Yahoo CEO Terry Semel announced Tuesday that the company's long-awaited new ad-serving platform, known as Panama, had gone live. Semel, who made the announcement during a conference call discussing third-quarter earnings results, said that the company had started asking U.S. advertisers to switch to the new system, and that it would invite more to upgrade through the early part of 2007. The announcement was consistent with Yahoo's previously stated plans to roll out Panama's "front-end" in the fourth quarter before launching the "marketplace design" part of the platform, which allows for particular ad tailoring functions to be introduced in the first quarter of 2007. "We believe that through this platform we will be able to unlock the full potential of our large global user base and improve our search monetization capabilities," said Semel. The news of Panama being unveiled on Tuesday helped to push Yahoo's stock up nearly 3 percent to $24.83 in after-hours trading. Overall, however, Semel said he was not satisfied with Yahoo's third-quarter financial performance, and that the company was "committed to doing better." Yahoo in September said that third-quarter revenue would fall within the lower half of previous estimates, due to softening ad revenue in the auto and financial services sectors. Yahoo missed Wall Street's quarterly revenue target of $1.14 billion--reporting net sales of $1.12 billion, excluding the money it pays to search-advertising partners. The company had a profit of $159 million, or 11 cents a share--in line with analyst expectations. In the year-earlier period, Yahoo reported net income of $254 million, or 17 cents a share. The Internet giant also estimated fourth-quarter revenue of $1.15 billion to $1.27 billion, falling below the Wall Street target of $1.31 billion. Yahoo expects that "industry-specific" problems experienced by advertisers in the auto and financial services segments will continue to affect ad sales during the quarter. The successful rollout of Panama in the coming months may be the biggest factor influencing Yahoo's rebound from slowing ad sales and heightened competitive pressures. "It's definitely good for them," said Greg Sterling, principal analyst with Sterling Marketing Intelligence, of the new ad platform launching. "The interface that they've created is much more graphical and user-friendly." He added that Panama was also more flexible, enabling Yahoo to more easily release subsequent versions as needed. But any financial impact from the phasing-in of Panama shouldn't be expected until the second quarter of 2007, warned Yahoo Chief Financial Officer Sue Decker. In addition to Panama going live, Yahoo earlier in the day had announced two other corporate moves to help garner more ad revenue: the acquisition of rich media ad company AdInterax and a 20 percent investment in online ad exchange Right Media (see related OnlineMediaDaily story). Semel said that the deals would help Yahoo to expand and improve its ad offerings during a transition period as new forms of advertising and new competitors emerge online. Facing challenges from rivals such as Google and MySpace, Semel stressed that Yahoo was focusing on strengthening its offerings in the areas of social networking, video and mobile communication. Saying that Yahoo was a "far bigger player" in social networking than generally believed, he noted its acquisition of Web 2.0 companies such as Flickr and del.icio.us in the last year. He said that Yahoo would continue to be a key player in the field. With regard to video, Semel pointed to Yahoo's recent deals with Al Gore's CurrentTV and CBS's local TV stations as examples of where the company is headed in terms of expanding its video content. He also noted Yahoo's purchase last month of JumpCut, which makes online video-sharing and editing tools, as an expansion into both social networking and video. Meanwhile, Yahoo Video was the company's fastest-growing property in the last year--averaging 5.6 million unique visitors during the third quarter of 2006, compared to 1.6 million for the year-earlier period, according to AdRelevance, a unit of Nielsen//NetRatings. In the mobile realm, Semel predicted that the company's Yahoo Go platform for mobile will be available on a majority of cell phones worldwide in the next 18 months.
Yahoo on Tuesday announced a pair of strategic moves aimed at bolstering its ad operations. Yahoo acquired rich media ad provider AdInterax, and took a 20 percent stake in automated ad online exchange Right Media as part of a $45 million venture capital financing round for the company. The deals, announced the same day that Yahoo reported lackluster third-quarter earnings (see related OnlineMediaDaily story) are intended to streamline the ad-buying process and make Yahoo's ad inventory more accessible to marketers. By acquiring AdInterax--which makes software for creating rich media ad types from banners to streaming video--Yahoo is banking on a future where Internet advertising looks more like TV advertising. "We're very focused on one thing," said Todd Teresi, vice president of global sales operations at Yahoo--"the growing adoption of rich media online." Yahoo's growing video ambitions were reflected in its deal this week with CBS to offer 10 to 20 local news clips a day from 16 CBS-owned TV stations nationwide. Yahoo likely also feels a new sense of urgency about maintaining its share of video advertising in the aftermath of Google's $1.65 billion acquisition of video-sharing site YouTube last week. Yahoo's market share of estimated image-based advertising revenue was 30.8 percent in the third quarter, according to AdRelevance, a unit of Nielsen//NetRatings. Overall revenue from image-based ads was up 13 percent from the second quarter. Through the AdInterax deal, Yahoo will provide the company's package of rich media software tools directly to marketers at no extra charge as part of Yahoo's display advertising offerings. The AdInterax platform will form the basis of a self-service model for advertisers and publishers in its content network. Marketers on Yahoo, however, will still be free to work with other rich media providers if they choose. As a result of the acquisition, AdInterax employees will be relocated from the company's New York headquarters to Yahoo's headquarters in Sunnyvale, said Teresi. By buying a minority stake in Right Media, Yahoo is further broadening its ad offerings by providing marketers with a way to buy remnant display ad inventory through an open bidding process. The Right Media Exchange, formally launched in June, allows Web sites to auction impressions to the highest bidder rather than having to rely only on ad networks or agencies as middlemen. The exchange has about 11,000 participants--including 8,000 publishers and 3,000 advertisers--and serves some 2 billion impressions a day, according to Right Media CEO and founder Michael Walrath. Teresi said the Right Media exchange would serve as a channel through which Yahoo could offer its "non-premium" inventory for marketers "looking for a very simple and basic run-of-network advertising." By investing directly in the New York-based company, he added that Yahoo "would be better positioned to work with and influence the evolution of the ad exchange and bring the expertise and knowledge that we have of marketers needs." In return for its investment, Yahoo will gain a seat on Right Media's board. Walrath agreed that his company's ad exchange would complement Yahoo's existing, traditional ad network by making remnant inventory sales more efficient. "Yahoo understands really clearly, and has a similar worldview of 'Let's open the marketplace up and be more efficient for everyone and let the cards fall where they may,'" he said. He noted that attempts in the late 1990s to launch online ad exchanges fizzled because the ad market wasn't as complex, and the need for efficiency wasn't as great as it is today.
Universal Music Group took aim at video-sharing sites this week, with a copyright infringement lawsuit against Bolt Media and Grouper Networks. The lawsuit charges the sites with hosting Universal-owned clips, and seeks $150,000 damages for each piece of infringing content. "User generated sites like Grouper and Bolt, that derive so much of their value from the traffic that our videos, recordings and songs generate, cannot reasonably expect to build their business on the backs of our content and the hard work of our artists and songwriters--without permission and without in any way compensating the content creators," Universal Music said in a statement. Josh Felser, president of Grouper--acquired by Sony for $65 million six weeks ago--denied that the company violated Universal's copyrights. "This lawsuit is without merit and we certainly expect to win," Felser said. He added that Grouper complies with the Digital Millennium Copyright Act, which contains a "safe harbor" provision that protects Web hosts from liability if they remove copyrighted material when owners complain. A Bolt Media spokeswoman also stated that the company always takes down any copyrighted clips as soon as it's notified of complaints. If Bolt and Grouper as a matter of policy remove copyrighted material when record labels ask them to, they likely have a defense to the lawsuit, says Jason Schultz, a staff attorney at the Electronic Frontier Foundation. Schultz says that the DMCA protects Web hosts from lawsuits when they promptly take down copyrighted material upon notification and meet the other "safe harbor" requirements. But some other legal experts aren't certain that the law would protect Bolt and Grouper. Eric Goldman, a professor at Santa Clara University School of Law, says that the DMCA doesn't directly address whether Web hosts are protected if copyright owners file suit without first complaining to the site. Goldman said that only about 20 courts had so far considered the issue, and that opinion was divided. The Universal Music lawsuit comes several weeks after CEO Doug Morris publicly threatened to bring a case against video-sharing site YouTube for copyright violations. But Universal and YouTube instead forged a revenue-sharing deal providing that Universal will get a cut of ad revenue generated by its content; that agreement was announced the same day that Google said it would buy YouTube for $1.65 billion. A Bolt spokeswoman said the company still hoped to strike its own deal with Universal.
The next generation of the Einstein family is ready to pick up the mocking mantle of comedy for the Internet age, and "It's Much Worse Than I Thought." No--that's not a critic's judgment. It's the name of a new humor Web site from Mike and Jeff Einstein, heirs to the Einstein family comedy legacy of Albert Einstein and Bob Einstein--better known by their stage names of Albert Brooks ("Broadcast News," "Mother") and Super Dave Osborne--and punchline patriarch Harry Einstein, who started the whole comic spiel in the 1930s as the radio comedian, Parkyakarkus. "'It's Much Worse Than I Thought' is our response to the thousand-and-one inanities and indignities of life in the digitally new and improved America of the 21st century," says Jeff Einstein. "It's the only reasonable conclusion in a consumer society run amok, a society where almost everything is advertised but almost nothing works as advertised." Found at itsmuchworsethanithought.com, the interactive site invites visitors to share their opinions and stories, and pose questions to a variety of so-called experts, like mock anger management consultant Dr. William Ire, author of "F**k that S**t: The Tanked Up Guide to Political Correctness." The site also includes links to short-form comedy videos, preceded by 30-second commercials, appearing on EVTV1.com's "Much Worse Channel" and across several hundred affiliate Web sites in the Vidsense video syndication network. Although the site sells caps, t-shirts and coffee mugs, Einstein says the business plan calls for turning the videos--which rely on jokes as opposed to sight gags for laughs--into audio clips for radio and syndicating them. "We plan to re-engineer the audio and put them on CD and syndicate them through the radio market to drive the brand," he says. "The repurposed material can be localized and used with local talent, where people call in to talk about common experiences." Einstein says the site needs to reach a certain level of traffic, and then the advertising will kick in. When it comes to the business model, he's all-serious. "Look, I'm under no illusions. I know it's tough to launch a site and difficult to drive traffic to it," he says. "We've got to accrue eyeballs."
A post this week on a gaming message board sparked a public relations backlash against in-game ad firm IGA, with gamers alleging that the company uses "spyware" that collects personal data on players to better target dynamic in-game ads. The accusations were triggered by a podcast last week by the magazine Computer Gaming World, which reported that the new Electronic Arts game "Battlefield 2142" included a printed insert notifying players that IGA collects IP addresses and other information to serve in-game ads. IGA's CEO Justin Townsend said the insert didn't reflect any change in the company's procedures, adding that IGA has always collected players' IP addresses in order to serve the correct version of ads, and in-game data to track ad impressions. But the release of "Battlefield 2142" appears to mark the first time this information was disclosed in print, as opposed to the end-user license agreement. Monday, a user who heard the podcast made a post to the independent video game forum, ShackNews, complaining about "spyware" in "Battlefield 2142." This user claimed that IGA was also tracking Web-surfing habits--a claim that Townsend denies. "That's a complete misrepresentation," he said, adding that IGA was not interested in learning which sites gamers visited. Still, that allegation was picked up and repeated as fact on other blogs and social media sites, including Slashdot, Digg and Kotaku, Gawker Media's gaming blog. Nielsen/BuzzMetric's BlogPulse service reported that as of Tuesday afternoon, 52 bloggers had written about Battlefield 2142 and spyware. By Tuesday, users on the social media sites railed against IGA and Electronic Arts, with hundreds of gamers stating that they would cancel their orders of the game, and recommend their friends not play. Townsend described the disgruntled gamers as a "very, very small subset," and said that IGA doesn't intend to combat the negative PR. "Right now we don't have a specific strategy for communicating to the hard-core minority," he said. But word-of-mouth expert Pete Blackshaw, chief marketing officer with Nielsen/BuzzMetrics, said that "defensive branding" might be called for in this situation. "Gaming is a category where there's an unusual level of intensity among hard-core gamers," he said, adding that he typically advises gaming companies to exploit their official sites and forums to address these issues. The game's development studio, Dice, appears to be taking a more proactive stance than IGA. Dice's community manager, Colin Clarke, posted on the "TotalBF2142" forums. "Data will only be gathered from in game. Web browsing and other profiling data is not being gathered," he wrote in a post that was noted in the Slashdot thread discussing the issue.