SearchQuant

Apple: iTunes Gift Cards For Platoon?

2012-01-13T14:05:00.000-08:00

I've 'adopted' a platoon of Army Rangers (part of 1st Brigade, 82D Airborne Division) who will be deploying to Afghanistan in February (until Nov 2012), and when I asked the platoon leader what his 25-30 men could use, he said they need outlets for their daily stress, with music and video games the most popular.

That said, I'm hoping a good soul who works at Apple can help me secure 25-30 $25-50 gift cards for delivery either electronically or by snail mail by end of January or early Feb so they can deploy on our behalf with music & games. Please comment here on the blog if you can help, or get in touch via LinkedIn (my profile).

Thanks!

Chris Zaharias

Mozilla/Google, or Pooff Goes The Magic Dragon

2011-12-21T12:05:00.000-08:00

When I was a child, I spoke as a child, I understood as a child, I thought as a child: but when I became a man, I put away childish things. - 1 Corinthians 13, verse 11

When Netscape, who first brought the Internet to the masses, found itself battling Microsoft, we rallied around a godzilla-looking mascot called Mozilla, and around the fact that an open Internet would be much better than the one Microsoft would have thrust upon users if they won the Internet platform battle. We had a great exit (who could complain about $4.2B), but despite Microsoft being convicted by the DOJ, there was no fixing the irreparable harm their illegal leveraging of the Windows monopoly did to the growth of Netscape and of choice in accessing the Internet.

After AOL killed what it had acquired, the fuzzy mascot became Mozilla.org, which took the open source Netscape Navigator code and built upon it. The massive amount of work from hundreds of Mozilla.org members resulted in Firefox, a browser that finally rivaled IE in sustained market share, and more importantly, introduced tons of valuable features that forced first Microsoft, and then Apple & Google to innovate in their own browsers.

Fast forward to today, though, and a different Internet monopoly now exists - Google Search - a toll booth advertisers must go through each and every day to get to over 80% of the world's Internet users. Mozilla, a non-profit whose core principles include consumer choice, transparent community-based processes and a balance between commercial interests and public benefit, has greatly facilitated Google acquiring monopoly status, first by making Google the default search in Firefox as Firefox grew share, and now by renewing that relationship for three more years even as Microsoft's monopolistic threat has been replaced by Google itself.

Were I to have faith in Mozilla's leadership, I would now launch into why Google, and not Microsoft, is the new bogey whose monopoly control we & they must work to limit. Dozens of my blog posts have already detailed how Google is very effectively turning the screws on the online advertising ecosystem now that it's a monopoly. But just as the boy stopped playing with his dragon when he grew up, so we Internet builders must stop believing Mozilla's leaders adhere to their stated principles.

The Chairperson of the Mozilla Foundation (an ex-Netscape lawyer) was quoted once saying "The average consumer does not know the difference between browser, Internet and search box." You're right, Mitchell Baker, yet Mozilla's own justification for renewing the deal despite Google's dominance ultimately rests on continued consumer choice, which effectively does not exist. Consumers are as non-technical as you say, and we in the industry know that 'default setting', practically speaking, means 'forever'.

The Mozilla Corporation is headed by a board comprised of a lawyer who's paid $500,000/year (~85% of which comes from Google) and three industry veterans who are primarily investors in Internet companies. It becomes clear to me now that Mozilla's board is very likely corrupted (knowingly or unknowingly) by the money Google gives them, and by the power being on the board of Mozilla gives them. Time, then, for Mozilla.org members and Firefox users who do really care about the principles to make their voices heard and demand a change at the top. Unless, that is, you want a future in which one company sits between all humans, and all knowledge.

To my fellow ex-Netscaper Mitchell Baker, to former Efficient Frontier CEO Ellen Siminoff, to Greylock VCs John Lilly and Reid Hoffman, I say this: the browser wars continue, but the Nestcape/Microsoft war is over. Google is the new Microsoft if you care to look closely enough, and by your actions you are the new Vichy government helping them and yourselves consolidate power. You are riding the magic dragon into the ground, but I'm confident that ultimately a startup will come along that will disrupt, and probably one not foreseen or funded by you.

SEM Predictor Roll-Call: Google Will Crush Q4 2011 Consensus Revenue Estimates

2011-12-05T15:23:00.000-08:00

This week I'll be in Park City for the Search Insider Summit, an SEM sausage fest where vendors pay shit-tons of money to hear each other speak, and big search advertisers feign interest in order to rationalize their free ski trip. I've never attended before, but decided to because I'm considering getting back into the space and have to meet people there. Since then, Efficient Frontier was acquired by Adobe, so thinly-veiled gloating over the largest SEM M&A exit of all time is an added bonus.

We'll have poker night in Geoff's suite (companies spending >$1M/mo on PPC only, or wealthy drunks), but because it's possible I'll lose at Pass The Trash, 5-card-draw-with-7s-wild or High/Low Anaconda, I've decided to invest in a sure thing = Google crushing consensus Q4 2011 revenue estimates.

How have I arrived at this conclusion? By looking at data five of the top SEM firms have put out in the past week and which show Google coming in way, way over the 30.3% consensus for year-over-year (YoY) revenue growth.

Rimm-Kaufman Group (RKG): +43% YoY
George Michie and team pore over and manipulate SEM data the way Columbo solves murders, and this time is no exception. RKG's Mark Ballard reports a 43% YoY increase in non-brand paid search spend for the first half of Q4, with higher click-thru-rates (CTRs) accounting for most of the increase. While 1-2 quarters of accurate quarterly forecasting to not an SEM oracle make, RKG's data is perfectly in line with our next datapoint.

Marin Software: +44% YoY
CEO Chris Lien has built Marin into a top five SEM platform, and his large & varied customer base means their aggregate data is likely to be a statistically valid indicator of Google's business. Their most recent Q4 data dive shows 44% YoY growth, with CTR increases leading the way.

Kenshoo: +48% YoY
My wife likes saying 'Kenshoo', and last time she liked a startup name I told her about, it was 'Google', where I turned down Omid's offer to be Google's first salesman. Sorry honey. Kenshoo's CMO - Aaron Goldman - once *wasn't* present for a car I gave away on behalf of Omniture at SES (d'oh!), so he's equally unlucky. I'll forgive him, though, as his take on Q4 (showing 48% YoY growth) allows the savvy investor to triangulate Q4 reality with Marin & RKG data.

IgnitionOne: +31.2% YoY
I've given up trying to keep track of the-firm-formerly-known-as-360i-or-SearchIgnite, but they're top SEM practitioners whose Q4 data shows *merely* 31.2% YoY growth. Theirs is the lowest Q4 estimate I've found, and yet it's still over consensus.

Performics +104% YoY
Of all the firms mentioned, no one's been at SEM longer than Performics, so it'd be unwise to overlook their point of view. In this case, I'm not sure what to make of their data, as it's so wildly positive that I'm inclined to think that their methodology involves illegal narcotics. That said, they're showing 104% YoY growth for Nov 21-25. Matt Miller & Dan Parks, if you read this, you have some explaining to do.

Wall Street readers to the SearchQuant blog: assuming you take my advice and make tens of millions of dollars in profits, do me a solid and send me one of these after you close out your position (5.2L preferably).

Google Tells The Story Of Its Search: No, You're Not Mentioned

2011-11-28T12:59:00.000-08:00

"History is written by the victors." - Winston Churchill

TechCrunch wrote today about a video Google recently released summarizing the history of Google's search engine:

It's a very well put-together video that does capture how Google is continually innovating , but I noticed a few things the video did not include:

RealNames
Mayer discusses AdWords (starting 57 seconds in), and the timeline shown in the video says Google didn't have ads on its search results until September 2000. That's not true. RealNames, the firm Michael Arrington & I worked at, convinced Google to try our paid search ads - in late 1999. It is perhaps no surprise that Google omits the role a business partner played in convincing them of the value (both in terms of revenue to them, and value to users) of market-based pricing for search ads, but I'm here to tell you & future historians what really happened. Here's the Dec. 2009 press release announcing Google's partnership with RealNames:

http://www.google.com/press/pressrel/pressrelease10.html

AdWords API
Google is as big a part of our lives as it is today for two reasons:

1. They built the best search engines; and
2. Because they've been the best at monetizing our use of their search engine;

Had Google not out-monetized its competitors, other engines would have been able to secure key distribution deals, such that we'd be using AltaVista, Yahoo, navigating directly via Internet Keywords in the browser address bar, or various other services in lieu of Google. Way back in 2004, Google's traffic acquisition costs (TAC) were 79% of revenues, versus 24% today; back when search was wide open and marketshare much more evenly distributed, Google needed to monetize better in order to earn additional eyeballs. Perhaps Google only wants to tell the consumer-facing version of its search history, but to not talk about the AdWords API is to miss how fundamental it was to Google winning the monetization game. The AdWords API allowed many SEM tools providers (both existing at the time, and new ones thriving today) to bring scale and automation to SEM campaigns, subsequent to which Google's revenues grew from $1B/quarter when the API was launched into beta Q4 2004, to $10B this quarter. 83% of Google's revenues come from 26% of its advertisers (AdAge, Sept 2009), and anecdotally I'd bet close to two-thirds of that 83% is spent via the AdWords API. [It's also worth noting that Google's attitude towards AdWords API developers of late is ambivalent.]

Partners
Nowhere in the video does Google so much as mention the partners that gave them distribution, the agencies that build & manage campaigns, or the trading platforms through which much of their revenues come. Were FedEx, HomeDepot, Ford or WalMart to put to video similar histories of their services, I rather suspect partners would be included and/or figure prominently. Not so for Larry, who, I've been told several times recently, would prefer that not a single company exist in between Google and its users. Larry, keep the following in mind: 1) Max never scaled; 2) your top advertisers shouldn't, don't & won't use your tools for strategic reasons; and 3) the essence of your business model is not search, but rather direct navigation via search for people who already know where they want to go but are too technically inert to use bookmarks and the address bar to get there.

In Google's history of search, you the publisher, you the agency, you the spend enabler... are nowhere to be found.

SEO Platform Wars: Bloomreach & BrightEdge

2011-11-21T15:40:00.000-08:00

I just read about Yahoo's decision to end-of-life its Site Explorer product. With this move, there now no longer exists any free tool to find out all of the links pointing to any particular website (as SEL's Barry Schwartz says, Google has for many years suppressed this data). While there continue to be a number of paid tools that help websites figure out the ever-changing link structures of competitors' sites, it is nevertheless important to note Yahoo's decision, as it appears to be part of a larger trend of the major internet players laying claim to their data as a strategic asset.

As I wrote last week, Google has now stopped providing referral keyword information for organic Google search traffic from logged-in users of Gmail, G+ & other Google apps. As with the Site Explorer end-of-lifeing, SEO's are raging mad that Google's done this, as it seriously undermines their white hat efforts to use keyword search data as the basis for a better user experience.

In my 2011 SMX Advanced exhibitor analysis I noted that there were as many SEO technology vendors as SEM vendors paying for booth space this year (go Danny), and with these moves by Google & Yahoo/Bing to make SEO harder, one can only expect that enterprise SEO vendors will benefit.

Pivoting over to my favorite sales tool, BuiltWith Trends, a website technology tracking service, their data for two of the top SEO platforms, Bloomreach & BrightEdge shows Bloomreach with 160 customers, all of which are among the top 10,000 websites, and BrightEdge with 148 customers, 37 of which are top 10,000 sites. Interestingly, Bloomreach's customer base is 3/4 retail, whereas BrightEdge has the type of customer diversity one would expect of CEO & Salesforce.com alum Jim Yu.

These numbers were in the 25-50 range when I queried BuiltWith for the data 9-10 months ago , ergo enterprise SEO is getting more investment. This should continue, as it increasingly appears those who have lots of search data want to keep those who don't in the dark.

Google Brings Increased Privacy To Searching (or, 'Privacy Theatre')

2011-11-15T12:10:00.000-08:00

People, Oct. 18, 2011 was a beautiful day in the history of the Internet; on that day, Google brought true searching privacy to all consumers who are logged in to any Google app (G+, Gmail, Google Reader, G Analytics, hosted apps, etc). As of that day, Google has routed signed-in users to the SSL version of Google (https://www.google.com)

Google did this *for us*, because they love us and want to protect us. Love, protection, caring and privacy are things we all value, and so isn't it just wonderful that Google has given us this early holiday gift? That reminds me, I need to hug Matt Cutts & Avinash the next time I see them, just hug them.

It turns out that the evil-doing data-users have been watching you in Google's house, watching your every move. The ISP's, they have been monitoring your queries and selling the data; the public WiFi snoopers abound, while the owners of routers & trunk Internet lines have their ears to the wires listening to your silent queries.

These stealthy hunters will no longer stalk you and watch your Google searching activity, thanks to Google. Merchants, while you would otherwise henceforth know nothing about the signed-in flock Google sends to thee organically, in its magnificence Google will still provide, via Google Webmaster Tools (GWT), an aggregated list of the top 1,000 search queries that drove traffic to your site for each of the past 30 days.

For the rest of us who make a living from online marketing:

IMPACT
So far the three relevant datapoints I’ve seen are:

1. SearchEngineLand survey: 12.02%
2. Hubspot view across 3644 Hubspot analytics customers: 11.36%
3. Conductor (1.5M visits across 5 websites): 6.5%
4. All 39 individual anecdotes from commenters to SEL, SEOMoz & Hubspot articles on this topic from the past two weeks: 13.27%

I expect the impact will end up being just as large as Google's combined marketshare for Gmail, G+ and all other products from Google requiring log-in. That is to say, potentially upwards of 50% over the next year or two.

Key quotes from Webmasterworld thread on this topic, which as usual is *the* place to be illuminated:

1. "Boom. A dagger through the heart of web analytics." - johnnie (WMW)
2. "To protest everyone could simply bounce all SSL referrals from Google, I dare you... :) (incrediBILL, WMW)
3. "From the look of it for the past couple months Google have officialy declared war on all webmasters." (Donna, WMW)
4. Protects privacy from snooping 3rd parties = ISPs (who all currently monitor queries & sell the data); public WiFi snoopers; owners of routers & trunk Internet lines; any middleman
5. "Privacy theatre" distract the gullible & helpful only to Google (Leosghost, WMW)
6. "The point here is that Google will be able to analyze this data--You won't. It's all about separating you from information that has historically been, and would continue to be yours to evaluate." (loner, WMW)
7. WE NOW NEED TO AVOID ALL GOOGLE TOOLS, AS THEY HAVE DECLARED WAR ON WEBMASTERS
8. "goog is just an enormous personal data sucking black hole that wants nothing more then the complete and total control of the net....and that means getting rid of ANYTHING they do not control, IE webmasters that run websites. Every single move they do is to erase something and replace it with "goog this" (J_RaD, WMW)
9. "Google's turning off one of ten lights in your room. Enough, maybe, to be noticeable, but not enough to throw you into complete darkness." (rlange, WMW)
10. "you better start diversifying your online revenue channels beyond SEO" (wwconnect, WMW, his post #4376750 on thread is really good)
11. "G has always been pretty "siloed"..the only ones who seem to have access to all areas and know what is going on overall appear to be the lawyers , the accountants and the ruling triumvirate.." (Leosghost, WMW) -like medieval church!!! USE THAT ANALOGY
12. "Make organic an unworkable solution and force people to pay the extortionate prices for adwords. We've seen this again and again and will continue to see this. Push the organic results down, populate the page with goo, and now take away tracking." (shazam, WMW)

Startup Equity Survey Synopsis: You Are The 99%

2011-11-09T08:24:00.001-08:00

The startup equity survey I started two weeks ago is up to 34 responses (& counting), and with my upgraded SurveyMonkey membership I can now share the results here. If you work in startups you had better read this, as there's a ton to learn about the huge disconnect between the startup equity dream and startup equity reality.

Highlights:

Only 26.5% of respondents know within 2% accuracy the total number of shares outstanding in the startup they work at.

Two-thirds don't know what the preference structure is at their startup. You might want to, for two reasons:
1. Whether your startup is Standard or Participating Preferred can have a 30-40% effect on the value of your common shares in a liquidity event;
2. I can virtually guarantee you that if the preference structure at the startup you work at or are interviewing with is gonna f#&k you in the keister upon liquidity, you never asked the right question and your employer consciously avoided disclosing what you'd have wanted to know.

Only 11.8% legally have any control over what role & responsibilities they'll have post-acquisition. Now do you understand why so few startup employees are truly happy with their role within the acquirer? Reality is management oftentimes doesn't think it through - either in terms of the employees' best interests or, frankly, the best long-term interests of the acquirer - because a) they have no incentive to; and b) you the Common shareholders haven't used your leverage to gain basic control over what happens post-acquisition.

A strong majority (61.8%) of startup workers don't know what the industry average is for equity given to people in similar positions. This wouldn't be an issue for you, the Common, if 50% of you weren't expecting that your startup options will be worth $100K-$1M and 20.6% $1M+. It's a dog-eat-dog startup world, and you 61.8% are wearing Milkbone underwear.

Only 35.3% of you are certain you have any type of trigger clause in your employment agreement with the startup you're at, and even fewer (18.2%) negotiated that language. A trigger clause gives you partial or full vesting acceleration should you be a) fired without cause; b) put into a role inferior to that for which you were hired; or c) upon acquisition. Given its importance, employees' profound lack of knowledge in this area is why a much higher percentage of VCs drive luxury cars while you drive Pinto's.

Dreamers Dream, But Lawyers Wake Them Up
Half of the respondents expect their startup equity to be worth $100K-$1M after 4 years' vesting, and 20.6% expect $1M+. [Generously] assuming $100-$150K annual salary, people are clearly dreaming that their startup equity will have a big & positive (quite possibly life-changing) impact on income. Yet, only 29.4% have had two or more liquidity events. I realize in retrospect that I should've asked people what, if any, money they made from their equity in those exits, but anecdotally I've heard from several people that by no means did liquidity events always correlate to income events for them.

So what does this all mean? Two things really:

1) A strong majority of non-founding startup employees don't know what they need to about startup equity, and as a result are putting themselves at the mercy of founders and investors for receipt of a chunk of change that they largely expect to change their lives;

2) The glaring lack of knowledge on the part of Common shareholders at startups is a major contributing factor to the huge gap between startup equity income expectations and reality for non-founding startup employees.

I've had 4 startup strikeouts, 2 singles, a double, and expect to hit an RBI triple on an at-bat that's taken forever to end. That's a .429-.500 batting average; not bad but definitely better than those surveyed. The pain of walking back to the familial dugout after those strikeouts, coupled with the pride of digging out an infield single has taught me a ton about startup equity. If you need help, reach out [chris dot zaharias at gmail dot com] and I'll see what I can do.

Startup Equity Survey: Initial Results

2011-10-17T12:05:00.001-07:00

With 19 initial responses to my startup equity knowledge survey, I've posted below the initial results, above. Several key takeaways:

-Over 40% of startup employees don't know what % of equity they have. Imagine if 40% of stock market investors didn't know how many shares outstanding there were in the publicly-traded companies they were investing in...
-73.7% don't know what preference structure their startup has. That's like not knowing what your insurance deductible is.
-58% of startup employees don't know how their % equity compares to others in similar roles. Given that the same group expects to make $100K-$1M on equity while working at their startup, you'd think know the comps would be important in negotiating, right?
-Over half don't know what a trigger is, and only one quarter have one. People - you may as well get down on your hands & knees and pray before signing your offer letter, 'cause that's how much control you'll have over the outcome if you don't understand triggers.
-68% of startup employees have had one or more 'exits'

Startup Equity: Do You Know What You Need To Know?

2011-10-14T17:31:00.000-07:00

Fifteen years in startups (& plenty of mistakes) taught me how to maximize startup equity. See what you do/don't know about startup equity by taking this survey!

U.S. Large & Small Cap Internet Stocks

2011-10-12T16:59:00.000-07:00

Above is a list of all large ($1B+) and small (<$1B) U.S. Internet stocks. Things that caught my eye:

1. Price to Sales ratios: 4.38 for large caps and 2.06 for small caps.

2. Two government-focused companies skyrocketed up the Small Cap list: Liquidity Services (LQDT) and NIC Inc. (EGOV). It should be no surprise that as government becomes a bigger a bigger component of GDP, Internet companies focused on government should do well.

3. Big winners in market cap growth were Amazon, Priceline, Shutterfly and LivePerson

4. All the Internet market cap growth has occurred in the private markets rather than public. With the exception of LinkedIn, the massive growth Internet duo of Facebook & Zynga have done their thing offline.

The Conduit Toolbar Deal: A Bing Victory, Or Strategic Move By Google?

2011-05-19T15:23:00.000-07:00

Today I read RKG's [as usual] brilliant blog piece on the impact of Conduit switching from Google to Bing. In it, RKG's Mark Ballard shows that, in getting Conduit to switch, Bing has taken ~1% search marketshare from Google. He also showed that Conduit traffic converts at 2/3 the rate of Google.com traffic.

I don't recall this change, which happened during December 2010 & January 2011, being discussed by Google in its Q1 earnings call, despite the fact that it possibly contributed to their Q1 miss (the one that destroyed ~$12-13B in market cap). IMO, Google takes great pains to appear supremely strategic, and sell-side analysts, for their part, are easily fooled because they lack fundamental knowledge of the SEM space.

That said, the big question in my mind is: did Bing take Conduit away from Google, or did Google dump Conduit? AllThingsD's Kara Swisher wrote about this, but commenters to the article disagree on this point. If Bing outbid Google in a deal Google wanted to keep, then one could argue that Google was handed a big, strategic loss. If, on the other hand, Google was no longer willing to pay what they had been paying to Conduit, then Bing took the bait and forked over a lot more dough than they should have for the 1-1.5% search marketshare this gives them.

My opinion? Bing outbid Google, and will do the same on a number of other major search distribution deals to come, including Firefox later this year. Bing monetizes search traffic at roughly the same rate as Google, and MSFT's cash hoard will now be used to wreak havoc on Google's growth in what may, just may become a sustainable advantage to Bing's search business.

My brother once took advantage of Bing's cashback rewards to buy several 1oz gold krugerrands via a Bing merchant for 30% off. That was 5 years ago and it appears Microsoft is not done throwing serious, serious coin around to buy their way into search. Meanwhile, 190 people in San Mateo are about to get a lot richer.

Miva is Vertro: Different Name, Same Outcome

2011-05-13T13:11:00.001-07:00

Non-value-adding search distribution partners always end up getting screwed by the big guys, making small-cap search engine stock plays a bad bet.

SMX Advanced 2011: Exhibitor analysis

2011-05-13T10:13:00.000-07:00

I ran into Danny Sullivan at the airport a couple days ago on my way to Seattle, but that's about as close as I've been to my old world of SEM in a long time. Last year I took a spin in the world of dynamic display, joining Dapper, an Accel-funded startup. We were acquired in Q4 by Yahoo!, and now I run Sales for Smart Ads, Yahoo!'s dynamic display business.

Anyways, being in Seattle got me to thinking about all my trips up there in years past to attend SMX Advanced. SMX Advanced is far & away the best search marketing event, and the only one that consistently has sessions worth attending. [NOTE: judging by the fact it is sold out, the industry must agree with me.]

Looking at the 2011 exhibitor list, though, much has changed. Whereas before it was mainly SEM tools, SEM agencies and keyword intelligence tools vendors, the crowd of firms paying for exposure has changed in two key respects:

1. SEO tools vendors now are on par with SEM tools vendors (7 vs 7):
BrightEdge, Conductor, SEOMoz, SEOClarity, webposition, webCertain & The Search Monitor

2. Dual SEM/SEO agencies and SEM/SEO agency/tool hybrids:
Efficient Frontier, Covario, Zeta Interactive, AdSage, BruceClay, Deluxe for Business & AimClear

From these changes, two key trends emerge. First, SEM as a growth channel has clearly slowed down for advertisers on an individual basis, such that they now have to take SEO more seriously. And second, the hybrid agency/tool business model that Efficient Frontier pioneered back in 2003 has become accepted and embraced by both advertisers and investors.

Last, while I won't be attending (I need a miracle, Danny!) I'd attend the following sessions if I could:

Day 1 - Human Vs. Machine: What’s The Best Way To Manage Paid Search? (12:15-1:45). Since I beat down a rabble of agency types who would've liked to convince the audience that bid management is dead back in 2007, the debate has turned to the relative value of human vs machine.

Day 1 - The Modern Online Marketing Plan: Maximizing the SEO, PPC and Social Mix
I fully expect Covario's Harrison Magun to drive a data-driven session and show the world again just how on top of their game Covario is. Harrison, yeah, I'm calling you out; you guys have great data, so let's see it!

Day 2 - Leveraging SEO Power Tools
With lots of inhouse and VC-based investment in the SEO tools space, this should be a great session. Specifically, it'll be interesting to see how Amazon's internal SEO tool (Advanced Mechanical Turk) compares to the best the VC-backed world has to offer. Wait! But there are no VC-backed power SEO tools on the panel! Conductor, BrightEdge, BloomReach et al., you had better be in the audience & ready with tough questions, or else the crowd is likely to end up thinking that they can build vs buy. . .

Time for new SEM vs SEO data!

2010-06-02T11:01:00.000-07:00

With all the SEM & SEO data available on the web, it's exceedingly surprising to me that AFAIK there is *no* data more recent than 2004-06 on what % of search clicks go to paid vs organic results.

There's recent data on the CTR of different organic positions, data on the CTR of different AdWords positions, but no public data I can find showing what % of overall search clicks/traffic go to AdWords vs organic listings.

I've looked high and low on the wider web, so please show me to be a weaker searcher than you, and let's find some accurate, recent data on the topic.

Why is this important? Well for starters, I think that people will be surprised with the extent to which growth in AdWords has come at the expense of organic traffic. Otherwise put, I'm not so sure Google's monetizable inventory is growing much anymore, and suspect that most of the growth in paid search is net-zero growth = coming from organic as opposed to net-new monetizable queries.

Should that be the case, then:
a) valid questions can be posed as to the expected future efficacy of SEO efforts;
b) companies can expect (and plan/budget for) continued increases in AdWords vs SEO traffic, and the higher overall CPA that entails;
c) Yahoo, Bing, Apple and other search aspirants can knowledgeably think about what strategic moves they'll have to make with their own SERPs in order to compete with Google for users *and* distribution partners

In June 2004 I wrote up the below for a client who was asking me essentially the same question, and while I can't recall where I got the data from then, I'm reasonably sure it was as close to accurate industry data as was available at the time:

The major SE’s vary wildly in percent of click-throughs monetized through paid search:

Google = 27%
Yahoo = 35%
AOL = 50%
MSN = 70%
Ask Jeeves ~ 75%

Those numbers are an indicator of who's doing the best job of monetizing inventory, but also of who has the most future upside should they better monetize search. To that end, here's another piece of data that quantifies that growth potential relative to the varying current monetization levels for each engine. Namely, the % of paid versus free links at several major search engines:

Yahoo - 29%
Ask Jeeves - 52%
AOL - 44%
Google - 50%
MSN - 45%

Dividing the % of click-throughs to paid search by the % of listings that are paid, you get a measure of the engines' effectiveness at maximizing click-throughs per paid listing:

Google - 27%/50% = 54%
Yahoo - 30%/29% = 103%
AOL - 50%/44% = 114%
Ask Jeeves - 75%/52% = 144%
MSN - 70%/45% = 156%

This shows how much room there is for Google to grow its revenues independent of search query volume. Likewise, Yahoo can throttle up monetization by 40-50% before it reaches the upper limit already attained by Ask Jeeves & MSN. As for those two, future growth for them will have to come from growth in search query volume and/or CPC growth, both of which are largely out of their control.

So, anyone out there have such data? We know Google does, but I'll bet they consider that about as proprietary as CocaCola does their secret recipe. [AWA - I'd love your thoughts, but expect your access to such data is greatly exceeded by your marching orders not to divulge #:^)]

Blogging My Recent SEM/SEO/Display Tweets

2010-05-27T12:36:00.000-07:00

If you follow my blog but not my tweets you might wonder if I'm in a coma or something, as I'm [like many others, I suspect] blogging less and Tweeting, LinkedIning and Facebooking more. That said here's a recap of my <140-character observations, from most recent to oldest:

SERountable poll: 43% of SEO's say traffic down since Google redesign, & only 13% say traffic's up. Monopoly money IMO http://bit.ly/cmDdIz (May 27)

Title of SEO forum post yesterday: "Is 1st place organic worthless without Adwords campaign?" http://bit.ly/avMV3c Directionally accurate. (May 27)

Interesting stats from DataXu showing how volatility in display CPMs dwarfs that of paid search http://bit.ly/auH61e (May 25)

Map by Brent Halliburton shows the interconnected web of funding for ad tech companies, organized by functional groups http://bit.ly/bpzaZ5 (May 25)

@ppc_tools Can you please stop posting the same tweet?!? "The most efficient frontier in PPC..." It's gettin' old. #stale (May 13)

RT @fabianabartholo visualize people's innermost thoughts, compare google suggest results... http://dlvr.it/wCf3 (May 11)

As usual, interesting cutting-edge SEM data from RKG, this time on types of searchers http://bit.ly/b2L8bo (May 10)

Algo(s) run amok caused 1000-pt drop in the Dow b4 market recovered. It's odd that's never happened with SEM bid algos http://bit.ly/a0IBVa (May 6)

UK SEM guru Nick Morley just told me about three UK SEM agencies that've gone belly-up recently. Innovate or die a debt-filled death. (May 5)

RT @searchbeest If there are any i-level people who are great SEM/PPC operators, Efficient Frontier is recruiting at all levels. Get in touch. (May 5)

Of all the Internet stocks I track (65 total), only 6 are up today (VPRT, SAPE, OSTK, UNCA, TRAD.ST & 0700.HK http://bit.ly/9NUc5Z (May 4)

Interesting (but not surprising) that Google & Facebook are both buyingGoogle ads on 'How to advertise on Twitter'. (May 3)

Ex-Efficient Frontier sales guy Tim Krozek goes to Support.com to run BD, stock then goes up 12%. NASDAQ: SPRT. (Apr 30)

Trying to make sense of where the bewildering world of display advertising technology is going? Jerry Neumann's take: http://bit.ly/aBwD8S (Apr 29)

Here's as good a definition of 'DSP' as any I've seen. http://bit.ly/a3qjIh Many DSP's are actually DST's. (Apr 29)

The Display Adv'g Tech Landscape PDF from GCA Savvian: 144 entities, 137 companies, of which ~6 have been acq'd. Consolidation ahead... (Apr 29)

SharesPost valuations for Zynga, FB, Twitter & LinkedIn up 13.8% recently, on average. (Apr 27)

Is Facebook's Like button distribution damaging to social sharing firms? I don't know, but BuiltWith.com trend info suggests so http://bit.ly/aAqILt (Apr 26)

I've got on my To-Do list to move to a new blogging platform, one goal of which will be to incorporate my social media stream...

Is The Pareto Rule An Understatement in SEM?

2010-04-22T11:12:00.000-07:00

I've often wondered whether or not a very small percentage of searchers generates a disproportionally large % of search engine revenues. This belief is based on the observation that, of most people I know, there are two types: those who rarely/never click on paid ads, and those who *always* do, using paid ads almost as their primary means of search-based navigation.

Does anyone care to comment or share data anecdotes on this topic? The only data I'm aware of on this topic was put out by Comscore in 2009 and in which they categorize searchers as light, moderate & heavy, with heavy searchers (20%) accounting for 80% of searches. I'll bet, though, that that was a generalization and not a specific fact.

If you have data or meaningful anecdotes on this topic, I'd love to hear from you and suspect Searchquant readers would too. More accurate data on this subject would, I think, have a material impact on SEM strategy.

Any thoughts?

Searchquant's Internet Stock Indices

2010-04-08T11:35:00.000-07:00

If you work in the areas of search engine marketing, SEO, analytics, ecommerce or online marketing, you're probably positive on the near, mid and long-term prognosis for those sectors and many of the companies within it. In addition to working at or investing in startups, some of you probably have dabbled in investing in the space with public companies.

In the interests of laying the full field of Internet investment opportunities out there for you, I've put together an exhaustive list of all publicly-traded Internet companies that fit in one or more of the above categories, ordered by market capitalization. I've left out all but a few that fall below the US$200M market cap threshold, and in addition to all the U.S.-based/traded companies, I've included European, Asian and Latin American firms. List is stock symbol, company name and then market cap in USD.

Without further a-do, I give you the Searchquant Internet Stock Indices:

Large Cap U.S. Internet Stocks (>US$1B market cap)
GOOG Google; $180B
AMZN Amazon; $60B
EBAY eBay; 35B
YHOO Yahoo; $23.4B
PCLN Priceline; $11.94B
AMTD TD Ameritrade; $11.88B
EXPE Expedia; $7.35B
AKAM Akamai; $5.63B
NFLX Netflix; $4.32B
ETFC ETrade; $3.26B
AOL ; $2.97B
IACI Interactive Corp; $2.67B
VPRT VistaPrint; $2.54B
WBMD WebMD; $2.38B
MELI MercadoLibre; $2.2B
MWW Monster WW; $2.09B
GSIC GSI Commerce; $1.72B
SAPE Sapient; $1.27B
DRIV Digital River; $1.2B

Small Cap U.S. Internet Stocks ($100M-$1B market cap)
VCLK Valueclick; $846M
NILE BlueNile; $829M
OPEN OpenTable; $827M
QNST Quinstreet; $798M
ACOM Ancestry.com; $786M
OWW Orbitz; $713M
CTCT ConstantContact; $665M
RNWK RealNetworks; $654M
UNTD United Online; $648M
SFLY Shutterfly; $632M
ARTG ArtTechnology Group; $561M
EGOV NIC Inc.; $466M
OSTK Overstock; $460M
INET Internet Brands; $448M
LPSN LivePerson; $409M
INSP InfoSpace; $403M
EHTH E-Health; $365M
ICGE Internet Capital Group; $346M
MOVE Move.com; $345M
LQDT Liquidity Services; $319M
GSOL Global Sources; $296M
TZOO TravelZoo; $257M
PRTS US Auto Parts; $220M
MCHX Marchex; $181M
UNCA Unica; $180M
WWWW Web.com Group; $146M
TSCM TheStreet.com; $115M

Asia Internet Stocks
0700.HK Tencent/QQ; $36.2B
BIDU Baidu; $21.1B
CTRP CTrip; $5.4B
NTES NetEase; $4.74B
SNDA Shanda; $3.05B
FMCN Focus Media Holdings; $2.33B
SINA Sina.com; $2.25B
SOHU Sohu.com; $2.07B
PWRD PerfectWorld; $1.81B
GA Giant Int'l Grp; $1.74B
CYOU Changyou.com; $1.66B
CRIC China Real Estate Info. Co.; $1.45B
JOBS 51job.com; $493M
WZEN Webzen Inc; $122M

Europe Internet Stocks
MEET.PA Meetic; $715M
SLG.PA SeLoger.com; $682M
MONY.L MoneySuperMarket; $545M
TRAD.ST TradeDoubler; $239M
DNX.PA Dreamnex; $118M

Internet Marketing Stocks
GOOG
YHOO
BIDU
AOL
IACI
FMCN
SINA
SOHU
GSIC
CRIC
DRIV
VCLK
QNST
CTCT
ARTG
EGOV
LPSN
INSP
ICGE
TRAD.ST
MCHX
UNCA
WWWW

E-Commerce Stocks
AMZN
EBAY
PCLN
AMTD
EXPE
CTRP
NFLX
ETFC
VPRT
MELI
GSIC
SAPE
NILE
OWW
SFLY
OSTK
INET
EHTH
ICGE
LQDT
TZOO
GSOL
PRTS

Gaming/Music/Content
0700.HK
AKAM
NTES
SNDA
WBMD
MWW
PWRD
GA
CYOU
OPEN
MEET.PA
SLG.PA
RNWK
UNTD
MONY.L
JOBS
EHTH
MOVE
WZEN
DNX.PA
TSCM

If you think I'm missing any companies, please let me know. There were a bunch of companies I thought about including but didn't, either because they're too small, or Internet-based revenues are <50% of total revenues. Also, if I can figure out how to do it, I'll create portfolios with $10,000 hypothetical $$ in each company so that we can track how the different Internet sector's are doing.

ENJOY!

Gotcha!

2010-04-01T15:52:00.000-07:00

[If you got here from somewhere other than an online marketing forum, Twitter or Facebook, disregard, it's an April Fool's Joke].

SEMs Competing For SEM Traffic: An Update

2010-03-08T09:40:00.000-08:00

Here's a list of SEM firms and the competitors that are bidding on their brand terms:

Efficient Frontier:
1) Omniture
2) Trada
3) iSearchMedia
4) Wordstream
5) Marin

Marin Software:
1) SearchForce
2) Channel Advisor
3) Omniture
4) Click Equations
5) Trada

ClickEquations:
1) SearchIgnite
2) Omniture
3) Wordstream
4) PPCMaze
5) iGetListed.com

Kenshoo:
1) Marin
2) Omniture
3) SearchForce
4) Visiture
5) ClickEquations
6) iGetListed.com/Kenshoo (attack ad)

Acquisio:
1) Omniture
2) Mongoose Metrics
3) Click Equations
4) PPCMaze
5) iGetListed.com

SearchIgnite:
1) ClickEquations
2) Omniture
3) iGetListed

Dart Search:
1) Performics
2) Omniture

CMO.com: Digital Marketing Insight

2009-08-27T00:22:00.000-07:00

I am excited to let you know that today we launch CMO.com, a new site that delivers digital marketing insight and resources to help marketing executives lead in the digital age.

Online marketing has become strategic to CMOs. As Omniture has expanded its Online Marketing Suite, we have become more and more involved in “big picture” conversations with C-Level executives about their strategy to move from traditional forms of marketing such as TV, radio and print to digital marketing.

I hope Searchquant readers will find CMO.com to be a valuable resource to them going forward, and one you'll visit regularly.

Important YoY & multi-year trends in search & online marketing

2009-08-24T14:02:00.000-07:00

I read a study published recently by SEM firm Engine Ready, and which looks at key statistics across paid and organic search, direct site traffic and referral traffic. The data's very interesting, but what's most illuminating is comparing the data to an earlier version the firm put out Jan 2008. NOTE: the recent study's data is based on data for 26 retailers taken from 7/1/08-6/30/09, while for the earlier study 27 retail advertisers' data was aggregated over a 2-year period 2006-2007. 21 of the 26 advertisers in the most recent study were also in the previous study.

Highlights:
1) Conversion rates (CR) have improved mostly in direct access and referral site visitation, and least in paid and organic search. This helps explain why growth in search CPC's has stalled;
2) Retail consumers increasingly know where they want to go, and use search less and less to get there (proportionally speaking);
3) The conversion rate disparity between direct and referral site visitors, on the one hand, and paid and organic search visitors on the other hand, has grown significantly;
4) AOV used to vary widely by traffic source, but has largely consolidated to a multi-channel average

Advertiser Strategy implications:
1) Advertisers testing & targeting efforts should be particularly focused on paid & organic search traffic, as CR has been most stagnant in search;
2) Multichannel attribution measurement is the key opportunity for revenue and marketing gains from CMO orgs, as it alone will allow for a conscious, strategic shift from dependency on lower value, recurring cost paid search channels over to higher value, higher growth direct & referral traffic sources;
3) Brand advertising - social media, search and offline - and with a strong set of visitor engagement metrics is a must to drive growth in the fastest-growing and most profitable traffic segments - direct and referral traffic. Waiting at the bottom of the sales funnel - paid search - for customers is a recipe for disaster;
4) Understanding and optimizing to Lifetime Value is critical, as AOV is a less and less movable needle. LTV, multichannel measurement & optimization go hand in hand.

Kudos to Engine Ready for putting together such interesting data.

My WebAnalyticsWorld Interview

2009-08-21T10:18:00.000-07:00

For those interested, here's a link to an interview I did with prolific analytics blogger Manoj Jasra of Web Analytics World last week at SES San Jose. In it we talk about Omniture's SearchCenter product and the importance of the rest of Omniture's platform to our SEM clients.

SES SJ: (S)omone (E)xamine (S)trategies

2009-08-07T10:39:00.000-07:00

I don’t know about you, but I dislike the word ’strategy’. It’s right up there with ’skill sets’, ‘engagement’, ’synergies’ and ‘leverage’, words businesses often use to invoke and associate with the idea of higher thought. With Search Engine Strategies San Jose, the world’s largest search marketing conference upon us next week it occurs to me that the show has devolved to tactics, not strategy - and that needs to change.

The tactics used to successfully attack paid and organic search *are* important, but can I please get a ‘whoop whoop!’ from attendees who will high-step it out of *any* session whose panelists talk about keyword generation, campaign structuring and ROI-based management as if those were strategies and not just tactics we’ve all learned about, implemented and lived by since the Long Tail was 100 keywords?

Strategies are overall plans to win the battle before it is fought, and tactics are the activities we engage in to implement our strategy.

Panelists, vendors, consultants and engine folk, let’s admit it - in our haste to secure our piece of this rapidly expanding pie, we have turned this conference and others like it into a glorified feeding frenzy where insiders position tactics as unique insight, features as solutions and experience as vision.

Strategy really matters now. Like you, your competitors have learned the tactics and implemented them. They too have seen the growth, the ROI and the measurability of search - and they want more just as badly as you do. Sheer effort still distinguishes some from others, but that same sheer effort eventually takes a 40% pay raise from a competitor, leveling the playing field right quick.

The engine duopoly, meanwhile, is wringing more money out of advertisers by pushing gratuitous, default campaign settings, silo’d SEM mindsets and self-serving system optimizations. It’s no wonder most advertisers are seeing diminishing returns.

And last, the SEM vendors, oh the SEM vendors. They've scored easy VC money with visions of a $100M+ exit, and then thrust features that only serve to guide advertisers down a path of strategic myopia. Have you met many SEM vendors who want you to invest towards becoming an effective multi-channel marketer? Do they entice you with Google Maps mashups, no-work-required deployment pipedreams and avoidance of the API costs you will soon bear? Do they want you to play a defensive Quality Score game rather than a multichannel offense?

Omniture, a firm whose SEM stance even I once scorned, has arrived with a strategy and accompanying technologies and services that can inform and enable your own strategy.

Omniture will be discussing search engine Strategies next week. In our view, the Internet is not just a marketing channel. It has become an enabler for a business strategy that consists of:

1) measuring customer acquisition and conversion;
2) using information to inform automated optimization;
3) extending the view of the customer across channels on and off-line and despite multiple 3rd-party apps; and
4) applying new insights to optimize your business based on a complete view of all customer interactions

Come join us next week at the sessions Ron Belanger and I will participate in - or at our booth - and we’ll look forward to talking… Strategy with you.

Google's Bid S[t]imulator

2009-08-03T12:38:00.000-07:00

It's been 6 years now that I've been on the sales side of hundreds of SEM discussions with advertisers and agencies, with much of that time spent discussing the importance of instrumenting SEM campaigns so that the all-important data (Green Gold as we call it here at Omniture) can be captured and used to optimize to business goals. As a third party vendor who must add value to clients' SEM campaigns to justify fees, our interests are fully aligned with the ad spender.

In an interesting twist, however, Google's now offering the Bid Simulator, a tool that purports to simulate traffic levels at various CPC's the advertiser could choose. This is interesting for a number of reasons:

Data Accuracy: those who've been in SEM for some time know full well that Google's primary attempt at estimation - Traffic Estimator - has been so far off from actual traffic levels advertisers see as to be laughable. Now, though, Google's offering - for free (Warning, Warning, Warning) - to help advertisers see how much more traffic they could get if they would just try the [mostly higher] CPC's Google suggests.

Motive: searchers increasingly know where they're trying to go, and thus reliance on paid ads to get there has leveled off. For proof of this one need look no further than Google's latest financial results, which showed negative sequential click volume growth. Were it not for miraculously higher CPCs, GOOG would be, well, just GOO. Most industry watchers can't explain the rise in CPCs for the simple reason that the economy still stinks, and CPC's tend to track to ROI. So how did Google get 5% growth in CPC's in Q2? Part of it was changes in exchange rates, but part of it was, as Google execs said on their earnings call [I paraphrase here] "Over a dozen ads quality improvements that had higher than usual impact."

Did you notice the quality of ads improving? I sure didn't, and so I'm left wondering if ads quality improvement means improvement for Google itself in the form of higher CPCs despite flattish ROI.

And so back to the Bid Simulator; advertisers & agencies who are trying it are most typically seeing Google suggest bids that are so far above the campaigns' optimal settings as to be laughable (see this SEW Forums thread).

Given Google's historic inaccuracy when it comes to advertiser-specific traffic estimation, coupled with the fact that Google's under duress to buck the economic winds flailing their business, I suggest advertisers think of this new feature as the Bid Stimulator, and treat it accordingly.

[9/1/09 note: someone came to my blog after searching for 'Google Bid Stimulator' just now. Freudian slip, me thinks.]

Did proper nouns all of a sudden become low-quality?

2009-08-01T01:16:00.000-07:00

A small but noticeable group of SEM experts have noticed that Google's AdWords system has recently lowered the Quality Score for many of the proper nouns they buy. Forum discussion on Webmasterworld is here.

First Google opens up trademark bidding to boost otherwise flagging revenues, and now all of a sudden they're deeming proper nouns lower quality (and thus lower Quality Score) for which there was no change in landing page. This can mean one of two things IMO:

1) Google has identified a keyword sector that will bear higher CPC's and is inflicting them;
2) Someone at Google thinks proper nouns are worth more because they're, well, proper

Either way, I see hot burning coals under the feet of proper nouns, while adjectives, predicates, adverbs and conjunctions go untouched...

Here is the REAL Google quality score

2009-05-01T16:27:00.001-07:00

If you like scorin' nasty good tunes on a Friday afternoon, this is the real Google quality score. Check out Nathan 'Flutebox' Lee & Beardyman - the UK's top beatboxers - tear it up at Google's London office.

"Retention Is The New Acquisition"

2009-04-24T16:47:00.000-07:00

Uttered by Palo Alto commercial landlord Charles Keenan recently.

I Have Another Blog, on... Climate Change

2009-04-18T16:36:00.001-07:00

[NOTE: this has nothing to do with SEM and everything to do with climate change, so if that's not your cup o' tea, skip this post.]

I have a bunch of tiny blogs, one of which is Climate Varies, dedicated to expressing to all 20 of that blog's visitors that Al Gore's Inconvenient Truth is actually the opposite, a Convenient Untruth.

Since SearchQuant gets at least double the traffic, I'm posting the below so that folks know where I stand on the topic.
=====================================

[Excerpt from my Facebook wall in the last 24 hours, consisting of a back and forth I'm having with a former colleague]

Status: Chris likens the green movement to the Church's Indulgences during the Middle Ages. Keep sinning, but no Hell.

Colleague: Intriguing notion, but I can't connect the dots. Can you elaborate?

Me: Whether it's sustainability or lowering CO2 emissions, fear motivates us more so than desire to do right for right's sake. If we *were* acting on ethics/honor and not guilt, we wouldn't commit the eco sin of living the way we do in the first place. We'd choose *lifestyles* that are green rather than try to erase every material step we take.

Identical to the Catholic Church's selling of indulgences 100's of years ago. The church turned the supply of guilt (collectively perceived thanks to centuries of religious indoctrination + shorter life spans) into a source of revenue. The church knew people couldn't live up to the Christian ideal, and so it offered Get Out of Hell Free cards that people bought out of fear - not because it was right.

Same with today's environmental movement. Hypocritical eco-priests like Al Gore & Holllywood sucking on our guilty bones.

Colleague: Are all pollution credits BS, or just carbon credits?

Me: We know pollution is bad for us in the here and now, so we deal with it because it affects us. That's a social contract. Carbon credits, on the other hand (me selling you a carbon credit so you can keep operating a coal-fired choo-choo train, for example) is an Indulgence because even though I know it will have zero impact on what global warming *might* exist, I sell it to you so I can fund the growth of my cause.

Colleague: Thanks for the explanation. I understand your point now. You see carbon-trading as a useless activity that can in no way help reduce global warming. All that it reduces is guilt--or, more likely, what it does is allow a corporation to advertise that it is clean, thus creating positive PR for itself.

Do you object to the theory behind carbon trading, or do you merely think that it is poorly implemented? As I understand it, the theory is that environmental costs must be built into the marketplace and, when proper costs are assigned, the market will then self-correct. Further, as I understand it, when a corporation purchases a carbon offset, the money they spend actually goes to reduce carbon emmisions elsewhere, so that the net will be zero.

Me: Yes, and yes. I object to the theory because it assumes a) that we know what causes the planet's temperature to vary; b) that our math can accurately model climate; c) that climate variation is bad; and d) that there's anything we can & should do about it. And I object to the implementation because it gives the new fires every chance to burn and ... Read Morefocuses on the naturally dying old fires.

I also object to it because it's a fantastic racket that I unfortunately didn't think up; but I *am* thinking about building a global warming carbon offset iPhone app.

Colleague: Yes, I understand that you question the underlying assumptions behind global warming. But, suppose those assumptions were true: namely, that global warming is occurring and that's it's bad for the environment. Do you think carbon trading would be an effective way to combat it?

Me: Supposing all you ask me to suppose, I very, very much do think carbon trading would be a horrible way to combat it, for the simple reason that it would give CO2 emitters a perfect & easy way to avoid reducing CO2 while passing on the fees they pay straight to the consumer in the form of higher prices. At first glance, that's exactly what seems to ... Read Morebe happening.

A better way - and I hate even talking about this since to me the notion of climate change being caused by humans is preposterous - would be to give citizens tax *rebates* as they lower their carbon footprint. Lowered taxes as an incentive would be way more powerful an incentive to achieve the desired ends, and it would avoid the gross ineffeciencies that always result when citizens let govt manage money.

Colleague: Ah, but if you're willing to believe for a moment that humans *are* causing climate change...and you believe in supply and demand...then passing the cost of CO2 emitters to their customers is precisely the right thing to do---increased cost->decreased demand->reduced CO2

Rebates (lowered costs) are just the flip side of increased costs. All the ... Read Moresame coin, so all the same result.

The difference being---it's easy to measure the emitters and increase their cost. It's exceedingly difficult to measure those who lower footprints.

Me: *If* I'm willing to accept anthropogenic climate change, then please don't add insult to injury and make me accept that ballooning the federal govt or the UN to try and manage it top-down is the best way to mitigate it.

AdGooroo Estimates Top 25 Search Advertisers

2009-04-13T11:28:00.000-07:00

AdGooroo regularly puts out some very unique and interesting data on the SEM space, and today's report is no different. The report has some very interesting data points on ad coverage, # of ads/page, # of advertisers and ads displayed per impression.

But what I found most interesting this time around was AdGooroo's list of who they deem to be the top 25 U.S. PPC advertisers by search engine (the estimate "is based on total number of recorded first-page ad impressions"). Advertisers in the top 25 list for Google, but not for Yahoo or MSN are:

Ask.com (one of G's top 3 distribution partners, so no surprise that they're doing G-sanctioned arbitrage so to speak)
Dell
DexKnows.com
Google (hmmm, does Google's marketing dept have to pay internally?, and lo & behold, Google's not on Yahoo or MSN's top 25 list)
Shopping.com (AdSense distribution partner, a la Ask.com. Arbitrage, baby!)
TripAdvisor (Part of Expedia, and you'd expect T.A. to be top 25 given that the measurement is based on ad impressions; T.A. is probably living in avg ad position 5-10, below the more transactional travel sites but high enough to feed Expedia a daily diet of warm leads)
WireFly.com - now that all the wireless companies are trying to compete with the iPhone, let the PPC marketing dollars fly. WireFly (formerly InPhonic) will do well, or die trying, as they did in 2007 when unsuccessful PPC & online marketing led to bankruptcy. I wonder what they'll do differently this time around?
Zappos - I've never bought shoes from them, but their Google Maps mashup is a must-have if you want to know just how god-awful America's taste in shoes is. [NOTE: if you want great shoes that will last 5+ years and get positive reviews from SEM & custom shoe officionado David Rodnitzky, Berluti in Paris is the place to go.]

Is Ask.com Pulling Away From Google Relationship?

2009-04-09T16:02:00.000-07:00

I read today on SEW that Ask.com will be using Anchor Intelligence's ClearMark system to detect and eliminate click fraud. Given that the overwhelming majority of Ask's paid search inventory currently goes to Google AdWords, you have to wonder why Ask would invest in Anchor Intelligence's solution if it's only going to apply to the <25% of Ask's inventory that the company sells direct to advertisers.

My guess is that this is a sign Ask is either

a) significantly increasing the percentage of inventory they sell direct; and/or
b) preparing to leave Google's distribution network altogether

I'm doubtful on (b) since the Google/Ask deal runs through the end of 2012, which leaves (a). In IAC's 2008-end 10Q, they say "For the years ended December 31, 2008, 2007 and 2006, revenue earned from this arrangement was $610.8 million, $568.1 million and $379.0 million, respectively." Looks like they've topped out in terms of how much they can make with Google, so why not slowly cut out the middleman?

Omniture Billboards: Green Hiring

2009-04-09T11:41:00.000-07:00

For those of you who haven't visited the Salt Lake City, Utah area before, here are some of the billboards you would see if you were driving on the highway.

LAST CHANCE: SearchQuant SEM March Madness, $2K Prize Money, NO BUY-IN.

2009-03-18T14:02:00.000-07:00

In case you missed my earlier post, here's your last chance to get in on the SearchQuant SEM March Madness Tourney. $2000 in prize money, no buy-in (see, I told you it was 'March Madness'). So far we have 31 people registered to play, including folks from:

Omniture
Efficient Frontier
Google
Kenshoo
Rimm-Kaufman Group
multiple SEM consultants and SEM advertisers

In the spirit of the Olympics, many SEM competitors will lay down their swords temporarily, only to take them up again once the Madness that is March is over.

At some point I'm gonna realize how stupid this was on my part, so register before I do and let the Madness course through your veins.

Registration link is here, and you have until Midnight tonight (Wednesday) to register and make your picks.

Google Stumbling into the World of SEM Sales

2009-03-16T16:18:00.000-07:00

I've been hearing of more and more situations where Google reps are telling 5 to 6-figure per month SEM advertisers that their Conversion Optimizer tool is capable of delivering double-digit lift in campaign performance. Just today on the Inside AdWords Google group I read the following:

"We've just completed a new analysis on the performance of campaigns
which have adopted Conversion Optimizer. We found that on average,
these campaigns achieved a 21% increase in conversions while at the
same time decreasing their CPA by 14%. The analysis compares the
performance of Conversion Optimizer campaigns with a control set of
campaigns and represents the average impact of Conversion Optimizer.
The actual impact will vary from campaign to campaign (and a small
number of advertisers could conceivably perform better without
Conversion Optimizer). If you would like to learn more about Conversion
Optimizer, the results we've seen, and how it can help you get more
conversions and lower CPA, join us for one of the three webinars we are
hosting March 18-19th. Posted by Amanda Kelly, Inside AdWords crew."

Yet, the clear majority of anecdotes on the web point to Conversion Optimizer actually hurting campaign ROI, as I detailed on this Webmasterworld thread. [The WMW thread includes links to C.O. ROI anecdotes.]

For those of you who may never have used SEM tools before but are realizing that you need to move from manual & infrequent SEM management to a more instrumented, calculated approach, I'd suggest strongly that you consider the motivations behind the paid vendors, as well as for Google with their free Conversion Optimizer. The paid vendors have to actually drive lift in ROI, or people won't pay for their product. Google just has to get you to hand over the controls to your bank account, at which point they're able to spend your money however they see fit.

Think about that.

You don't get what you don't pay for, people.

Does Google Charge Itself API Fees?

2009-03-10T07:55:00.000-07:00

I was looking at our firm's Google AdWords API bill this morning, and all those huge numbers reminded me that as Google becomes more and more of a competitor to the companies comprising the ecosystem around it, they have the distinct advantage of not having to pay AdWords API fees.

Does anyone know if the department within Google that uses the API makes an internal transfer to the department that runs the API? I seriously doubt it.

API access & associated fees are the SEM industry's water rights issue, and Google, as landlord of a large agricultural district that it has come to own fair & square, is now making the same mistake as their presidential candidate = not trusting free markets. By charging API fees to SEM firms but not themselves, Google is preventing SEM firms from investing to their fullest in building solutions that help advertisers profitably spend more on AdWords. Every dollar an SEM firm must spend on API fees is a dollar less spent on support for targeting functionality, or better client services, or marketing to get that technology in more advertisers' hands.

In a real way, Google charging API fees is driving down rents on the land Google owns - not a smart move for a landlord to make. So Google, as you think about how to overcome the macro-economy's effect on your SEM world, please rediscover free market economics and realize that the SEM community - if freed from unequal access to the water you lord over - will do that much more to help your/our customers spend more on AdWords.

SearchQuant March Madness: $2000, No Buy In + You

2009-03-09T12:36:00.000-07:00

SEM + March Madness + $2000 + NO_BUY_IN + You = Hell Yeah Baby!

SearchQuant, the SEM blog with a fresh, uncensored view on paid search is sponsoring what will be the SEM industry's biggest ever March Madness pool. I've invited 200-300people from the SEM world to participate, and best part is there's no buy-in. Prizes:

FIRST PLACE: $1000 (or, if 2+ people tie, $1000/#ppl)
SECOND PLACE: $500 (likewise, if a tie, $500/#ppl)
THIRD PLACE: $250 (if tie = $250/#ppl)
FOURTH PLACE: $250 (if tie = $250/#ppl)

What, no buy-in? Certainly there must be a catch, no? WRONG. No buy-in, just a good old-fashioned fun time with everyone trying to win money, and maybe some SEM trash-talking on the message board.

Email me at chris dot zaharias at gmail dot com if you want in, or follow this link. Only caveat - you have to work in the SEM industry or manage SEM budgets as part of your job. **I will, at my sole discretion, decide who's allowed into the tournament.**

SearchQuant
aka Chris Zaharias
PS - Did I mention there's no buy-in? Just checking...

50% of Private SEMs to Suffocate This Year

2009-03-09T06:50:00.000-07:00

I'm traveling this week, it's tax season, and some thoughts don't need much verbiage. This week all my Searchquant blog posts will be titles + a picture + a link, that's it.

Link.

Your Next 4 Conferences - Here They Are

2009-02-06T15:19:00.000-08:00

Wow, that was the longest SearchQuant blog posting hiatus of all time; if a were a millionaire I'd hire a ghost-writer...

Anyways, I wanted to let you know that I'll be participating in the following three conferences:

SMX West
Feb 10-12, Santa Clara, CA
I'll be doing a Q&A session with a customer of ours - Brandon Proctor of Improvement Direct - Wednesday 10:20-10:40am at Theatre B, and my colleague Chris Knoch will be on the 'Measuring Search & Offline Marketing Success' panel Tuesday 1:15-2:30.

Omniture Summit
Feb 17-20, Salt Lake City, Utah (Salt Palace)
This is Omniture's own conference and brings together 1000+ companies who in the aggregate represent 30%+ of all online advertising budgets. Reasons to go:

-Chance to attend interesting sessions covering SEM, analytics, multivariate testing, behavioral targeting, and multichannel optimization
-The conference organizers, in their infinite wisdom, have roped off Friday for skiing in Utah

LeadsCon
March 4-5
The Mirage, Vegas [baby]
David Rodnitzky, Frank Lee, Michael Yang and I will talk about mastering PPC in the lead gen space, Thursday March 5 10:45-11:30am. This is a much more important conference than most people think; lead gen firms are the legitimate side of the cutting edge in online marketing, and for the most part the lead gen space is much further along in customer acquisition and conversion optimization than most other sectors. [Vegas baby]

PubCon Austin
March 11-13, Austin
If you're in Texas, you live large, but can you handle Large Scale Bid Management? That'll be the topic Wednesday March 11th 11:30am-12:45pm and I'll be there along with Kate Morris, Did-It Chief Frog Kevin Lee and an as-yet unnamed Googler, who if we're lucky will have a Jim Carey moment when extolling the virtues of Conversion Optimizer, Google's SEM tool, for which Google charges a 18% of spend fee directly in your AdWords account.

C'mon people, don't let a global economic depression get in the way of your conference attendance. And if anyone questions why you're going to any of these conference, tell them it's experiential marketing.

Franksgiving

2008-12-01T15:21:00.000-08:00

I'm hearing people say that Black Friday was good and that sales have risen year-over-year for this holiday period. People need to understand, though, that Thanksgiving 2008 was November 27, 5 days later than last year when it was November 22. That means the U.S. holiday shopping season is 15% shorter than it was last year (27 days vs 32 days). So even if Black Friday 2008 is a few percent better than in 2007, things still look awful relative to retailers' expectations.

Back during the Great Depression, Franklin Roosevelt in 1939 used his presidential powers to order that Thanksgiving be moved up from November 30th to November 23rd, this in an effort to pump life into a flagging U.S. economy. As detailed on Wikipedia Franksgiving, as it was called, caused more harm than good, screwing up sporting event and travel schedules for millions of people while providing no discernible positive economic impact.

While it's clear that neither lame-duck Bush nor President-elect Obama are likely to move Thanksgiving up on the calendar for next year, it's worth noting that when Thanksgiving occurs later in the month of November, it's likely to have a negative effect on the economy relative to years where the holiday falls earlier. Likewise, search marketers need to understanding this calendar cyclicality and manage their SEM campaigns accordingly.

Thanksgiving is the psychological marker for when we're to start our holiday shopping, and Christmas Eve marks the last day to buy gifts. Because the current year's holiday period length is 15% shorter, it follows that total holiday shopping could be as much as 15% lower than for last year's 32-day shopping period. While this is [hopefully] only partially true - one would hope our gift-giving is not so directly tied to the # of days we have to shop - because of the world of macroeconomic pain we're in as well as the speed with which that pain's descended upon us, it's unlikely the 2008 holiday shopping period will bring anything but pain to retailers, including those using search as a primary marketing channel.

To lessen the negative effects of this year's calendar, search marketers should consider temporarily lowering their ROAS goals or raising their allowable Cost of Sales constraints, in the hopes that consumers are aware that they have fewer days to shop and will thus convert at a higher rate than in years past.

Moreover, now is a good time to tune your bid management's data recency weighting - at least for high-volume keywords - to take fewer days into consideration when making bid changes; now that the first few days of the holiday season are in the data bag, so to speak, advertisers should rely on these last few days of data.

The Tale SEM Queries Tell

2008-11-26T14:25:00.000-08:00

Since 2003 I’ve been blogging on SEM, and for most of that time I’ve tracked the queries that lead people to my blog. In addition to learning that offhand references to Michael Jackson songs can lead to tons of unwanted traffic, I’ve learned a great deal about what SEM buyers are looking for. In this blog post I’ll list some of the types of SEM-related queries I’ve seen, and comment on what the queries say about search marketing.

SEM Vendor Queries
‘ppc management [vendor name]‘
‘Google recommended bid management tools’
‘[vendor name] competitors’
‘[Vendor 1] [Vendor 2] [Vendor 3] [Vendor 4]‘
‘top SEM firms’

It’s perhaps no surprise that when people responsible for SEM at an advertiser or agency are looking for SEM tools, they go to search, but what is surprising is how little objective content they find. Do a search for any of the above queries, and what you’ll find is that aside from industry-specific blogs such as mine, there are no independent third party reviews on SEM tools to speak of. Not so for more mature technologies such as CRM, databases, industrial supplies and web hosting. Perhaps someone should take this bull by the horns? Anyone? In the meantime, SEM technology buyers should post on forums such as Webmasterworld, SearchEngineWatch and DigitalPointForums asking others what experiences they might’ve had with Vendor X, Y or Z. Also, if you’re going to settle on the right solution, see who is & isn’t advertising on the SEM-related queries you’d expect them to, and keep in mind that irrational SEM bidding by SEM vendors is a sign they probably won’t take good care of your own campaigns.

SEM Sales Rep Queries
‘Chris Zaharias Omniture’
‘Anil Kamath Efficient Frontier’
‘Kevin Ryan Motivity’

No doubt the SEM buyer is trying to learn about the SEM salesperson they have met or will meet, but more importantly, I think SEM buyers want to know that the people they’re speaking to out SEM tools actually know what they’re talking about, participate in industry conferences and discussions, and have enough knowledge of the space for their viewpoints to be worth considering. Over the years I’ve had many, many business relationships start with people coming to me and saying, in effect, ‘I wanted to get your opinion on your and other solutions because I keep seeing your name as I research the space.’ Horn tooting aside, this really means that most of the people representing SEM firms in pre-sales discussions don’t know enough about the space to be trusted as capable of giving accurate assessments of their and other vendors’ solutions. And further, these SEM credibility searches make clear the unfortunate predicament SEM buyers face: there is no objective source of SEM vendor reviews.

SEM Campaign Management Queries
‘history of bid management’ - surprisingly, there are quite a few students of the space, but very little in the way of Wikipedia entries or historical SEM articles. This will change, but only if SEM buffs do their part (here's my part)
‘Google match types’ - probably the most frequent query I see, reflects consistent industry concern that the match types Google defaults to are not the ones that best serve advertisers.

‘Expanded Broad Match’ - likewise, you never see people searching for Exact or Phrase match ; those match types work the way you’d expect them to, whereas EBM is much more challenging for advertisers to understand.

‘Automatic Match beta’ - there's been a spike in occurence of this query lately, due it seems to Google having invited a larger number of advertisers & agencies into the beta for Automatic Match in the past week. No one but Google knows, but it would appear that Google's closer to making this a production feature of AdWords. Automatic Match ROI anecdotes are anything but promising, so consider this The Coming SEM Laziness Tax until we have reason to think otherwise.

’search query length’ - I’m seeing more of this query lately, perhaps because people are seeing shrinkage of the long tail in their own campaigns.

‘SEM optimization algorithms’ - not as rare a query as you’d think, shows that buyers know SEM systems’ math is an important consideration.
‘ppc distribution fraud’

‘AdWords account hijacked’ - little has ever been written about what is actually a very regularly occurring PPC-related crime, but hardly a month goes by without someone on an SEM discussion forum claiming that their account was hijacked and new campaigns added that drive traffic to a fly-by-night affiliate program. This happened to me too, funny story here.

Perhaps just as interesting are the SEM queries you don’t see. Why aren’t people searching for
‘best SEM user interface’
‘SEM buyer’s guide’
‘what to look for in SEM solutions’
‘SEM vendor reviews’

Because the majority of SEM solution buyers are first-time buyers, most don’t know what they don’t know and just assume that if they research the vendors that contact them, they’ll do fine. That couldn’t be further from the truth, though, as SEM firms are notoriously good at - lo & behold - using search to identify prospects and will take advantage of novice buyers like you wouldn’t believe. So as an SEM solution buyer, recognize the lack of objective information, talk to as many other buyers as possible, and know the vendors from multiple viewpoints online and off.

Google Search Network: See It & Weep, or A Renaissance of Accountability

2008-10-20T10:36:00.000-07:00

About a week ago Google started, for the first time ever, to break out impression/click/cost data between Google and its Search Network, something many of us in the SEM community had been asking for for years.

Now that Google's providing this much asked-for visibility, advertisers are getting their first view into who exactly Google's search distribution partners are, as well as the conversion value of their traffic. Lo and behold, the results don't live up to Google's owned & operated search traffic. One poster from Webmasterworld said it best:

"Wow, just split stats on an account. Bye bye Search Network!"

A long, long time ago, in a world far, far away, Google didn't allow advertisers to view on or bid separately on Google Content; this led to a situation where most advertisers simply didn't participate in Google Content (at least until Google made it a default & hard to opt-out-of feature in the AdWords interface, but that's another story...). After pulling their hair out over this for 2+ years, Google finally had the good mind to break Content out separately for both reporting and bidding, and lo and behold - advertisers took up the channel. In the most recent quarter, Google's Content network accounted for a disproportionately large amount of the company's growth. Give people visibility and control and they'll bid to ROI, so it seems.

So now we're seeing this story repeat itself with Google's Search Network. Visibility is step one, but the ability to bid separately must not be far behind. With visibility, it'll be 'bye bye Search Network' for many, but once bidding separately on the Search Network is enabled, you'll see advertisers bid the Network to its own ROI characteristics, which should lead to a renaissance of accountability.

In the short term, though, I believe it'll be 'bye bye Search Network' for many, with some - but not all - of the savings being reinvested in Google O&O traffic.

Simplest Explanation Of Our Economic Crisis Yet

2008-10-09T15:00:00.000-07:00

Once upon a time, in a village, a man appeared and announced to the
villagers that he would buy monkeys for $10 each.

The villagers, seeing that there were many monkeys around, went out to
the forest and started catching them. The man bought thousands at $10
and, as supply started to diminish, the villagers stopped their effort.
He further announced that he would now buy at $20 for a monkey.

This renewed the efforts of the villagers and they started catching
monkeys again. Soon the supply diminished even further and people
started going back to their farms. The offer increased to $25 each, and
the supply of monkeys became so small that it was an effort to even find
a monkey, let alone catch it!

The man now announced that he would buy monkeys at $50! However, since
he had to go to the city on some business, his assistant would now buy
on behalf of him.

In the absence of the man, the assistant told the villagers. "Look at
all these monkeys in the big cage that the man has collected.
I will sell them to you at $35, and when the man returns from the
city, you can sell them to him for $50 each."

The villagers rounded up
all their savings and bought all the monkeys.

They never saw the man nor his assistant again, only monkeys everywhere!

Now you have a better understanding of the global financial crisis.

Omniture's Platform: Coming To A City Near You

2008-10-09T13:53:00.000-07:00

One of the most interesting developments in the Internet space is...

...something that hasn't happened.

Despite 10+ years of constant growth in online marketing and e-commerce, no overall platforms have emerged to serve the needs companies have in the key areas of web analytics, campaign management, conversion optimization and associated enterprise integration.

There are a number of reasons for this, IMO:

1) New territory tends to be exploited by specialists first;
2) VC firms see 1-2 years ahead, not 5-10;
3) vendor consolidation occurs primarily during economic down cycles

Today, however, we have an Internet landscape ripe for the emergence of a few key platform vendors. Most companies who are active in online marketing and e-commerce have more vendors than they can effectively manage; VC firms as of now are no longer the primary financier of new technologies; and if you haven't noticed, this qualifies as an economic down cycle to say the least.

If you have any interest at all in the multi-billion dollar market for online marketing solutions, and if finding a strategic partner for your online business optimization needs is of strategic importance to you, I'd like to invite you to attend a 3-hour seminar on the being hosted by Omniture next week in Dallas, Los Angeles and the SF Bay Area, and mid-November in Atlanta, Chicago and New York.

Details and registration page. Dates/Locations are:

Dallas - Tuesday 10/14
L.A. - Wednesday 10/15
SF - Thursday 10/16

Atlanta - Tuesday 11/18
NYC - Wednesday 11/19
Chicago - Thursday 11/20
[All seminars are 8:30-11:45am]

Most of the SEM, analytics, email, survey, A/B testing and other startup-funded, pre-IPO vendors you rely on today will not exist on the other side of the 5-10 year economic depression we are entering into. Please, then, come to see Omniture in a city near you and dare to believe that the online business optimization suite you need exists.

Things I've Heard Today

2008-09-29T13:34:00.000-07:00

From someone I know in SF who's been working on an advertising technology startup:
"My project's going great and really bad. Great in that we have a working prototype of what we're building; bad in that funding's totally dried up, so I just spent 30 of the last 50 days traveling the world."
That, folks, is what many in the early-stage startup community are finding now, and is what the startup community as a whole should expect for, oh, 3-5 more years.

While discussing the safekeeping of gold & silver:
"I had a friend in banking and there was a memo that said the gov't can declare an emergency and not allow the removal of anything besides cash from a safety deposit box."

and from a guy who's been predicting this crash for 2+ years:
"Get ready for foreign exchange controls"

Yes, folks, things may - indeed most likely will - get so bad that the government will prevent us from exchanging our depreciating dollars for foreign currencies.

While discussing the collapse of world financial markets and the proposed govt bailout:
"So our gov't is single handedly going to destroy our economy"
Actually, my colleague has it wrong - the govt is not responsible for this. We're in a democracy, and ultimately its the citizens who are responsible for what's happening. We've so thoroughly abdicated our citizenship responsbilities that naturally greedy and self-interested people in govt, banking, mortgage banking as well as housing buyers have royally F'd us all. Anyone who blames this on govt, banks or any particular political party overlooks the fact that this is a democracy wherein we're all resopnsible for electing the govt that represents us and holding them accountable to their actions.

Search: So Easy A Caveman Can Comment On It

2008-09-08T11:20:00.000-07:00

Earlier today the Wall St Journal reported that the Association of National Advertisers (ANA) has written the DOJ opposing Yahoo's plan to outsource paid search to Google starting in October. In an interview, Bob Liodice, chief executive of the ANA, said the group believes the "deal is, on balance, a negative" for advertisers.

I don't know if the ANA's proclamation had anything to do with the ~$25 drop in Google's stock price today, but I've gotta believe it did to some degree, which set my wheels turning.

What is the ANA?
Who is in the ANA?
Who within the ANA handles Internet-related issues?

It turns out that the ANA has a Digital Marketing Committee that incidentally meets this Wednesday 9:30am-2:30pm in NYC; if in NYC, you might want to attend as I'm sure this'll be the evening's main topic when open discussion starts at 12:30pm.

More interesting, though, is the composition of that committee. Looking at a list of the 150+ committee members, two things jump out at me:

1) It's a list of large traditional advertisers - Burger King, Mars Bar, Kraft, Campbell Soup and Coors to name a few - precisely the type of advertisers that have been slow to understand, adopt and fully participate in paid search;

2) Microsoft has three people on the committee, while Google and Yahoo have... zero.

So what you have, then, is a group of Fortune 1000 advertisers whose search spend is most likely drawfed by Google's top 1000 advertisers, coming together to worry about the Google/Yahoo ad pact and then the financial press commenting on it to great effect. Hmmm, I wonder if Microsoft had anything to do with that?

Meanwhile, companies like Expedia, Amazon, MoneySuperMarket, Recruit and agencies such as WPP, Dentsu, Omnicom and Interpublic are busy as hell building out their SEM-based businesses, all trying to use search for all it's worth. You don't hear those companies complaining about the ad pact nearly as much, probably because they know that Google is already a monopoly, and that properly managed, Google AdWords is the best marketing system ever.

If the ANA committee updated its digital committee to reflect the primacy of search in online marketing, they probably wouldn't have come out against the ad pact. Savvy search marketers know a few things the ANA doesn't:

1) Search is still deserving of more ad $$ than it gets, and were there more search engines to buy on that would only slow the transfer of offline dollars into search;

2) Google's system is light years more advertiser-friendly than Yahoo's or Microsoft's, and has won because it's better. Part of the reason Yahoo's outsourcing to Google is Yahoo's realized it's in advertisers' interest to have Google features such as one interface for multiple countries available to advertisers;

3) While recent moves like Automatic Match, Page 1 Min Bids and Google Suggest are worrisome in their potential impact on advertiser ROI, they all are dependent on an auction marketplace for search that coaxes money out of advertisers & agencies rather than unilaterally demanding it.

SEM's At The VC Teat

2008-09-03T14:06:00.000-07:00

Many Searchquant readers (yes, there are many of you despite my inability to set up an RSS feed) have told me that one of the things they like most about my blog is what I have to say about SEM firms, competition among them and the market-making aspect of SEM sales.

One aspect of the SEM vendor world I've been meaning to comment on is that subset of SEM firms whose pricing model is so low that even the pants-around-ankles analogy is woefully inadequate. You have folks like DART Search and other agency-focused SEM vendors who regularly go in at 1-2% of spend fees for annual contracts, and others who sell self-service tools/platforms at 2-6% of spend fees, all of which is below the 8-15% the industry used to charge back in the day when search was infinitely easier and more ROI-positive.

But then you have that most desperate, that most irrational, that most pitiful SEM vendor. Yes, you know what I'm talking about: the recently VC-funded, *very* late market entrant. With the economy stagnating and worse times yet ahead, these late-inning VC-funded pipe dreams have to fight at least 7-8 other direct competitors as well as several dozen agencies tooth & nail for their business, all in the hopes that the equity exits of 2004-2007 still apply (they don't). Doing a 30-day no-cost trial and then offering month-to-month 1-1.5% of spend contracts may be a great way to gain consideration in lieu of hard work, and some advertisers may think it's a good opportunity for them individually as potential clients.

But now multiply that across these SEM firms' entire businesses and you basically have vendors 'buying' *potential future business* with the VC money they've raised.

Word to you wise $50K+/mo PPC advertisers: if search is at all important to you, you need to take into account vendor stability, durability, proven ROI and product integration into your analytics, internal systems and 3rd party applications, and you need to buy based on value, not just price.

You need to buy based on value, not just price.
You need to fight the good fight and get your management to fund SEM as something other than an afterthought.
You need to remember what Grandpa told you: you get what you pay for.
Value, not price.
Value. Value. Value.

Look for financial stability, proven performance, credible product roadmap, global infrastructure and all the other things that ensure your partner's value to you will last as long as your SEM efforts do. Otherwise you'll end up with a vendor incapable of providing the services necessary for you to get off the ground and up & running with their solution. Likewise, understand that what's *not* in short supply is advertisers who need to do better in search. What *is* in short supply is vendors who can help them get there.

If you're a VC and your recent SEM investment is leading with free trials, month-to-month contracts and 1-2% pricing, I humbly submit that you are the nursing mother seated at the park bench reading your magazine, and Jim Carey is that SEM firm you funded.

Automatic Matching: An ROI Update

2008-09-03T09:50:00.001-07:00

Like anyone trying to make a living in the SEM world that is the Googleshpere, it pays to keep up to date on how Google's AdWords system changes & evolves over time. This is especially true in the last 2 years as Google has increased the pace of change and at the same time been less explicit as to the nature of and motivations for those changes.

While the big G's recent announcements on Quality Score changes and Google Suggest have been getting most of the coverage lately, the SEM Laziness Tax Google's been working through beta since February is still relatively undiscussed and unknown.

In an effort to keep up to date on the Automatic Matching beta, I scoured pretty much every single corner of the blogosphere and uncovered a grand total of two anecdotes on ROI from advertisers who've been in the Automatic Matching beta. They are as follows:

1) A commenter on an SEO Speedwagon blog post summarizing Automatic Match gives a 3-line summary of ROI: "My conversion rate dropped from 10.5% to 9% and my cost per conversion increased by almost a dollar. I just turned this "feature" off today. It's a real money waster." Thanks EdG, whoever you are.

2) Jim Gilbert & Mike Churchill over at SEM Clubhouse give a great ROI analysis of pre- and post- Automatic Matching ROI. Summary:
a) Adgroup spend increased 600%
b) 88% of all clicks were from Automatic Match and "only 12% were from the actual phrase match keyword."
c) 4 out of 5 Automatic Match clicks came from keywords they consider to be not relevant, making the Effective CPC much worse in their case.

Because Google chooses not to make crystal clear to its advertiser base the extent of this 'beta' (# of advertisers or % of total advertisers please?), and because this appears to be an opt-out feature (clarity on that, puh-lease?), we in the SEM community need to do the legwork and get the word out so that we can make more informed decisions for ourselves and our advertiser customers. That said, I hope you benefit from this scouring of the 'Net to find out what Automatic Match means for ROI. Likewise, if you know of any other ROI anecdotes, please post them in the comments section.

SES Day 1 - Pre-Show Activity

2008-08-18T08:33:00.000-07:00

I arrived to SES SJ early this morning to get some work done prior to othe show starting and realized there are largely two groups of people who show up to SES <8am Monday:

1) People from Asia and Europe for whom 7am is wide-awake time;
2) Salesteams sitting in groups at tables, reviewing the session agenda and lists of associated speakers to try and find sales opportunities, and assigning coverage duties to each other.

While advertisers fly in, drive in, read the morning paper or catch up on email, the SES vendors are busy planning their strategy to find you, turn you into a lead and close you. Think GGGR...

Gold And The Price Of Keywords

2008-08-14T13:06:00.000-07:00

I've been following and investing in gold, silver and palladium since 2006 (thanks to my wise older brother); for those of you who haven't followed the precious metals market, we've seen a strong bull run since late 2005 that has seen the price of gold go from $450 to nearly $1000/ounce.

If you regularly buy physical gold and silver as I do, you are probably scratching your head over the last 30 days because while the spot price for gold - meaning, the price you see when you check prices on global metals websites - has plummeted from $985 to $808, the 2000 or so physical dealers of gold nationwide literally cannot get their hands on gold. Gold dealers we know are offering to buy gold at as high as $850/oz despite the fact that global markets are listing gold at $808/oz.

Yes, you heard me right. While the exchanges through which govt-controlled gold gets traded is saying gold is $808, at the local shops where gold is bought and sold by individuals you can't even buy gold at $850.

What this likely means is that U.S. & European central banks are working in concert to artificially prop up the dollar by shorting gold on the major gold exchanges in London and Zurich. This is possible a) because the gold market is tiny compared to global equities and currency markets; and b) because gold is somewhat less fungible a store of wealth and it therefore takes time for changes in its value to be felt by individual investors. This is the prevailing thesis right now among knowledgeable gold watchers.

As I listened to my brother walk me through what's going on, it made me think that the gold market and the keyword markets are eerily similar. Central banks - which have an effective monopoly on paper money which is the primary store of wealth - are printing more money to finance everything from wars to social welfare and farm subsidies, and are using their monopoly to prevent owners of wealth from understanding the inflationary effect of the ~15% annual increases in money supply that they've been printing.

In search, you have Google and Yahoo controlling the market of buying intent ('wealth' to advertisers) and printing their own new, free [to them] money in the form of broader & by default matching options and unilateral account 'optimizations', but unable to control the one true source of 'wealth' in search = buying intent. Moreover, you have Quality Score and associated minimum bids, one of whose effects are to artificially inflate the value of traffic, while doing nothing to change real wealth - buying intent.

What's going to happen in the gold markets is anyone's guess, but if 5,000+ years of gold as the one true, immutable currency has taught us anything, it's that market intervention can only ever have temporary effects because global gold supply is fixed and only ~1.5% additional gold is extracted from the earth each year. Hence, you can expect this temporary market manipulated by Western central govts to fail over anything other than a short-term [election-term?] horizon.

Hmmm, maybe that's not entirely true, though? If consumers search their buying power weakened through inflation, perhaps they'll work harder to make ends meet, and to some extent increase productivity. And/Or, they'll spend less and save more.

Likewise in search, artificial manipulation by search engines to inflate the value of their users' buying intent can only work as long as advertisers are able to compensate for higher cost per unit of buying intent by increasing conversion rates. This undoubtedly means multivariate testing and behavioral targeting solutions like Omniture's Test & Target will have a steady stream of buyers for years to come. Also, advertisers will be forced by this market manipulation to capture buying intent more directly through effective multichannel analysis and attribution modeling so that they can better understand the intent they're already paying for and keep the users behind it much closer to them after the first sale. Lastly and most importantly in the short-term, this means every ppc advertiser spending what to them are significant sums of money must instrument their SEM campaigns with a platform that can give them that multichannel visibility, inform and tie into conversion optimization systems and manage buying intent from search to their own benefit and not that of the search engines.

Not So Cuil After All

2008-08-07T15:22:00.000-07:00

Cuil is a startup search engine that's chock full of people with tons of experience building search engines, not the least of which is Louis Monier of AltaVista and EBay fame; I'm partial to him because he's French and well, I'm with the French posse.

That said, however, this recent Hitwise data shows that it'll take more than some PR to compete with Google.

The firm that's going to disrupt Google doesn't exist yet, but it will be a company that realizes that building a better search engine is neither enough, nor necessary. To beat Google you'll have to help consumers realize that Google is monetizing their intent, and offer consumers a non-intrusive way to monetize their own intent, not via coupons or other equally schlocky means, but through something disruptive and which no one's thought up yet - all while achieving search parity with Google. Root Markets' model (with the Attention Trust piece) touches on the idea of helping consumers take control of their intent, but that's not gotten far.

[Obviously I wouldn't be sittin' here blogging if I'd figured out the elegant solution to this problem, but email me if you do...]

Thinking Of Attending SES SJ? I Got You Covered.

2008-07-29T18:04:00.001-07:00

SES San Jose is just around the corner, and it's still the #1 SEM show in the world. If you're thinking of going, or planning on going but haven't yet registered, Omniture (my employer) has a 20% off coupon code: 20OMN (that's the number '20' followed by the letters 'OMN' - I know...). Register here.

If you've already registered, like paying full fare, or are still drawing down from the FU money you made in your last company's liquidity event, stop by all the same as Omniture will be showing its full product lineup including:

SearchCenter v3.1 - keyword management without the compromises
Test & Target - THE #1 multivariate testing solution (better conversion, anyone?);
SiteCatalyst v14.1 - there's a reason why more top 100 PPC advertisers use SiteCatalyst than any other web analytics solution;
DiscoverOnPremise - feel the power of real-time SEM path analysis within a platform first developed for use by secretive govt agencies

One more thing: how would you like to win a brand new Smart car while at the show? If having the smallest, most fuel-efficient car on Hwy 101, or appearing as a bug crawling over the hills on 280, come by Omniture's booth (#303) and enter for a chance to win - unless you're a competitor, in which case you won't want it as it has Omniture on the rear, hood & doors.

Real-Time Anecdote on Banking Implosion

2008-07-14T11:06:00.000-07:00

For those of you who think that the online finance category will somehow be immune from the broader macro-economic worsening going on, think for a minute about what this means for online finance & related online marketing.

From the Mr. Mortgage blog post:

"I was just out and noticed a line out of my local WAMU branch. I then drove a few miles away and saw another. I talked to someone there and they said the lines started an hour before the bank opened and people are sweeping their accounts.

I could be wrong but I do not think this is to open an account and get a free toaster.

This is exactly why I think they tried to cover up the IndyMac bank seizure by calling it a bank-initiated shut down of the mortgage unit, which was essentially all they were.

This is all visual speculation on my part at this point, but in my 40 short years on this planet I have never seen anything like this."

Thou Shalt Not Kill

2008-06-18T15:06:00.001-07:00

I read this news and realized there are no ads for the query in question, and so am posting the 10 Commandments below so that those thinking of breaking Commandment #6 think twice.

Thou Shalt Not Kill!

Also, if you are searching for ways to kill, know that I've now logged your IP address and can help authorities track it back to your computer if necessary. By searching you have just de-anonymized yourself, so don't do it!

If you are having thoughts of suicide, please call this hotline and talk to someone. Nothing's worth taking your life over.

Automatic Match - A Tax For Advertisers Who Can't Target

2008-05-28T09:53:00.001-07:00

My uncle used to say that the lottery is a tax for people who can't count. Automatic Match is a tax for people who can't target.

I wrote up a short piece on Omniture's blog this morning discussing Google's beta Automatic Matching feature. If you haven't added it to your reading list, Omniture's blog covers web analytics, search, behavioral targeting and multivariate testing, all things search advertisers must become expert in to maintain a leg up on the competition.

Take a look, and expect more SearchQuant stuff on Omniture's blog going forward.

New Google Match Type: Mis-Match

2008-05-18T23:51:00.000-07:00

After reading this weekend that Google is widening the Automatic Matching beta, I chimed in on WMW and said my $0.02, which is that Automatic Match is about as pro-advertiser as Microsoft's forced Vista upgrade is pro-enterprise.

For those who haven't heard of Automatic Match, it's a new ad-to-query matching option (currently in beta) whereby Google looks across its advertiser accounts, finds accounts with unspent budgets and broadens the ad-to-query matching with the goal of spending the remainder of the advertisers' budgets - while being relevant.

Note, though, that this is very different from a match type that would try first to be relevant, and second to spend advertisers' budgets.

Very different. Very different. Very different. Very different.

Within a few weeks the SEM and online marketing community will be talking about this, but for now there are just a few of us crazies walking around SF, SEM Frank Chu's so to speak, trying to tell the world about the coming flood of ad dollars, the looming SEM Stupidity Tax, yes, the imminent Mis-Match.

There's not much for me to do on this one, but for some reason that last scene from Dumb & Dumber comes to mind where they pass up on the two-month oil-boy tour of duty aboard the Hawaiian Tropic Bikini Tour bus.

Don't miss the bus that is a proper match type strategy.

AMP!s to Eleven, Stat!

2008-04-06T21:55:00.000-07:00

With Ballmer sending the type of love letters that most soon-to-be-betrotheds would rather do without, Yahoo's now in a tight spot: if they take the current Microsoft offer that's on the table, they'll sign over control of their company for a price that a couple years ago they would have scoffed at, but if they don't take it, well then they're looking at a potential proxy battle for control of the company, one that's likely to hurt Yahoo shareholder value while the game plays itself out.

No wonder, then, that Yahoo's talking up a new ad buying platform today & which won't actually ship until Q3, much like they talked up Panama at least 3 full quarters before it was operational. Last time around investors took Yahoo at their word and waited relatively patiently; this time around, it'll be interesting to see how the world reacts.

Sue Decker wrote about AMP! (formerly Project Apex) on Y!'s corporate blog tonight, and included a demo video that's pretty damn powerful if you ask me.

The title of her blog post - 'This One Goes To Eleven' - is eerily reminiscent of a 7/31/07 Searchquant blog post discussing Google's Campaign Optimizer titled 'These Go To Eleven'. Decker's title is clearly a thinly-veiled reference to the Spinal Tap amplifier sketch, but that's an odd reference for Project Apex given that Yahoo's life as an independent company pretty much depends on it - recall that while the amps in Spinal Tap *did* go to eleven, they weren't actually any louder, were they?

I do think AMP! could put Yahoo back on track, but I guess we'll just have to wait and see whether it's the amp itself, or merely the dial, that goes to eleven; for the sake of continued good Silicon Valley mojo, I'm hoping it's the former...

Going Green, or Moving On To My Next SEM Challenge

2008-04-04T09:44:00.000-07:00

Back in 1999, after having spent 4 years at Netscape in Europe and NYC, I entered the world of SEM when I joined RealNames, an early competitor to Overture(now YSM). RealNames was the firm that first convinced Google to carry sponsored links in its previously organic-only search results. Seeing how powerful of a sales pitch keyword advertising was got me hooked on paid search - after all, the Holy Grail for any good salesperson is a product or service that sells itself.

More recently, I spent 4 years running Sales & Interational for Efficient Frontier, a firm that came out of nowhere to establish itself as the dominant SEM firm among Google, Yahoo and MSN's top 500 advertiser base. Efficient Frontier has a fabulous team (from founder Anil 'Dr K' Kamath, to current CEO James Beriker, and most importantly a Client Services, Sales and Engineering team composed of truly superb individuals who have worked extremely hard to get & keep the SEM pole position, all while driving the kind of lift that makes customers (and their investors on the public markets) happy.

Now, I'm embarking on a new challenge, namely that of leading SEM Sales for Omniture, the 800-pound gorilla in the web analytics space. For those of you unfamiliar with Omniture (NASDAQ: OMTR; $1.65B market cap), they are the worldwide leader in web analytics, a sector that is primed for strong growth over the next 5 years. Who *doesn't* need to get a better understanding of their websites and how to better convert organic and campaign-driven traffic sources? (ANSWER: no one).

With the acquisition of Offermatica & Touch Clarity in 2007, Omniture added a robust testing & targeting solution that will be increasingly valuable to the SiteCatalyst user base, whose analytics deployment serve as the basis for the testing (Offermatica) and targeting (TouchClarity) that they'll need to dive deep into in order to increase conversion rates, improve revenue attribution and overall stay ahead of less sophisticated competitors.

Yet unbeknownst to many, Omniture's been working at building a self-service keyword management platform for over 2 years, and recently surprised many in the SEM world when they announced SearchCenter v3.0 at their Omniture Summit in March and the type of SEM momentum many SEM-only firms have lost - $500M in spend under management and 50% of the AdAge Top 50 Interactive Agencies as customers.

With SearchCenter v3.0, Omniture has built an SEM solution that is going to give the rest of the market a run for its money. Tight integration with SiteCatalyst, incredibly flexible portfolio and rules-based management, and unified multi-SE management are just the tip of the iceberg. By coupling analytics, testing & targeting and SEM campaign management tools with a robust set of launch-related, training, transitional, and ongoing SEM services, Omniture will help more agencies & advertisers succeed in search than anyone in the business - and hopefully become the largest SaaS company in the world in the process.

These are exciting times, and I look forward to continuing to post SEM-related observations here, and to working with many of you.

Go Green!

S-E-O to the P-P-C

2008-03-30T11:30:00.000-07:00

Here we are on Sunday, feelin no pain
My boys be playin soccer and bringin they game

While the family is doin what they do
I'm readin up on search and all the fly news
I come across Moserious whose raps are unique
For they teach on SEO while poppin a beat

So lest you not find what he has to say
I'm cuttin and I'm pasting him from YouTube today

Mobile Directory Services: I Crap On Thee

2008-03-13T08:49:00.000-07:00

I called a vacation rental property owner's phone number yesterday - from my cell phone - and got voicemail. Before I could leave a message I was asked if I wanted the business' contact info SMS'd to me. I hung up at that point, but have since received the following SMS message:

"Reply Y now to get info on the # you arehttp://www2.blogger.com/img/gl.link.gif trying to reach. Locator Svc $9.99/month +std msg fees for 20 lookups/month. Support/Terms? www.sms181.com"

I know this is opt-in and clearly described, but it still strikes me as one of the most underhanded money-grabs in the world of search/navigation/directory services.

A) If I don't ask for the service, don't offer it to me
B) If I *did* want the business' info, why should I have to opt in to a subscription service to get it?

If you visit the website behind this spineless jellyfish of a business practice - www.sms181.com - you will have no luck finding any information on who runs this company. This, of course, earns the unknown proprietor of SMS181 the PooPoo Grande in abscentia, from one of my favorite sites, DogDoo.com.

Until governments force mobile operators to shun unwanted subscription-based partners, use of SMS as a search & directory service will not live up to its potential.

June 19, 2008 update: Someone from the FTC hit this post after searching "SMS181.com locator" on Google, so hopefully they're on it...

Search Arbitrage's Friday the 13th

2008-03-10T18:15:00.000-07:00

At one time well north of 15% of Google's total revenues were coming from search arbitrageurs, people who were buying tons of low-CPC Google traffic and sending it to pages full [usually] of higher-CPC Yahoo ads.

Put another way, up until mid-2007, the percentage by which Google regularly trounced guidance and added tens of billions of dollars to their already-$100B+ market cap was coming mainly from a Panama Canal of sorts connecting two CPC oceans of different elevations and operated by marginally savvy but seriously greedy hombres.

Google eventually decided that *it* wanted to be the only firm printing money from search, and so on Friday April 13th Google did a huge manual crackdown on many of the largest search arbitrageurs, raising their minimum bids to unsustainable levels overnight.

One such casualty was Canadian firm Geosign, whose life-then-death story was recently chronicled by the Financial Post. It's rare search arbitrage gets covered by the mainstream press, and they did a very good job explaining the relationship between the rise of AdSense and search arbitrage. The article has one big fault, however; namely that it attributes Google's search arbitrage smack-down to G's desire to protect advertisers. My very strong opinion is that Google got rid of arbitrageurs because it realized that doing so would forcefully redirect the low-CPC clicks they were getting to higher-CPC ads.

It's ironic but fitting that Yahoo's code name for its revamped search system was 'Panama', when the real Panama Canal of Search was actually epitomized by the likes of Geosign. It's *also* ironic that the image on American Capital's PR announcing their $160M investment in Geosign is called...the Geosign Tombstone.

Facebook Kisses Google A$$, Hiring for SEM

2008-03-10T16:26:00.000-07:00

2007: Facebook is at the forefront of user generated content, viral marketing, socially-empowered brand awareness building yet non-invasive forms of online advertising. Its model is so powerful that Microsoft saw fit to buy a chunk of it in order to lock up Facebook's supremely bodacious ad inventory, thus establishing a $15B valuation for this Palo Alto startup and inflating PA real estate almost as much as their youthful founders' egos.

2008: Facebook is hiring an Internet Marketing Associate, but don't let the vague title fool you: Facebook wants someone with paid search experience to help them draw potential advertisers to their site via, you guessed it, that soooooo Web 1.0 advertising format known as paid search.

Like so many companies purporting to have game-changing business models - comparison shopping engines, vertical portals, alternative search engines, web 2.0 startups, dating sites, you name it - the proof of who's still king is their customer acquisition strategies, which as far as I can tell require, to this day, funneling massive amounts of $$$ to Google AdWords.

Will social media conferences ever have a session titled "Paid Search: How We Make Ends Meet?", or "PPC: Buying Traffic When Times Are Tough", or perhaps "SEM, Because No One Likes Our Inventory"?

I doubt it, but Facebook realizing in 2008 that they don't have sufficient advertiser traction is the tea leaf smart social networking types would do well to consider.

Affiliate Summit West (Vegas) Pass for Sale: $500

2008-02-21T14:42:00.000-08:00

Sorry for commercializing Searchquant for a moment, but I have a full conference pass to the Affiliate Summit West conference Sun-Tue February 24-26 and can't go due to a schedule conflict. The conference is Sold Out, and did I mention it's in VEGAS?

I paid $949 (Early Bird price) for this full conference pass, and will sell it for $500 to the first taker. Email me at searchquant at mac dot com if you're interested. I have the online receipt (which shows $949) so if you lose too much money gambling, all you have to do is submit the $949 receipt with your expense report and you can crawl $449 of the way out of whatever hole you dig yourself.

And who knows who you might meet in Vegas? I met my wife there, poolside at the Tropicana...

S-E-M to the Q-U-A-N-T

2008-02-10T07:23:00.000-08:00

a little groove for yo' Sunday is how it should be

Thanks to ReveNews and UberAffilate for the find.

Boycotting Berkeley via Facebook

2008-02-07T17:47:00.000-08:00

You've probably read about the City of Berkeley city council's decision to declare the Marine recruiting center "uninvited and unwelcome intruders"; if not, read the SJ Mercury's coverage.

While I'm not surprised given how wacked out and out of touch Berkeley has become, I'm certainly not gonna let the soldiers my elected officials have put in harms way *on my behalf* be disrespected by any city. To that end I've started a Facebook ad campaign targeting all ~2M California Facebook members and whose goal is to encourage a boycott of the City of Berkeley. Interestingly, I've had 42 clicks on 21,000 impressions since launching the campaign... 7 minutes ago.

My daily budget is set to $200 and any contributions by like-minded readers to the running of this campaign are greatly appreciated. Here's my campaign landing page.

Please join me in boycotting the City of Berkeley and showing 100% solidarity with the Marines that our elected officals deploy; the democratic ideal allows no less. And if you really have to go to Berkeley, let me know and I'll FedEx you a sweet new Marine 503rd Airborne grey t-shirt (3 XL & 2 L's available) & blue hat if you promise to wear it in Berkeley.

Dell Bitch-Slaps The Adsense-based Ecosystem

2008-02-06T09:44:00.001-08:00

As many of you know, there's an entire ecosystem that's built up over the years around the monetization opportunity created by Google's AdSense program. With AdSense, SEO guru's, domain tasters, social network mavens and all manner of money grubbers have been able to take traffic (much/most of it non-converting) and drive it to pages full of AdSense ads.

Despite efforts Google has undertaken to limit abuses of AdSense - most of which fall far, far, far short of 'Don't Be Evil' quality efforts - the AdSense ecosystem continues strong to this day. On Webmasterworld, for example, there are consistently more AdSense-related discussions than AdWords discussions, and for every AdWords-related freeware tool there are 20 AdSense tools, for everything from finding high-CPC AdWords ads to build content around, automatic content generation tools, and the list goes on and on.

A lawsuit filed recently by Dell shows just how much money certain, more ambitious members of the AdSense community have been making, as well as the role of domain tasting and trademark typo-squatting. Here at SearchQuant, we will forever be against the moral relativism that runs rampant throughout the Adsense community & in relation to such tactics. Using another's brand to profit - without the brand owner's permission - is wrong, and Google (and Yahoo for that matter) should be punished for knowingly allowing this type of trademark infringement to go on for so long.

A few places to go to read up more on the Dell lawsuit:

1) SEOmoz's detailed analysis of the lawsuilt. When 50 SEO community members post comments on SEOmoz's tome, you start to ask yourself "Why do these SEO people know so much about trademark infringement, domain tasting, AdSense monetization". Well duh! of course they know the details of the defendents' alleged improprieties intimately! WHITE HATS AND BLACK HATS ARE ONE AND THE SAME IN MANY CASES.

2) Network World's write-up. If the article is reminiscent of exposees into opium farming, prostitution rings and/or money-laundering schemes, that means what it means.

3) Webmasterworld discussion. Unlike threads on Google Analytics, AdWords campaign optimization or Quality Score, you won't see Google-appointed WMW participants participate, and you certainly won't see them empathize with Dell or advertisers. Listen to the defeaning silence.....

In some sense search engine marketing is the last bastion of growth in the Western economy. Once online marketing plays out its transformative role, what else do we have left to drive growth? Not much, unfortunately, and those engaging in AdSense arbitrage, domain typo-squatting and other ROI-draining activities are just speeding up the process, for which I hereby virtually slap them to the face with a back-hand.

WHACK!

PS - Here are a few great moments in slapping history as well as one below:

China's Undiscovered Interenet: BBS

2008-01-22T10:51:00.000-08:00

I came across a great article this morning discussing one aspect of Internet usage in China that I certainly wasn't aware of, namely that bulletin board services are one of the top two or three most widely & often-visited types of sites. The article was written by Gang Lu on his blog Mobinode.

In the article the author interviews Kevin Day, the founder of the largest Chinese BBS company (Comsenz) and asks him whether or not social networks (SNS) will supplant BBS in China, to which he responds:

“BBS will not be replaced by SNS and they will not be the competitors to each other either. BBS is a must-to-have application in SNS, at least in China. The features of BBS can help the social network users to exchange their ideas efficiently. On the other hand, SNS is a people-centric networking platform but BBS is a topic-centric platform. SNS is to map the social relationship in real life into the cyber space, which in my opinion is one of the reasons people love Facebook; But BBS is there for users to follow the hottest topics and expand your social experience virtually. In BBS, people goes there because they are interests in the topics, and whom they communicate with are not really matter.”

To me, BBS makes a lot more sense than social networking. As Day implies, people care more about topics than they do about what topics people are interested in - a distinction that the Facebooks of the world would IMO should take to heart as they try to build long-term, viable businesses.

It's also interesting to note that Comsenz (Kevin Day's BBS company) has its own AdSense-like BBS monetization platform, called Insenz, and that Sequoia, Google and Morningside invested in Comsenz in 2006. Perhaps this type of diligent, forward-thinking investing is why Sequoia is one of only a couple dozen VCs (out of 1000+) to have actually made money for its investors over the last decade...

Latest Count: 2,475 SEM Firms

2008-01-18T12:50:00.000-08:00

Ah, how I long for the good ole' days of 2003, when there were a mere 5 or so SEM firms. It was soooo much easier for advertisers to make SEM decisions, the SE's themselves knew who to spend time with, and the SEM's could track competitors with a 5-column spreadsheet.

Fast forward to 2008 and the SEM vendor list (tools and/or agencies) looks much like the long keyword tail everyone's been talking about. Here's a partial list of SEM vendors to give you an idea of just how many there are:

Efficient Frontier
Doubleclick/Performics - product is called DART Search
Did-It
360i/SearchIgnite
Marin Software
Clickable
Kenshoo
The Search Agency
Reprise Media
Omniture SearchCenter
KeywordMax
SearchRev
SendTec
RKG
Apex Pacific
Yield Software
Acquisio
Bid Maximizer
Adapt.com
BidHero
Web Trends Dynamic Search
Coremetrics Search
Salesforce.com for Google AdWords
iCrossing
SEMPhonic

European SEMs
Efficient Frontier
The Search Works (BidBuddy)
Lattitude
MakeMeTop
Iando
OneUpWeb
ESearchVision
MediaBoost

Sales Awards: Stroke It

2007-12-15T08:02:00.000-08:00

Pop quiz: which recently major, ultra-modern internet company likes/needs to stroke their sales ego by competing for national sales awards typically reserved for old-school air-conditioning, plumbing and roofing supply firms?

Congratulations to Omniture for nominating themselves and winning an award that matters to virtually nobody! You gotta check the show pix too; I haven't seen that many double-breasted suits since Trading Places!

As a huge believer in web analytics and a fan of Omniture's sales & marketing execution, I wonder why they need external validation of their efforts? Perhaps there's truth to the persistent rumor I've heard the last two years that Omniture's sales team is often found, deal after deal, in the web analytics winner's circle...

...with their pants around their ankles.

Having met 10-20 Omniture salespeople over the past 4 years, there's definitely a chip on their soldier (a great thing, BTW), but c'mon guys - with all the cash infusions you had prior to the IPO (and in stark contrast to your less well-funded competitors), you would've had to be comatose to not win the web analytics battle.

I've got OMTR in my kid's education fund, so what I'm trying to say is: show me sumthin'. Show me a blow-out quarter , show me a quarter in which you sign some non-standard, creative megadeals, and show me a kick-ass 2008 here, in Europe *and* in Asia. Actually make money from SearchCenter while you're at it too. Live up to the opportunity that the web's growth and [frankly] your competitors' poor execution has afforded you.

Pull your pants up from around your ankles, look within for your satisfaction, and relax. You're doing just fine *without* the award.

Dad, what's a monopoly?

2007-12-06T15:55:00.001-08:00

Whenever I had an academic question as a kid, my dad - who was born in Greece - would always start his answer with something straight out of the film 'My Big Fat Greek Wedding'.

Me: "Dad, what does 'eucalyptus' mean?"
Dad: "Well son, the word 'eucalyptus' comes from the Greek 'eukalyptikos', which means 'well-covered'. It's also the name of the Greek goddess of lamb fertility, whose icon adorns the church at Avrigopoulos near Thermopylae. Interestingly enough......."
Me: "Oh brother, here we go again"

The definition of the term 'monopoly' is much easier. Look at the above graph from Efficient Frontier's blog, which shows share of paid search wallet in the U.S., UK and Europe. Thanks to EF Research for putting this out!

THAT's a monopoly, folks.

Facebook Local Advertising Anecdote

2007-11-28T14:04:00.000-08:00

A high school buddy of mine who's a residential real estate broker here in Silicon Valley just came over to my house so I could show him what's possible with Facebook. In 10 minutes we created a Facebook ad campaign showing a home he's listing, and since we launched the campaign 10 minutes ago he's gotten 1200+ impressions.

He was stunned by how easy & powerful Facebook is as an advertising platform. You & I may already know this, but it sure feels like Facebook is soon going to start getting serious amounts of revenue from local advertisers.

UPDATE: since launching the campaign ~1pm PST today, we're now up to 55,000 impressions and 43 click-throughs 3 hours later, at $0.26 CPC. Granted, we could get a 2-5X higher CTR if we spent more than 2 minutes on ad copy and 2 on targeting, but shit man, this is a serious level of traffic for one individual real estate agent, and 1/4th the CPC he'd pay on Google or Yahoo.

Trying...Hard...Not...To Be...Facebook...Fanboy

2007-11-14T13:53:00.000-08:00

Facebook has become the #1 source of traffic to my blogs, with just a few tiny but targeted Facebook ad campaigns. Interestingly, I'm getting more traffic from Facebook than I am paying for in click charges, and this is distinct from general Facebook traffic which had been fairly stable until I launched my campaigns. It definitely appears as though Facebook ad impressions have good brand awareness building value for the time being.

With Google bringing the volume but at increasing cost to advertisers, and the big G pissing off publishers with periodic revshare land-grabs, it appears that Facebook is going to soon get the attention of large numbers of Google's top 5000 customers who, in their quest for ever more volume of conversions, flock to Facebook like miners to the Goldrush.

For people wanting to simply drive traffic to a site, Facebook advertising is a goldrush in the making. Because of the lack of buying intent inherent in all non-search traffic, however, I think Facebook advertisers will find lots of copper - a valuable metal, yes - but little gold.

10 to the 100th Power Eating More Pi

2007-11-07T13:41:00.000-08:00

Over the last few days have started hearing reports from hundreds of AdSense publishers worldwide who are almost all saying that they're seeing their eCPM paid by Google for AdSense go down by 30-50% starting on or near October 19th.

There's a thread on Webmasterworld on the topic, and the reigning theory is simply a profit grab on the part of the 'Plex. Here are some of the quotes from that thread for those of you who aren't forum dwellers like me:

" I have seen a reduction to the extent of Friday's [Oct 19th] being 50% of the first 15 days of October."
" my eCPM is down by 50%"
"Similar scenario here. Traffic has been healthy and extremely well targeted, yet my October average for Adsense this year is way down."
" I just checked, and we're down 33% for the same days compared with last October, but around 13% of that is because we've taken a good number of pages out of Adsense to try to get our CPM back up."
"my traffic levels and sources are right where they have been for the last six months+ but my earnings have dropped over 50% to levels lower than my worst days in the last six months - and are still trending downwards!"
"eCPM for my biggest earning page is down by 50%."
"Traffic for me is up, AdSense CPM is down big time - this week was 24% lower than last month. I had record setting months recently (earnings and traffic), but things are sliding down. I do not know why."
"This October is awful. I haven't seen it this bad since I started."
" My earnings for October 2007 are 34% below that of October 2006. "
" My eCPM since Friday 19th October, the date many are mentioning, has averaged, the average quoted here, -30%."
"my eCPM is now -65% compared to my year and early October average."
" Our ecpm's have been down by about 30% for the last 10 days or so though traffic has been steady. "
"My eCPM is down ~50% vs. normal levels."
" Earnings are down to 50% yet traffic is up. It has been the worse 3 days for ages. I guess it is time to see what yahoo is offering or am I wasting my time on that one? "
" As a site which has averaged approximately 30,000 daily page views a month for over three years now, with a yearly increase of about 5-10% in traffic, I have seen a marked decrease in eCPM in October, and this site is remarkably consistent otherwise."
" [eCPM] continues to drop to the levels that is unacceptable. Our ecpm is 30% of 1 year average. "
"eCPM is down almost 20%"
" Same here... We saw ECPM drop by a third in the middle of Oct. It had been steady for years. Not sure whats up. "
" ecpm still very low, down 50%"
"same number of visits , same ctr, same number of clicks , but the earnings decreased by 50%"
"I have about a 60% reduction in eCPM now. (It's getting worse.) "
" Things are still down for me. We're not talking a dollar a day, we're talking X,000 per month DOWN. "
"Single large site, 60% ecpm drop, $X,000/mo loss, traffic/costs are growing..."
"One large site, also several thousand monthly loss."
" Several large authority sites, traffic ranges per site 1-2 million users per month. Revenue loss, deep X,000.00 figures per month. BTW all the sites dropped at the same exact time with no change in ctr or traffic and someone at google says we are not smartpriced. So you tell me #*$! happened?"

Googol is certainly eating Pi as if it were an infinite number...

Query Length Growth: The Downward Trend Continues

2007-11-02T12:43:00.000-07:00

I write last year about how search query length had, after many years of unbroken growth, had started to slow down. Well, it appears as though John Q. Public continues to use less & less words in their queries. Check out the above data that I put together from seven different OneStat measurements, starting April 2003 and going through October 2007.

The Long Tail is underpinning of virtually every successful search marketing campaign, but I think it's now safe to say that the tail's getting shorter.

Anyone care to venture as to why this is happening, and what, if anything it means?

YSM Blocked Domains: Hercules and the Hydra?

2007-10-26T15:13:00.000-07:00

Yahoo recently introduced Blocked Domains, a feature within YSM whereby advertisers can block up to 250 domains from within Y!'s distribution network. All observers, myself included, are glad Yahoo's doing this as it shows their commitment to improving the quality of their search distribution network.

However, a one commenter on Webmasterworld noted today, for every crappy distribution partner he blocks, more pop up. 'Beren' writes:

Over the past six months or so, Yahoo seemed to be doing a better job getting rid of scam affiliates. There were still plenty of them, but after a complaint, the bad ones usually disappeared. There was always a rotation as the scammers just switch to other domains, but it seemed overall to be getting better.

Then in the summer YSM introduced Quality Based Pricing and things were even better. I started to think YSM was getting serious about quality control and giving a decent deal to advertisers.

Then they started allowing blocking of domains, and I hoped things would get even better. I put in the worst offenders on my list and waited. Immediately new affiliates sprang up. I put them on the list. New ones, more additions to the list. The rate of new YSM affiliates in my industry appears to have increased vastly in the past couple of weeks. It's like Hercules and the Hydra: cut off one head and two more spring up in its place.

I just wanted - for one day - to get the percentage of YSM clicks coming from yahoo.com to get as high as 35%. No matter how many affiliates I block that percentage doesn't change much.

One anecdote does not a trend make, but most people I've talked to on the AdSense/YPN publisher side have said they don't expect Blocked Domains to actually block crappy distribution partners.

Only time will tell, but let's hope for everyone's sake Yahoo does better than Hercules did with Hydra.

The Importance of Original Content

2007-10-14T19:39:00.000-07:00

I was a literature major in college, so I had to share what my 10-year-old son Theo wrote in class the other day. The theme was "I am from...":

"I Am From"
I am from a place where red and white paintings come alive. Couch and flies bumping around.

I am from a place where there are noises and chirps. Cars and trucks coming and going. The sound of the creek as solemn as me.

I am from a place where souls descend and rise, just to say hello to me.

I am from a place where people say, "hi, how was your day" and "do this or that."

I am from a place where spaghetti and meatballs come alive. Mashed potatoes mashed up in my stomach.

I am from a bed of memories.

Facebook Fanboys & Naysayers Face Off, Future of Palo Alto Real Estate Market At Stake

2007-10-05T14:31:00.000-07:00

One thing has become clear to me as I explore the Facebook world from an individual and business perspective: never, perhaps, in the history of Internet businesses has there been such a rapid and profound polarization of opinion on the prospects for a company.

Why, you ask, is a guy who's been bashing contextual advertising for years, even writing about Facebook? Quite simply, my wife & I are considering moving to Palo Alto (where I grew up) and how many Palo Alto-based Facebook millionaires there might be has a big impact on when we pull the trigger on a house in Palo Alto. If you think Facebook's a fad, then you have time to look for the exact right home in Palo Alto; if you think Facebook rockets to the moon, then you had better buy your Palo Alto home now because being in the middle of a Google/Facebook bidding war for a 3-4BR home in north Palo Alto could get pretty darn ugly.

[NOTE: the Google Map at the top of this post is of all the places I've lived in Silicon Valley; you'll note that I keep getting further & further from Palo Alto, which is not really what I had in mind.]

You literally have people who think Facebook is worth $500M all the way up to $100B, a full 2.5 orders of magnitude difference in opinion, despite the fact that everyone pretty much agrees on Facebook's current size and growth rate.

In case you haven't yet made up your mind, here are a couple key fanboy and naysayer arguments:

Fanboy: Lee Lorenzen, CEO of Altura Ventures, owner of the Adonomics blog which tracks Facebook application usage. Lee's VC fund invests solely in Facebook apps, and he makes the case for Facebook getting up to 200M users by end of next year as well as a $500/user valuation. Laugh all you want (I certainly did), but Google has a >$250/user valuation right now themselves.

Naysayer: Kara Swisher, who's been around long enough and has enough of an investment coverage background to have a legitimate argument for why even a $15B Facebook valuation is f$#%&ng crazy?

Fanboy #2: Vinny Lingham, whose Facebook valuation model is based on comparisons with Google's AdSense business. His model makes sense, but IMO he misses one critical point - people won't necessarily continue to use Facebook to the extent they do today. Remeber Geocities? Friendster, Excite@Home, Netscape, MySpace (a soon-to-be has-been)? You can't assign a $10B valuation to a company *today* based on what you think will happen over the next 4 years, certainly without several years of track record at your back. Vinny's counterpoint to that argument, though, is one that not easily dismissed: the consumer data Facebook has will allow for off-Facebook ad and offer targeting to an [ROI] extent never before seen, and that's ultimately why Facebook's worth $10B.

Facebook Advertising: Get With It?

2007-10-03T23:07:00.000-07:00

One month into Facebook and I'm still trying to figure out what the hell I'm doing there. I go there regularly now, but don't really get the feeling it was built for people over 25. I'm not looking for a relationship, I don't really care what other people are listening to (I once did, but that was ~20 years ago), and I'm not specifically looking for friends.

But I go there nonetheless, probably because I'm interested in Facebook's rise to prominence, and definitely in order to figure out what this means for advertisers.

I've been running a couple tests of Facebook's two ad offerings - Facebook Flyers, and Flyer Pro. Flyer is a CPM-based offering ($2) and Flyer Pro is a CPC-based offering. With FlyerPro you can target specific networks, Male/Female, day of week, by country and/or city, relationship status and keyword. In my case, I'm targeting Google & Yahoo employee networks with an ad promoting my blog as indispensable to their SEM quest for knowledge.

My test campaign on FlyerPro is getting a 0.536% CTR [Oct 25 update: average CTR is now 0.35%]. I mainly wanted to run the test to see what CTR's Facebook can get from their contextual inventory, but also because it's early and I'll bet knowing how to advertise on Facebook becomes essential to any marketer's skillset.

I really don't know squat about Facebook as an advertising medium - and expect that very few people do - so I read a 60-page study tonight that Fox Interactive Media commissioned in conjunction with Carat and highly recommend it as does AdAge. The study is [I think] the first significant research into how creating a brand-related page impacts such measures as brand recall and purchase preference.

SearchQuant Top 5 All-Time Posts

2007-09-30T22:33:00.000-07:00

In the interests of saving you all the time of going into the SearchQuant archives for The Best of SearchQuant, I've created a list of my top 5 posts of all time (as measured by views):

#1 - Expanded Broad Match: Taming the Beast
#2 - A Brief History of Bid Management (YouTube video)
#3 - F#@k Click Fraud, It's Distribution Fraud That Matters
#4 - Does SEM Cannibalize SEO? Not Likely In The Real World
#5 - Get Off My Portfolio Algorithms

*NOTE: this post is serving a dual purpose, dual meaning I'm running a Facebook Flyer CPC-based ad on the Facebook networks for Yahoo and Google employees, basically to see what kind of CTR I can pull within Facebook's CPC-based ad format.

Google Radio Ads- poor results so far

2007-09-28T10:18:00.000-07:00

I've been trying to follow advertisers' use of Google Radio Ads (the result of their DMarc acquisition), and haven't yet heard of anyone having other than poor to ambiguous results. There are two good, thorough reviews on DigitalPoint Forums from people who've run Google Radio Ad campaigns in the last months. Exceprts:

Goramba says:
"The first test was done on a budget of about $1,000 for 30 days. I selected 4 major cities, requested it NOT play after 12am, but had no other restrictions. The effect: WORTHLESS! After playing for about a week Google claimed 293 plays to 201,000 listeners. Watching my Analytics keenly I saw absolutely no effect at all. Nothing. That was rather upsetting but I stopped it before it took all my cash.

Test #2: This test was in two stages. I requested a new audio ad and created two new campaigns. One had a budget of $300 for a week and I removed as many chances for it landing on AM stations as possible (removed talk radio, etc.). The second campaign was another budget of $700 for 3 weeks, also removed AM type stations, and requested it play on fewer stations to maximize my bid. Both overlapped for the first week.

The effect: Nearly worthless! There was an effect, but minimal. I had roughly 30 direct visitors a day increase for the one week the campaigns overlapped. After that, nothing. It pretty much dropped to before-ad levels. That's the "good" thing about Audio, you know they're almost always the direct ones.

Totals for these two campaigns before I stopped the second one was 123 ad plays to 418,000 listeners. Out of that, over the week plus, I got about 230 new visitors at a rather sizable cost. The total comes to right around $3 per visitor not including the cost of creating the ads. The only good thing I can really say about my experience is that you get the best of the best visiting your site. They heard your ad and went out of their way to find out more, instead of just impulsively clicking on a link. That turned into some conversions ($1,000 in sales, but cost that to get them!) and good time-on-site."

and Afmusan says:
"RESULTS: Radio ads are not trackable for me. My site is established and already gets 10k people a day. Radio is more about branding. Hit peoples ears over time and maybe they remember your site when they see it online or it comes to mind when they think of my service. I'm looking at the addresses of my customers and trying to find spikes in those markets where the ads are run. About three days into ad plays in two markets, I did notice a few more customers that are from those markets. I don't know for sure, but they could be from radio. I do think that a customer may need to hear your ads a few times to 1) remember it or 2) start to trust it to check it out. I don't think it would do any good to play one ad one time in 100 markets. I think each target market needs to be blanketed over several weeks.

My site uses Adsense at bottom of pages for those leaving the site. From the first weekday run of ads, I did notice an upturn in page views on the site. Not necessarily customers. Is it from radio or just a coincidence? Is it from a search engine adjustment? Is it from added content? I don't know for sure. I'm not seeing ranking changes or new sections adding up to the increase. I'm seeing more direct entries. But maybe something else happened that I can't detect. My site has sections to it with worldwide subsections and I do notice that the increase is in the USA section in the area of the ad focus. I'm not seeing the same increase in other world areas or topics outside the ad focus. The increase in ad revenue from that day forward is more than I'm spending on the radio ads so I can't complain yet."

There are a few endorsement quotes on Google's radio ad site, but those must be taken with a grain of salt, so I think the jury's still out on this one, unless some of you have more positive data?

David McClure: tellin' it like it is

2007-09-24T23:40:00.000-07:00

Every once in a while I meet someone and get to talking about work history. They'll tell me where they worked before and I'll do likewise. Usually when I say I worked at Netscape from 1995-1999 I have to quickly add that I joined a week *after* the IPO so they don't make the mistake of thinking I actually made much money.

The way I do this is by saying that when I joined Netscape, I didn't know the difference between a IPO and a PPO. That was pretty much true at the time; remember, this was summer 1995 and the 'IPO' hadn't exactly become the household word it is today.

Since then I've worked at a bunch of startups, and each time I've started earlier and earlier stage, culminating with being one of the first three employees at Efficient Frontier - which has since gone on to kick pretty much everyone's ass in the SEM space.

You'd think that I'd know a ton about stock options, VC funding, liquidation preferences and cap tables by now, but the reality is I've never actually been the founder. I've avoided all that and instead found work at startups with interesting ideas and interesting teams.

The past 12 years has taught me a lot about all this, though, unfortunately the hard way. Things I've learned:

1) be 'in the know', or be screwed. Unless you are involved in the fundraising process directly, expect to never get all the details you need to correctly value the options you're working for.

2) 95%+ of all Silicon Valley startup employees are spineless jellyfish when it comes to sticking up for themselves in equity negotiations. Over the years as I've increasingly been at the forefront of equity knowledge discovery within the startups I worked at, I've also made the concurrent realization that most around me weren't asking for knowledge that management wasn't giving.

3) Absolute power corrupts, absolutely, and in the absence of employee unions and/or legislation, investors and founders hold 100% of power within startups. If you're a VC or a founder, you might be thinking to yourself "Yeah, that's *exactly* the way it should be you punk", but you'd be wrong to think that way, because which startup is successful is all about

E-X-E-C-U-T-I-O-N

and execution doesn't happen without motivated employees, and motivated employees don't stay motivated employees unless they have a reason to stay motivated employees.

All that said, I have to applaud David McClure for his great find & review of Leo Dirac's presentation on VC term sheets and liquidation preferences. If you want to go from being the Silicon Valley equivalent of a Microserf, check out Leo's presentation as well as Dave's great review.

You'll learn about all those things you vaguely were aware of, like preferred vs common, liquidation preferences and hopefully you'll be better prepared in your next startup to ensure that you know everything you need to know to go into that long hard schlog that is startup life with the right expectations.

Google Disables Axis of Evil Geotargeting

2007-09-17T14:20:00.000-07:00

Iranian's love their satellite dishes that connect them to external news sources

Iranian President Ahmadinejad does not...

While trolling Digital Point Forums I learned today that it appears Google as of very recently is no longer allowing people to advertise via AdWords in Iran, North Korea, Sudan and Syria from outside of those countries. What's interesting, though, is that they're not saying anything about this recent change. Google says specifically:

"Thank you for your email. I understand your concern that you are not able to target Iran as one of your targeting countries while setting up a new campaign. This is because Google routinely reviews its policies regarding advertising, including its policies regarding the geographical targeting of ads. Based on our most recent review of these policies and consistent with the Terms and Conditions of our AdWords service, we have decided to no longer offer geographical targeting of ads to Cuba, Iran, North Korea, Sudan and Syria.

We apologise for any inconvenience this may cause. Please keep in mind that this decision only concerns our advertising and in no way affects the search results we deliver. Google offers broad access to content across the web without censoring results."

While a person in Iran can still advertise via AdWords in Iran, an American who wants to, say, expose Iranians to Wafa Sultan's revolutionary message, can no longer do so.

Why is Google doing this, you ask? Wouldn't Google want to support U.S. advertisers' ability to target international markets?

I'm not sure why they've made this decision, but I'm pissed they've taken a great tool out of the hands of people wanting to spread viewpoints into the countries whose people most need to hear them.

Someone from Google, please correct me if I'm off base here, but I think this is BAD, right up there with their decision to censor their search results in China. What kind of message does this send to Ahmadinejad, Bashar and Kim when we prevent our own people from targeting messages to their people???

Priuses are great, caving to foreign despots is not.

Top Ten SEPR Click Percentages Revealed (Again)

2007-09-13T17:54:00.000-07:00

I put the leaking of AOL data right up there with the unearthing of Pompeii, the finding of the Dead Sea Scrolls or the discovery of King Tut. Future historians will have a perfect window into the times with this data.

Many of you may have already seen this particular unearthed discovery, but I haven't so bear with me.

Below is data showing the % of clicks going to positions 1-10 on AOL (a good proxy for GOOG since GOOG supplies both paid and organic listings on AOL).

Position 1: 42.13%
Position 2: 11.90%
Position 3: 8.50%
Position 4: 6.06%
Position 5: 4.92%
Position 6: 4.05%
Position 7: 3.41%
Position 8: 3.01%
Position 9: 2.85%
Position 10: 2.99%

1st page: 89.82%
2nd+ pages: 10.18%
[NOTE: sample size is 4.5M+ total clicks]

The data is from an EarnersForum discussion wherein folks there were looking through the reams of data AOL mistakenly made public back in August 2006.

Yahoo mobile search

2007-09-11T22:23:00.000-07:00

Omniture offers $65M for Offermatica

2007-09-07T07:02:00.000-07:00

Back when I worked at Netscape in New York ('98-'99) I got to know the brothers Roche (Matthew & James) who in 1996 started Fort Point Partners, a web development shop that worked with retailers such as J.Crew, KMart/Bluelight.com, Intel, HP and Estee Lauder.

It's rare to see co-founder brothers, and even rarer still to name your startup after a surf spot - 'Fort Point' is a great spot under the Golden Gate Bridge in S.F.

Anyways, James & Matt built a thriving practice around helping retailers building personalization into their ecommerce websites, and F.P.P.'s platform of choice became ATG. Lead forward a few years and I was at Totality, a managed services provider (since acquired by Verizon) that provided outsourced management of large [ATG-based] sites such as American Airlines, Best Buy, Sharper Image and Cabela's.

Totality was actually a company formed from within Fort Point Partners. Michael Carrier, who was one of the early guys (co-founder perhaps?) at FPP kept noticing that FPP had no one at the client to hand over site operations to once they had finished building the site, and so he had the bright idea to build a company to do just that - outsourced site operations so that the site operator could focus on their core functions (marketing, merchandising, etc).

FPP hit hard times after the bubble burst, and hobbled along for a few years until they got the religion around multi-variate A/B testing. Not to toot my own horn (well, yes, actually I am tooting my own horn), but I had a conversation back in mid-2003 with one of the FPP guys wherein I told them how interesting and long-legged I though the multi-variate A/B testing space was. My core thesis? Everyone was just starting to buy lots of paid search traffic, which would eventually lead to an arms race on the part of advertisers to increase their conversion rates in order to remain competitive in search.

Since then FPP renamed itself Offermatica, hired one of the best bag-carrying sales managers I know in Darren Johnson (aka DJ) and has gone out and fairly well dominated the landing page optimization industry here in the U.S., despite Optimost's 2-year head start. This I credit to

1) FPP's having been in business since 1996;
2) the hunger that comes from having invested 10 years of your life into a startup;
3) a huge amount of learning in the area of personalization and via the ATG platform;
4) a stellar sales execution effort, to which Matthew and James Roche contributed, but which DJ spearheaded. Frankly, DJ kicked ass.

Seeing Omniture, the world leader in web analytics, pay $65M for Offermatica is for me a heart-warming story of perseverance, the restorative powers of bursting bubbles, brothers-in-arms and great sales execution.

Congrats guys!

Dave McClure's Metrics Preso: A Great Read

2007-08-28T08:53:00.000-07:00

I came across this guy's presentation and just had to pass it along. I know that for me, I've tended to be a bit myopic given my focus on SEM, and so it's always good for me to see someone like Dave McClure give a much more general presentation on how to think about overall online marketing strategy.

Also, is it me or is SlideShare a really, really cool app?

AKQA/SearchRev: revenues & profits still matter

2007-08-22T17:59:00.000-07:00

I just read that AKQA acquired SearchRev, that most fearsome of SEM competitors for...

DRUMROLL..........

...less than $10M.

[CZ note added Oct 26th: apparetly the acquisition price was somewhat higher, but no one knows and I still maintain that <$50M acquisition price means there's little or no technology, despite my ex-Netscape colleague's claims to the contrary. Proof, please!]

What? Only $10M? How can that be? SearchRev claimed to have developed groundbreaking technology that tests every possible variable in a search campaign. Wasn't that the ideal way to optimize a search campaign?

At $10M many of you are probably saying "No, that can't have been a good way to optimize campaigns, or they would have sold for far, far more."

The reality is that you're right - $10M means they didn't actually build anything, which is what I've been saying all along. Their real business timeline:

1)While working at Yahoo, the founders realized Yahoo didn't know how to manage its search campaigns (call that Semel-itis).

2)Founders sign a couple Y! business units to their fledgling startup and THEN realize they need a solution (guys, you got it backwards).

3)To build a solution, they realize they need $$. Hence they spend approximately 5 minutes thinking up a technology spin, hence 'test every variable'. That approach, incidentally, is analogous to 4th graders adding up 24 17 times for lack of knowing how to do multiplication.

4)Once VC money's in hand, they start selling to other advertisers, making promises to marketers who know little and expect much.

***Still no solution***

5)12-18 months in, they start to realize the only business they're winning is with their pants around their ankles, and the desperate fire sale begins.

6)Enter wise AKQA who buys at the right moment = The Breaking Point.

This, folks, is what you get when dumb VC money is too plentiful and an industry has too much demand for suppliers.

Dad, when are you going to be the boss?

2007-08-20T11:10:00.000-07:00

After my early post-college illustrious career as a Floral Conveyance Specialist, I was Assistant to the Telemarketing Representative at one firm, then did telesales at another company before getting my big break at Netscape, which at the time was ~225 people. I worked there for 4 years and when I left the company was ~2000 people.

Since then I've been getting involved in startups at earlier and earlier stages, culminating most recently with Efficient Frontier, where I joined as employee #3 (Beefcake & Trish came before me). EF's since become the most sophisticated and successful SEM in the world, and yet my 8-year-old son Luca keeps asking me:

"Dad, when are YOU going to be the boss?!?"

Having lived in Silicon Valley most of his life, most of his friends' dads either started their own company, run their own company or sold their own company, and have private jets, trampolines, Maserati's, McMansions on flat ground (or dysfunctional marriages) to show for it.

My son, though, is no idiot. He knows that being The Man in Silicon Valley means starting your own company and so for the past 18 months he's been asking me when I'm going to start my own company.

I'm finally taking his advice. Last Friday was my last day at Efficient Frontier, and now I'm working on a couple ideas I have for startups, one of which I hope to settle on and turn into a business.

I'll keep writing on Searchquant from time to time, but neither of my startup ideas is in the search space, so I may start to digress into other areas in the coming months.

Son, I'm the Boss now!

You'll Know Aquantive's part of MSFT when...

2007-08-20T10:09:00.000-07:00

...they start saying things that hurt Google.

Aquantive put out research today in which they say that branded keywords are superfluous to SEM campaigns, as most consumers will find the merchants' sites anyways.

What's funny is that while their research clearly says much of the 50%+ of PPC budgets going to brand terms should be cut, Aquantive ends up saying they advise their clients not to drastically lower their branded PPC spend.

I don't get it. Is the data right, or the advice? It's gotta be one or the other. I also don't get why during the course of the previous 5 years Aquantive never had anything this potentially damaging to Google or the search industry to say. Frankly, either they were quiet for too long or have been assimiliated; good for them for taking the $$ & running, but something smells fishy.

Given that Atlas Search (the bid management tool Aquantive aquired but doesn't really use themselves) never was able to optimize on Google (nor Y! Panama or AdCenter), I'd take this data with more than a grain of salt. Frankly, I'm much more inclined to take great data from the likes of Jonathan Mendez and Avinash Kaushik than what is likely politically motivated research from Microsoft.

Google Campaign Optimizer: "These Go To Eleven"

2007-07-31T06:39:00.000-07:00

Who doesn't remember the scene from Spinal Tap with the amplifiers that go not to ten, but to eleven? Well, Google has apparently learned to apply a similar tactic with the release of its Campaign Optimizer tool today. SEL has covered it already, but for redundancy's sake it's an automated tool that spits out suggestions to advertisers for how they can enhance their already running campaigns. Typical suggestions:

* Change [read: increase] daily budget
* Add new keywords [never will the system suggest eliminating keywords]
* Change keyword matching options [always to broader, more expansive match types such as Phrase & Broad Match]
* Adjust keyword maximum cost-per-click bid [upwards, of course]
* Change ad text

GOOG will undoubtedly get some uptake from small to midsize advertisers who don't know better, but this makes no more sense for the advertiser than do amplifiers that 'go to eleven'. Decisions on daily budget, match types, keyword addition/deletion, campaign structure, CPC and ad copy are best made by inhouse or SEM agency teams that can look at both cost *and* revenue/margin data.

That said, however, bravo to the folks at the 'Plex for pulling a play from the Spinal Tap book.

Funny SEM Anecdote: Le Chat

2007-07-19T08:03:00.000-07:00

[This all happened in France, so imagine I'm tell you this in French]

A French guy I know was at a meeting in Paris with a French SEM & their client. The SEM had a recent list of the top 100 search terms, and while talking about keyword generation he motioned to the list on the wall next to him and to prove a point about the ever-changing nature of top search queries, said "See here? 'Cat' is one of the top 10 search terms. Why 'cat' and not 'dog', no one knows, that's how varied users' search queries are."

The French client sitting across from him said "Maybe it's because 'cat' ('chat', in French) means 'chat' in English...

Je m'en tape de ROI, je veux la remise!

2007-07-18T04:57:00.000-07:00

I'm in France and this post is about the French SEM market, so it'll be... written in [my bad] French. If you can't read French, just imagine I've written something intelligent.]

Ca fait un mois que je suis en France pour démarrer Efficient Frontier à Paris. Les annonceurs français dépensent un plus grand pourcentage de leur budget marketing en liens sponsorisées que leurs homologues américains, et la croissance de leurs campagnes est toujours très forte. Tellement forte que, quand je vais présenter aux annonceurs, il n'y a que très peu qui ont un vrai problème. En plus, la selectionnement d'agence SEM se fait plutôt par rapport a quel remise reçoit l'agence du régis, et non pas la valeur ajoute pas l'agence.

Depuis 4 ans j’essaie de prouver et faire comprendre aux annonceurs américains et anglais que notre gestion mots-clés, à base d'algorithmes provenant du monde boursier, est unique et trés important pour optimiser leurs campagnes, mais ce n'est pas facile. D'abord, essayez de convaincre à un annonceur qui ne ressent aucun mal qu'il va se cogner la tete à un moment dans le future, contre un seuil de volume dans son search marketing au dela duquel il ne pourront trouver plus de revenue ou de marge. La nature humaine est telle que la plupart des annonceurs (y inclus, pour vous faire peur dans vos investissements boursiers, les sociétés cotées en bourse et qui dépendent du marketing online pour leur croissance) devront subir un mal avant qu'ils seront prets à sortir du 'comfortable'.

Je peux vous raconter au moins 25 meetings ou la première et dernière question sortie de la bouche de l'annonceur c'était "Vous avez quoi comme remise?" comme si c'était la seule chose d'importante. Pour moi, c'est la meilleur preuve que les 'leaders' du marché français (qui d'ailleurs n'ont rien de spécial mise à part avoir commencé le cours la première), n'ont rien à offrir sauf la remise. Par contre, le jour ou Google élimine la remise, au revoir au plupart des agences SEM français qui n'ont pas de techno, pas de atout.

La raison pour laquelle mes collègues et moi mettent la plupart de notre temps à travailler avec ceux qui dépensent $100K-$1M+/mois en ppc, c'est que ces grands annonceurs - et non pas les annonceurs récents ou de tailles moyennes - sont ceux qui sont deja arrivé (ou vont bientôt arriver) à cet seuil de croissance.

Ces annonceurs-là ont appris ce que sont les limitations des systèmes de bid management à base de règles, et ils ont deja subis des malheurs à force de gérer leurs mots-clés à la main. Ils savent aussi que les acteurs comme BidBuddy, eSearchVision et autre sont des voleurs qui profite du moment d'inexpérience du marché.

Ils savent aussi qu'à force de ne pas avoir une visibilité stratégique sur les points d'efficacités de leurs campagnes, ils finissent par ne pas faire leur chiffre et ensuite faire chuter l'action de 10-30%. C'EST A CE MOMENT-Là que les guerres religieuses et le bullshit sortent par la fenêtre, et le PDG finance rentre dans le SEM pour demander la visibilité stratégique qu'on lui a dit viendrait avec search et online marketing.

Qui peut disputer le fait que le SEM deviennent un calcul sans fin? Certes, il y a du travail marketing qui sera toujours mieux fait par l'être humain - ad copy, optimization pages web, etc (autrement dit, réactions à Quality Score) - mais bid management est en train de devenir un monde d'algorithmes également chez Google et chez l'annonceur.

Expanded Broad Match: Taming the Beast

2007-06-21T04:51:00.000-07:00

There's a great thread going on in WMW wherein advertisers are discussing particular cases of Google's Expanded Broad Match (EBM) matching ads to searches that have nothing to do with the product/service they sell, and in cases of brand keywords are matching to other brands - resulting in legal cease & desists and pissed off partners.

For those not well-versed in Google's EBM, it is a match type option whereby the advertiser leaves it to Google find the maximum amount of related searches against which to match the advertiser's ad. It's the broadest match type and the one many, many advertisers use to get the maximum volume of [hopefully well-targeted] traffic.

It would appear that Google is permitting itself more and more liberties recently to support advertisers' quest for ever more volume. You can't fault Google for this, least of all given that their broad matching - pimples, hiccups and all - is the best broad match in the market, but in cases where advertisers are feeling pain from EBM wackiness it certainly begs the question:

How can Google on the one hand be turning the Quality Screws more and more while riding the white horse of The Sacred User Experience, and at the same time encourage all new and existing advertisers to use EBM when it has such profound flaws built into it and which C - L - E - A - R - L - Y provide both a horrible user and advertiser experience?

The answer harks back to one of my SEM predictions for 2007:

3. George Reyes' fingerprints found on Quality Score knob at the 'Plex.

Likewise, David of Blogation fame wrote a great summary of how Google's auction system has changed in terms of how ad rank is calculated and how that change has led to an EBM-dominated world. He says:

These days, the value of the tail has diminished, if not disappeared entirely. There are three primary reasons for this:

1. The Search Engines are Smarter: All of the search engines now have "broad matching" or "advanced matching" features. This means that a big competitor that bought the keyword "mortgage rates" will still likely show up when a user types in "best mortgage rates" or "discount online mortgage rates." The rationale behind this - from the search engine perspective - is fairly obvious; by populating obscure long-tail searches with results from very competitive keywords, the bids increase dramatically (no more $.10 clicks on the long-tail).

It used to be that the search engines tried to balance their drive for additional revenue with user experience concerns by looking at "token matching." Think of a token as a word. A phrase like "bad credit mortgage loans" has four tokens. The old rule was as follows: if a generic phrase matches at least 50% of the tokens in a long-tail phrase, the search engine would consider that relevant enough to show the broad match results on the long-tail phrase.

So, in the "bad credit mortgage loans" example above, "mortgage loans" and "bad credit loans" would be broad-matched, but "mortgage" and "loans" would not (because they only have 25% of the tokens).

Based on what I see in the market today, this is no longer the case. The search engines have basically moved away from the "token-matching" system and are getting closer and closer to a "category-based matching" approach. In this model, a broad phrase like "mortgage rates" could be matched not only on "bad credit mortgage rates" but on "home loan rates", "find a mortgage", and "san mateo county loans for new home buyers."

One other related point worth noting. In the olden days, even if a broad match had a 50%+ token match and did show up alongside long-tail searches, it had to compete in the same auction for top ranking.

Here's what I mean: let's say that you paid $5 CPC on Google for the keyword "mortgage rates" and you elected to be broad-matched across all long-tail keywords Google thinks are relevant to you. Let's say that I bought the keyword "alabama low mortgage rates" and I was willing to pay $2 CPC for this keyword.

When a user did a search for Alabama low mortgage rates, Google looked at two factors to determine ranking - maximum CPC and click-through rate (CTR). The key point here, however, is that Google looked at CTR on a keyword-specific basis. So, if your broad matched keyword had an overall CTR of 10%, but only a .5% CTR on the specific keyword "Alabama low mortgage rates", Google would use the .5% CTR to determine ranking. So, if my $2 bid had a CTR of 10% (due to the fact that I would likely have highly-specific ad-text, and I might be an Alabama-specific mortgage lender),
my effective "cost per thousand" (CTRxCPC=eCPM) basis would be $200 and yours would only be $25. So, if we went head-to-head against each other, I would clearly show up more highly than you.

That is not the way things work today. As far as I can tell, Google has moved away from the keyword-specific auction model to more of an "overall CTR" auction model. In this new scenario, if your generic keyword has an overall CTR of 5% (but remember, only .5% on the specific keyword) and my specific keyword has a 10% CTR, the eCPMs would be $250 for you and $200 for me - you would show up first. The long and the short of it is that this new system decreases the relevance of the tail by enabling high-CPC generic keywords to outposition targeted keywords.

By changing "token matching" to "category matching" and by changing the concept of a "single auction" to an "overall auction", the results may be slightly less specific-ads for the user, but virtually eliminate market inefficiencies (read: no more low CPCs) for the search engine.

Of course, the flip-side of that is that as user queries are consolidated into a few categories, the bulk of ad-generated traffic is consolidated into those advertisers who can pay top position for the most popular searches. Or, to put it another way, instead of entering into 10,000 auctions for 10,000 different keywords, advertisers are now entering into just a few auctions for those 10,000 keywords. If you want to get traffic, you have to win in one of these few auctions.

to which EF's own David White responds thoughtfully:

Interesting post! Although the calculations are correct, I'd question the bid assumptions - looking at the words "mortgage rates" and "alabama low mortgage rates", I think that the second term could justify a higher price. The traffic could be driven to an Alabama-specific landing page with relevant offers that convert better than the generic mortgage rate offers.

Therefore, it may be more realistic to use a $5 CPC for mortgage rates and a $10 CPC for alabama low mortgage rates. If you run the calculation for this scenario, you'll see that the new eCPM for mortgage rates is still $250 but it would be $1000 for alabama low mortgage rates. Even if you assume that the bids are equal ($5 for alabama), the alabama term would still win with an eCPM of $500.

Tail terms may no longer be a gold mine, but they still make sense because they allow you to outbid the broad-match advertisers on the terms where you convert best.

This front line of advertiser need and search engine supply is what will keep optimal SEM solutions in demand for a long time to come...

The Real Shoe Money

2007-06-19T01:05:00.001-07:00

When you hear the name ShoeMoney in the world of search it's synonymous with Jeremy Schoemaker, the SEO/AdSense guy who prints money due to his insane SEO and AdSense skills.

But here on Searchquant I'm writing to literally ask you for... shoe money.

I've become a Soldier's Angel to an entire U.S. platoon stationed in Afghanistan, my role being to help them out in any way they can while they hunt for bad guys in the mountains and generally put themselves in harms way.

So far myself and a group of like-minded people have sent them 20+ pairs of the ballistic-grade sunglasses they needed along with a ton of snacks. Now, though, I want to try and get them each a pair of the boots they need for the 2-3 day patrols they're conducting in the mountains of Afghanistan in order to engage an enemy funded by countries whose gas we buy.

The shoes will cost ~US$2000 (includes shipping). If anyone's interested in playing angel to soldiers overseas and in harm's way, email me at chris dot zaharias @ gmail dot com letting me know how much you're in for, or PayPal me at the same email address; I'm not supposed to divulge the soldiers' names or exact location, but can give you more details in private.

No matter what we all think about the wars in Afghanistan and Iraq, they're our soldiers and are fighting our wars, right?

Thanks to everyone who helps out!

Searching For A Way To Help Our Soldiers

2007-06-04T16:50:00.000-07:00

You can be for or against American foreign policy, but our soldiers are our soldiers and they're doing our elected officials' bidding in Iraq, Afghanistan and a number of other places. Helping them deal with the reality of dangerous fighting, extended tours and a generally anti-U.S. world falls to us U.S. citizens, then, but what to do?

One great way to help them is to join Soldier's Angels, an organization that links up people who care about our soldiers with the soldiers themselves. Join the group and they'll match you up with someone who's likely stationed in Iraq or Afghanistan; from there they give you lots of tips for how to help your soldier, from writing letters, to sending snacks they crave while overseas, to helping them deal with their family's daily life in absentia.

If you're searching for a way to help our soldiers, believe me, this is the way to go. Cindy Sheehan recently complained that 1% of America is fighting this war, so if you don't want her words to be true, sign up here.

My soldier and his platoon are about to receive more snacks than they've ever seen in their lives, along with ballistic-grade Oakley sunglasses for the looooong patrols they go out on regularly. Thanks to everyone who contributed!!!

Interview with Efficient Frontier Founder Anil Kamath

2007-06-04T16:40:00.000-07:00

Back in mid-2003 Chris Moore at RedPoint Ventures asked me to meet Anil Kamath and talk about the keyword management technology he had built. I went into the meeting thinking I was going to tell Anil that he had no hope to build a business. Bid management systems already existed (GoToast and others started in 2002) and the SE's themselves provided bidding-related functionality as well.

Then Anil showed me a simple example of how Efficient Frontier (then Everest) algorithms worked better than anything on the market, subsequent to which I got down on my hands and knees and begged him to let me start Sales for the company.

Since then Anil's been busy building and enhancing EF's algorithms and technologies, so it's rare for him to see the light of day. However, he was interviewed recently by Eric Enge of Stone Temple Consulting and the transcript is here. The discussion is on one of my favorite topics: portfolio based bid management.

Enjoy!

Incubators That Incubate Incubators, Part II

2007-05-30T11:32:00.000-07:00

[The below is an email written this morning by my brother who has always been very insightful when it comes to Internet and business trends. He wrote the email to a number of friends and colleagues.]

Hello. Hope you're doing well. It's me again and unfortunately, I am here today to rain on your parades, your fantasies, your business models, or your investment portfolios once again. It's happening again and so I will put up or shut up as several of you said I must back in March of 2000.

First a little history........In the lead up to March 2000, I saw a proliferation of signs that the end was nigh for web 1.0. Though painfully obvious at the time, hallucinations of the mass variety can exert quite a strong hold on one's faculties - my RealNames IPO net-worth mental masturbation calculator stands as a testament to that fact. As the Launch-Party summer of 1999 became the Fall of RealNames withdrawn S-1 registration, I knew it was over and began to search for the perfect contra-indicator that would become that final stake in the ground upon which one could sell short the entire Nasdaq with impunity. To those of you copied on this email who were actively discussing tech stocks with me back then, you will remember those days well. To those of you who were not, welcome to Incubators that incubate Incubators, Part II.

One month before the march of 2000 Nasdaq crash I made an offhand, grabass comment to the effect that we'd know the top when a venture capital firm would fund an Incubator that would incubate other incubators, which in turn would incubate web start ups. I was really just talking trash as the idea was clearly too stupid for even the worst venture firm.

Fortunately, about two weeks before the crash, Bill Romans (who is once again a recipient of my usual blather via this email) sent me an email with a link to a CNET story describing just such an incubator that incubated other incubators, which in turn would incubate web start ups.

So that's the history. So why do I bring this up today? Well, for those of you who haven't noticed, web 2.0 has gotten pretty nuts again. Silly people, doing silly "socially-conscious" social networks. All sorts of crap. And to be honest, its really quite embarrassing. Lately i've found myself laughing at start-ups more than I ever have before. The names of these things.... I mean every time I read Arrington's site I see names that sound as if they were made up by my 2 year old son's play group. Its funny and sad at the same time.

So I'm reading the SF Chronicle this morning (which by the way, is seriously the world's worst newspaper) only because I can't read the web while I'm taking my morning doompha. And there it is - its happening all over again:

http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/05/30/MNGHPQ3PST1.DTL&type=tech

I've got to take my daughter to school now so I'm going to let you all read this article first before I explain why James Currier and his Ooga Labs*is 2007's version of the flashing "Danger Will Robinson, Danger!" signal that we got in March of 2000 with incubators that incubate incubators, which in turn would incubate web start ups.

Talk to you soon,

Nick

p.s. and if you think I'm wrong, please tell me why.

* I have not looked up the names of the VCs who funded Ooga Labs, so apologies to any and all who may have funded this turd.

[CZ May 2009 post-script: here's the 'Incubators that Incubate Incubators' article that covered this insanity.]

Google EDU - Seeding the Future w/Google Analytics

2007-05-27T06:42:00.000-07:00

I noticed this morning that Google is quietly funding a series of university online marketing bootcamps in which they're offering free training on Google tools - chief among them Google Analytics.

Reminds me, obviously, of Apple's EDU strategy which is paying off nicely if they're increasing marketshare is any indication.

Today Omniture rules the web analytics world, but will tomorrow see the Google Analytics sun rise?

You Now Know That I Know That You Know That I Know You Were Here

2007-05-16T18:55:00.000-07:00

You visited my company's site, then my blog.
I know this from my analytics package.
We researched your SEM campaign to see if we might be of help.
Then you emailed in interested in our company's services.

The Minority Report didn't have to have such a bad ending...

SEM Valuations: What's Wrong With This Picture?

2007-05-11T11:02:00.000-07:00

Back when AOL bought Advertising.com for $435M, it was said that Ad.com's revenues were $132M. 3.3X revenues seemed like a reasonable valuation, but the reality was that 75%+ of that $132M was the media buys Ad.com made on behalf of clients. Granted, in some cases Ad.com was working on a revshare basis, but if what you're doing is taking over a banner or search campaign and running it on a revshare basis and with no volume, commitments, you're really just putting your topline on steroids. If Ad.com had claimed as revenues [Revshare minus media spend], they would've looked more like a $30-35M revs firm, and $435M would've been a crazy number to pay IMO.

There's more of that air-gulping going on in SEM today. I know of at least 4 major SEM's (two in the UK and two in the States) who claim to have revenues of GBP50M, GBP100M, US$25M and $112M, respectively, when in reality their revenues (less search billings) are 1/4th to 1/5th their stated revenue numbers.

Why count search spend under management as part of your topline revenues? Well, for starters it makes you look a lot bigger than you actually are. Second, managing the search engine billing relationship makes it hard for the advertiser to ever leave you - the old ball & chain, if you will. I can't tell you the number of times an advertiser has made a decision to leave their SEM and work with us only to find out their existing SEM owns the SE account and drags their feet when it comes time to move their campaigns into a new account.

Look at the valuations for Interpublic Group, Omnicom and their competitors, and think about what happened to Priceline when they stopped counting bookings as revenues. The right SEM accounting model is to account for service and technology license fees as revenues, and nothing else.

Notes from Google Invalid Clicks Seminar

2007-05-09T08:00:00.000-07:00

I spent 5 hours last week attending an ‘Invalid Clicks’ seminar at Google yesterday, learning about their views on click fraud as well as what they do to prevent it. We've certainly come a long way from the days of the H.M.S. Click Monkey. Here’s a summary:

Bucket o’ data
-Google said <10% (my read = 8-10%) of total clicks are determined by Google’s proactive and reactive measures to be invalid.

-‘Invalid’ means both fraudulent clicks as well as invalid clicks in the case of
double clicks, back button impressions, etc.

-Google really wants to get people thinking about ‘invalid clicks’ rather than click fraud because clicks that advertisers shouldn’t pay for encompass both fraudulent and non-fraudulent clicks. I can see their point - most clicks not worth paying for are non-fraudulent.

-Google claims that only the infinitesimally small <0.02% of invalid clicks are not detected by Google’s proactive filters or Google-initiated offline analysis. Interestingly, GEICO was in the audience and said 0.02% is roughly the amount of refunds they alone got for clicks they found to be click fraud, so that tells you the truth is probably two decimal points over (~2% IMO).

Statistical Anomaly Detection (that’s S.A.D.)
That’s the name for Google’s 100 or so filters that are applied in real-time to detect and filter out invalid clicks. The system captures “the overwhelming majority” of invalid clicks, and only a minority are captured offline by human-led analysis. [NOTE: given the amount of reactive refunds I've seen, I think reactive captures are closer to 0.2-2% than 0.02%.]

Invalid Clicks Team
36 people, which includes engineers, operations and support reps. A good part of that team was at the seminar, and they were very nice people.

False Positives
Google feels strongly that the absolute $ amount of invalid click refunds given has stayed the same or declined since 2004, all while advertiser requests have gone up by at least 2-3X. This means there’s a huge amount of false positives, a point I tend to agree with. False positives include:

a) AOL Proxy. To most advertisers, multiple clicks from one AOL IP address looks like click fraud, when in fact it’s AOL’s proxy servers representing multiple AOL users.

b) Back button. Unless advertisers/agencies use auto-tagging and URL redirects, when the searcher clicks on an ad, visits and site and then clicks the back button (think how often we all do that), to many advertisers this appears as multiple clicks from one user. And given how few advertisers are sophisticated in their approach to tracking, it’s not surprising that back button accounts for 40%+ of what advertisers initially deem suspicious activity.

More Transparency Going Forward
1)Google avowed that sometime in Q2 ’07 they will offer IP Exclusion, whereby an advertiser can specify IP addresses or address ranges for which they don’t want their ads to show.

2)Also during Q2, they will provide enhanced reporting, which most in the room took to mean ad group or keyword-level ‘invalid click’ reports.

3)As certain of Google’s search and contextual distribution relationships come up for renewal, Google is inserting in the renewal contracts language that [finally] gives them more control over who the partner can sub-syndicate to. This should help control click arbitrageurs (‘garbitrageurs’) from whom click fraud oftentimes emanates.

EF’s role in all this
Many of the attendees were large advertisers who universally complained that they don’t have the bandwidth to constantly monitor referrer logs to make sure that [(PPC traffic – invalid clicks) = PPC $ Spent], and they also said that no SEM or agency is capable of scaling to do this for them and all the SEM's other clients. This is clearly one of the reasons Google's reactive rate is so low - advertisers just don't have the time to do the digging. Good SEMs, then, must develop technical solutions that take advantage of the add’l transparency Google is set to provide in Q2. And the industry must continue to push the search engines to clear up their distribution networks - and reward them when they do so.

The Middle Ground
Lest I be called 'brainwashed by Google', I'll point out the following areas where I think Google's being 'Plexpomorphic':

1) 0.02%. No way Google's filters catch 99.98%. If the sum total of advertiser-lead refunds in my immediate vicinity is 5X that and we manage 3-4% of total search spend, then the number's probably closer to 2%. It appeared that Google spends 99.98% of their time looking at their own data; I would urge them to look at the advertisers' and SEM's data more often, even if that means paying for the privilege.

2) The real problem that needs to be talked about more is invalid distribution partners. Google *does* seem to be preparing to address this in Q2, but putting all the burden on advertisers and agencies to proactively identify low-quality distibution partners is nearly as bad as doing nothing at all about the problem. Why should it be the advertisers' sole responsibility to police such a huge network? The answer is - it shouldn't.

3) Google's PPA offering should be rolled out to its entire network, as that is the most efficient and effective way to combat invalid clicks. Google is doing itself and the industry a disservice by continuing to operate its business with clicks and CPC as a translation layer between search engine Revenue Per Query (RPQ) and advertiser ROI.

Lastly, it's also important to state Google's relative position on invalid clicks. Google is doing a much better job than any other search engine in dealing with invalid clicks, as measured by Google's relatively higher ROI, an impressive feat given how much bigger they are than any other SE. Kudos to Google for that.

I'm Winning The French Presidential Elections

2007-05-04T13:12:00.000-07:00

The French are set to vote a new president in this weekend, and it's down to Segolene Royale and Nikolas Sarkozy. Unable to sit by without any voting power, I couldn't resist and so launched a pro-Sarkozy blog & associated PPC campaign targeting the French on Google.fr.

I launched the campaign 3 hours ago and have already gotten >1100 clicks at $0.15 CPC and 3.32% CTR.

Thank you, Google, for letting me do more than merely vote.