Wednesday, February 21, 2007

Oooh, you actually want to *use* your tracking system

In the 3.5 years I've been in post-bubble SEM, I've seen the two tracking system incumbents (Doubleclick and Atlas) quite often resort to extortion when asked by the advertiser to allow them to set up an ROI datafeed so that EF can use the advertiser's existing tracking investment to enable our optimization of their PPC campaigns.

Despite the fact that setting up & maintaining this feed costs $250 at best (one-time and ongoing), the above firms typically ask for $2500-$5000 *per month* to provide a feed that amounts to [keyword, revenue event, event date, event value].

Oddly enough, firms who haven't yet suffered from install base obesity (think Omniture, Coremetrics, Efficient Frontier and WebTrends) don't resort to such highway robbery.

Tracking incumbents: if my mom were alive she would give you one of those shame-on-you stares with the rasping finger.

SEM Competition: A Case of Pants Around Ankles

I've written in the past about some of the underhanded, spineless tactics lower forms of SEM life resort to in an effort to compete with my firm; lying about the nature of one's client base is a primary tactic, as I described here.
I refer to it as the Perpetual Motion Machine Trick.

Almost six months later, would you believe the same competitor tried the same exact tactic today?

This is how the Perpetual Motion Machine Trick works:

1)Offer a *free* 3-month test to a big EF advertiser to get his foot in the door (that's the pants around ankles part)
2)Get verbal agreement on the $0 test (that's the easy part)
3)Immediately email several other EF advertisers in the same vertical with a subject that reads "[Competitor] Lands Another Major Mortgage Player This Week" (that's the lying part)
4)In the email say "One of the wins this week was a major online mortgage lender that has been using Efficient Frontier." (that's the follow-on lie that earns you 20,000 years in Dante's Inferno)

This, folks, is the Perpetual Motion Machine trick, aka Leaning Forward a Bit Too Much On Your Skis. The competitor gives one big advertiser a free test, giving others the false impression that his firm is succeeding in the marketplace, which then leads to more tests.

Like the perpetual motion machine, this competitor needs:

1) an initial dose of kinetic energy = a free test + a Jupiter ranking*
2) periodic infusions of kinetic energy = lies

But as with claims of perpetual motion, the proof is in the performance, and the competitor's test went horribly and the advertiser gave them the heave-ho.

As I said in a previous post, SEM competition is fierce, and I love it.

Thursday, February 15, 2007

Google: Check Out our Checkout

As of Feb 13th Google has taken promotion of Checkout to a whole new level, replacing the tiny green shopping cart with a much more prominent symbol that is sure to move the needle for participating advertisers' CTR. Do a search for water filters and note the Aquasana ad - which incidentally has been moving up in the ad ranking significantly since 2/13.

Google's announcement via its blog is here, and associated discussions on Digital Point forums.

Tuesday, February 06, 2007

Before The Fall

A certain large search engine contacted me about a job opportunity today, and I responded. Pride is sometimes good, but hubris is always bad. For amusement read the recruiter's letter to me, and mine back below. Should I send her a reading assignment?

From: [A Certain Search Engine's Recruiter]
To: Me
Subject: [Said Search Engine]


I came across your resume and thought you might be interested in a
Leadership position here at ______. If you would be interested in
further discussing this opportunity, I would be happy to arrange a time to
further discuss more details.

Job Title: Leadership, Online Operations - HQ

If you would like to be considered for this position, please respond to
this email with an updated copy of your resume in a Word or PDF format.
However, if you are not interested or happily employed, feel free to pass
it along to people in your network



Hi ______,

Thanks for contacting me. I'm happy here at Efficient Frontier; we're managing 3-4% of total worldwide search spending on behalf of our clients, and I've been with the company since its inception in 2003.

Don't take this the wrong way, but telling me I should "feel free to pass it along to people" in my network, or that I "might be interested in a Leadership position" at ______ presumes it's a privilege to be recruited by ______. With the stock having peaked and 2007 looking to be the year the valuation bubble bursts, I think ______'s going to have to show a bit more humility going forward if it's to continue the success it's had to date. I would be an incredibly valuable contributor to ________'s success were I to work there, but _________ is by no means the only game in town.

Monday, February 05, 2007

Rabbits From Hats

Judging by the haircut Google's stock has taken today, it would appear that investors are disappointed with their Q4. I have no clue as to why Wall St is punishing Google, but perhaps its because they don't think the company can improve beyond its already industry-leading position.

That said, does anyone have any ideas as to what rabbits Google may be able to pull out of its hat in 2007?

P2P, TCP/IP, Triangle Offense & Team D

I was reading a great dialogue between Mark Cuban - he of and Dallas Mavericks fame - and Bram Cohen (the founder of BitTorrent), and it occurred to me that I've never, ever heard of anyone who is so conversant in both technology and basketball.

I've played basketball since I was 10 years old (my high school team won the CA state championships in 2005 and back in 1993, yeah baby), and if there was any place you could expect to find techno-hoopsters it would be Palo Alto H.S.; after all, Paly's right across from Stanford, the epicenter of geeks with skills. It never happened, though. Sure, we had a 2nd-string point guard who went on to found his own startup, a power forward who played at Gonzaga, but never did we have someone who understand the Triangle Offense *and* P2P in the same breath.

You just tend not to see people who know so much about both worlds. Reading Cuban's critique of BitTorrent, however, it emerges that not only can the guy properly motivate an elite group of NBA players and arm them with unbreakable defensive skills, but he also knows a ton about P2P, TCP/IP and last-mile bandwidth constraints.

That's my kind of Renaissance Man...

Friday, February 02, 2007

Search For Global Warming Answers

The act of searching requires that we look for something; it is impossible to search without knowing that one lacks, wants or needs information.

**To be a searcher, then, you need to start by knowing that you don't have all the answers.**

With the press this week having bought the global warming hypothesis hook, line and sinker, I'd like to go on the record saying that I have searched high and low for answers on this topic, and I think human-caused global warming is the biggest fraud committed via the press since Orson Wells' Depression Era 'War of the Worlds' radio address. Only this time rather than convincing millions of otherwise isolated radio listeners that the planet was being invaded by Martians, we're being told by a large, mainstream group of scientists that humans are to blame for a recent warming trend that is about to wreak total havoc on mankind.

Here's a counter-argument to this colossal UN-backed IPCC nonsense that is inassailable in its logic. Rip on me all you want, but before you do that, please read the below. The stakes are high: if people of sound mind and body cannot see this politically-motivated non-science as the power grab that it is, the economic development and increasing prosperity currently lifting boats worldwide may be stalled, if not reversed, by policies that spite growth to save the planet from a threat it simply does not face.

Expert says global warming fears are based on bad data
Written By: James M. Taylor
Published In: Environment News
Publication Date: May 1, 2003
Publisher: The Heartland Institute

The former president of the International Association of Official Statistics (IAOS) has challenged the statistical basis for climate change fears, contending the global warming scenarios developed by the United Nations' International Panel on Climate Change are flawed due to the use of unrealistic data.

According to letters by former IAOS President Ian Castles, reported by the British news weekly the Economist and for a time made available on the publication's Web site, the IPCC "story lines" assume unrealistic economic growth over the coming century in developing nations and attribute to these nations too high a level of greenhouse gas emissions per unit of economic production. As a result, Castles reports, even the smallest temperature increase contemplated by the IPCC--1.4ยบ C warming by 2100--is probably too high.

Wealth Gap Overstated

Castles documents several flaws in the IPCC's underlying data.

First, he notes the IPCC overstated the baseline income disparity between the world's wealthiest and poorest nations. This inflated disparity is important because the IPCC warming scenarios assume poor nations will achieve economic parity or surpass the economic output of wealthy nations by the end of the century. According to the IPCC, the more economic growth required by poor nations to catch and surpass wealthy nations, the more new economic output must be generated, and the more greenhouse gas emissions will be released into the atmosphere.

The IPCC, according to Castles, calculated the current income disparities between wealthy and poor countries by converting Gross Domestic Product estimates into a common currency of U.S. dollars using market exchange rates. This method of comparing relative wealth, he notes, has been thoroughly discredited by statistical experts.

Instead of relying on nominal exchange rates to compare relative wealth, notes Castles, the IPCC should have expressed national GDP in terms of purchasing power parity.

The IPCC's Technical Group on Climate Impact Assessment admits it used the common currency approach "in full recognition of the fact that the preferred measure of wealth and poverty is to adjust GDP using purchasing power parity (PPP) estimates--a practice initiated by the World Bank in 1996. ... PPP estimates more accurately capture the command over resources in poorer nations."

"As a result of the use of an invalid method of comparison," explains Castles, "the authors of the [IPCC] report had greatly overstated the scale of these differences at the beginning of the projection period. They had thereby been led to overstate the growth in average incomes in developing countries that would be required to achieve the much more even distribution in global income that is envisaged in most of the scenarios. Prospective levels of emissions in these countries had probably been overstated as a result."

By how much did the IPCC overestimate the likely economic growth of poorer nations over the next century? For poorer nations as a whole to catch wealthier nations in economic output this century would require that average incomes on the entire continent of Asia increase over the next 100 years by a factor of 70 to 1 for the IPCC's least-warming scenario, and 140 to 1 for its most-warming scenario.

Such dramatic economic growth by even a single country--let alone an entire continent--would be unprecedented, notes Castles. Examining growth rates in wealthier countries during their most dynamic periods of economic growth, Castles points out that "average real incomes in the United States increased by a factor of perhaps 5 to 1 in the nineteenth century, and average real incomes in Japan increased by a factor of almost 20 to 1 in the twentieth century."

GHG Intensity Overstated

A second flaw in the IPCC story lines, according to Castles, is an underlying assumption that the greenhouse gas intensity per unit of global economic growth will remain as high as it is today. He documents that greenhouse gas intensity has been declining for quite some time.

"In Britain, the first developed country, average carbon dioxide emissions exceeded 2.5 tonnes of carbon per head of the population in 1880, before the motor age began. Now Britain produces at least five times the volume of goods and services per head as in 1880, but per capita emissions of carbon dioxide have not increased at all." The carbon intensity per unit of economic production has fallen dramatically in Britain over the past 120 years.

Adds Castles, "No country in western Europe today emits the 3.2 tonnes of carbon per head that Britons emitted in 1913, and per capita emissions in the United States, Canada, Germany, France, the Netherlands, Belgium, and Sweden are now lower than the peak levels reached in the 1970s or earlier."

It is implausible at best, Castles argues, to assume greenhouse gas intensity per unit of economic growth will remain constant over the next century.

1990s Empirical Data

A third flaw in the IPCC story lines is a failure to calibrate twenty-first century projections with real-world data gathered during the last decade of the twentieth century.

Castles points out that the IPCC story lines emanate from a 1990 baseline. Although the story lines were not released until 2000, work on them began more than a decade earlier. As a result, by the time the story lines were released, fully 10 years of story line projections could be measured against what actually happened between 1990 and 2000.

A close correlation between the projections and the real-world data would tend to validate the story line projections, Castles explains. A significant disparity would tend to invalidate the story lines.

How did the projections fare? Predictably poorly, according to Castles. "The global level of CO2 emissions in 2000 was well below the standardized base for that year reported for all [40] story line scenarios," states Castles.

David Henderson of the Westminster Business School in London, whose observations were also posted on the Economist's Web site, further observes there were substantial differences between actual GDP in the 1990s and what the IPCC story lines predicted for the decade. The story lines' "treatment of developments over the 1990s seems curiously detached from what actually happened. Actual developments in the 1990s, as distinct from model-generated data, appear not to figure in the [story lines]."

Given that the IPCC released its story lines in 2000, "consideration of the reasons why some model results diverged substantially from actual developments over the decade--in respect of energy consumption and CO2 emissions, as well as GDP--could well have been given in the Report," Henderson notes. Yet the disparities were never mentioned or explained.

Common-Sense Questions

The disparities between real-world observations and IPCC projections should come as no surprise, according to Castles. Even before the statistical flaws in the IPCC assumptions were discovered, common sense should have dictated taking the projections with a grain of salt. The projected warming depended on numerous implausible and striking assumptions about the twenty-first century economic growth of developing nations.

For example, under even the most conservative story lines, the IPCC assumes that by the year 2100, per-capita GDP in the U.S. will be surpassed by the per-capita GDP of such countries as Estonia, Latvia, Lithuania, North Korea, Malaysia, Singapore, Hong Kong, Libya, Algeria, Tunisia, and Argentina. The more extreme story lines assume that by the year 2100 U.S. per-capita GDP will fall behind even more disadvantaged nations than these.

"The more I learn about the processes and the outcome, the more uneasy I have become about the way that the scenarios have been used by the IPCC and are being used by the research community," summarized Castles. "The unprofessional use of statistics to make exaggerated statements about differences in income levels between regions and countries of the world places at risk the status of the IPCC as an objective and policy-neutral body."

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