving is totally attached to what lies ahead. I wish my former colleagues only the best success," Pahade told OnlineMediaDaily. Rob Norman, worldwide CEO of WPP's MEC Interaction--consisting of Wunderman Media, The Digital Edge, and Outrider Worldwide--is stepping in to run Beyond on an interim basis. "We are really sorry to lose Nick, and wish him well," Norman said. "He has involved me in his decision over the last few weeks, and I have begun to look at the Beyond organization to identify the right blend of skills to take things forward." Said Dene Callas, president of Mediacom U.S.: "Nick's new role marks the official integration of Beyond and Mediacom and recognizes the expanding role and importance of the interactive world."
Google's launch last week of a service dedicated to searching for music and lyrics could intensify a brewing battle between music publishers and Web sites that publish song lyrics. While lyrics pages--especially those created by fans--have been online for years, the Music Publishers' Association and National Music Publishers' Association only recently started complaining that Web sites containing lyrics violate the publishers' copyrights. The new Google service calls even more attention to those sites--potentially increasing users' awareness of such sites, and also making them even easier to find. In the two weeks before Google unveiled its service, the Music Publishers' Association and National Music Publishers' Association publicly charged that posting lyrics online violates the music publishers' copyrights. David Israelite, president of the National Music Publishers' Association, told BBC News that "unauthorized use of lyrics and tablature deprives the songwriter of the ability to make a living, and is no different than stealing." Meanwhile, the Music Publishers' Association President Lauren Keiser said the group will next year begin actions against sites that post lyrics. A spokeswoman for Israelite said he was unavailable for comment; Keiser did not return phone calls for this article. Google typically removes sites from its index if there is a complaint that the site violates copyright law; as of press time, Google didn't respond to questions about whether any such complaints had been lodged about lyrics pages. Israelite's remarks to the BBC were about both lyrics and tabs--or written notations for playing the music--but lyrics alone appear sufficient to draw publishers' ire. Several weeks ago, Warner/Chappell Music demanded that pearLyrics cease and desist distributing a software program that made it easier for users to add lyrics to their iPods. pearLyrics complied with the request. But late last week, under pressure from the Electronic Frontier Foundation, Warner/Chappell apologized to the developer of pearLyrics. Warner/Chappell's initial request, says EFF lawyer Fred von Lohmann, assumed that consumers who had already purchased a song couldn't legally download the lyrics--when that conclusion might not be the case. "When I buy a CD, I think I should have the right to figure out the lyrics," he said. Still, the pearLyrics dust-up didn't shed any light on the larger question of whether posting lyrics online violates the rights of copyright holders. Lawyers say the answer is likely to turn on the thorny question of whether posting lyrics constitutes a fair use of copyrighted material. "Fair use is pretty context-specific and tends to be fairly unpredictable," said attorney Eric Goldman, who teaches cyberlaw at Marquette University Law School. One of the crucial factors is whether these sites hurt the market. But which market? It's probably not the same market as for audio songs, Goldman says. In fact, fan sites might even help the market for songs. Rather, it's more likely that online lyrics sites hurt the potential market for song lyrics. But that raises the question of whether such a market exists. The mere fact that lyrics sites have been around for so long might be evidence that such sites haven't hurt an existing market, said Goldman. Otherwise, the music publishing industry presumably would have acted before now. "The music industry doesn't easily overlook situations where they're losing revenues," Goldman said. But von Lohmann proposed another theory. He said music publishers apparently want to create a new market in selling online lyrics--and that lyrics sites potentially hurt this future business. "What the publishers are arguing is that they could offer an Internet-based lyrics search service, and these sites cut into that market," von Lohmann said. He added that it's as if the publishers are saying: "We are losing the money we could have made if we had done this and charged you for it."
In a move that potentially encourages blue-chip marketers to increase their online advertising, Yahoo! and Aegis Group's Marketing Management Analytics will offer marketers a tool that assesses the relationship between online ads and offline sales, the companies said Friday. Currently, Yahoo! offers marketers who advertise on its network of sites data about online ads--such as how many times users were exposed to ads. But with this new deal, MMA will offer marketers the opportunity to assess return on investment based on econometric analysis, or calculations that attempt to measure the relationship between seemingly unrelated variables. Marketers will have to pay an extra fee for the new service. John Nardone, chief client officer of MMA, said the model looks at marketing as well as all possible factors that can have an impact on sales. "That changes from business to business, brand to brand," Nardone said. JupiterResearch's Sapna Satagopan saw the announcement as a bold move by Yahoo! to show marketers in big-spending industries like consumer packaged goods and auto manufacturing that they mean business. "Yahoo! is saying 'This is what you should expect from us,'" said Satagopan. "'We deserve your bigger budgets.'" According to Yahoo! Research Vice President Michele Madansky, marketers have expressed a strong demand for greater ROI assessment and accountability. "Marketing executives are interested to know what effect their online campaigns are having," said Madansky. And accountability is now the name of the game, commented Sucharita Mulpuru, a senior analyst at Forrester Research. "This is definitely smart of [Yahoo!] because marketing is becoming so ROI-driven, and everyone's kind of realizing that you need to be held accountable," said Mulpuru. Mulpuru speculated that while marketers were indeed pressuring Yahoo! for cross-channel accountability, the Internet company was probably happy to oblige. "In their mind, they might be thinking they're not getting what they deserve." And, Mulpuru said, Yahoo! has little to lose with this service. "The worst case scenario is that online advertising shows no lift to a marketer's sales. Then they'll get no credit for driving offline sales, which is just how much credit they're getting now."
Internet film and game firm AtomShockwave today is expected to launch AddictingClips.com, a clearinghouse of links to popular video content, including comedic shorts, consumer creations, and clever commercials. The site, which is modeled after online game aggregator AddictingGames.com, a recent AtomShockwave acquisition, contains more than a thousand links to video content sites. Scott Roesch, general manager and vice president of Atom Films, described the site as "the world's greatest repository" of the videos that millions of bored office workers send each other every day. At launch, Unilever's Axe body spray is sponsoring the site. Axe will have a full takeover of all the ad units on the site, and two Axe ads are linked to in the site's video library. Otherwise, the site's ad inventory is relatively spare--box ads and a leaderboard, Roesch said. "Part of the appeal of these sites is that they have a grassroots noncorporate look and feel, and we didn't want to mess that up with a lot of ads," he said. The Axe sponsorship closes in early January, after which a regular cycle of advertisers begins. A spokeswoman for AtomShockwave said that the brands that have expressed early interest largely target the youth market--clients from the entertainment, soft drink, and snack food industries--many of whom already advertise on AtomFilms. Currently, the site hosts no content of its own, but Roesch said that AtomShockwave intends to solicit user-created clips that will be hosted on the site. The company--whose flagship properties are AtomFilms and Shockwave, an online games site--is considering selling video ad inventory against the content, but no decision has been finalized. "We're going to look long and hard for the right way to do that," he said. "Those ads are a fantastic element of our businesses on AtomFilms and Shockwave, but part of the appeal of viral and consumer-generated [media] sites is the immediacy--you click and it's right there."
After a series of server woes in October and November, blogging service TypePad, owned by Six Apart, experienced another major outage last week. The latest problems prompted a new round of complaints from users of TypePad, which only several weeks ago assuaged users by offering 45 days' free service to compensate for the outages. Anil Dash, TypePad's vice president of professional products, said the outage occurred when the company's servers crashed while they were adding more redundant backup storage capacity. The downtime stopped users from posting and commenting for several hours. Later, TypePad restored some functionality, but the blog pages displayed were from backups, so many blogs appeared to have lost their most recent posts--although, Dash said, the data is still there on the servers. The crash occurred Friday, around 2:00 a.m. "We were restarting a new redundant storage system, and had a failure during that restart process," Dash said. "It's kind of like a perfect storm--at the point we were adding on a redundancy, we had a failure." He said that Friday's trouble was unrelated to the past service outages. TypePad this weekend restored the content not displayed on the caches, and all the posts and most of the recently uploaded pictures and files were restored by 7:00 a.m. Sunday morning. After the previous downtime that TypePad faced in October and November, the company sent out an open letter to its users, apologizing for the service problems and allowing them to choose either 0, 30, or 45 days of free service. Dash said the company might do something similar in response to last week's outage. "We're definitely going to do what it takes to make it right. Until we know the severity and the scale of what's happened, it'll be some time till we figure exactly what we'll do," he said. "One of the things that TypePad users have told us loud and clear is that they like that level of dialogue." Pete Blackshaw, chief marketing officer of buzz monitoring firm Intelliseek, said more server troubles for TypePad could mean permanent loss of users. "The buzz will be negative, and for some, unforgiving," he said. "Bloggers build their reputation on constantly updating and refreshing content." Blackshaw also said that when the blogs that went down came back online, many of the bloggers first posted apologies and explanations, which mentioned the server troubles, thus writing them indelibly into search engine indexes. "The real ROI impact for TypePad will be if organic search results on Google or Yahoo! shift toward the negative for the brand," he said. "The last thing TypePad wants is for all their bloggers to apologize to their readers because that will rewire the search algorithms. This is where conversation has such a lasting impact."
In an effort to simplify its search bid management offering, SearchIgnite today is expected to announce the expansion of its software platform to include portfolio-based optimization. The goal, according to SearchIgnite President Roger Barnette, is to give agencies and marketers the biggest bang for their buck on portfolios of keywords across multiple engines. The efforts are coordinating with daily allotted budgets in order to achieve a desired metric--be it revenue, profitability, site visits, or cost per action. SearchIgnite, a division of Innovation Interactive, provides many of its clients with the underlying technology to manage, track, and optimize multiple online campaigns simultaneously across major search engines--including Yahoo!, Google, MSN, and MIVA. JupiterResearch's Gary Stein said that while SearchIgnite is not the only search marketing company now offering portfolio-based management--Atlas and Did-it.com to name two--the move represents a trend that bodes well for search marketing in general. "This is a really efficient way for marketers to manage their search campaigns, and SearchIgnite doing it shows they're serious," said Stein. Stein also noted that prioritizing a daily budget is a relatively new concept in search marketing, and it shows that bid management firms are starting to wise up. "It wasn't that long ago that search marketers couldn't tell their bosses how much they needed to achieve their goals," said Stein. "The idea of a budget is totally attractive to marketers and their bosses." In mid-October, the company landed a partnership with Digitas to provide its clients--American Express, AT&T, Delta Air--with analytics services.