Showing posts with label Google. Show all posts
Showing posts with label Google. Show all posts

27 October 2010

What Earnings Reports have revealed about Ads

Associated Press

Here are highlights of recent quarterly earnings reports from selected Internet, media and advertising companies and what they say about the state of spending on advertising:

Oct. 14: Google Inc. says its average cost per click rose 3 percent from a year ago, meaning companies paid more to place ads. People clicked on ads 16 percent more than they did in the same period last year. Executives also indicate that display advertising accounted for nearly 10 percent of ad revenue in the quarter, and mobile advertising was almost 4 percent. Those figures helped justify two of Google's biggest acquisitions - of DoubleClick Inc. and AdMob.

Oct. 15: Gannett Co. reports a 37 percent rise in third-quarter earnings on Friday, helped by a jump in broadcasting revenue. A recovering auto industry and political campaigns heading into midterm elections poured money into Gannett's 23 television stations. That, plus an increase in advertising on the company's websites, helped the biggest U.S. newspaper publisher halt declining revenue for the first time since 2006.

Tuesday: The New York Times Co. and McClatchy Co. both report that print advertising fell compared with a year ago, when ad sales had already taken a big plunge from 2008 levels. And neither company was able to draw enough new business from its digital operations to make up for the losses in print.

Yahoo Inc. says search advertising revenue fell 7 percent from last year to $331 million. But Yahoo generated slightly more revenue from each search in the third quarter, the first time that has happened in two years. The company fared much better in its stronghold, the "display" advertising category that covers banner and full-screen ads, sometimes featuring video. Revenue in this segment climbed 17 percent to $465 million.

19 October 2010

NBC Universal Drops Ad Partnership with Google

LA Times

The media titan stops turning over excess commercial time from some of its cable channels to the Internet giant to sell.


Google Inc.'s ambitions to broaden its advertising reach beyond the Internet have been dealt a blow by the loss of its marquee media partner — NBC Universal.

NBC said Wednesday that it had stopped providing unsold commercial time from several of its cable channels to Google. Two years ago, Google's efforts to ramp up its television ad sales brokerage system received a substantial boost when NBC Universal became the first major TV programmer to sign on. NBC had been contributing time from its Syfy, Oxygen, MSNBC, Sleuth and Chiller channels.

"We're not currently contributing inventory into the Google marketplace, but we continue to work with Google on multiple projects involving advanced advertising," NBC Universal spokeswoman Liz Fischer said in a statement.

A few months ago, NBC determined that, while the Google service helped fill advertising space on small channels that were not included in Nielsen Co. ratings surveys, it was less effective for more established networks, according to a person familiar with the company's decision. NBC Universal never included its most popular channels — the NBC network, USA and Bravo — in the initiative.

Analysts said that the end of the partnership between the media and Internet giants underscores Google's struggles to get a toehold in advertising sales of traditional media.

"Any marginal benefit that NBC might have seen was not sufficient to outweigh the much larger benefit of maintaining a relationship with their advertisers," said Greg Sterling, an Internet analyst and the founder of Sterling Market Intelligence.

Media companies continue to evaluate whether Google is friend or foe.

"Google's point of view is that they bring more to the table than they take way — whether it be more eyeballs or more revenue. But not everybody sees it that way," Sterling said. "Google has become this force sitting between companies like NBC and their customers. These media companies want to have a direct relationship with their readers, TV viewers and advertisers."

In a statement, Mountain View, Calif.-based Google said it was continuing to work with NBC Universal and its properties. It said that financial news channel " CNBC is an important partner in the launch of Google TV and we are working together on research studies."

Google still counts satellite television providers DirecTV and Dish Network among its partners, along with the Bloomberg, Outdoor, CBS College Sports and Hallmark channels and two Santa Monica cable channels: Ovation and the Tennis channel.

"Google has found it much more challenging than anticipated to sell a TV ad opportunity to big marketers, even those they have delighted and formed relationships with online," said Jacquie Corbelli, chief executive of Brightline TV, a competing advertising agency that specializes in on-demand and interactive TV advertising. "TV, unlike the Web, continues to be — and will be for the foreseeable future — a highly fragmented marketplace of many platforms, with little resemblance to the Web from a pure advertising standpoint."

02 September 2010

Logitech To Create First Google TV Set-Top Box In Fall 2010

HotHardWare


Google managed to score quite a few big partners with their Google TV launch, with Intel and Sony being two key partners in moving the technology forward into the mainstream. But for those who don't want to purchase any entirely new television this fall with a CE4100 processor and the Google TV app onboard, they'll need a set-top box to connect to their existing setup. For that, there's Logitech.

This whole situation feels a little bit like when Microsoft first launched "Extenders for Windows Media Center" at CEDIA a few years ago, but those boxes eventually failed and are pretty much relics today. Google's hoping to have a lot more success with their own STB, with Logitech selected to be the first out of the gate. The details on the box have yet to be fully revealed, but it's pretty clear what it will do. You'll connect the box to your existing HDTV, and then the Google TV platform will come to life via the internal hardware within the sleek, small black shell.

No price points were discussed either, but consumers were told that it will be compatible with existing Logitech Harmony remotes and it will ship with a few accessories, too. A compact keyboard, remote control and touch pad, to be specific. Logitech will also be responsible for a few more Google TV-related accessories, including an "an HDTV camera for video conferencing, and specialized apps that allow you to turn your smartphone into a Google TV controller." Expect the box to launch alongside the service this Fall.

11 June 2010

Apple's Next Disruption: Advertising

The Wall Street Journal

 
If anything is clear from the punches being thrown by Google at Apple over mobile advertising, it is that the search giant understands what is at stake.

As mobile advertising comes into its own, Google should be well-positioned to grab a big piece of it. Prospects for other large media companies, online or traditional, are less sure.

It is easy to underestimate the importance of mobile Internet and advertising. ComScore estimates 48 million people had smartphones in the U.S. in the three months to April, of whom only 5.4 million searched the Web on the devices on a near-daily basis. In contrast, the firm counted 214 million people searching the Web generally in April.

Estimates from eMarketer put mobile advertising at $593 million this year, compared with about $25 billion for total online advertising.

But eMarketer's numbers were issued last September, before the release of the iPad. The Apple tablet's strong sales so far confirm consumer demand for tablet computers and suggest consumers' online behavior is likely to become a lot more mobile. That is likely already the case for owners of smartphones with robust Web browsers like iPhones or Android-powered devices.

Android and iPhone devices commanded 37% of the smartphone market in the first quarter between them, according to Nielsen, against 35% for Research in Motion's BlackBerry. Nielsen's data also show that close to 90% of iPhone and Android owners used the mobile Internet in the previous 30 days, compared with 73% for all smartphones. Browsing the Web on a BlackBerry can be a frustrating experience. So as RIM's market share declines and iPhone, iPad and Android devices become more common, mobile Web use will take off.

Data are scarce on how mobile browsing affects online behavior at a PC. But the ability to do Web searches anywhere likely reduces those done at a desk. Searching could become less important as people rely on apps for certain functions.

All this should spark an ad shift to mobile, particularly to apps. Admittedly, advertisers can take years to respond to changes in consumer behavior. But Apple's plunge into the ad market with iAds, which serves advertising inside apps, is likely to accelerate the change. That it drew $60 million in second-half 2010 commitments from such marketers as General Electric, Unilever and Nissan Motor indicates mobile-ad estimates are too low.

Who will suffer from the advance of mobile advertising? TV networks, potentially, if the caliber of big-brand advertisers snagged by Apple continues. As the mobile audience is likely to fragment among applications, big Internet portals also may be at risk. Regardless, mobile likely will cause a bigger, faster disruption to the ad world than is generally appreciated.

08 June 2010

Google Buys Online Ad Startup Invite Media

Mercury News

Google has acquired Invite Media, an online advertising startup based in New York and Philadelphia.

The Mountain View Internet giant announced the deal Thursday in a post by Neal Mohan, vice president of product management, on Google's DoubleClick Advertiser Blog. Terms of the deal weren't disclosed. However, Peter Kafka of the AllThingsD blog estimated the value as "in the $70 million range."

According to Mohan's post, Invite Media's technology allows advertisers and ad agencies to use "real time bidding" to buy online display ads on exchanges including Google's DoubleClick Ad Exchange. "We're big believers in the benefits and future of this type of display ad buying," he wrote.

The technology "enables advertisers and agencies to tailor their bids on an impression-by-impression basis, based on their own data, when bidding on websites that choose to make their ad space available through an advertising exchange," Mohan wrote.

According to Invite Media's website, the company was founded in April 2007 out of The Wharton School at the University of Pennsylvania. It has been funded by Comcast Interactive Capital, First Round Capital, Genacast Ventures and angel investors. The co-founders are CEO Nathaniel Turner, President and Chief Operating Officer Zachary Weinberg, Scott Becker and Michael Provenzano.

As of November, according to the company's site, Invite Media had 28 employees with offices in New York, San Francisco, London and Philadelphia.

22 May 2010

Google's Open Video Standard Begins New Battle with Apple

San Francisco Chronicle

Google may have just entered a new battlefront with Apple at the "I/O" developers conference when it took the wraps off its plans for the VP8 video codec.

While this battle is not as transparent, or sexy, as Android versus iPhone, it's going to create yet another point of tension for the two companies.

Google's big open video plan is called the WebM project. It will make the VP8 video codec, which it acquired when it bought On2 for $133 million, an open source standard. It will also use the open source Vorbis codec for audio.

When Google announced the new open source project, it said it was partnering with Mozilla, Opera, Google Chrome, Adobe, and others to proliferate the standard across the web.

As John Gruber at Daring Fireball noted, there's a big name missing from the list: Apple. (Microsoft is also missing, but it has thrown some support VP8's way.)

Apple is missing because it put its full support behind another video codec, H.264. H.264 is not an open standard. H.264 is free to use for the next five years, but after that MPEG LA plans on charging a royalty for using it.

It is a proprietary standard, owned by a consortium of tech companies called MPEG LA. Apple and Microsoft have both contributed patents to MPEG LA, so they are part of the consortium.

Those patents are important. Steve Jobs has hinted he will be doing all he can to protect them. In an email to Hugo Roy of the Free Software Foundation, Steve Jobs wrote (our emphasis added):

All video codecs are covered by patents. A patent pool is being assembled to go after Theora and other "open source" codecs now. Unfortunately, just because something is open source, it doesn't mean or guarantee that it doesn't infringe on others patents. An open standard is different from being royalty free or open source.

We don't know, but we suspect that Steve Jobs knew Google was planning on open sourcing its video format when he wrote this. While he specifically mentions Ogg Theora, he also mentions "other 'open source' codecs," suggesting that Apple could be mulling plans to sue Google over the VP8 codec format.

This wouldn't be Apple's first patent lawsuit aimed at Google. Let's not forget it's also suing HTC, a big Android customer.

Aside from the possible patent issues, this codec bothers Apple for other reasons, according to web video experts.

We spoke with Peter Csathy, CEO of Sorenson Media and David Dudas, VP of product development about Google's VP8 announcement. Sorenson Media has been involved in video encoding and compression for over a decade.

Peter and David speculated that Apple doesn't like VP8 for the following reasons:

    * Apple is a control freak, and it doesn't like the idea of Google having control over a new video format, even if it is open source. Apple is closed, it likes its own quality control. With H.264, it has some of that.
    * Apple has been getting companies to commit to its H.264 format. That works well for transmitting video on iPads and iPhones. If another format comes along, it could mess that up.
    * Apple is battling with Google. Why would it help proliferate VP8? The new standard is only going to help Google. Peter and David think Google can monetize from this new format in a number of ways -- from advertising to cloud services. It will also help Android, Google TV, and Google's tablet efforts, they say. Conversly, it's unclear what Apple gains from it.

Admittedly, it's still early in whole messy codec-war. And as you probably noticed, it's also very complicated. It's entirely possible Apple will eventually announce support for WebM once it gets a better look at it.

Lately, though, Apple has not been in the mood to play nice with competitors. We've already mentioned its lawsuit against HTC. It's also in a lawsuit war with Nokia. Then there's also the nasty spat is has going with Adobe. Remember also, CNBC reported Steve Jobs hates Google CEO Eric Schmidt now.

If Google plans a new format that will give it more control over web video, possibly hurting Apple in anyway, we don't see any reason for Apple to let this one go. So, get ready for more fireworks between the two tech companies.

This time it could be over video codecs, of all things.

17 February 2010

Opinion: Will People Leave Facebook for Buzz? Fat Chance.

cNet



Let's say you'd constituted a drinking game for the aftermath of Tuesday's unveiling of Google Buzz, the odd new mishmash of status messages, geolocation, and social-media aggregation: Take a drink every time some pundit says Google is trying to "kill" Facebook, Twitter, or any number of the "geo" start-ups out there.

You'd have been totally blitzed.

The cries of "It's a Facebook killer!" and "It's going to kill Twitter!" are tedious, but completely understandable considering that this is one of the first big pushes from Google, which has never been able to get a good grip on social networking, to make inroads in the space. And Buzz is indeed a product that's reactionary as opposed to trailblazing. It's Google's biggest acknowledgment of the fact that people dig these short real-time messages and social-media sharing. It aims to take the reasons why people use Facebook, why people use Twitter, and why early adopters have started using "geo" services, and wrap them all up into a product intimately connected to its existing Gmail client.

But things are very different from the days just a few years ago when it seemed like any social-media site was in constant danger of being one-upped by another. The space has matured to a point where the rise of a new player means tens of millions of people voluntarily ditching the last one. Not easy. Facebook has surpassed 400 million active members around the world, and additionally announced Wednesday that it has 100 million of those members using its mobile Web site. That's a significantly deeper influence than Friendster or MySpace ever can claim to have had, and the rise of Twitter does not seem to have curbed its growth.

Facebook is a household name, and it takes a lot for a tech brand to reach that point. Google did it with search and iTunes has done it with music sales--which is why it takes massive companies like Microsoft and Amazon, respectively, to make a dent in that market share, and they've still had an uphill battle (to say the least).

So here's the positive news for Google: It's created a great way for people to actually start using Buzz, assuming they're Gmail users in the first place: The "Buzz" link is right below the "Inbox" link in Gmail, and when there are new messages on Buzz, it shows up just as though they were new e-mail messages. It's like we're already conditioned to check up on it.

But here's the thing. There's a whole lot else that people do on Facebook besides comment on one another's status messages--the biggest of which is the company's groundbreaking third-party app platform. The biggest social game on Facebook, Zynga's Farmville, attracts 75 million people per month. That's nearly a fifth of the social network playing a single game. Then there are the people who engage in other sorts of "games" on Facebook: the social capital that members feel they earn by getting tagged in a lot of photos and having a ton of wall posts from friends should not be sniffed at either, for example.

It's a different story for Twitter, a far smaller company with an active user base that arguably can't be considered fully mainstream. Twitter users with legitimate "social capital" are generally restricted to celebrities, media figures, and those who got on the bandwagon early, meaning that there are millions of casual and passive Twitter users whose allegiance to the service may not be anywhere as strong as their allegiance to Facebook. Buzz, even if it doesn't "kill" Twitter, has a chance to suck up some market share that Twitter's still striving to get.

Remember why Twitter really started to break into the mainstream in the first place? It had a lot less to do with social-networking than you'd think. Celeb-culture freaks wanted to see what funny links Ashton Kutcher was posting, or they'd heard it was the fastest way to get breaking news from across the world. Twitter's surprisingly high attrition rates, in turn, indicate that some of these passive users only experimented with it, and others might be reading the latest from Ellen DeGeneres and Perez Hilton without actually posting tweets themselves.

This is where I can see Google Buzz getting reach: in Twitter-like mass short-form communication, but for the audiences that haven't found the need or desire to dive into the jargon-filled, truncated culture of Twitter. If you use Twitter to read John Mayer's irreverent messages and get JetBlue deals, but don't actually update it yourself, Google Buzz might be a completely different product. For better or for worse, it's forced its way into your Gmail.

But it's a lot harder to force a ubiquitous social network out of people's lives. Importing a contact list is a pain in the butt regardless, and you can bet that Facebook won't make it any easier.

Nor has Google Buzz yet proven that it can offer something better than Facebook. The only thing it does that Facebook doesn't do is enable geotagged status messages; not only will those likely be coming to Facebook eventually, but geolocation is a feature that is far from mainstream acceptance and will likely go unnoticed by the average user. Early uncertainty about the exact privacy specifics of Google Buzz may quash any advantage it may have had in the public eye about being "safer" than Facebook.

There are reasons why people ditch Web services: the experience is bad, they're technologically stagnant, uptake wasn't enough to bring users back, or there are real financial incentives to go elsewhere. AOL's once-unstoppable dial-up service languished because its prices were undercut by faster cable and DSL providers, and its shiny software features were matched by cheaper, slicker technologies on the Web. Friendster's founder has blamed technical difficulties for the social-networking pioneer's plunge in U.S. popularity. MySpace's culture of "meet new people" and predominance of flashy, music-blaring profile pages was a turn-off for many adults.

Right now, Facebook is neither suffering from obsolescent technology nor facing an upstart alternative with some kind of financial perk. And Google Buzz, at least at launch, doesn't offer enough that's new.

Plus, there is absolutely no way to raise a barnyard of virtual pigs. That apparently means something to a lot of people.

10 February 2010

Google to Add Social Feature to Gmail

The Wall Street Journal


Google Inc. is taking a swipe at Facebook Inc. and Twitter Inc. with a new feature that makes it easier for users of Gmail to view media and status updates shared online by their friends.

Google could announce the new Gmail feature as soon as this week, said people familiar with the matter. A Google spokeswoman declined to comment.

The change adds a module to the Gmail screen that will display a stream of updates from individuals a user chooses to connect with, said one of these people. It is a format popularized by Facebook and Twitter.

Yahoo Inc. added a similar feature to Yahoo Mail last year, allowing users to see whether friends have uploaded a photo to a site like Flickr, for example.

Google, too, is trying to get users to turn to Gmail as a place they can go to see what's up with their friends. But whether users will want to blend sending email with browsing friends' content is unclear.

Google has been trying to fashion Gmail into more than an email service for years. It currently lets users set an "away message"—which can be a link to a Web site—that their friends see when they message them.

The new stream will eventually include content that a user's connections share through Google's YouTube video site and Picasa photo service, according to one person familiar with the matter. But whether those features will be announced in the coming days remains unclear.

Google's move comes after Facebook last week rolled out a new design with a newmessage inbox that more closely resembles an email inbox like Gmail's. The social-networking company said it had roughly 400 million users. Gmail had 176 million unique visitors in December, according to comScore Inc.

08 February 2010

Google Runs Television Ad During Super Bowl

Bloomberg

Google Inc., the world’s most popular search engine, ran a minute-long commercial during the Super Bowl, marking a rare use of TV advertising for the company.

The ad demonstrated features of the company’s search engine, including its translation functions. The commercial, called “Parisian Love,” showed an Internet user relying on Google to court someone in France.



Google hasn’t typically relied on television ads to publicize its products, though it did use TV to promote its Chrome Web browser last year. Those commercials, which were developed by Google’s Japanese employees, first aired on the YouTube video site. The Super Bowl commercial had a similar origin: It was part of a series of videos that ran on YouTube for more than three months.

“We didn’t set out to do a Super Bowl ad, or even a TV ad for search,” Chief Executive Officer Eric Schmidt said in a blog posting yesterday. “Our goal was simply to create a series of short online videos about our products and our users, and how they interact. But we liked this video so much, and it’s had such a positive reaction on YouTube, that we decided to share it with a wider audience.”

Schmidt signaled that the Super Bowl commercial was coming last week, saying in a Twitter update that he couldn’t wait to watch the game. “Be sure to watch the ads in the third quarter,” he said.

The Super Bowl, held at the Sun Life Stadium in Miami, pitted the Indianapolis Colts against the New Orleans Saints for the National Football League championship. The Saints won 31-17.

CBS Corp., which broadcast the game, said the cost of some of the Super Bowl ads exceeded $3 million for a 30-second spot. The game drew an estimated 106.5 million viewers, making it the most-watched program in U.S. television history, according to Nielsen Co.

Google rose $2.18 to $533.47 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have fallen 14 percent this year.

08 January 2010

In Search, Microsoft May Race To The Bottom

Business Week



The world is finally waking up to the full implications of Google's business, and they're not all pretty.

Leading the rebellion is News Corp. (NWS) CEO Rupert Murdoch, who is threatening to keep his newspaper content beyond the reach of Google (GOOG) searches. Murdoch wants to keep Google from reaping so many of the financial benefits of advertising placed adjacent to News Corp. content. He's being aided and abetted by Microsoft (MSFT).

In a scenario under consideration, Microsoft would pay News Corp. for making articles from The Wall Street Journal and other Murdoch-owned publications searchable exclusively through Microsoft's Bing search engine. If the effort encourages other powerful content providers to demand compensation from Internet companies that generate revenue from online ads, the Murdoch-Microsoft partnership could create a big problem for Google.

Search is not Microsoft's core business, but it generates a lot of tech industry revenue—and funds Google, Microsoft's No. 1 competitor. So the best play for Microsoft in the Web search market could be to diminish the revenue stream for everyone involved. If Microsoft could reduce the overall market value of Web searches, it could protect its own software revenue while hurting Google.
Changing the Economics of Search

Blogger and entrepreneur Jason Calacanis recently suggested a strategy whereby Microsoft could gain search market share by paying content providers more than they're getting from search referrals.

Google's threat to Microsoft and other software and telecom companies is manifold. Google is competing not only in search engine software, but also in mobile phone services, personal navigation, and operating systems.

In concept, it wouldn't be especially difficult for Microsoft to change the economics of the Web search market, as long as the company can tolerate losses. Microsoft could take advertising revenue generated by Bing and pass it along to media providers, in return for exclusive arrangements to make their content available on Bing. Microsoft would modify the money flow.
Alternative Model: GDS

The search-engine economy doesn't need to work the way it does; there are alternative models. Consider the travel industry's global distribution systems, used by airlines, car rental agencies, and hotels to make their inventory available to travel agents. The systems amount to search engines for the travel industry.

As time went on, the global distribution systems (GDS) had to pass more money from airlines to travel agents in order to motivate them to use the systems. So an airline might pass $8 per booking to its GDS, which then must pass $5 on to Expedia.com (EXPA). Like Google, the GDS centralize great power over finding information. But unlike Google, companies that invest in the travel systems don't keep all the profits for themselves.

Similarly in the Web search market, Microsoft could redirect the flow of funds. The company doesn't need the money from search. In its most recent quarter, Microsoft generated more than $7 billion in sales from its main businesses, Windows and Office. By reducing the value of Web searches for media content, Microsoft could strike a blow at Google, which is challenging its main applications and operating system businesses. In other words, Microsoft could make Internet search more like the GDS model and sap the profitability from it.

Microsoft is likely well aware of the potential. In 2008 it tried to follow exactly the GDS model by "incenting" consumers to use Bing through a program that provided consumers with cash back on purchases made via its search engine. The program wasn't successful, but it reflected Microsoft's willingness to try to shake up the Web-search economy.
Will Others Emulate Murdoch?

Today, Microsoft is focused on working with companies that care dearly about revenues—media companies such as News Corp. Search-related ad revenue is the bonanza on the Internet, and News Corp. doesn't make enough from display ads to pass up Microsoft's deal. News Corp. could strike an arrangement that lets it lock in a disproportionate share of search ad revenue from Bing-driven hits on News Corp. sites. That kind of deal would work to Microsoft's advantage, too.

Microsoft could sweeten the deal for News Corp. by sharing a cut of broader Bing search ad revenue. Microsoft could in effect say, "Rupert, old pal, we really like you. Here's a big chunk of our search revenues, as long as you're willing to work with only us."

Other publishers have reasons to follow News Corp.'s lead. If payments from Microsoft exceed the value of ads generated by Google-related traffic, it would make sense for other publications to delist from Google, too.

As more content becomes available exclusively on Bing, users could switch away from Google search. That in turn will move market share. Google may even begin to pay incentives, putting pressure on its margins. Microsoft could be willing to race all the way to the bottom.

26 December 2009

Google Races To Speed Up The Web

Business Week



Google is in a really big hurry to make the Web experience faster.

That became abundantly clear in 2009, when the company unveiled a steady stream of projects, products and enhancements focused on increasing Internet speed.

The initiatives varied widely in scope and focus. They included organic Google search engine optimization tools for webmasters to improve Web site performance. Others were speed-focused products like the Go programming language and Chrome OS. Google also pushed proposals to revamp aging Internet protocols and lobbied governments for broadband improvements.

The common denominator across the various heterogeneous efforts is an urgent desire to speed up the Web. This is rooted in Google's deeply held belief that a faster Internet is good for everyone, drives up online usage all around and boosts the company's business.

"The benefit of speed improvements is very substantial for the overall Internet. In the end, as the Internet gets faster, we benefit because people will use it more, which hopefully means they'll do more searches, which gets us more revenue," said Urs Hölzle, a Google fellow and senior vice president of operations.

At first pass, it's hard to argue with this reasoning, particularly when many of the Google efforts are free and available as open-source software, which anyone can adopt, modify and use.

Plus, Web latency remains a chronic, thorny problem with many improvement opportunities, and Google has the financial and talent resources needed to lead the way and tackle the bottlenecks.

"Google can afford to develop these projects in a way that's going to be strategic," said Sheri McLeish, a Forrester Research analyst. "Google has a luxury most companies don't. They're running a very successful business and what we're seeing is what that success affords them."

Still, as Google advances aggressively with its speed initiatives, it also indirectly increases its already considerable power and influence over people's and organization's Web activities, raising so-called "Goog-zilla" concerns.

For example, in early December, as part of this overall speed initiative, Google launched a new system to resolve DNS (domain name system) queries. It said its product improves on existing DNS resolver technology with faster, more efficient caching and additional security safeguards.

The thing is, those who switch to Google Public DNS will let the company know which Web sites they're visiting. This adds to the already massive amount of user data Google has access to via its search engine, online services and applications.

"Google definitely sees itself as being in a position to influence the future direction of the Web. From a business strategy perspective, it's smart of them, because clearly they're a major beneficiary of Web traffic," said Hadley Reynolds, an IDC analyst.

"However, many people are very concerned that when you add up this whole picture there can be some deep nefarious purpose behind all of these moves. That's a legitimate concern," Reynolds added.

Reynolds notes similarities between Google's rise to power on the Web using its leadership in search and the way in which Microsoft used its dominance of the PC OS to expand into many other areas of consumer and enterprise computing.

"When you add up all the elements, it amounts to essentially being a Windows kind of dominant player in the Web environment, creating the same kind of presence Microsoft has had on the PC and then the enterprise. Google clearly has a level of ambition to do the same kind of thing on the Web," Reynolds said.

"At this stage, no one in the Web environment has a similar platform from which to compete against Google," he added.

Hölzle said Google understands privacy concerns around its various products and initiatives, which is why the company strives to be clear and transparent in its policies related to user data collection, analysis and retention. After all, the company reasons, if people distrust Google, they will stop using its products and services.

For example, Google pledged that Google Public DNS will retain end-users' IP addresses for no longer than 48 hours, and that it will store for no longer than two weeks general data about the users' ISP and city. Google also promised not to use Google Public DNS traffic data to complement data it collects from users in its other services.

Nonetheless, as skeptics often point out, one must take Google at its word on faith, hoping it sticks to its promise not only now but also in the future, and that accidental data leaks or compromises don't occur.

Another concern is what some view as Google's sometimes short attention span, which causes the company to release early prototypes of often promising services that it later loses interest in and abandons. By Hölzle's estimation, Google has about 25 speed-focused projects in various degrees of completion.

"One of the bigger challenges for Google is delivering on its promises. It tends to make announcements very early in the development cycle to get people excited and interested, but then it seems to take a long time to move those products to production ready," McLeish said.

Hölzle said Google views its speed efforts as key to its business, and that its commitment to them is solid and long term, supported by the company's top executives. Google even has a virtual team focused on speed matters with members in a wide variety of product groups.

Hölzle also pointed out that Google's speed obsession isn't a fad that caught on this year. The company has been stressing the importance of speed for several years, and many efforts unveiled in 2009 had been in the works since 2008 and before.

One ambitious speed initiative is SPDY, pronounced "speedy," which aims to revamp the venerable HTTP protocol for Web content transport. SPDY, still in experimental phase, could be much faster and better able to take advantage of broadband, a sort of "HTTP 3.0," Hölzle said.

In this area of legacy Internet protocols, Google backs HTML 5.0, because the company believes its improvements greatly help to narrow the performance gap between Web applications and PC applications.

Changes at the Internet protocol and standards level require industry-wide goodwill, consensus and collaboration, which are sometimes tricky to generate due to competitive tensions among vendors. Hölzle trusts Google will succeed with its proposals, especially SPDY, for which it has high expectations.

"The Internet community is good about having technical arguments and making them based on technology merits. If we show why [our proposals are] good and we can give people an open-source implementation to demonstrate how it works and also measurements to see what the benefit is, I'm confident we can change standards because everyone will realize it's for everyone's benefit," he said.

Another major area of focus for Google is Web site design, where best practices are often ignored, even by major Web publishers, resulting on clunky and slow Web pages. Google has promoted good design principles and released webmaster tools like Page Speed. This open-source Firefox add-on analyzes a site's server and front-end design and, based on a set of best practices, generates recommendations.

Then there are the products created primarily because Google saw an opportunity to build a better mousetrap, like the Chrome browser, launched last year, and Chrome OS and Go programming language, both introduced this year. Likewise, many improvements across its product line are driven by speed considerations. "We see again and again that if you make something faster, the usage goes up almost immediately," he said.

It remains to be seen if, in fact, what makes Google SEO better and faster does indeed have similarly beneficial effects on the Internet community at large. With the velocity at which Google is pushing ahead its speed efforts, we'll likely find out soon enough.

23 December 2009

Google, Yelp Deal May Be Scrapped

PC World


The rumors that Google might purchase Yelp for over half a billion dollars have been replaced by new rumors that the alleged deal is dead. If that is true, it is very unfortunate because the two complement each other in ways that no other acquisition or partnership can match.

The buzz all weekend was that Google was close to a deal to acquire Yelp--a site that allows users to review local businesses. As of today, the deal has unraveled with a sort of "he said, she said" scenario about which party broke things off, and with little explanation of why.

Regardless of whether Yelp walked away for the promise of a better deal, or Google called things off feeling that Yelp was not negotiating in good faith, or just to call Yelp's bluff, the news is unfortunate. Google is really the only suitor that can really capitalize on what Yelp has to offer, and Yelp fills a void that can really tie all of Google's advertising empire together with a pretty red bow.

Match Made in Heaven


The rival suitor that allegedly offered $750 million for Yelp has not been revealed, but it seems safe to say it would have to be Microsoft--if the offer really exists and wasn't simply a negotiating tactic to try and elicit more money from Google. What other company has that kind of money and can find any strategic use for Yelp that would be worth an investment of that size?

Microsoft has done well with Bing--developing a number of innovative search elements and creating a compelling alternative to Google. Bing is a success and it is gaining in market share, but it's no Google and Microsoft doesn't have all of the other pieces necessary to capitalize on what Yelp has to offer.

Google, on the other hand, is uniquely suited to leverage Yelp. Combined with other recent Google acquisitions like AdMob and Teracent, purchasing Yelp would extend Google's advertising capabilities and enable it to deliver targeted ads based on personal preferences and current geographic location via mobile platforms.

With all of the various components in Google's advertising arsenal and Yelp, Google could come close to emulating the sort of personalized, point-in-time ads that sprang up all around Tom Cruise in the Minority Report--minus the holographic images.

Local shops and small businesses would be able to get into the mobile ad game. Combined with GPS positioning in mobile handsets to track your location, Google could present ads from local shops that are in your immediate vicinity. I am much more likely to act on a $2 off coupon from a local coffee shop I am walking past right now, than to care about a more abstract mobile banner ad for a product or service.

Kiss, and Make Up

It's hard to say what the state of the Google-Yelp negotiations is. Whether Yelp walked away or Google retracted its offer, neither side is saying that the deal is off forever. Face it, neither of them has an alternative that is even remotely as viable as what the two can do together.

For the sake of all parties, I'll keep my fingers crossed that they play nice and reach an amicable solution.

15 December 2009

Google Labs Creates 'Living Stories'

LA Times



Google today said it has developed an experimental news site that it calls "Living Stories."

The idea, jointly developed with the New York Times and the Washington Post, is to pool together the many disparate stories a newspaper writes on a single topic, such as healthcare reform, into a single Web page.

Readers can customize pages based on the topics they wish to read. Each page automatically updates to include new stories on the topic, and remembers what the reader has already viewed to serve up newer or related stories and photos.

Living Stories was launched today in Google Labs, an area reserved for products that are not yet ready for prime time. The page currently has stories only from the Post and the Times, which worked with Google to develop the prototype.

"This project is a pilot," said Josh Cohen, senior business product manager for Google News, in an interview. "The idea is to make improvements based on the feedback we receive, then make those tools more widely available."

The concept of grouping articles by topic isn't new. Yahoo came up with its version, called Yahoo News Topics, two years ago. Here's Yahoo's page on "Google," for example. What's different is that Google sees publishers using Living Stories on their own websites, not just on Google. Here's an example from the Times of what a page about the war in Afghanistan looks like.

Publishers have no lack of options when it comes to digital distribution models as they cast about for a way to make up for the losses in print circulation and advertising. Just today, a group of five major publishers announced they would jointly build an online storefront for readers to buy magazines and newspapers. You can read more about that announcement here. Many see the effort as a response to Amazon.com's Kindle model, which pays publishers 30% of the revenue generated from the sale of periodicals.

So what's the benefit to publishers of going with Google?

Cohen said it's a happy union of developing a reader-friendly experience while maximizing a website's rank with search engines that can drive traffic to a publisher's website.

A page containing links to many stories on the same topic tends to rank higher with search engines than a page with a single story. This explains why Wikipedia is often at the top of a search results page on any given query.

"On the search side, there’s a single page to point to," Cohen said. "Instead of thousands of links, there is a single point of reference. And that’s helpful for users as well."

Google Debuts URL-Shortening Device

Channel Web


Google debuted a new URL shortening service, dubbed Goo.gl, which prompts the question: Why?

The program takes long, unwieldy URLs and miniaturizes them. Making a 20-character URL into an eight-character URL is handy for posting on microblogging sites and social networks, where space for text is at a premium. It's such a great idea that two other services, Tiny.url and bit.ly already perform the task quite well. Why then would Google offer the same service? Here are three reasons.

1. Security. Google said in a blog post by software engineers Muthu Muthusrinivasan, Ben D'Angelo and Devin Mullins that the service will automatically check each URL to detect sites that may be malicious and warn users when the short URL resolves to such sites.

2. Reputation.
Google thinks that its household name will appeal to users who will find it reassuring that Google shortened these URLs.

3. Brand expansion. The service is aimed at people who use the Google Toolbar and FeedBurner. Goo.gl is baked into various Google services like the Feedburner RSS service and Google Toolbar for Web browsers, on which users can now find the Goo.gl function as they would any other Google tool. It's important to note that for now, Google's URL shortener will not be available as a stand-alone service -- as are competitors bit.ly and tiny.url -- though that could change depending on how Goo.gl fares in the market.

29 November 2009

YouTube To Broadcast Univision (Sans Telenovelas)

Wall Street Journal


Google and Univision said Monday that they will provide the Spanish-language broadcaster’s videos on YouTube starting in the first quarter.

Univision is the largest Spanish-language broadcaster in the U.S., and its YouTube channel will include both clips and full-length programs from its three networks, Univision, TeleFutura and Galavision.

Viewers won’t be watching Univision’s most popular telenovelas, however — those series are owned by Mexican media company Televisa, and Univision doesn’t have the right to stream them in the U.S.

YouTube said that there is “huge demand” for Spanish-language content on the video-sharing site and noted in a blog post that its Hispanic audience grew 80% this year.

For Univision, the deal is a way to snag more online-advertising dollars, which to date have been a small part of its overall sales. Its third-quarter revenue from television rose 5.4% to $421.8 million, while revenue from interactive media inched up only 0.9% to $11.6 million.

13 November 2009

How NOT To Show Up In Google SERPs

Rupert Murdoch is determined to change the way print content is treated on the web. In addition to being one of the first and largest media companies to plan a full-scale switch from free to paid content models for its newspapers, Murdoch is saying he will block News Corp content from being indexed by Google.

The issue involves the debate surrounding free versus paid content. Murdoch has made it clear for months that he believes free content online devalues the worth of the content. With that in mind, News Corp plans to stop offering its news sites for free, though Murdoch has said the company might not meet its own deadline of charging for content across all sites by the middle of next year. Murdoch’s company has clearly been at the forefront of the debate, and Murdoch expects a paid model to begin to be played out more and more often over the next two years.

News Corp, if it does indeed block Google’s access to its content, will be the first major media company to do so. “The traffic which comes in from Google SEO brings a consumer who more often than not reads one article and then leaves the site,” Miller says. “That is the least valuable traffic to us… the economic impact [of not having content indexed by Google] is not as great as you might think. You can survive without it.”

Google, for its part, claims to send news organizations about 100,000 clicks every minute. “Publishers put their content on the web because they want it to be found,” said a spokesperson (via the Telegraph). “But if they tell us not to include it, we don’t.”

11 November 2009

Free Airport Wi-Fi -- What's In It For Google?

from Channel Web


Travelers slogging their way through the nation's airports this holiday season are sure to benefit from the free Wi-Fi service Google will be making available in 47 airports between now and January 15.

But maybe not as much as Google, which is subsidizing the Wi-Fi service.

Google Tuesday said that it would provide the free Wi-Fi access through a partnership with Boingo Wireless. Consumers can donate to one of several charities when they log on, and Google will match the donations up to $250,000. Google is already providing free Wi-Fi on Virgin America flights in a promotion that also lasts through January 15.

Google's seemingly altruistic offer should pay big dividends at a time the company could use some goodwill. Here's why:

1. The move will help Google build political capital. Google has long been a big proponent of high-speed, wireless Internet access, lobbying in Washington D.C. to open up a government auction of licenses to provide wireless services to other companies (possibly even Google itself) beyond the mainstream broadband service companies. Google also backs efforts to develop new Net neutrality rules.

2. Providing free airport Wi-Fi also will help Google build up some goodwill among consumers at a time when its reputation could use a little burnishing. Google has been stung in recent months by several highly-publicized failures of its Gmail e-mail service and the controversy over its efforts to digitize millions of out-of-print books. The former has raised questions about Google's reliability and the latter about whether the company is living up to its informal "Don't Be Evil" corporate motto.

3. Subsidizing airport Wi-Fi for travelers will help with Google's brand-building efforts. While one might think Google doesn't need to work on its brand -- "Google" has become a verb to search for something online, after all -- it can't afford to become complacent. Archrival Microsoft has been offering free Wi-Fi at hotspots around the country since September, and Yahoo is now giving away free Wi-Fi in New York City's Times Square.

Google SEO is in no immediate danger of losing its dominant position in the Internet search market: Microsoft's Bing hasn't cracked the 10 percent market share barrier yet, compared to Google's 65 percent share. But you have to wonder whether all those Microsoft TV advertisements showing dazed Google users spouting useless search terms are making people consider alternatives.

01 November 2009

Search Market Exploding With Innovation

Mercury News



It's a global battle whose foot soldiers will be engineering teams working inside a few square miles of Sunnyvale and Mountain View, with billions of dollars in advertising at stake.

Almost a decade after Google became a household name, Microsoft's launch of its Bing search engine, followed by Microsoft and Yahoo's deal to collaborate on search, could give the world's dominant Internet search engine its first serious challenge in years, as search becomes a key front in the looming competition between Google and Microsoft.

But regardless of who wins this competition, the beneficiaries are everyone who uses search engines, as quickening innovation improves the quality of information and delivers it in more useful packets. This year for the first time, a majority of the roughly 180 million U.S. adult Internet users typed a query into a search engine on a typical day, and search is gaining on e-mail as the most common online task.

Thanks to new technology, users will get their answers faster, from more than just text, and if the companies are successful, may find search engines are better at understanding what they are looking for.

"Search is going to change more in the next year than it has in the past five years," said Ben Schachter, an analyst with Broadpoint AmTech, who believes the pace of search innovation is the greatest in at least a decade.

Deluge of innovation

The pace of new features rolled out by Google, Yahoo and Microsoft has been furious in recent weeks.

At the Oct. 20-22 Web 2.0 industry conference in San Francisco, Microsoft announced a deal that allows Bing to search up-to-the-minute postings on Twitter, with much of the software engineering done at Microsoft's Mountain View campus. Google scrambled to announce its own real-time search deal with Twitter several hours later.

Not to be outdone, Google last week unveiled a new service that allows people to search for a specific song title and see a link to that song on MySpace or Lala in their search results — a service Google described as yet another way to speed users to results.

Within minutes of Google's music launch, Yahoo posted a company blog reminding that its search engine has had the ability to show links to free audio files in a partnership with Rhapsody since 2008.

Google has been unveiling so many search changes — even tweaking the size of the search box on its sacrosanct home page and pinching advertising on the results page slightly toward its center— that it has begun a "This Week in Search" item on its company blog to track new features.

Yahoo, which has been working aggressively to make sure the look and feel of its search engine remains distinct, even though its underlying results eventually will be generated by Bing, announced a new "Search Experience" in September. Among the changes: Yahoo allows users to bundle their search results from an array of topical providers they can select. A search for a restaurant would allow a user to click on a link to Yelp results; a sports search would offer bundles of results from ESPN, or a local newspaper.

"Now the real competitors have emerged, and it's mainly Google and Microsoft, with Yahoo in there because of its brand identity," said Greg Sterling, principal of Sterling Market Intelligence.

Beyond the blue links

On each of the three biggest search sites, the basic 10 blue hyperlinks that have been the essential product of an Internet search are rapidly being augmented or replaced by deeper, richer and more detailed nuggets of data — for example, a map, photos, restaurant reviews embedded in Yahoo search results for "San Jose sushi," not just the basic links to restaurant Web sites.

Since Microsoft launched Bing in June — calling it a "decision engine" for its ability to filter out unimportant information — the new search engine has gained more than 156 million monthly searches, while Google has seen a slight decline, according to comScore.

While Google and Yahoo say Bing is not driving the innovation surge, some analysts are not convinced. "I do think Bing has put some pressure on Google," Sterling said.

Microsoft, Yahoo and Google say they are innovating because people's expectations for a search engine are far higher than they were even five years ago. People no longer search for a Web site; now they expect to find a specific piece of information, like the cheapest airfare to Chicago.

"We increasingly find that people think about search the way they think about a public utility," said Susannah Fox of the Pew Internet & American Life Project, which compiled the search data. "When you turn on a tap you expect clean water to come out, and when you do a search you expect good information to come out."

The big three search engines also search more than words. Bing offers visual searches, allowing users to browse and filter images of politicians, celebrities, album covers, or even yoga poses, as they search for information.

Clicks that count


Increasingly, a successful search is about an engine's ability to reveal a "Web of objects" — images, videos, audio files, or blog posts — rather than just a web of pages, said Larry Cornett, Yahoo's vice president for consumer products and search.

"We kicked off this huge innovation in search engines well over a year ago," Cornett said, "before anyone was doing anything else but the 10 blue links."

The new Yahoo page offers a "Search Pad" where users can note their searches. In an effort to make the results more relevant to an individual by tracking their search history, Yahoo is reading it, too.

"Every search engine looks at clicks," Cornett said. "We tried to be very open about that and say, not only is that going on, but, hey, do you want to use this for your benefit?"

At Google, speed remains king, said Johanna Wright, Google's director of product management for search.

In a recent experiment, it slowed its Web site by 0.4 seconds. The result, Wright said: People searched less.

Among the changes Google rolled out in the past three weeks are a "Jump to" link in the search results that allow a user to go directly to a keyword buried deep within a document, saving the user time, like the music search Google rolled out this week.

"Speed is something we take almost manically seriously," said Jack Menzel, group product manager for search. "We obsess about tens of milliseconds."

Microsoft, which has its Search Technology Center in Mountain View, says its philosophy boils down to helping people make a choice, sometimes limiting results when Bing decides a person knows what he is looking for.

A search for "UPS", for example, produces little on the results page but a box to enter your package tracking number, and the customer service number for UPS.

"What it amounts to is trying to build a mind-reader, to understand people," said Qi Lu, head of online services for Microsoft.

Microsoft also realized that its old search identity, called "Live Search,'' wasn't exactly hip, said Stefan Weitz, director of Bing Search.

"We wanted to make sure you could use it as a verb," Weitz said. "You want people to be able to say, 'I Binged that.' "

31 October 2009

Google Voice Has 1.4 Million Users, According To Leaked Info

from Google Watch


It's not even rolling out to everyone yet, but the Google Voice phone management application already has 1.42 million users, 570,000 of which use it daily according to a letter Google sent to the Federal Communications Commission this week about its call-blocking behavior.

The version that eWEEK saw on the FCC's Web site Oct. 29 was redacted, but Business Week unearthed the data point Oct. 30.

Google filed the letter to answer the FCC's inquiry into the ins and outs of how Google Voice blocks certain phone calls in rural areas.

Google admitted it did this to thwart traffic-pumping phone porn and free conference call schemers seeking to leverage Google Voice, a free Web app that gives users one special number to ring and manage their home, work and mobile phones.

However, Google also asked that the Google Voice users number, as well as the the names of third party providers with whom Google has contracted to supply telecom inputs to support Google Voice, be redacted from the document to the FCC. In something of an embarrassing gaffe by Google on par with the Janet Jackson Wardrobe Malfunction, Google told me Oct. 30:

Though we had intended to keep sensitive information regarding our partners and the number of Google Voice users confidential, the PDF submitted to the FCC was formatted improperly.

And presto, now we all know what Google didn't want us to know. Why doesn't Google want us to know that? According to its request for confidentiality:

The information subject to this request is commercial information that Google customarily guards from competitors in the highly competitive market for Web-based applications.

BusinessWeek also said Google alludes to taking Google Voice beyond the U.S., signing contracts with a number of "international service providers for inputs to Google Voice." Good for Google, I say. It needs to get international exposure for Google SEO to take off. That's what happened to Skype.

Google Voice has many, many miles to go before catching Skype's user base of 481 million, but 1.4 million users is not bad considering only a select few could use the application until June 25, when Google began rolling it out to more folks.

That's when Google opened up the select invite period, but things have been rocky since July, when Apple rejected Google Voice. As if it's not enough that AT&T sicced the FCC hounds on Google for blocking calls in September.

We're still waiting to see how that unfolds. Meanwhile, have you heard of VoxOx? It's also free to a degree, and then low cost, and provides the same functionality and more.

Of course, there is always the old school standby, Skype. The choices are varied, and all have something good to offer users.

21 October 2009

Yahoo Says Online Ad Market Improving

From Business Week


Results from the Web portal gave further evidence that the online ad slump is ending, though executives stopped short of calling a recovery

While no match for the resurgent third quarter reported by Google a few days earlier, Yahoo's (YHOO) results and its forecast for current-quarter sales beat analysts' expectations and gave further evidence that this year's swoon in Internet advertising may be ending.

Investors were pleased with the results, boosting Yahoo's shares almost 6% in extended trading after the market close. "It was a clean 'beat' quarter," says Sandeep Aggarwal, an analyst at financial services firm Collins Stewart (CLST.L). "You see signs of stabilization, which is very positive."

Yahoo, in the midst of a sweeping reorganization and rebranding campaign under CEO Carol Bartz since she joined in January, emphasized that the online advertising market is stabilizing. But still-declining revenue signaled that a full-blown recovery has yet to materialize. "Ad spending is starting to free up, and we are a great value proposition for advertisers," Yahoo Chief Financial Officer Tim Morse said on a conference call discussing the results. Bartz did not participate in the call because she had a minor illness. However, she said in a statement that Yahoo had a "solid third quarter that signals our major businesses have stabilized."
Profit from Alibaba Sale

In the third quarter, Yahoo earned $186.1 million in net profit, or 13¢ a share. That's up from 4¢ a year ago. Gross revenue of $1.58 billion was down 12% from a year ago. Net revenue after commissions to advertising partners, a more closely watched metric, was $1.13 billion.

About 5¢ of the profit came from the sale of Yahoo's stake in China's Alibaba, but remaining results were still ahead of forecasts. The company was expected to earn 7¢ a share on gross revenues of $1.52 billion, or $1.12 billion after payments to advertising partners.

In particular, Yahoo saw relative strength in selling display ads on its own sites, such as its home page. Revenue from those so-called guaranteed ads, whose placement is planned in advance, grew at a mid-single-digit percentage rate. That was much better than "non-guaranteed" ads, which run on pages with less valuable audiences, such as e-mail pages. Those ads declined, partly thanks to a recent Yahoo drive to rid itself of lower-quality ads for weight loss and other schemes.
Losing Ground to Google

Although display ad revenues overall grew 2% from the second quarter, the second straight quarter of sequential growth, they were still down 8% from a year earlier. Moreover, Yahoo's search business fared much worse, with search revenue falling 19% from a year earlier. That means Yahoo continues to lose ground to Google SEO (GOOG), which saw growth accelerating in the third quarter.

Yahoo said it expects gross revenues of $1.6 billion to $1.7 billion in the fourth quarter. Operating income before depreciation, amortization, and stock-option costs is expected to be between $400 million and $450 million. Both of those are somewhat higher than Wall Street forecasts.

More than Google's results, Yahoo's may be indicative of the broader trend in online advertising, since Yahoo is a leader in the display ads that most Web sites depend on for revenue. Overall online ad revenue is expected to fall 2.9% this year but rebound to 5.9% growth next year, according to forecasts by market researcher eMarketer.

Eliminating Annoying Ads

There are some other glimmers of improvement in display ads. Prices for ads sold through middlemen known as ad networks have been rising each month this year, and are up 32% since the start of the year, according to PubMatic, which helps online publishers run the most lucrative ads. "The market has bottomed," says PubMatic CEO Rajeev Goel. "Marketers are returning to the fray."

Yet the display-ad market will not bounce back as quickly as the market for search ads, the mainstay for Google, says Bryan Weiner, CEO of digital ad agency 360i. While marketers can measure the effectiveness of search-related ads through several means, including whether they result in the sale of a product, they've been less successful in testing the effectiveness of display ads other than by counting clicks, widely acknowledged to be inadequate for brand-oriented display ads.

Yahoo SEO faces unique challenges as well. Even as it cuts some operations, it's making some costly investments in its many Web properties, as well as spending $100 million on a new branding campaign. It's also revamping its ad systems to eliminate annoying ads as well as ads advertisers pay to appear in search results. Those and other changes are expected to cost Yahoo about $60 million in revenue a quarter but eventually pay off in the form of more satisfied users and advertisers.
Losing Search Share

Still, all that means lower sales and higher costs in the short term. Meantime, a deal announced July 28 to let Microsoft (MSFT) handle Yahoo's search operations likely will take until early next year to be approved by regulators. The companies estimated the deal would boost Yahoo's operating profit by $500 million annually, but it might take Yahoo a couple of years after the deal closes to reap that benefit.

Despite Yahoo's struggles since it rejected several Microsoft buyout and search deal proposals last year, its stock has risen 31%. But that's just under the Nasdaq's 32% rise—and Yahoo has underperformed the index even more than that in the nearly three months since it finally reached a search deal with Microsoft. Investors were disappointed that Bartz didn't craft a more lucrative deal with Microsoft, which did not include the multimillion-dollar up-front payment many had expected.

Moreover, Yahoo has continued to lose search share since then. Share fell by half a percentage point, to 18.8%, in September, while Google and Microsoft's Bing gained, according to market researcher comScore (SCOR). That's why some investors remain bearish. "We don't think Carol Bartz has a coherent plan for Yahoo in search," says Jeff Donlon, managing director of technology research for asset manager Manning & Napier, which holds shares in Google and Microsoft but not Yahoo.
Hoping for a Faster Turnaround

Analysts, however, have turned moderately more positive on the stock of late, with 14 recommending a buy, 14 advising a hold, and only one calling for a sell, according to FactSet (FDS). Wall Street is hoping Bartz's cost-cutting and strategic focus will set up Yahoo for a faster turnaround as marketers open up their wallets starting in the fourth quarter. And if the Microsoft deal passes regulatory muster, Yahoo will not only reduce its search costs but start to get significant revenue from Redmond.