Microsoft and Yahoo could ink their Web search and ad agreement announced in late July by the end of the week. So says All Things Digital's Kara Swisher, citing sources close to the partnership. But as the deal gets closer to reality, it appears that red flags have begun to wave. Ad industry executives had expected Microsoft and Yahoo to seal the deal in October. But when that date passed, industry insiders began to scrutinize the structure of the agreement and whether the real winner would become Google. The deal, however, remains subject to U.S. and European antitrust regulations. Yahoo has several search syndication deals expiring now and during the next year, according to Didit CEO Kevin Lee. "With both Yahoo and its syndication partners being powered by Bing for paid and organic results, within the pending partnership, the real hurdle for Yahoo in this is how Yahoo can continue to deliver value as an extra layer for search syndication partnerships," he says. "Microsoft has good reason to try to establish those partnerships directly with publishers, without the Yahoo middleman." Yahoo needs to find a creative way to approach the publishers when renegotiating deals. Without adding value, Microsoft will likely grab a significant number of search partners from Yahoo, Lee says. It could mean the demise of Yahoo's syndication business. Although not a significant biz, Yahoo's syndication business focuses on monetizing search clicks through its ad platform on non-Yahoo properties. Microsoft also needs to beat Google at the game, which Lee says remains on the negotiating table with publishers. The structure of the deal between Yahoo and Microsoft puts the Sunnyvale, Calif. company in a bad position, according to some industry insiders. Investors are also a bit concerned about Yahoo's continuing loss of search query share to Bing. October's comScore data released this week indicate that Yahoo lost 80 basis points last month -- dropping the company's share of core searches to its lowest level at 18%, Bernstein Analyst Jeffrey Lindsey wrote in a research note published Wednesday. He believes Yahoo's 18% market share in search is worth $6 per share to investors. Bernstein analysts share several concerns, but the firm's analysis indicates the loss of search share is not catastrophic. "Advertisers are waiting to see what will happen to the user-interface and the performance of the new combined business before committing significant new budget increases," Lindsey writes. "Ironically, the uncertainty of the limbo in the Microsoft deal may actually be driving more marginal advertisers toward 'market leaders' as Mr. Ballmer calls them, and away from Yahoo."
Dealing a blow to IAC, a federal judge has decided that disgruntled online marketers can proceed with a class-action click-fraud lawsuit against the company. U.S. District Court Judge Christina Snyder in Los Angeles ruled that the search marketers could be certified as a class because their complaints against IAC stemmed from the same type of alleged conduct. "Plaintiffs advertised using Citysearch's pay-per-click advertising program and were allegedly charged by Citysearch for invalid clicks," Snyder wrote. "Notwithstanding any asserted differences between class members, plaintiffs' claims are based on an alleged common course of conduct." The class includes all pay-per-click marketers on Citysearch who "experienced click fraud by reason of double clicks" -- clicks within a short period of time from the same IP address -- or from Citysearch's "failure to apply automatic filters to traffic from its syndication partners" before March 23, 2007. Barry Diller's IAC had opposed the marketers' efforts to proceed as a class, arguing that "each advertiser's expectations of and experience with Citysearch are unique." This decision appears to mark the first time a judge has ruled on a contested motion to certify a class in a click-fraud lawsuit stemming from pay-per-click ads. While Google and Yahoo have both faced class-action click-fraud lawsuits, those cases were resolved without litigation about whether a class should be certified, according to attorney Brian Kabateck. He represents the marketers in the lawsuit against IAC, and has also represented search marketers in class-actions against Google and Yahoo. Whether a class can be certified is key in these types of cases because individual marketers' damages from click fraud are usually too small to justify the expense of suing, unless they can proceed as a class. The two advertisers who brought the case, make-up services company Menagerie Productions and payroll company Redwolf, alleged that they were billed for clicks that were "invalid." They said that in some cases, Citysearch charged them for more than one click from the same IP address in a short period of time. They also alleged that IAC did not apply filters to screen out suspicious clicks. Menagerie alleged that it shelled out $1,900 in a three-month period for pay-per-click ads on Citysearch without receiving any new clients. Redwolf said it paid $700 over a five-month period and also didn't see any new business as a result of the ads. Kabateck said the case could go to trial next year, unless it settles. "Hopefully, Citysearch will make things right with their customers," he said.
While Google remains consumers' favorite online brand, Yahoo and Amazon are not far behind, according to a new report from Forrester Research. "In the minds of their fans, the top online brands exhibit very traditional attributes such as trustworthiness, helpfulness, and relevance, all at the expense of more-predictable tech-friendly characteristics such as innovation and speed," reads the report authored by Forrester analyst David Card. According to the report, direct-to-consumer brands in categories including media, retail, financial services, and travel -- and consumer electronics, given its technology angle -- should position themselves against competitors' weaknesses, and deliver their brand messages through site experiences that complement offline marketing. For the report, Forrester surveyed more than 4,823 U.S. consumers about their favorite online brands or companies; what brand attributes make them popular, and how brands can make themselves more online-friendly. Online and off, Google recently ranked seventh in an annual brand value study conducted by BusinessWeek and Interbrand. Coca-Cola topped that list for the ninth year running. Online, however, Google has gained ground in the past two years, with 44% of online adults rating Google their favorite in 2009 compared with 36% in 2007. Two years ago, Yahoo held a strong second place behind Google, with a clear gap between it and third-place Amazon. While Yahoo has lost a little luster -- dropping from 32% to 27% -- it's nothing like MySpace, which has faded dramatically from 13% to 5%. Back in 2007, meanwhile, Facebook was just gaining momentum, and Forrester didn't even offer it as a choice. Now it's three times as popular as MySpace. Google is the favorite brand for each of the age groups Forrester examined. Among young adults ages 18 to 24, Facebook ranked second at 36% to Google. MySpace triples its share with young adults at 16%, but can't match Yahoo, at 23% -- or YouTube, at 18%. With the exception of Facebook, the other top five brands all do well with older age groups, maintaining or modestly bettering their share. Notably, Microsoft's popularity directly correlates with age, ranging from a low of 5% among young adults to a high of 24% among seniors (65 and older). Among the wealthy, Google is by far the most popular brand. Indeed, 55% of those making more than $100,000 name Google their favorite. Amazon, at 31%, is next -- and more weighted to higher-income households than eBay. Facebook fared evenly in the space -- which Forrester found surprising, given that it's largely considered a "youth brand." "Trustworthy," "helpful," and "relevant" are the top brand attributes, according to Forrester. Analyzing the phrases consumers assigned to their favorites revealed four tiers of characteristics. The most popular brands did a good job on the first tier: establishing trust, helpfulness, and relevance to their fans. They also did well with the next tier, which comprised value, fun, and quality. The seemingly online-friendly characteristics fell into a third tier of attributes -- and things such as prestige, authenticity, and "cares about the customer" either didn't move the popularity needle or have been neglected by the top online brands. More than half of the consumers who called Amazon one of their favorites said it was trustworthy; 40% of Microsoft's "fans" used the same description. Google, Yahoo, and eBay also did well in that attribute, which combined to drive "trustworthy" to the top of the charts. Half of Google's fans believe it to be helpful, compared with 42% of Yahoo's. The two shopping brands -- Amazon and eBay -- do well on value, while Facebook and MySpace are both social and fun.
Avinash Kaushik, Google's Analytics Evangelist, will be kicking off the Search Insider Summit in just two weeks. I had the opportunity to chat with Avinash last week about what might be in store. As anyone who has heard him before would agree, it won't be-sugar coated, it will be colorful and it will probably wrench your perspective on things you took for granted at least 180 degrees. Here are the three basic themes he'll be covering: The Gold in the Long Tail Avinash believers there is unmined search gold lying in the long tail of many campaigns. The secret is how to find it in an effective manner. I've talked before about how longtail strategies must factor in the cost of administering the campaign, which can be a challenge as you expand into large numbers of low-traffic phrases. Chris Anderson's Long Tail theory assumes frictionless markets where there is no or very low "inventory management" costs, such as digital music (iTunes) or print on demand bookstores (Amazon). In theory, this should apply to search but, in practice, effective management of search campaigns requires significant investments of time. You have to create copy, manage bid caps and, optimally, tweak landing pages, all of which quickly erode the ROI of long-tail phrases, so I'll be very interested to see how Avinash recommends getting around this challenge. I'm sure if anyone can find the efficiencies of long tail management, Avinash Kaushik can. Attribution Redefined For the past three Search Insider Summits, attribution has been high on the list of discussion topics. Avinash thinks much of the thinking around attribution is askew (his term was not nearly as polite). All search marketers are struggling with attribution models for clients with longer sales cycles; often these models are little more than a marginally educated guess. I believe simply crunching numbers cannot solve the convoluted challenge of attribution. The solution lies in a combination of qualitative and quantitative approaches. This, by the way, is the topic for another panel later in the day, "Balancing Hard Data & Real People." Avinash, despite his reputation as the analytics expert, always drops the numbers into a context that keeps human behavior firmly in focus. Search Data Insights The third topic that Avinash will be covering is how to take the massive set of consumer intent signals that lie within the search data and leverage it to not only improve your search strategies, but every aspect of your business. We chatted briefly on the phone about how unfortunate it is that search teams are often separated from much of the day-to-day running of a company. Typically, search marketers and their vast resources of campaign and competitive intelligence are not even connected to the other marketing teams. Avinash will show how the "database of intentions" can be effectively mined to provide unprecedented insight into the hearts, minds and needs of your market. Any one of these topics is worthy of a keynote slot, but at the Search Insider Summit, you'll be getting all three! See you there in just two weeks!
Today we close out the chapter on business lessons learned from Google. As much as I like a good top-ten list, I couldn't whittle this one down, so here are numbers nine through eleven. (Feel free to take a moment to refresh yourself on numbers one through five and six through eight.) 9. Follow the law of averages at your own peril. This one was sparked by David Gould of Resolution Media, who responded to my very first column in this series with this quip: "How about the 'Law of Averages.' Build and market enough 'stuff' and some of it is bound to succeed." Google is certainly the poster child for building lots of "stuff." I think had Mr. Gould not been commenting in a public forum, he might've used the old saying, "Throw enough crap against the wall and some of it's bound to stick." However crass you want to be, the point remains that Google bested its rivals in search largely due to its willingness to experiment and its quick product release cycle. Per Wikipedia, "As invoked in everyday life, the 'law [of averages]' usually reflects bad statistics or wishful thinking rather than any mathematical principle... For example, 'The roulette wheel has landed on red three consecutive times. The law of averages says it's due to land on black!' Of course, the wheel has no memory and its probabilities do not change according to past results." Now, I can tell you with certainly that the law of averages can be very misleading, especially as it pertains to roulette. I once had my "doubling theorem" blown up by five consecutive red spins before reaching table max and then the next two spins immediately following. (Oy, how I wish I'd never seen "Passenger 57"!) There's another famous quote that's applicable here: "Live by the sword. Die by the sword." Google has fallen flat in almost every area outside of search. Silicon Alley Insider nicely chronicles the various Google products that have come and gone over the years. One company that's proven to respect the law of averages without swallowing its sword is Zappos. While it has expanded outside its sole (pun sadly intended) original offering, Zappos hasn't strayed from e-commerce, where it's able to put its "WOW philosophy" of customer service to good use. 10. Find your golden goose, then give away the farm. In looking at all the various investments Google's made over the years in product development (and even PR and public policy), there's one common theme: Google is relentless in its effort to create more Internet page views. Witness its steadfast commitment to cloud computing through products like Gmail, Docs and Spreadsheets. See its "gift" of WiFi at US airports. And, of course, don't forget its lobbying for net neutrality. Heck, Google just launched Google PowerMeter in the U.K. to drive people online to monitor home energy consumption. So, beyond driving Internet page views, what's the other common thread across all these initiatives? They're free. How can Google afford to release all these free tools? Very simple. Someone at the Googleplex has calculated the amount of money Google makes for each new Internet page view -- not page view on a Google property, page view anywhere on the Internet. And I can assure you that amount is more than any other company in the world. I can also assure you that amount multiplied by all the new Internet page views generated each day is not less than what Google is spending on these programs. Have you seen Google's quarterly earnings reports? Bottom line, with AdWords and AdSense syndicated far and wide, the only way Google will stop making money hand-over-fist is if people stop using the Internet altogether -- or somehow kick the Google habit. A great comp here is Intuit. Tax prep has been Intuit's cash cow since inception. And to feed that cow, it launched an array of free tools for small businesses including accounting software, Web site development platforms, etc. Sure, it charges power-users for premium versions of those products but, then again, so does Google. More importantly, Intuit knows that its install base of small business owners will be more likely to use Intuit for tax filing if the rest of their back offices are running off Intuit products. 11. Make yourself very profitable for other businesses. What better way to finish up this list than with another Chu-ism? Dave Chu of Eton, as you'll recall, has weighed in with a number of lessons learned from Google, including marketing, product development, and business. As far as this business lesson goes, Dave elaborates, "I would know. Google created my job. SEO/SEM. Adwords experts. How many new media professional jobs did Google create? Who do these new media pros love to talk about?" Not only has Google sustained an entire profession, it's made incredible sums of money for businesses across myriad categories. I think Reach Local is the poster child here. On one hand, it's a company that is thriving based on reselling Google listings. On the other hand, its customers -- local restaurants, lawyers, dry cleaners , etc. -- are also profiting from Google and, in turn, Reach Local's services. How's that for perpetuating an ecosystem? Google Your Date Alright, folks, that's a wrap on business lessons learned from Google. Join me next time as we explore what Google can teach us about dating. Tweet your suggestions to @LearnFromGoogle. And thanks to the recently rebranded Janel Laravie for the first submission, urging people not to wear black hats on first dates. Google Me at SIS Hope to see many of you in two weeks at the Search Insider Summit in Park City where, as always, I'll be keeping track of all the buzz and assorted tweetables. Also, for the first time, we'll be putting on Search Engine Idol and I'll be doing my best Ryan Seacrest. No word yet on who will be playing the role of Simon Cowell -- but I can assure you we'll find someone with an accent. I'm looking at you, Olivier!