Posting first-quarter earnings that beat analysts' expectations, Yahoo co-founder and CEO Jerry Yang said Tuesday that the financial results showed the company's "strategy and investments are starting to pay off" in realizing full value for the Web portal. But Yahoo's unchanged outlook on revenue for 2008 may not provide enough leverage to help the company fend off an unsolicited takeover attempt by Microsoft or push up its offer price. In a conference call following the earnings announcement, Yang reiterated Yahoo's rejection of Microsoft's $31-a-share bid as substantially undervaluing the company's "one-of-a-kind global brand." But he added that Yahoo remains open to a potential deal with Microsoft while "expeditiously pursuing" other alternatives. For the quarter, Yahoo reported earnings of 11 cents per share on revenue of $1.35 billion (excluding traffic acquisition costs) that were at the high end of the company's forecast range. Wall Street had expected profit of 9 cents a share on revenue of $1.32 billion, according to a survey of analysts by Thomson Financial. Yahoo's EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of $433 million in the quarter was also above the estimated midpoint of $425 million. The company got a lift during the quarter from a non-cash gain of $401 million through the initial public offering of China-based Alibaba.com, which Yahoo holds a 40% stake in. Overall, Yahoo said its international revenue dropped by 11%, while U.S. revenue jumped 19%. Yahoo executives remained tight-lipped about the latest developments surrounding the company's epic takeover stand-off with Microsoft. Regarding a recent test to outsource paid search ads to Google, President Sue Decker said it was too early to say whether the effort would lead to a wider partnership with Google. "It's premature to speculate on what options we may ultimately pursue or whether some form of arrangement might result," said Decker, referring to the search ad trial the companies announced two weeks ago. She stressed that Yahoo still plans to be a significant player in search, noting that the company surpassed its three-year goal of 10% volume growth in U.S. search during the quarter and came close to that goal internationally. Decker also cited upgrades to parts of its Panama search platform aimed at improving the relevancy of ads by lowering bid requirements for advertisers with higher click-through rates. Furthermore, revenue per search (RPS) was up 15% globally. Even so, Decker acknowledged that Yahoo has a ways to go catch up with Google in search monetization. When it launched Panama, the company estimated that it had about a 100% RPS gap with Google. That gap has been narrowed by 30 percentage points, leaving about 70% still to close. On the display side, Yahoo reported that revenue on its own sites increased 16% compared to the year-earlier period, and that inventory had exceeded its goal of 12% growth in the quarter. Chief Financial Officer Blake Jorgensen said Yahoo has continued to see softness in both display and search in financial services, travel and retail advertising sales as a result of the broader economic downturn. The areas in which the company continued to see "double-digit" growth included automotive, telecom, pharmaceutical and consumer packaged goods advertising. Among the stronger categories, however, telecom and technology were only strong in display. "The underlying marketing services business continues to grow at very healthy rates," he said. Decker also noted that CPMs on remnant inventory sold through its Right Media Exchange had nearly doubled and that premium inventory prices were up modestly. Looking ahead, Jorgensen affirmed Yahoo's full-year 2008 revenue estimate of $7.2 billion to $8 billion, but raised guidance on free cash flow from a range of $850 million to $1 billion to $900 million to $1.050 billion. The estimate on operating cash flow was also increased from $1.725 billion to $1.97 billion to $1.77 billion and $2.025 billion. Some analysts had suggested that a significant boost in Yahoo's full-year guidance could give the company a stronger hand in negotiating a higher bid from Microsoft. But its modest 2008 outlook isn't likely to place additional pressure on the software giant to sweeten its bid. For his part, Microsoft CEO Steven Ballmer reiterated that the company was sticking with its $31-per-share bid. "We think we can accelerate our strategy by buying Yahoo, and will pay what makes sense for our shareholders," Ballmer said Tuesday in a Reuters report while on business in Morocco. "I wish Yahoo all the success with its results, but it doesn't affect the value of Yahoo to Microsoft." Microsoft has threatened to lower its bid and launch a proxy fight by Saturday if Yahoo doesn't begin merger talks. In a preview report issued Monday, Piper Jaffray analyst Gene Munster predicted that if Yahoo's quarterly earnings met expectations, a proxy contest would be the most likely step in the unfolding corporate drama. In after-hours trading, Yahoo's shares were trading down 0.53% at $28.39.
A search marketer has sued Google for allegedly tricking him into paying for ads on its publisher network, when he only wanted to purchase ads that would run on the search results pages. In the lawsuit, filed Tuesday in federal district court in San Jose, Calif., David Almeida alleges that Google did not adequately inform him that his paid search ads would run on the AdSense network as well as the search results pages. Almeida alleges that he thought he had opted-out of AdSense during the registration process, when he didn't respond to a question asking how much he would be willing to pay per click for contextual ads on sites that participate in Google's publisher network. "Plaintiff, like any reasonable consumer, expected that leaving an input blank would indicate that he did not want to bid on content ads," alleged Almeida, a Massachusetts private investigator who began using Google's paid search program in November 2006. He said that Google instead charged him for pay-per-click ads on AdSense pages--which, he alleged, "are demonstrably inferior to ads appearing on search result pages." "Google has benefited from the receipt of such money that it would not have received but for its concealment," he charged. Almeida, who is alleging unjust enrichment, fraudulent concealment and violations of California's business code, has asked the court to certify the case as a class-action. Google offers marketers the opportunity to op- out of AdSense, but Almeida's lawyer, Brian Kabateck, said Almeida didn't know how to do so. "It's very, very difficult for a novice advertiser to understand," Kabateck said. But not everyone agrees that Google's opt-out procedure is too confusing. "It's quite possible that some new advertiser would not understand all the aspects of the system, but I don't think there's any fraud here," said search expert Greg Sterling. "It's pretty easily discoverable that you can opt-out." Google said it hadn't yet been served with a complaint, and declined to comment on the case. Kabateck has previously sued Google and Yahoo for click fraud. His law firm, Kabateck Brown Kellner, settled with Yahoo and joined in a $90 million settlement with Google.
AtomicOnline has snapped up theFashionSpot.com, a 70,000 member-strong online community for fashionistas. The deal adds a unique demographic to the Los Angeles-based digital media company's stable of over 50 sites--high-fashion connoisseurs, designers and enthusiasts. According to AtomicOnline General Manager and Senior Vice President Mike Dodge, it's a market that is underserved by networks like Glam Media and even publishers like CondéNast and Hachette. "SheKnows.com--our community for women--continues to grow, but we found that there was a huge demand for targeted fashion info," Dodge said. "And theFashionSpot.com caters to that by providing content around trends and all things related to fashion. Networks like Glam claim to be all about fashion, but when you dig deeper you find that they spread out into semi-related categories." Dodge said that theFashionSpot.com was even better suited to fashion enthusiasts' tastes, and the advertisers seeking to reach them, than larger properties like Elle.com or Vogue.com. "Online versions of magazines face the huge challenge of trying to meet the mainstream demands of publishing," Dodge said. "They have to deliver niche content, but be broadly appealing at the same time." AtomicOnline plans to supplement theFashionSpot.com with niche sites devoted to modeling and the couture lifestyle that larger publishers don't have the time or sales force to invest in, he said. As for advertisers, Dodge said that while high-end clothing and cosmetic lines would be the obvious fit, theFashionSpot.com also presents an opportunity for well-known brands--particularly CPG companies. "We're finding that a lot of branded advertisers are interested," Dodge said. "The packaged goods companies want to be affiliated with a site that is highly valued by users, and theFashionSpot.com delivers them an engaged user base." AtomicOnline's ad sales and creative teams also assist with campaign design, so Dodge said that theFashionSpot.com would offer custom microsites, Flash-based wallpapers and other rich media options. The new site joins SheKnows.com (with content on health, wellness, celebrities and gossip for women 25 and older), CraveOnline.com (comics, sports and entertainment for men ages 18-34) and teen hub TeenCrunch.com.
Web video network Broadband Enterprises has selected ScanScout as its exclusive domestic provider of in-stream video advertising, the companies are expected to announce today. ScanScout becomes the exclusive provider of overlay video ads for Broadband Enterprises' lifestyle, news and entertainment affiliate network. "The deal expands our network five to seven times to roughly about a billion monthly streams in the U.S.," said ScanScout co-founder and CEO Waikit Lau. Despite drawing large and highly engaged audiences, social and video-sharing networks have had difficulty making the experiences relevant for marketers. ScanScout has been trying to change that with Brand Protector, a proprietary technology that scans online video content to determine its appropriateness for a particular advertiser's brand. Its technology breaks up a video into tiny segments, which it lumps into ad categories, making sure the piece of content is both ad-friendly and relevant. "ScanScout's Brand Protector, as well as their additional technology offerings, holds great potential moving forward," said Darryl LaRue, executive vice president of operations and marketing at Broadband Enterprises. BBE plans to implement ScanScout's overlay technology across its news and entertainment affiliate network, which includes some 1,800 branded local TV, newspaper and radio sites across the country. "This relationship enables our delivery of overlay ads from Fortune 500 brands across BBE's roster of A-list publisher partners," Lau said. ScanScout's proprietary content-matching technology is expected to increase the ability of Broadband Enterprises to monetize its network's traffic by automatically matching relevant ads with its professionally produced content. ScanScout's creative ad formats provide additional opportunities for advertisers to showcase their messages in ways that encourage interaction. The company claims to have served more than one billion ad impressions in the most recent six months, while the partnership with BBE is expected to bring exponential growth. On average, Lau said, the company now commands $15 CPMs for overlay ads. "That number," he added, "varies depending on campaign size, targeting technology, and other factors." Expanding further into the world of original content development, Broadband Enterprises is scheduled to hold its digital upfront for advertisers later this week. Presently, Broadband Enterprises is producing two original online video programs, "The Fantastic Two"--a mockumentary series that chronicles a pair of sports fanatics and their fantasy football wars--and a celebrity news-focused "Access Hollywood"-like series named "Hollywood Fast Track." With the help of Omnicom's OMD Digital, Broadband Enterprises has attached some big brands to its original programming. For "Cube Fabulous," a mock-makeover series made exclusively for the Web, OMD brought in AOL. And the deal paid off: It its third season, "Fabulous'" 16 five- to-seven-minute episodes were streamed 200 million times by some 25 million unique users. For "Fantastic Two," OMD wrangled up none other than McDonald's. Since the series debuted this fall, it has so far been streamed 30 million times.
Federal Communications Commission Chairman Kevin Martin told the Senate Tuesday that no new laws are needed to protect consumers' ability to access the Web because the agency already has the authority to enforce net neutrality principles. "I believe that the Commission must remain vigilant in protecting consumers' access to content on the internet," he testified at a hearing convened by the Senate Commerce Committee. "It is critically important that the Commission take seriously and respond to complaints that are filed about arbitrary limits on broadband access and potential violations of our principles." The hearing, "The Future of the Internet," took place as the FCC is considering whether to take action against Comcast for interfering with traffic to peer-to-peer sites. Comcast argues that it was only trying to manage its network, but net neutrality advocates say the company had no good reason to single out peer-to-peer sites for special treatment. Comcast last month said it will stop throttling traffic to peer-to-peer sites by the end of the year, and will instead deploy "protocol agnostic" measures. "Comcast does not, has not, and will not block any websites or online applications, including peer-to-peer services," the company reiterated Tuesday. Martin also testified that any attempts to regulate traffic should be subject to government scrutiny. "In a manner similar to the way in which restrictions on speech are analyzed, network management solutions would need to further a compelling or at least an important/legitimate interest and would need to be tailored to fit the exact interest," he said. "If the concern is about stopping illegal content, a network provider should not block a particular application to all users if that application transmits both legal and illegal content." A pending Senate bill, the Internet Freedom Preservation Act, would prohibit Internet service providers from blocking or degrading efforts to reach any lawful Web sites. Similar legislation has been proposed in the past, but failed to pass. In Congress, Rep. Ed Markey (D-Mass.) recently introduced a bill that would create a national broadband policy. The aim of that bill is to enshrine net neutrality protections in law, but that measure in its current form does not specifically prohibit Internet service providers from blocking access to sites.
It isn't often I can begin my train of thought with a bold and seemingly surprising statement on the state of interactive marketing, but in this particular case the data is there to support it: Multicultural marketers are boldly going digital, whereas their general market counterparts have been timidly testing the environment. And this is particularly true for those marketing urban entertainment. Minorities tend to be the early adopters--the influencers and trendsetters; needing to see or buy the latest movie or album, latest gadgets and latest fashions. Playing into their aspirational needs, they aren't afraid to spend disproportionately more for what is perceived as "the best" (64% vs. 51% of Caucasians). African Americans and Hispanics have flushed out robust online entertainment experiences; using the web to consume more media: both premium (downloads of music and films) and user-generated content. All interactive marketers are beginning to understand that the new hurdle is not just impressions or eyeballs, but also true consumer engagement and adoption. Targeted outreaches have to look at consumer online patterns and behavior, understanding how they are engaging with a brand's messaging or online experience and ultimately, leading to consumer initiated proactive adoption. Leveraging technology to 'spread the word' is a daily part of the African American, Hispanic and Asian online experience, and all of this is not lost on multicultural marketers, who generally suffer with the challenge of having to do more with less resources. Entertainment brands seeking these engaged online multicultural groups seem to be hitting their stride. Big media companies, content distribution companies, music labels have all found that digital/social networking is the perfect platform for stimulating participation in consumer dialogues. Knowing that minorities are more prone to and comfortable with consuming entertainment and create "virality" around it, multicultural marketers in the entertainment industry are creating bold programs and launching them across a variety of social networks; reaping successful rewards. How are they doing it? Well, from our own experiences on BlackPlanet.com and MiGente.com, the largest social networks for African Americans and Latinos, respectively) we have isolated six key ingredients: 1. Self Expression: Be brave and bold and allow users to express themselves around your relevant brand messages and experiences. After all, most successful brands might be recognized and respected by many, but most certainly won't be right for all. 2. Engage, Enlighten, and Entertain: Don't forget that this is precious time for your consumers. Make your brand interactions fun and rewarding. 3. Facilitate & allow brand evangelists: Easy to say, but hard to do, clearing a path for the dialogue to begin is a start. 4. Community is driven by the members, not driven by the brands: Remember that relevancy and authenticity to the audiences in messaging makes brand campaigns successful. 5. Become a relevant and seamless part of the community: Brands must leverage their key insight into their audience to be integrated into the fabric of the community. 6. Leverage your friends: Successful brands generate "opt-in" brand "friends"/ambassadors as valuable networking assets. Ultimately, it's not strange that multicultural marketers in the entertainment industry are leading the way with successful campaigns in new media. The interactive space is inherently more cost efficient, reaching larger audiences in shorter times, and allowing marketers to test, adapt and enhance their campaigns in near real time. Starting with the sweet spot of entertainment is the low hanging fruit. Leveraging these passion points to their benefit is helping these proactive brands to create compelling and engaging experiences for their consumers while simultaneously raising the bar for what true online consumer engagement can really look like. So for once, multicultural marketers can take pride in leading the way, but don't be fooled, your general market peers are right behind you!