"Grossly exaggerated" is how independent analysis describes Google's 2009 and 2010 Economic Impact report, in which the search company claims to have generated $54 and $64 billion, respectively, in activity for American businesses. Could it be that FairSearch.org, which released the analysis by Allen Rosenfeld, a Ph.D. economist, Wednesday, is working the numbers in its favor? FairSearch.org, a coalition of travel sites and tech companies, spearheaded efforts to persuade the Justice Department to block Google's purchase of ITA Software, which provides flight data. Coalition members include Expedia, Kayak, Microsoft, Sabre Holdings and Farelogix. During the opposition, Google responded with a blog post explaining the reasons for wanting to purchase the company. The analysis from FairSearch.org concludes that Google overestimated its U.S. economic impact by more than 100 times the value of the actual contribution of its search engine. The analysis details the fundamental flaws of Google's impact on the U.S. economy from its search engine advertising business, examines the validity of each of the explicit assumptions and the association between advertising spend and economic activity. Findings suggest that Google "contradicted economic logic" and did not account for costs of doing business. It also ignored the results of previous empirical economic studies, and failed to consider negative economic impacts of the company's market dominance. As a result, "Google's net impact on the economy could well be negative" after accounting for these impacts. Rosenfeld claims that determining Google's impact on the economy must take into account the company's "unusually high profits, search engine dominance and market power." The analysis claims Google did not take into consideration its 75% dominance in search engine clicks; 76% in search engine ad revenues; and profit margins that far exceed those of competitors and average Internet and U.S. companies. The report specifically points to Google's claims that its AdSense program for publishers accounted for roughly 10% of its overall economic contribution. The revised analysis in the report found that Google's estimation of the impact from its AdSense program is 10 times the value of its actual economic contribution. Digging deep into the numbers, Rosenfeld calls Google's donations from nonprofits -- less than 1% of Google's estimated total contribution -- "unjustified," since the donations represent redistributions of some of Google's profit margins and do not reflect further economic activity. Without listing all assertions, a revised model of Google's economic impact suggests: 1) The advertisers' surplus is less than $1 for every $1 spent on AdWords, since the cost of search advertising must also account for fixed costs, resulting in costs equal to (1.20)(spending), rather than (1)(spending) assumed by Google. 2) For every 3 clicks on paid ads, businesses get 7 clicks on unpaid links, rather than 5 unpaid clicks for each paid click as assumed by Google. 3) The conversion rate of clicks into sales for organic links is only 51% of the conversion rate for paid ads, not 70% as assumed by Google. 4) Sales from free clicks result in only 15% as much revenue as sales from paid clicks rather than the same revenue, as assumed by Google. 5) A cost to businesses, for optimizing organic search links, of 25 cents for every dollar spent on paid-search ads replaces the zero cost assumed by Google. 6) The contribution of search engine advertising to revenue is estimated to be $1.30 per $1.00 of ad spending, rather than $2 for each dollar of ad spending as assumed by Google. Google did not respond to requests for comment based on the analysis.
SEOmoz, a Seattle-based SEO tools company, unveiled an upgrade to Open Site Explorer Wednesday. The tool suite allows marketers to view inbound links on their Web sites, pages and content or on others. The platform enables marketers to discover the reasons why the competition outranks them in search query results for specific keywords, and to find content that is most interesting to specific consumers on a site or a page. Google, Microsoft, Baidu, and Yandex collect link information, but the engines do not share it with marketers. Yahoo announced earlier this month it would shutter its version of Site Explorer by the end of 2011. U.K.-based Magestic offers a similar tool, but SEOmoz co-founder and CEO Rand Fishkin believes reports are not as detailed. Open Site Explorer runs off a new Web index, since first launching 18 months ago. Fishkin said with the new features, the tool can step up and fill the void. "This new version lets us reach deeper into the Web," he said. "Previously, I would get frustrated with the tool because finding pages deep down in an important Web site was very difficult. This tool exposes deep pages on an important Web site." While not all reporting features are available for every version of the product, overall the platform monitors and tracks URLs, as well as the top 25 pages based on authority of links. It reveals when users share or "like" content on Facebook, tweet on Twitter, or click on Google's +1 button. The new version identifies the content drawing the most links to competitor Web sites and allows marketers to compare up to five sites side by side. It also allows marketers to download advanced link or page reports filtered by authority, domain TLD, anchor text, and more. This is noteworthy, considering that SEOmoz isn't building a traditional search engine, but a tool that identifies link structure running across the underbelly of the Internet. "There are billions and billions of pages. So to build the index, our Web crawler, between 20 to 30 days, reaches about 59 billion pages represented across nearly 100 million domains," he notes. The advanced reporting section in SEOmoz's Open Site Explorer shows link information around metrics and quality scores. It also has a filter that lets marketers see only internal, external or nofollow links. It doesn't provide feedback on whether linking to the content proves profitable or beneficial, but Fishkin said it's possible to provide the feedback. Most of the tools are free with registration. Fishkin explains that advanced query reports, such as searching for the .gov links that point to bb.co.uk and contain the anchor text "monkey," require a paid subscription at $99 per month.
As Hulu and Netflix continue to square off, it's important to note key behavioral differences between their respective audiences. According to new research from Nielsen, the vast majority of Hulu viewers get their video fixes via computer, while far less Netflix users rely on their "small screens." Specifically, 89% of Hulu users consume its content directly on a computer, while 42% of Netflix users report watching shows and movies on their computers. Hulu and Netflix users also trend toward different content types, according to Nielsen. Nearly three-fourths -- 73% -- of Hulu users primarily view TV shows, compared to just 11% of Netflix users. On the flip side, more than half -- 53% -- of Netflix users primarily watch movies, while a mere 9% of Hulu users say the same. While "Netflix and Hulu have both attracted reams of followers ... these results underscore the different strengths of the brands based on their content offerings," Jo Holz, senior vice president of Client Research Initiatives at Nielsen, said via email. "While Netflix has a large library of movies, Hulu established itself and remains primarily a TV destination." Hulu recently went on the block, but despite their complementary usage segments, Netflix is reportedly not in the running to acquire the company. Also of note, twice as many Netflix users as Hulu users watch both movies and TV shows equally. Overall, about 15% of Hulu users -- and 14% of Netflix users -- report that they stream by connecting their computer to the TV. Other over-the-top Internet-enabled devices, such as Roku Box, Google TV and Apple TV, were also cited as a means for connecting with Hulu and Netflix. As such, respondents were able to select more than one viewing method to best reflect their viewing habits. For its research, Nielsen completed more than 12,000 online interviews in March 2011, focusing on usage and attitudes for over-the-top video, particularly Netflix and Hulu.
In a move aimed at attracting more publishers, Yahoo's Right Media Exchange is rolling out new tools for selling inventory in the marketplace on a real-time basis. The changes are designed to give publishers more control over how they sell ad space across the exchange, especially when offered through real-time bidding. The technology allows inventory to be bought and sold according to the attributes of each impression in real-time. While RTB promises greater efficiencies in the online ad market, it has also raised concerns among publishers over issues like sales channel conflict, data leakage and uncertainty about pricing and the quality of advertisers. Safeguarding their premium display ad sales from newer platforms, such as exchange-based selling that might pose a threat, is paramount for publishers. To help address those issues, Right Media has added new features that allow sellers to determine the specific types of inventory they offer through RTB and to set reserve, or minimum, prices for different kinds of inventory to help publishers protect the premium sales channel. They would also be able to set floor prices according to each buyer, via RTB or otherwise. In the Right Media Exchange, publishers will also be able to set the type of information they share with buyers by URL, publisher ID, site and channel. Beyond that, they can manage the volume of RTB transactions by analyzing bid-versus-buy data from their buyers. That can help them decide how much inventory to make available to each RTB buyer. In short, the upgraded system will allow publishers to determine what inventory they want to sell to each buyer at what price, and at what level of visibility. In a blog post Thursday announcing the steps, Ramsey McGrory, who heads Right Media, said the new capabilities could also be used to create private marketplaces as well as regular hosted transactions in the exchange. "The general idea here is that Right Media wants to make publishers more comfortable. They can put their inventory into the exchange and it's not the Wild West," said Joanna O'Connell, a senior analyst at Forrester. If the new controls help bring in more quality publishers, that will only benefit the Yahoo-owned exchange by creating more liquidity that will drive more buying and higher pricing. "The more good inventory is in the exchange, the healthier the marketplace is going to be," said O'Connell, who helped create the Atom Systems agency trading desk while at Razorfish. The key draw to date for advertisers in the Right Media Exchange has been to gain access to Yahoo inventory. Other top publishers using the exchange include Beanstock Media. "Yahoo wants to give more power to publishers in an RTB auction -- if for no other reason than to better monetize their own Yahoo owned-and-operated inventory through Right Media Exchange," noted John Ebbert, managing editor of AdExchanger.com. The new tools for sellers come more than a year after Right Media opened up real-time bidding on the buy side to demand-side platform firms, including Data Xu, Mediamath, Turn and X+1. If that move was intended to bolster relations with the DSP's agency clientele, the latest step could be seen as an effort to strengthen ties on the sell side. The enhanced services for publishers also follow a month after Google's $400 million acquisition of ad optimization company Admeld, which caters to publishers. Google also operates the DoubleClick Ad Exchange that vies directly with Right Media. "A couple of very big players -- Google and Yahoo -- are both fighting to be the most attractive to publishers so they'll bring inventory to their exchanges," said O'Connell.
Under a new partnership, Quidsi-owned BeautyBar.com will power e-commerce on Allure.com, the online arm of Conde Nast's Allure magazine. The integration will allow users to buy health and beauty products featured in articles and reviews throughout the site through BeautyBar.com rather than linking to manufacturer sites. Pricing information and a "buy it now" button will appear on product pages that come up when users click on branded items mentioned within articles. These pages include basic information, including what it does, key ingredients, and why it is recommended. All are collected under a tabbed section on the home page. Allure says all products on its site have been researched and tested by its editors and vetted by the magazine's expert panel of cosmetic chemists, dermatologists, makeup artists and hairstylists. The new e-commerce component will be accompanied by a refreshed design for Allure.com, which says it averages 21 million page views and 1.2 million unique visitors per month. Users can save products to a favorites list or click the "buy' button to begin filling a shopping cart that will follow them through the site. At checkout, they will be taken to a co-branded page on BeautyBar.com, which sells high-end brands including Bliss, Philosophy and Dermalogica. It will also offer mass-market beauty products through its Soap.com sister site. If they are not already registered on BeautyBar.com, Allure.com, visitors have to do so before making a purchase. The site promises all products will arrive in one or two days, with same-day delivery for New York City orders and free shipping on all orders over $39. Katina Mountanos, site director for BeautyBar.com, said Allure.com is the first third-party site for which it is providing the e-commerce back end. "If it works out well, we're open to exploring other opportunities," she said. Mountanous declined to comment on finanical details of the partnership with Allure. Parent company Quidsi -- which in addition to BeautyBar.com and Soap.com also owns Diapers.com and Wag.com -- was acquired last November by Amazon for a reported figure of about $500 million.
There's a mobile device for every age group. New findings from media research firm Affinity suggest the growing range of connected gadgets entering the mainstream are attracting distinct audiences. The way it breaks down: E-readers are for baby boomers, PC tablets for Gen Xers, and smartphones for millennials. Affinity's American Magazine Study, surveying more than 60,000 consumers annually across print and digital channels, found that 12% of U.S. adults overall currently own an e-reader. That mirrors recent data on e-reader adoption recently released by the Pew Research Center. In terms of gender, the profile of e-reader owners skews female (54%) versus male (46%). Some 8.2 million of the 58.6 million boomers have e-readers, making them 19% more likely to have a Kindle, Nook or similar device than the average consumer, according to Affinity. What's more, 10 million plan to buy an e-reader in the next six months. More than 9 out of 10 boomers (92%) use the device at home, 13% at work, and 36% power up their e-readers on the go. Affinity defines boomers as those about 50 to 64 years of age. Tablets, meanwhile, are the domain of Gen Xers, those who are roughly between 30 and 49 years of age. They're 16% more likely to buy the devices than average. More than 9% of Gen Xers currently own a tablet PC, while 24% -- or almost 21 million -- plan to purchase one. Overall, 8% of U.S. consumers own tablets. Unlike e-reader users, men are more likely to be tablet owners than women, 52% to 48%. Among Gen Xers, those with household incomes of $100,000 or more are 63% more likely to buy a tablet than their generational peers. But more than half (56%) say they actively share their devices with others, according to the study. Millennials are the most likely to be carrying a smartphone. The under-30 crowd, also known as "echo boomers," are 28% more likely to own a smartphone than average. More than half (54%) of the 25 million millennials have a high-end phone and 18% plan to buy one in the next six months. Just to be clear, there may be more boomers who own smartphones than millennials, but the propensity of millennials to have smartphones is higher than other groups compared to the general population. Other data points: -63% of millennials use their smartphones at work, while 95% report they are the sole users of the device. -Millennials who have graduated college are 23% more likely to own a smartphone than others in their category. Tom Robinson, managing director at Affinity, said he was struck by the expected adoption rates for devices. "What was a bit surprising was the extent to which consumers report that they are planning to purchase each of the different devices, especially tablet PCs, which is a testament to how quickly these digital platforms are being adopted in the marketplace," he said. The Pew study in June found that e-readers have been growing faster than tablets this year. The number of U.S. adults owning an e-reader has doubled from 6% to 12% between November 2010 and May 2011, while tablet penetration during that period increased only from 5% to 8%. Still, IDC earlier this month raised its forecast for tablet computer sales by 6% to 53 million units on the strength of demand for the iPad and competing Android-based devices.
A merger between AT&T and T-Mobile could "undermine" Net neutrality, Sen. Al Franken warns in a letter to the Federal Communications Commission and U.S. Department of Justice. Franken, who is asking the government to block the proposed $39 billion merger, says the deal would create an effective duopoly with AT&T and Verizon controlling a combined 82% of the wireless market. The result is that consumers would be left with fewer alternatives if their wireless carriers start discriminating against competitors, he says. "As a result of the limited regulation of Net neutrality in the wireless market, consumers are extremely dependent on competitive market forces to provide an open network," Franken (D-Minn.) argues in a 24-page letter opposing the merger. The FCC late last year voted to require broadband carriers to follow open Internet rules, but imposed less stringent requirements on wireless carriers than wireline providers. The FCC's neutrality order bans all broadband providers -- wireline and wireless -- from blocking or degrading sites or applications. But the order only prohibits wireline providers from engaging in "unreasonable discrimination," which can include giving certain types of content preferential, fast-lane treatment. Wireless providers appear free to create fast lanes for companies that pay extra. "The FCC has opted to apply only very limited Net neutrality rules to mobile devices," Franken writes. "One of the primary reasons why the FCC found it unnecessary to apply the broader set of protections to wireless broadband is that 'consumers have more choices for mobile broadband than for fixed (particularly fixed wire line) broadband.'" He adds that AT&T and Verizon historically lobbied against neutrality rules, and that Verizon filed suit in an attempt to block them. That lawsuit was dismissed as premature, but observers expect Verizon and other providers to sue again as soon as the rules are published in the Federal Register. "After a merger, AT&T and Verizon will have less incentive to cater to consumers, and we can expect that they will make more blatant attempts to monitor and discriminate against certain content, Web sites, or applications in order to further their own financial interests," Franken notes. The senator argues that allowing the merger to go through will result in price hikes, job losses and diminished innovation. "T-Mobile has consistently remained competitive by innovating. T-Mobile was the first provider to offer the BlackBerry, the Sidekick and the Android operating system," he writes. T-Mobile's Tom Sugrue, senior vice president of government affairs, stated that Franken's analysis "is just wrong. ... We are confident that a thorough review of the record will demonstrate the transaction advances the public interest."
In one of Facebook's latest efforts to monetize the participation of its over 500 million members, the company announced in early 2011 that it will offer advertisers a new opportunity: "Sponsored Stories." Sponsored Stories will republish a content user's post about an advertiser's brand as part of banner ads. Advertisers can opt to have several types of user-posted content appear as Sponsored Stories, such as page "likes," check-ins, application engagement, and page posts. The use of "branded content" or integrating a consumer's message such as a tweet or Facebook post into a banner or other digital ad is becoming a more consistent part of the daily social media interactions consumers have with each other. Facebook is banking on Sponsored Stories, a form of branded content, becoming a big hit with advertisers and a win for Facebook. Brands can greatly benefit from the personal endorsements of social media users to all of their "friends," and Facebook can continue to monetize the millions of social media messages being disseminated by consumers on its network every second. Buyer Beware The key issue that advertisers need to understand with branded content campaigns, such as Sponsored Stories, is that by adopting the consumer's message, the message potentially becomes the advertiser's message and triggers many of the same legal and regulatory concerns an advertiser would have when developing traditional advertising, such as a 30-second commercial. For example, a Sponsored Story may use content created by a consumer and the consumer's name, triggering potential copyright, trademark, and right of publicity concerns. Also, if the consumer makes statements about an advertiser's products, an advertiser would need to ensure the statements are accurate and substantiated, as it could face competitor challenges or regulatory review from the FTC. Advertisers will also need to ensure that a consumer's privacy is protected when using such consumer's information and should not rely on Facebook, which has had its own share of privacy concerns raised by consumers and consumer groups in the past. Any one of these issues can also potentially trigger a public relations nightmare. Advertisers: Consider implementing some preventative measures. In order to maximize the benefits of a program like Sponsored Stories, which can positively reinforce an advertiser's message, and minimize the risks, advertisers should consider the following: *For risk-averse brands, limit Sponsored Stories about the company's brand to "likes" rather than allowing publication of users' full status updates. *Assign an employee to review Sponsored Stories consistently and flag for removal from Facebook any that contain unsubstantiated product claims, false competitor claims and third-party rights-protected content. *Communicate with Facebook to ensure flagged content is removed and is not subsequently re-posted. *Ensure privacy practices are implemented to protect your consumers. *Consult with legal counsel to review the relevant terms of use and evaluate the potential risks of engaging in Sponsored Stories or another social media campaign.