Search engine marketing remains Google's primary revenue source, but executives dropped a bomb Thursday on the corporate structure of the company before diving into fourth-quarter 2010 earnings. Co-founder Larry Page will replace Eric Schmidt as chief executive officer in a reshuffle of senior management. The moves, effective April 4, were made to "streamline decision-making and create clearer lines of responsibility and accountability at the top of the company," which makes some think that projects or platforms weren't getting pushed out as quickly as they had hoped. Being first to market will become even more important in the future as the mobile, operating system and tablet markets heat up with Apple and others. During the Q&A section of the earnings call, Jonathan Rosenberg, senior vice president of product management at Google, explains how all employees -- especially engineers -- will be pushed to do more, faster. In the new structure, Schmidt relinquishes day-to-day operations to become executive chairman. His focus turns to an advisory core for Page and co-founder Sergey Brin, along with deals, partnerships, customers and broad business relationships. The company reported Thursday during Q4 2010 earnings that paid clicks -- the amount of times consumers click on ads -- grew 18%, compared with a year earlier, and 11% sequentially. On average, advertisers paid Google 5% and 4% more per click, respectively. Google's revenue in the quarter jumped 26% to $8.44 billion in the fourth quarter of 2010, compared with the year-ago quarter. Revenue from company-owned sites rose 28% to $5.67 billion in revenue, compared with the year-ago quarter. Partner sites generated revenue, through AdSense programs, of $2.50 billion, or 30% of total revenue. That's a 22% increase from fourth-quarter 2009 network revenue of $2.04 billion. Traffic-acquisition costs, the commission paid to marketing partners, came in at 25% of revenue. International revenue from outside the United States totaled $4.38 billion, representing 52% of total revenue in the fourth quarter of 2010, compared with 52% in the third quarter of 2010 and 53% in the fourth quarter of 2009. The U.K.'s $878 million represents 10% of revenue. A growing digital economy, continuous product innovation that benefits both users and advertisers, and momentum of newer businesses such as display and mobile continue to drive revenue and profits, according to Schmidt during the earnings call. Profits jumped to $2.54 billion, or $7.81 a share -- up from $1.97 billion, or $6.13 a share, a year earlier. Google also expanded its employee head count 4.6% to 24,400. During the earnings call, Google execs told analysts and investors that employees across the board received a salary increase. Quality improvements provided the biggest boost to revenue, according to the company. More than 20 updates led to gains nearly double what the company would typically see in a strong quarter. Several new businesses started to see momentum. One business -- display -- now has more than 2 million publisher partners. The number of transactions on the DoubleClick ad exchange tripled, and publishers that sell their ad space through the exchange nearly triple revenue when the exchange wins the auction. In 2010, YouTube's revenue more than doubled. Google began adding features like live streaming to monetize content. Enterprise added customers such as the U.S. government's General Services Administration, and expanded a partnership with Japan's Softbank. Android activation hit more than 300,000 phones daily in 2010, driving a 10-times year-over-year rise in the volume of searches from these devices. In 2011, expect Google to "double-down again on the core of search and search ads, feed the 2010 winners display, YouTube, enterprise and Android, and do it all with even more financial rigor and cross-functional coordination all over the world," Rosenberg says. Local and commerce will become areas of focus for Google this year, he added.
Mobile email use is on the rise even as Web-based email use continues to decline, according to new data from comScore. The Web measurement firm found that traffic to Web-based email sites dropped 6% to 153 million in November 2010 compared to a year ago, while the number of people accessing email via mobile devices increased 36% to 70 million. "From PCs to mobile devices, whether its email, social media, IM or texting, consumers have many ways to communicate and can do so at any time and in any place," said Mark Donovan, senior vice president of mobile at comScore, in a statement. "The decline in Web-based email is a byproduct of these shifting dynamics and the increasing availability of on-demand communication options." In addition to shrinking the number of Web email users, engagement in the category has also dipped, with time spent falling 9%, and page views dropping 15%. Young users -- those between the ages of 12 and 17 -- showed the sharpest decline in usage during the past year, with the number of visitors dropping 24%, and total minutes and page views falling 48% and 53%, respectively. The shift away from email among younger people has not been lost on sites such as Facebook, which emphasized newer communication tools like texting and chat over email in the revamped messaging system it unveiled in November. "We don't think a modern messaging system is going to be email," said Facebook founder and CEO Mark Zuckerberg at the time. That view appears to be borne out by the latest comScore figures, although the firm notes that email is far from washed up. It remains one of the most popular Web activities, reaching 70% of the U.S. online population each month. Usage among older users 55 and over rose 15% in November from a year ago. On the mobile side, the 36% overall audience growth was accompanied by a 40% gain in daily usage to 43.5 million users. Not surprisingly, younger age groups tend to be more active in mobile email. People 25 to 34 were 60% more likely to access email than an average mobile user, and those between 18 and 24 were 46% more likely to do so. Of course, text-messaging is the communication channel of choice among teenagers. A study earlier this year from the Pew Research Center found more than half (54%) of American teens were text-messaging daily in September 2009, up from 38% eighteen months earlier. Overall, 72% of teens are now text-messagers. When it comes to the growth of mobile email, comScore cited the proliferation of smartphones as a key factor. "In a relatively short period of time, adoption of mobile email has reached 78% of the smartphone population, which is very similar to the penetration of Web-based email among Internet users," said Donovan. "These findings demonstrate just how quickly channel shifts can occur and why it's now essential for media brands to have a strong presence in both arenas."
Following through on its threat to challenge net neutrality rules in court, Verizon on Thursday filed suit against the Federal Communications Commission. In court papers filed with the U.S. Circuit Court of Appeals for the D.C. Circuit, Verizon alleges that the FCC exceeded its authority by voting to promulgate open Internet rules. The telecom giant also argues that the new rules are "arbitrary, capricious, and an abuse of discretion." The FCC's controversial open Internet rules prohibit wireline providers from blocking or degrading traffic or otherwise engaging in unreasonable discrimination. The order also prohibits wireless providers from blocking sites or competing applications, but doesn't prohibit wireless carriers from creating fast lanes for companies that pay extra. The rules -- which the FCC approved by a 3-2 vote in December -- drew criticism from many observers, ranging from consumer advocates, who say the rules don't go far enough to telecoms, who say that regulation will discourage investment and innovation. Verizon immediately vowed to challenge the rules in court. The telecom giant isn't alone in trying to ax the new rules. The Republican leadership of the House Energy and Commerce Committee also aims to vacate them. An Energy and Commerce Committee memo circulated this week lists nullifying net neutrailty as among this year's priorities. Congress has the power to vacate the FCC's rules, but only if a majority of the House and Senate vote to do so within 60 days of the regulations' official publication. The FCC has not yet published its order in the Federal Register, but is expected to do so soon. The committee, now under the leadership of Fred Upton (R-Mich.), also intends to hold hearings "on the harm regulation of the Internet will cause to investment, innovation and jobs, as well as the FCC's abuse of authority and process," according to the memo. Some lawmakers also are gearing up to legislate against neutrality laws. Earlier this month, Marsha Blackburn (R-Tenn.) introduced a bill that would strip the FCC of authority to regulate the Internet. Her measure -- which has garnered support from 60 other Congress members -- would ban the FCC from issuing "any regulations regarding the Internet or IP-enabled services."
Digital agency Razorfish on Thursday appointed Patrick Hounsell as SVP and general manager of Media for North America. In this new role, Hounsell is being asked to create a new national structure for Razorfish's media and search practice, while making better use of the agency's existing resources. Along with search, Hounsell will likely be placing greater emphasis on social media, along with other emerging channels like mobile and interactive video. "Razorfish's media practice provides solutions which combine multichannel media, analytics, and unmatched technology savvy," Hounsell said. Hounsell joined Avenue A in February of 2000 as a group account director for search, media and the customer insight group. After the merger with Razorfish in 2004, he joined the East Region's management team, overseeing some of its top media accounts. In 2007, Hounsell became general manager of the marketing and media group, and led Razorfish's offerings in media, search, analytics, social media, marketing creative and account planning. Razorfish recently launched a number of new services, including one aimed to help chief marketing officers get products and services to market more quickly. The initiative is based on the agency's "agile" methodology, whereby designers and technologists create rough drafts of Web sites and digital marketing campaigns, then modify them based on customer feedback. Late last year, meanwhile, the agency dipped its toe into the music business, attempting to drum up support for indie pop artist AM with corporate sponsors by bolstering his social media presence and co-sponsoring a promotional contest.
Internet radio service Pandora has hired a Draftfcb executive as its first director of mobile and emerging media, reflecting the company's growing focus on mobile platforms. Kim Luegers, who led emerging media strategy and planning for Draftfcb's Chicago office, will fill a similar, newly created role at Pandora. In the new post, she will be responsible for helping Pandora generate new revenues from mobile and emerging media; creating ad products for online, mobile and other digital media; and working with clients to develop effective mobile programs, among other tasks. At Draftfcb, Luegers worked on new media initiatives across mobile, interactive, Internet radio and advanced TV on behalf of clients including Miller Coors and State Farm. Before joining the agency, she handled buying and planning in traditional media in Chicago at both Mediaedge and OMD. In the last year, Pandora has ramped up its mobile monetization efforts through various initiatives including a new service launched with AdReady last fall allowing small and medium-sized businesses to run local ad campaigns on Pandora's mobile apps. In June, the company introduced its own iAd-like rich media ad units for the iPad with advertisers on board including Starbucks, Lexus and Budweiser. And as part of its effort to expand access to connected devices everywhere, Pandora this year expects to be more widely available through new in-vehicle media systems from automakers including Toyota, Ford, GM and Mercedes-Benz. More recently, Pandora's ad targeted practices were highlighted in The Wall Street Journal's series on online privacy. In an article last month, the newspaper reported that more than half the 101 popular apps it tested transmitted unique device identifiers to advertisers without a prompt. Some, including Pandora, also sent information including a user's age, gender and location. The company has said it uses listener data in accordance with its privacy policy, and that any advertiser programs (such as sweepstakes) that ask for personally identifiable information are opt-in. Pandora -- which says it has 75 million registered users, up from 50 million in March 2010 -- has raised about $56 million to date from investors including Greylock Partners, Crosslink Capital and Labrador Ventures.
A Minnesota resident has sued FinallyFast.com owner Ascentive for false advertising for allegedly using pop-ups and other online ads to trick consumers into purchasing unneeded software. "In essence, Ascentive falsely identifies computer problems and characterizes them as 'severe' in an attempt to scare consumers into purchasing its software," Douglas Ledet alleges in a complaint filed with the U.S. District Court in the Central District of California. Ledet alleges that Philadelphia-based Ascentive offers free software that purports to diagnose computer problems, but secretly installs an application that sends pop-up ads warning users that they have spyware. Ascentive allegedly recommends in these ads that consumers should obtain its software for $29.95 to rid their computers of spyware and other problems. What's more, he alleges, Ascentive doesn't sell the software, but licenses it annually and then renews people's subscriptions without adequate notice. "Upon information and belief, Ascentive continues to charge its customers' credit cards, even after Ascentive receives notice of cancellation," he alleges. Ledet is seeking class-action status. He is represented by Edelson McGuire, which has represented consumers in other class-action cases against Web companies. Ascentive did not respond to a request for comment. The company recently agreed to pay $78,000 and also issue refunds to Washington state residents to settle an investigation into deceptive advertising practices by the Washington Attorney General. Ascentive, which did not admit wrongdoing as part of that settlement, also agreed that it will not "deceptively" misrepresent to consumers that their computers are at risk of running slowly unless they purchase Ascentive's software.
Access to the Internet makes you more inclined to be involved with voluntary groups or organizations, says research from Pew Research Center's Internet & American Life Project. Some 80% of Internet users participate in groups, compared with 56% of non-Internet users. Social media users are even more likely to be active: 82% of social network users and 85% of Twitter users are group participants. By that measure, I am talking to the right folks in the right place at the right time. The advertising and media industries are no different from every other industry, where the selling process includes a fair amount of explicit or implied criticism of one's competition, and a tendency to gloss over your own product's or service's shortcomings. In an effort to yank ad dollars away from TV and print, the online industry has relentlessly pounded on media that are not interactive, measureable and quick to present an ecommerce opportunity right after your ad runs. Ad agencies are notorious for trash-talking about the ineptitude of senior execs at other agencies, or expounding on why a competitive agency lost a big account. While there is a veneer of statesmanship about another's gains and losses, there is also a high dose of schadenfreude or outright glee. The pervasiveness of electronic media that allows instant, anonymous, often thoughtless and at times, savage responses to news stories and blogs that mention competitors, has only served to lower the general level of civility. And so it is a rare and wonderful moment when the usual day-to-day acrimony is put aside, and players in the ad and media businesses join together in unity to fight breast cancer, a scourge that has touched nearly everyone in this business directly or through family, friends or colleagues. That moment is the 2nd Annual ING Bowling for Breastcancer.org fundraiser on Feb.16, to be held at Lucky Strike Lanes and Lounge in Manhattan from 6 p.m. to 10 p.m. Look at the range of diverse companies that have signed up to help underwrite the event, most taking a lane or two: Adap.tv, Ad Age, AOL, Aperture, Arbitron, BIZO, Casale Media, CBS Interactive, Collective Media, Comcast, comScore, Cox Digital Solutions, Cynopsis, Datran, DMG: Events, Discovery Communications LLC, Electronic Arts, eMarketer, Fox Broadcasting, Hallmark Channel, Health Central, Image Space Media, ING, Laredo Group, Lotame, MedHelp.org, MediaIQ, MediaLink LLC, MRI, National Geographic, NBC Universal, The New York Times, Nielsen, Pandora, Rainbow Media, SQAD, Time, Inc., Tremor Media, Turner Broadcasting, Univision, The Wall Street Journal, Yahoo, 24/7 Real Media and 212NYC.org. The plan is for each sponsor to invite their colleagues and perhaps clients to join them for heavy hors d'oeuvres, an open bar, bowling, billiards, and a silent auction. If anyone can keep their team sober and focused long enough, somebody will win the coveted bowling pin trophy, something that would look nice on a shelf next to a Golden Lion, a Clio, a Webby or even a plaque from Always On. If you saw your company on the sponsor list, find out who is organizing the teams and demand you be allowed to break out your vintage '50s bowling shirt and show the rest of industry you can hit that 7-10 split -- or sink the five and the eight in the same shot on a pool table. Can't attend because you can't stand to miss an episode of "Glee," and your DVR is broken? Then go to www.breastcancer.org/nycbowling and make a donation -- or better yet, buy a bunch of tickets and hand them out to your pals. They will thank you after having a hell of a good time (and who knows, for maybe enabling them to make a valuable contact for future business). If you are in this business, you need to lend a hand. Every $10 counts. As Everett Dirksen once said, "A billion here, a billion there, and pretty soon you're talking about real money."