Advertisers have finally begun to consider search retargeting as a way to increase accuracy when targeting ads. They're still not ecstatic about the increase in price, compared with serving up plain old ads, but how can they ignore talk of campaigns that begin with $168 cost per acquisition and fall to $29, and .93% conversion rates that rise to 6.93% within one month?
Consider how Yahoo's retargeting platform helped Value City Furniture, whose parent company, American Signature, is reportedly ranked as one of the largest furniture retailers in the country. Value City decided to launch a promotional sweepstakes that gave away six $2,500 shopping sprees during the fourth quarter of 2009.
When customers responded to the promotion, Value City captured data that allowed it to prescreen applicants for its private-label credit card offering. It also used the data to retarget visitors who engaged with the ad but didn't convert.
The goal to increase registrations for pre-approved Value City credit applications and in-store sales through its online channel led the retailer to tap Yahoo's My Display Ads for a retargeting and sponsored search campaign. The company saw its site and sweepstakes registrations increase by 650%.
Value City had a 5% conversion rate, with a CPA of $32, when the campaign began. After one month, the company had a 14.5% conversion rate and a CPA of just $12. Yahoo and Value City developed a Sponsored Search campaign that included 200 branded keywords to help promote the sweepstakes and its overall business. The campaign found display drove search activity, with a 168% increase in branded term searches. As a result, the company increased its display budget by 30%.
"It's becoming easier for advertisers to take a data set and activate it against all inventory in the company's target markets," says David Zinman, vice president and general manager for display advertising at Yahoo.
Cycle back to 2006, when Zinman offered retargeting at Blue Lithium and advertisers had to approach each online ad network, pull a pixel, and hope it could cover the majority of the ad impressions online. It's much easier to ensure coverage today, he says.
That assurance has prompted more than Value City into retargeting and search retargeting. Companies such as Travelocity have also jumped into the fray.
"Marketing to people who have already been to your site is a very effective form of advertising and driving conversion," Zinman says. "There's really not resurgence, it's just always been up and to the right on the chart for money spent on retargeting."
Yahoo added search retargeting in 2009, but began to push it into the marketplace in January 2010. It allows Yahoo's engine to target everyone who searches on relevant keywords and then targets them with display advertising.
Google's AdWords and the startup Magnetic also offer this service.
Yahoo moved toward offering clients retargeting with the acquisition of Blue Lithium in October 2007, but tweaked the technology in February 2009, adding search retargeting and dynamic ads. "Search retargeting has a lot of potential and growth ahead of it, mainly because it's so new," Zinman says.
Wednesday, March 31, 2010
Yahoo Has Flat Traffic, Flat Revenues, And Limited Growth Opportunities -- Here's Why
A source close to Yahoo's strategic planning recently complained to us that Yahoo has "a fundamental innovator's dilemma."
What he meant is that while Yahoo has flat traffic, flat revenues, and increasingly limited growth opportunities, it can't innovate it's way out of the problem with bold new products because it has to fund, protect, and iterate on "a big existing business that is, let's face it, very profitable" -- display advertising on Yahoo.com and the company's other media sites.
So while there is, at Yahoo, "a core group of people who still want [and] believe that Yahoo can change things," these product directors and line engineers increasingly find themselves working not for a tech company, but for a media company content to serve ad impressions against an already huge Web audience.
Right now, this "innovator's dilemma" is mostly a mild inconvenience that makes Yahoo a less fun place for Silicon Valley engineers and executives to work (which is why so many are quitting). But someday soon, it could kill the company.
That's because Yahoo's entire big, existing, profitable business is dependent on consumers continuing to use the Internet and the "Web" the way they are right now for the foreseeable future. That may be a bad bet.
Just ask Google, which is cranking out $25 billion a year on desktop search, but is scrambling to develop a mobile business anyway. Ask Apple, which used to just make Macs, but now calls itself a mobile devices maker. Or ask our source close to Yahoo who believes "the Web is on a verge of a tectonic shift" and that "the [Web] page as a dominate paradigm is going away."
Our source believes this upcoming "tectonic shift" presents an opportunity for Yahoo to "leverage and benefit from the next disruption." We agree. But first Yahoo has to solve its "innovator's dilemma."
Here are four possible solutions Yahoo CEO Carol Bartz and Yahoo's historically inept board of directors could pursue:
Seek a leveraged buyout lead by a large private equity firm such as KKR or Blackstone. In theory, this would allow Yahoo to ignore the quarter-by-quarter scrutiny that forces it to protect its display business above all else and re-invest in innovation. To do it it, a PE firm would have to borrow about $30 billion. The problem is PE firms typically buy a company because they believe they can "strip mine" it down to a single, healthy business and then sell it back to the public as a more efficient machine. That doesn't sound a like a recipe for innovation to us. Finally, remember when Terra Firma acquired record label EMI in hopes of figuring out the Internet? That was a big nasty old bust.
Sell 20% or more of the company to a mid-stage private equity firm, such as Digital Sky Technologies, Elevation Partners, or whomever else Quincy Smith and CODE Advisers could con into the gig. The new part-owners could kick Carol upstairs into the chairmanship and bring in a product-oriented chief executive, who, unlike the last one (cofounder Jerry Yang) is also able to make decisions. The problem with this option is that it requires co-operation from Carol and the board. Also, it assumes shareholders will provide Yahoo some leash after the deal. The other problem is that the model to follow here is Palm, which brought on a ton of Apple execs after Elevation Partners invested. That experiment failed.
Buy Zynga and put Mark Pincus in charge. We've heard Facebook gamesmaker Zynga is cranking out $1 million of revenue a day, putting it at annual run rate well over $350 million selling virtual goods that make its games easier to play. That's ridiculous, and it's happening thanks to three factors:
Give up on innovation and merge with AOL. Limited innovation is only a dilemma if the company's future depends on innovation. It's a tech company problem. Maybe Yahoo is a media company. If that's the case, it needs to focus on increasing scale and cutting costs. The best and most immediate way to do that is to merge with AOL, keep the winning media properties from both sides, and cut all the redundant human resources between them (starting with ad sales). The best person to run this company is a champion salesman like current AOL CEO Tim Armstrong. Whomever's in charge of the Miley Cyrus empire at Disney wouldn't be a bad hire, either.
What he meant is that while Yahoo has flat traffic, flat revenues, and increasingly limited growth opportunities, it can't innovate it's way out of the problem with bold new products because it has to fund, protect, and iterate on "a big existing business that is, let's face it, very profitable" -- display advertising on Yahoo.com and the company's other media sites.
So while there is, at Yahoo, "a core group of people who still want [and] believe that Yahoo can change things," these product directors and line engineers increasingly find themselves working not for a tech company, but for a media company content to serve ad impressions against an already huge Web audience.
Right now, this "innovator's dilemma" is mostly a mild inconvenience that makes Yahoo a less fun place for Silicon Valley engineers and executives to work (which is why so many are quitting). But someday soon, it could kill the company.
That's because Yahoo's entire big, existing, profitable business is dependent on consumers continuing to use the Internet and the "Web" the way they are right now for the foreseeable future. That may be a bad bet.
Just ask Google, which is cranking out $25 billion a year on desktop search, but is scrambling to develop a mobile business anyway. Ask Apple, which used to just make Macs, but now calls itself a mobile devices maker. Or ask our source close to Yahoo who believes "the Web is on a verge of a tectonic shift" and that "the [Web] page as a dominate paradigm is going away."
Our source believes this upcoming "tectonic shift" presents an opportunity for Yahoo to "leverage and benefit from the next disruption." We agree. But first Yahoo has to solve its "innovator's dilemma."
Here are four possible solutions Yahoo CEO Carol Bartz and Yahoo's historically inept board of directors could pursue:
Seek a leveraged buyout lead by a large private equity firm such as KKR or Blackstone. In theory, this would allow Yahoo to ignore the quarter-by-quarter scrutiny that forces it to protect its display business above all else and re-invest in innovation. To do it it, a PE firm would have to borrow about $30 billion. The problem is PE firms typically buy a company because they believe they can "strip mine" it down to a single, healthy business and then sell it back to the public as a more efficient machine. That doesn't sound a like a recipe for innovation to us. Finally, remember when Terra Firma acquired record label EMI in hopes of figuring out the Internet? That was a big nasty old bust.
Sell 20% or more of the company to a mid-stage private equity firm, such as Digital Sky Technologies, Elevation Partners, or whomever else Quincy Smith and CODE Advisers could con into the gig. The new part-owners could kick Carol upstairs into the chairmanship and bring in a product-oriented chief executive, who, unlike the last one (cofounder Jerry Yang) is also able to make decisions. The problem with this option is that it requires co-operation from Carol and the board. Also, it assumes shareholders will provide Yahoo some leash after the deal. The other problem is that the model to follow here is Palm, which brought on a ton of Apple execs after Elevation Partners invested. That experiment failed.
Buy Zynga and put Mark Pincus in charge. We've heard Facebook gamesmaker Zynga is cranking out $1 million of revenue a day, putting it at annual run rate well over $350 million selling virtual goods that make its games easier to play. That's ridiculous, and it's happening thanks to three factors:
- Facebook's rapidly growing audience (over 200 million people check the site each day)
- Consumers' willingness to pay small amounts of money to make the games they've been using for years to divert themselves slightly easier.
- Zynga CEO Mark Pincus's relentless focus on building products that people will actually love to use. (Seriously, the guy will kill a product if there's any doubt about its popularity.)
Give up on innovation and merge with AOL. Limited innovation is only a dilemma if the company's future depends on innovation. It's a tech company problem. Maybe Yahoo is a media company. If that's the case, it needs to focus on increasing scale and cutting costs. The best and most immediate way to do that is to merge with AOL, keep the winning media properties from both sides, and cut all the redundant human resources between them (starting with ad sales). The best person to run this company is a champion salesman like current AOL CEO Tim Armstrong. Whomever's in charge of the Miley Cyrus empire at Disney wouldn't be a bad hire, either.
Tuesday, March 23, 2010
Yahoo Wants Local Display Dollars
Yahoo is the top display ad seller at this point in time. That may come as a surprise to many because Yahoo has had a rough go of staying on top of anything lately. Now they are coming off a rough transition year and the tumult of the Microhoo deal is behind them (from a public perspective at least) so Yahoo needs to get in gear.
One of the methods it will be using to keep its top spot in the display ad sales category is to do what everyone seems to figuring out as of late: go local. Forbes.com tells some more
National advertisers spend more than $120 billion on advertising in local markets and Yahoo wants it.
This year the Sunnyvale, Calif., company’s sales reps are going after big companies with outlets that advertise in local newspapers and on regional radio stations and Web sites. These marketers include Dunkin’ Donuts, Burger King, Pizza Hut, State Farm Insurance and Home Depot. The list goes on and Yahoo intends to call every advertiser on it, offering them the opportunity to target regionally and reach millions of people online.
Granted, when you hear about a sales rep charge to make inroads into a hot market you can only hope that you aren’t on the other end of one of those calls. Despite that though, savvy local advertisers may see the value of Yahoo’s local display offering all by themselves (how about that idea?!) and can take advantage of the traffic that Yahoo’s site generates.
Hearing this kind of focus is being put into what Yahoo is actually good at is a great change of pace from the search “news” that still trickles out of Sunnyvale from time to time. In my opinion, Yahoo as a search entity is pretty much dead. They are a content company that provides a search option that will be run by another company who may or may not be a search company themselves. From a business perspective this push for display dominance makes sense especially since Google is flexing its muscles in this area as well.
Yahoo’s focus on local markets comes as Google is diving into the display world to grow beyond its core search business. Having launched a new ad exchange system similar to ones the stock market uses, Google is heating up the competition, adding more clients to its growing roster of display advertisers. Google is also going after some of the same customers–the burger joints and home-improvement centers–as Yahoo, pitching similar opportunities to reach TV-sized audiences without TV prices. It makes for a big battle.
With location based offerings becoming more prominent in the marketplace (at least by the social media industry types….The rest of the world? We’ll see.) and efforts like AOL’s Patch.com to generate local content for businesses to place ads around this space is getting the attention it likely deserves.
Most of our lives occur on some local level. Even if you live in a big metro area you do much of your regular life in close proximity to your home. Local is for everyone. Of course, it is also different for everyone so how this market plays out over time will be interesting as marketers try to find more ways to reach the consumer closer to home when they are closer to buying.
Your thoughts on local display advertising through large publishers?
One of the methods it will be using to keep its top spot in the display ad sales category is to do what everyone seems to figuring out as of late: go local. Forbes.com tells some more
National advertisers spend more than $120 billion on advertising in local markets and Yahoo wants it.
This year the Sunnyvale, Calif., company’s sales reps are going after big companies with outlets that advertise in local newspapers and on regional radio stations and Web sites. These marketers include Dunkin’ Donuts, Burger King, Pizza Hut, State Farm Insurance and Home Depot. The list goes on and Yahoo intends to call every advertiser on it, offering them the opportunity to target regionally and reach millions of people online.
Granted, when you hear about a sales rep charge to make inroads into a hot market you can only hope that you aren’t on the other end of one of those calls. Despite that though, savvy local advertisers may see the value of Yahoo’s local display offering all by themselves (how about that idea?!) and can take advantage of the traffic that Yahoo’s site generates.
Hearing this kind of focus is being put into what Yahoo is actually good at is a great change of pace from the search “news” that still trickles out of Sunnyvale from time to time. In my opinion, Yahoo as a search entity is pretty much dead. They are a content company that provides a search option that will be run by another company who may or may not be a search company themselves. From a business perspective this push for display dominance makes sense especially since Google is flexing its muscles in this area as well.
Yahoo’s focus on local markets comes as Google is diving into the display world to grow beyond its core search business. Having launched a new ad exchange system similar to ones the stock market uses, Google is heating up the competition, adding more clients to its growing roster of display advertisers. Google is also going after some of the same customers–the burger joints and home-improvement centers–as Yahoo, pitching similar opportunities to reach TV-sized audiences without TV prices. It makes for a big battle.
With location based offerings becoming more prominent in the marketplace (at least by the social media industry types….The rest of the world? We’ll see.) and efforts like AOL’s Patch.com to generate local content for businesses to place ads around this space is getting the attention it likely deserves.
Most of our lives occur on some local level. Even if you live in a big metro area you do much of your regular life in close proximity to your home. Local is for everyone. Of course, it is also different for everyone so how this market plays out over time will be interesting as marketers try to find more ways to reach the consumer closer to home when they are closer to buying.
Your thoughts on local display advertising through large publishers?
Tuesday, March 16, 2010
YAHOO STUNNED: Top Ad Exec Quits For Demand Media
Yahoo's top ad sales exec Joanne Bradford, VP of U.S. revenue and market development, is quitting the company to become Demand Media's chief revenue officer, Kara Swisher reports.
In a tweet, Kara implies that Joanne was not fired, writing "Yahoo had no idea."
Glam Media CEO Samir Arora -- who we just happened to have on the phone when we learned the news -- told us Joanne's departure "is really sad for Yahoo."
Kara reports that Joanne was expected to "play a key role" in Yahoo's search and online ad partnership with Microsoft (MSFT).
Demand Media is Joanne's fourth company since March 13, when it was announced she would leave Microsoft to join L.A.-based startup Spot Runner. Joanne quit Spot Runner six months later to join Yahoo (YHOO).
Joanne might end up back at Yahoo someday soon. Kara reports Yahoo looked at Demand Media -- a top 20 Web property thanks to powerhouses like eHow and Livestrong.com -- as a possible acquisition.
In a tweet, Kara implies that Joanne was not fired, writing "Yahoo had no idea."
Glam Media CEO Samir Arora -- who we just happened to have on the phone when we learned the news -- told us Joanne's departure "is really sad for Yahoo."
Kara reports that Joanne was expected to "play a key role" in Yahoo's search and online ad partnership with Microsoft (MSFT).
Demand Media is Joanne's fourth company since March 13, when it was announced she would leave Microsoft to join L.A.-based startup Spot Runner. Joanne quit Spot Runner six months later to join Yahoo (YHOO).
Joanne might end up back at Yahoo someday soon. Kara reports Yahoo looked at Demand Media -- a top 20 Web property thanks to powerhouses like eHow and Livestrong.com -- as a possible acquisition.
Yahoo announced a new pilot program
Yahoo Monday announced a new pilot program in which it is working with a group of "demand-side" ad exchanges and networks to develop best practices for audience-buying. Demand-side platforms involved in the program include Invite Media, Mediamath, Data Xu, Turn and X+1.
Agencies have increasingly turned to these ad systems to wrest more control of the ad-buying process from traditional online ad networks and keep more revenue for themselves as well.
"The pilot will demonstrate how Yahoo, in partnership with these industry leaders, can provide marketers with access to the audiences they most want to reach by leveraging insights from buyers, sellers and third-party data providers," wrote Ramsey McGrory, vice president, North American Marketplaces, and Seth Dallaire, vice president, mid market sales, on Yahoo's Advertising Blog.
They added that the program would also help the participating platforms enter into a tighter relationship with the Yahoo (Publisher) Network and the Right Media Exchange, including gaining access to the latter's real-time bidding (RTB) capability. Yahoo has been testing RTB, which let advertisers adjust ad buys on the fly on a per-impression basis, for the last several months.
The idea is that publishers benefit from higher ad rates for more targeted ads while advertisers increase the efficiency of media buys through the technology. A recent New York Times article highlighted how marketers such as eBay have been using RTB to boost their return on investment in online advertising.
The pilot program with demand-side platforms is part of Yahoo's broader effort to turn Right Media into a high-quality ad marketplace. To that end, the Web portal late last year kicked out the anonymous ad network using the platform and shut down its Direct Market Exchange unit aimed at smaller publishers. Yahoo said it will provide updates on its work with the demand-side networks.
Agencies have increasingly turned to these ad systems to wrest more control of the ad-buying process from traditional online ad networks and keep more revenue for themselves as well.
"The pilot will demonstrate how Yahoo, in partnership with these industry leaders, can provide marketers with access to the audiences they most want to reach by leveraging insights from buyers, sellers and third-party data providers," wrote Ramsey McGrory, vice president, North American Marketplaces, and Seth Dallaire, vice president, mid market sales, on Yahoo's Advertising Blog.
They added that the program would also help the participating platforms enter into a tighter relationship with the Yahoo (Publisher) Network and the Right Media Exchange, including gaining access to the latter's real-time bidding (RTB) capability. Yahoo has been testing RTB, which let advertisers adjust ad buys on the fly on a per-impression basis, for the last several months.
The idea is that publishers benefit from higher ad rates for more targeted ads while advertisers increase the efficiency of media buys through the technology. A recent New York Times article highlighted how marketers such as eBay have been using RTB to boost their return on investment in online advertising.
The pilot program with demand-side platforms is part of Yahoo's broader effort to turn Right Media into a high-quality ad marketplace. To that end, the Web portal late last year kicked out the anonymous ad network using the platform and shut down its Direct Market Exchange unit aimed at smaller publishers. Yahoo said it will provide updates on its work with the demand-side networks.
Saturday, March 13, 2010
Yahoo Goes Hollywood With New TV, Celebrity Shortcuts
Citing the popularity of entertainment-related searches, Yahoo’s search results have gone Hollywood with the announcement of new search shortcuts for TV shows and celebrities.
The TV shortcut shows the title and a short synopsis of the next episode, along with video clips and links to see photos, the show’s schedule, and an episodes list. All of this content comes from Yahoo TV.
The TV shortcut shows the title and a short synopsis of the next episode, along with video clips and links to see photos, the show’s schedule, and an episodes list. All of this content comes from Yahoo TV.
Friday, March 12, 2010
Microsoft and Yahoo! Tie the Knot
At the end of last month both the United States Department of justice and the European Commission granted regulatory approval for Microsoft and Yahoo! to move forward with the search and advertising partnership they announced back in July of 2009. The gist of the deal is that Microsoft will run the search side of the combined operation while Yahoo! will act as the sales force for premium search advertising services. Both companies hope the deal will help them capture a larger part of a market that Forrester estimates as worth $15 billion in the U.S. alone.
Of course, with brand name titans involved in such a public facing deal there has been no lack of comment. Shouts and murmurs are coming in from all sides with myriad suggestions as to the effect, but as integration will not be fully in place in the U.S. until later in the year and across the whole network for a couple more, the verdict is still out. "This is like a baseball trade where you don't know from the outset who is the winner and who is the loser," says Gartner analyst Allen Weiner.
Through all the noise, however, consensus can be distilled to read that this is a good deal for both Microsoft and Yahoo! - it allows them both to focus on core competencies and in doing so gain strength - but that the combined strength is not a serious threat to a Google-dominated landscape in the near term. According to Rebecca Jennings of Forrester Research, "This deal should allow Yahoo! to give up its drive to beat Google, and concentrate on the elements it does do better, display media and social media , devolving the competition and the significant investment involved off to Microsoft." Andrew Frank of Gartner agrees: "In other words, this sharpens the distinction between Microsoft's 'technology company' role and Yahoo's 'media company' role, making it harder for Google to play both against their alliance."
Both Microsoft and Yahoo! have struggled to gain a footing against Google; Yahoo! struggled rather silently, but Microsoft took a direct swing at earning favor in the search arena - and has done relatively well with the release of Bing. "Microsoft has shown they can actually do something that has a chance of reversing the slide of both Yahoo and Microsoft against Google," said Neil MacDonald of Gartner. An associate of MacDonald's at Gartner is reported in Computer Weekly as agreeing: "Gartner analyst Allen Weiner believes the Microsoft/Yahoo tie-up will prove Microsoft's Bing search technology is a viable alternative to Google." Numbers also indicate that Bing has been successful in improving Microsoft's place in search; from a year ago Microsoft's share of the search usage market has gained 3 percentage points according to comScore. Still moving from an 8 percent to an 11 percent market share leaves the company far behind Google (with roughly a 65 percent share), as well a! s behind its new partner which holds about 15 percent.
Also, Bing's immediate success does not necessarily secure its future. Microsoft's ambitious release was accompanied by an equally ambitious $100 million marketing campaign. Success has its costs and some are questioning whether Microsoft's share will drop as advertising tapers off. Karsten Weide of IDC: "Microsoft's estimated search ad revenue grew by 5 percent, or $11 million, year on year, but it should also be noted that the company currently spends about twice as much per quarter on the Bing marketing campaign," Weide adds, "It remains to be seen if Bing can hold on to this market share gain after the campaign ends, or if this is merely a flash in the pan."
Furthermore, Microsoft's share may be rising, but Yahoo!'s has fallen. In the same time period in which Microsoft realized its three percent gain, Yahoo lost just about the same - falling from about 20 percent to 17 percent. Even though the combined share of both companies going after Google will effectively give them a quarter of the market they will also be married for better or for worse. "What happens if Yahoo keeps losing share? Is this still a good deal for Microsoft?," asks Greg Sterling of Sterling Market Intelligence. This is not to say, however, that the existing assumption is that Yahoo! will continue its decline. The company has made numerous statements to the effect that it will continue to improve and remain innovative. It appears that this is not all talk - just last week Yahoo! announced it had made a deal with Twitter which will incorporate real-time updates into Yahoo! search and allow for Twitter updates to appear across the company's network.
While he does note that the company is struggling for identity, Rob Enderle of the Enderle Group, acknowledges that Yahoo!'s Twitter deal is likely a benefit to the company: "This is a company struggling for relevance," says Enderle, "Social networking, rather than search, was closer to Yahoo's initial strength, and they lost their way by going after Google. This takes them back to their roots, and typically that is a good thing. This does give Yahoo some much needed visibility." Forrester Research analyst Augie Ray also sees the Twitter deal as a solid step for the Yahoo! and representative of a boldness on the company's part: "The Yahoo deal is more extensive than the deals Google and made with Twitter, and I think it demonstrates a new assertiveness on the part of Yahoo," Ray says. "The new Twitter-Yahoo deal has the potential to position Yahoo in the intersection of the search, content and social worlds."
Despite the strides that Microsoft and Yahoo! take together and independently they are still chasing a giant with a tremendous lead. The two may find renewed strength through their deal but they are not, at least in the short term a threat to Google. "I don't think it has any sort of dramatic short-term impact on Google," Greg Sterling told the E-Commerce Times. "Google has not been adversely affected by Bing's growth, and I think it's pretty stable. This will benefit Microsoft, but it won't threaten Google in any kind of meaningful way." IDC's Weide agrees, "A number of people have said Google should be scared now, but it's not like this is going to change the world or turn things upside down. This is going to make Microsoft and Yahoo more competitive but it's not going to dethrone Google." However, looking at the longer term, recent activity in the search space shows a Google with at least some cracks in its armor.
Google's stand-off with China made headlines at the beginning of the year and while it presented a company with the ambition to stand up to an entire government there could be a downside to the stance it is taking. "If it were to leave that market and Microsoft/Yahoo stay in, the result could be an enormous opportunity for Bing," stated Charles King, an analyst with Pund-IT. Furthermore, there is a change taking place in the face of search and the deal between Microsoft and Yahoo! is moving both companies in the right direction. Shortly after the two companies announced their alliance Shar Van Boskirk of Forrester Research noted that, "Google is a great search engine, but the next wave of search will be more than just finding websites . . . Both Bing and Yahoo try to do that, and the partnership will help them develop the online concierge experience that they offer." Google is also currently facing an antitrust investigation from the European Union, another hassle which coul! d lead to traction for its competitors. "If this were to turn into a big deal for Google, it could give the Microsoft and Yahoo consortium a chance to make up some ground," says Dan Olds, an analyst with The Gabriel Consulting Group. "Google has a big search lead in the EU and anything that slows them down or inhibits their business practices is, by definition, good news for Microsoft and Yahoo."
In the end, Google has one very big thing in its favor - it is Google; and as Forrester's Jennings notes, "People are so used to Google, shifting them will be hard." On the other hand this is the Internet and just about anything can happen - just like Twitter and other new rising stars, Google came out of nowhere.
Of course, with brand name titans involved in such a public facing deal there has been no lack of comment. Shouts and murmurs are coming in from all sides with myriad suggestions as to the effect, but as integration will not be fully in place in the U.S. until later in the year and across the whole network for a couple more, the verdict is still out. "This is like a baseball trade where you don't know from the outset who is the winner and who is the loser," says Gartner analyst Allen Weiner.
Through all the noise, however, consensus can be distilled to read that this is a good deal for both Microsoft and Yahoo! - it allows them both to focus on core competencies and in doing so gain strength - but that the combined strength is not a serious threat to a Google-dominated landscape in the near term. According to Rebecca Jennings of Forrester Research, "This deal should allow Yahoo! to give up its drive to beat Google, and concentrate on the elements it does do better, display media and social media , devolving the competition and the significant investment involved off to Microsoft." Andrew Frank of Gartner agrees: "In other words, this sharpens the distinction between Microsoft's 'technology company' role and Yahoo's 'media company' role, making it harder for Google to play both against their alliance."
Both Microsoft and Yahoo! have struggled to gain a footing against Google; Yahoo! struggled rather silently, but Microsoft took a direct swing at earning favor in the search arena - and has done relatively well with the release of Bing. "Microsoft has shown they can actually do something that has a chance of reversing the slide of both Yahoo and Microsoft against Google," said Neil MacDonald of Gartner. An associate of MacDonald's at Gartner is reported in Computer Weekly as agreeing: "Gartner analyst Allen Weiner believes the Microsoft/Yahoo tie-up will prove Microsoft's Bing search technology is a viable alternative to Google." Numbers also indicate that Bing has been successful in improving Microsoft's place in search; from a year ago Microsoft's share of the search usage market has gained 3 percentage points according to comScore. Still moving from an 8 percent to an 11 percent market share leaves the company far behind Google (with roughly a 65 percent share), as well a! s behind its new partner which holds about 15 percent.
Also, Bing's immediate success does not necessarily secure its future. Microsoft's ambitious release was accompanied by an equally ambitious $100 million marketing campaign. Success has its costs and some are questioning whether Microsoft's share will drop as advertising tapers off. Karsten Weide of IDC: "Microsoft's estimated search ad revenue grew by 5 percent, or $11 million, year on year, but it should also be noted that the company currently spends about twice as much per quarter on the Bing marketing campaign," Weide adds, "It remains to be seen if Bing can hold on to this market share gain after the campaign ends, or if this is merely a flash in the pan."
Furthermore, Microsoft's share may be rising, but Yahoo!'s has fallen. In the same time period in which Microsoft realized its three percent gain, Yahoo lost just about the same - falling from about 20 percent to 17 percent. Even though the combined share of both companies going after Google will effectively give them a quarter of the market they will also be married for better or for worse. "What happens if Yahoo keeps losing share? Is this still a good deal for Microsoft?," asks Greg Sterling of Sterling Market Intelligence. This is not to say, however, that the existing assumption is that Yahoo! will continue its decline. The company has made numerous statements to the effect that it will continue to improve and remain innovative. It appears that this is not all talk - just last week Yahoo! announced it had made a deal with Twitter which will incorporate real-time updates into Yahoo! search and allow for Twitter updates to appear across the company's network.
While he does note that the company is struggling for identity, Rob Enderle of the Enderle Group, acknowledges that Yahoo!'s Twitter deal is likely a benefit to the company: "This is a company struggling for relevance," says Enderle, "Social networking, rather than search, was closer to Yahoo's initial strength, and they lost their way by going after Google. This takes them back to their roots, and typically that is a good thing. This does give Yahoo some much needed visibility." Forrester Research analyst Augie Ray also sees the Twitter deal as a solid step for the Yahoo! and representative of a boldness on the company's part: "The Yahoo deal is more extensive than the deals Google and made with Twitter, and I think it demonstrates a new assertiveness on the part of Yahoo," Ray says. "The new Twitter-Yahoo deal has the potential to position Yahoo in the intersection of the search, content and social worlds."
Despite the strides that Microsoft and Yahoo! take together and independently they are still chasing a giant with a tremendous lead. The two may find renewed strength through their deal but they are not, at least in the short term a threat to Google. "I don't think it has any sort of dramatic short-term impact on Google," Greg Sterling told the E-Commerce Times. "Google has not been adversely affected by Bing's growth, and I think it's pretty stable. This will benefit Microsoft, but it won't threaten Google in any kind of meaningful way." IDC's Weide agrees, "A number of people have said Google should be scared now, but it's not like this is going to change the world or turn things upside down. This is going to make Microsoft and Yahoo more competitive but it's not going to dethrone Google." However, looking at the longer term, recent activity in the search space shows a Google with at least some cracks in its armor.
Google's stand-off with China made headlines at the beginning of the year and while it presented a company with the ambition to stand up to an entire government there could be a downside to the stance it is taking. "If it were to leave that market and Microsoft/Yahoo stay in, the result could be an enormous opportunity for Bing," stated Charles King, an analyst with Pund-IT. Furthermore, there is a change taking place in the face of search and the deal between Microsoft and Yahoo! is moving both companies in the right direction. Shortly after the two companies announced their alliance Shar Van Boskirk of Forrester Research noted that, "Google is a great search engine, but the next wave of search will be more than just finding websites . . . Both Bing and Yahoo try to do that, and the partnership will help them develop the online concierge experience that they offer." Google is also currently facing an antitrust investigation from the European Union, another hassle which coul! d lead to traction for its competitors. "If this were to turn into a big deal for Google, it could give the Microsoft and Yahoo consortium a chance to make up some ground," says Dan Olds, an analyst with The Gabriel Consulting Group. "Google has a big search lead in the EU and anything that slows them down or inhibits their business practices is, by definition, good news for Microsoft and Yahoo."
In the end, Google has one very big thing in its favor - it is Google; and as Forrester's Jennings notes, "People are so used to Google, shifting them will be hard." On the other hand this is the Internet and just about anything can happen - just like Twitter and other new rising stars, Google came out of nowhere.
Friday, March 5, 2010
Yahoo! Turns 15
"Happy Birthday to me! One year! Happy birthday to Jerry and David -- 15!"
Yahoo! is turning 15 years old, with a big party -- well, balloons and candy everywhere -- at the company HQ. Chief executive Carol Bartz is speaking at a commemorative luncheon with reporters (and you thought you knew how to have fun.) Here are some highlights:
About the possible sale of Yahoo: "I was on (CNBC's) 'Power Lunch earlier today -- they kept asking me if the company was for sale -- come on, the company is not for sale," she said. "Then, they asked me at what price the company would be for sale." She shrugged.
About Google's closer scrutiny by various governments -- "For the most part, markets work. I don't wish antitrust on anybody...I am not going to go on record with any Google antitrust."
Mobile: "We're neck and neck with Google as far as mobile users. Our strategic difference, it's about running on the major platforms and having a good experience on feature phones so we can go into emerging countries....most of the advertisers really want to experiment with mobile...mobile revenues for everybody are still nascent."
What Yahoo is: "Think of us as a company that wants to deliver great content, and -- this is a difference -- I want our ads to be as great as our content....I want the page to know what kind of content I want...are we marching towards that? Sure. We have some optimization around that, but I want to get it down to what I call 'The Internet of One.' Why don't you know me?"
Changing content: "The thing we were behind in...was people being able to customize content...during the State of the Union we had so many comments that the site crashed -- I thought that was great. It shows people want interaction."
"We're going to be more immersed in content, just as we're more immersed in ads...the most important thing in content is parsing through it and delivering it to you you you and you...We now have taken content optimization to smaller segments...at first, it was male and female, could we tell one from another?....for Wal Mart we can now find seven out of 10 online moms for them every month...They want to be the center for mom's lives...
"That is still a rough cut...you'll see more personalization, more social...our (revenue per search) rps was up 8% because of better paid search systems....
On judging her success: "How long was Steve Jobs at Apple when he came back before it was a success? Four years -- and he knew the company better than anyone else...I'm not trying to make excuses, but I'm proud of what we've done."
"We had let ourselves get defined as a search company...if Yahoo hadn't let it get defined as a search company --it let itself get pigeonholed."
Advertisers "are definitely behaving differently, A year ago they didn't know what to think. Now, if they don't want to plan six months out they want to plan three months out. As much as you have said there's no display business anymore, they are hot to trot.
"A lot of the conversations are about special programs...they used to have these blunt force things, Oct 25 is when Christmas starts...then Valenitnes' Day come out. They were wasting January, selling Easter way too fast...when you see people start to search for prom dresses -- bingo!"
The Economy: "For those people who are laid off, it's terrible. The rest of us would just like the bad news to stop. Don't have another press conference talking about how bad things are. The consumer just wants to feel more confidence, and just keeps getting jolted."
Talent acquisition at Yahoo: "We have lost some people, and got some kick-ass people from Google -- a great engineer in Israel, some sales people. Recruiting to Yahoo is relatively easy. People are coming back, thinking things are changing. There is a very good Yahoo alumni group out there." Hiring in product management, direct sales, and engineers (for content and data centers). "We always try to be leaner and meaner in overhead people, like me."
What Yahoo wants to build: "Facebook is a phenomenally interesting product, it is not particularly heavy engineering...Google has a $4 billion engineering budget, we have $1 billion. ..we have to work around optimization. We're not going to have that shiny new object."
She added that Yahoo is still working to standardize reporting among vertical content areas, like sports and shopping. When the project is done, Yahoo scientists will be able to get a common batch, enabling more custom marketing campaigns.
Yahoo's big marketing campaign, which debuted last October: "didn't work in the US, it worked well overseas. We've seen great stats in India and the UK, France...The ads rolling out in March will be very product specific
"The fight to get relevant ad dollars is what I want to win. The additional dollar of trying to find the next unique user in the us -- there's other ways I want to spend money -- oh, now you're all going to say I don't want to grow."
Social Media "used to have a big definition, now social is Facebook.
...there's a lot we can do with our sites to make them more social for people -- interacting with their friends, bringing in content."
Whether Yahoo was hacked by China - "You can take this however you want. We are always hacked here, and we don't comment...What about Russia?
There's all kinds of hacking out of there."
On Google's threat to leave China: "China if they were really heartfelt, they should have done it...it was more a statement than an action. Nobody said 'Please, please stay.'"
"If something is illegal it's illegal. But it's illegal in different lands...The EU actually concerns me, because every country is starting to have at it....kind of weaving their own stories on some of this stuff."
"I don't think they should have pulled out. I just don't know what's happened in the seven weeks' since. I'm just not following that closely. We just don't operate inside that country. We have an investment in a company
(Alibaba) that does."
"We're kind of gliding through all this, and everyone is pissing on everyone: Apple is taking on Google, is taking on Adobe, the phone companies...we're Switzerland."
Yahoo! is turning 15 years old, with a big party -- well, balloons and candy everywhere -- at the company HQ. Chief executive Carol Bartz is speaking at a commemorative luncheon with reporters (and you thought you knew how to have fun.) Here are some highlights:
About the possible sale of Yahoo: "I was on (CNBC's) 'Power Lunch earlier today -- they kept asking me if the company was for sale -- come on, the company is not for sale," she said. "Then, they asked me at what price the company would be for sale." She shrugged.
About Google's closer scrutiny by various governments -- "For the most part, markets work. I don't wish antitrust on anybody...I am not going to go on record with any Google antitrust."
Mobile: "We're neck and neck with Google as far as mobile users. Our strategic difference, it's about running on the major platforms and having a good experience on feature phones so we can go into emerging countries....most of the advertisers really want to experiment with mobile...mobile revenues for everybody are still nascent."
What Yahoo is: "Think of us as a company that wants to deliver great content, and -- this is a difference -- I want our ads to be as great as our content....I want the page to know what kind of content I want...are we marching towards that? Sure. We have some optimization around that, but I want to get it down to what I call 'The Internet of One.' Why don't you know me?"
Changing content: "The thing we were behind in...was people being able to customize content...during the State of the Union we had so many comments that the site crashed -- I thought that was great. It shows people want interaction."
"We're going to be more immersed in content, just as we're more immersed in ads...the most important thing in content is parsing through it and delivering it to you you you and you...We now have taken content optimization to smaller segments...at first, it was male and female, could we tell one from another?....for Wal Mart we can now find seven out of 10 online moms for them every month...They want to be the center for mom's lives...
"That is still a rough cut...you'll see more personalization, more social...our (revenue per search) rps was up 8% because of better paid search systems....
On judging her success: "How long was Steve Jobs at Apple when he came back before it was a success? Four years -- and he knew the company better than anyone else...I'm not trying to make excuses, but I'm proud of what we've done."
"We had let ourselves get defined as a search company...if Yahoo hadn't let it get defined as a search company --it let itself get pigeonholed."
Advertisers "are definitely behaving differently, A year ago they didn't know what to think. Now, if they don't want to plan six months out they want to plan three months out. As much as you have said there's no display business anymore, they are hot to trot.
"A lot of the conversations are about special programs...they used to have these blunt force things, Oct 25 is when Christmas starts...then Valenitnes' Day come out. They were wasting January, selling Easter way too fast...when you see people start to search for prom dresses -- bingo!"
The Economy: "For those people who are laid off, it's terrible. The rest of us would just like the bad news to stop. Don't have another press conference talking about how bad things are. The consumer just wants to feel more confidence, and just keeps getting jolted."
Talent acquisition at Yahoo: "We have lost some people, and got some kick-ass people from Google -- a great engineer in Israel, some sales people. Recruiting to Yahoo is relatively easy. People are coming back, thinking things are changing. There is a very good Yahoo alumni group out there." Hiring in product management, direct sales, and engineers (for content and data centers). "We always try to be leaner and meaner in overhead people, like me."
What Yahoo wants to build: "Facebook is a phenomenally interesting product, it is not particularly heavy engineering...Google has a $4 billion engineering budget, we have $1 billion. ..we have to work around optimization. We're not going to have that shiny new object."
She added that Yahoo is still working to standardize reporting among vertical content areas, like sports and shopping. When the project is done, Yahoo scientists will be able to get a common batch, enabling more custom marketing campaigns.
Yahoo's big marketing campaign, which debuted last October: "didn't work in the US, it worked well overseas. We've seen great stats in India and the UK, France...The ads rolling out in March will be very product specific
"The fight to get relevant ad dollars is what I want to win. The additional dollar of trying to find the next unique user in the us -- there's other ways I want to spend money -- oh, now you're all going to say I don't want to grow."
Social Media "used to have a big definition, now social is Facebook.
...there's a lot we can do with our sites to make them more social for people -- interacting with their friends, bringing in content."
Whether Yahoo was hacked by China - "You can take this however you want. We are always hacked here, and we don't comment...What about Russia?
There's all kinds of hacking out of there."
On Google's threat to leave China: "China if they were really heartfelt, they should have done it...it was more a statement than an action. Nobody said 'Please, please stay.'"
"If something is illegal it's illegal. But it's illegal in different lands...The EU actually concerns me, because every country is starting to have at it....kind of weaving their own stories on some of this stuff."
"I don't think they should have pulled out. I just don't know what's happened in the seven weeks' since. I'm just not following that closely. We just don't operate inside that country. We have an investment in a company
(Alibaba) that does."
"We're kind of gliding through all this, and everyone is pissing on everyone: Apple is taking on Google, is taking on Adobe, the phone companies...we're Switzerland."
Wednesday, March 3, 2010
Yahoo! Search Platform Continues To Grow
Two weeks ago on, February 10th, Yahoo released two new search marketing products. Both products were unveiled to show the search market that even with the Yahoo-Microsoft ad partnership deal in place, Yahoo will continue to evolve and innovate in the search marketing space. Let’s take a look at the two new releases and see just what has been going on in the Yahoo lab lately.
The first product they announced was the Y!our Ads strategy. What Yahoo is doing here is serving ads based on the user’s past search history. By placing a cookie on the user’s computer, they are essentially retargeting that person further down the search road. As we all know, traditional pay-per-click (PPC) ads are served based on the immediate search terms of the user. This relevancy is what has made them so successful over the years. With Yahoo throwing a curve ball like this, I am sure there will be plenty of debate from both sides as to if this is the best direction to go into with search. Only time will tell if this type of targeting will work in the search space, but my guess is that they will not be as effective. By losing some of the relevancy of what the user has just searched for, I think advertisers will see much lower clickthrough rates. Also, a percentage of users that do make the click will be less likely to make a conversion due to the lack of relevancy.
The second product that Yahoo released was the ability to now serve ads via Yahoo Search Assist. What this means is that the words and phrases that appear just below the search box will now be for sale. For example, if the user types in “Olympic” they would instantly see search suggestions for various events such as “Olympic figure skating” and “Olympic hockey results.” Going forward, these suggested phrases will be for sale. What this will do is dilute some of the broader keyword searches into some of the long-tailed 3-7 keyword phrases. Advertisers will now have to make bids for the broad keyword at the Yahoo Search Assist level, while also expanding their traditional search campaigns to include bids on the more searched long-tail phrases. Great news for Yahoo as they can now capitalize on more search for these lower-volume keyword phrases, but bad news for the sophisticated PPC marketers already advertising in that space. There will be a steady rise in competition once this is more integrated into campaigns.
In June of 2009 Yahoo agreed to put Microsoft in the driver seat of the technology side of their search business. Even with this agreement in place, Yahoo is making strides to evolve as a leader in the search marketing space. It will be interesting to see if Google takes any of these strides by Yahoo and incorporates them into their own search platform.
The first product they announced was the Y!our Ads strategy. What Yahoo is doing here is serving ads based on the user’s past search history. By placing a cookie on the user’s computer, they are essentially retargeting that person further down the search road. As we all know, traditional pay-per-click (PPC) ads are served based on the immediate search terms of the user. This relevancy is what has made them so successful over the years. With Yahoo throwing a curve ball like this, I am sure there will be plenty of debate from both sides as to if this is the best direction to go into with search. Only time will tell if this type of targeting will work in the search space, but my guess is that they will not be as effective. By losing some of the relevancy of what the user has just searched for, I think advertisers will see much lower clickthrough rates. Also, a percentage of users that do make the click will be less likely to make a conversion due to the lack of relevancy.
The second product that Yahoo released was the ability to now serve ads via Yahoo Search Assist. What this means is that the words and phrases that appear just below the search box will now be for sale. For example, if the user types in “Olympic” they would instantly see search suggestions for various events such as “Olympic figure skating” and “Olympic hockey results.” Going forward, these suggested phrases will be for sale. What this will do is dilute some of the broader keyword searches into some of the long-tailed 3-7 keyword phrases. Advertisers will now have to make bids for the broad keyword at the Yahoo Search Assist level, while also expanding their traditional search campaigns to include bids on the more searched long-tail phrases. Great news for Yahoo as they can now capitalize on more search for these lower-volume keyword phrases, but bad news for the sophisticated PPC marketers already advertising in that space. There will be a steady rise in competition once this is more integrated into campaigns.
In June of 2009 Yahoo agreed to put Microsoft in the driver seat of the technology side of their search business. Even with this agreement in place, Yahoo is making strides to evolve as a leader in the search marketing space. It will be interesting to see if Google takes any of these strides by Yahoo and incorporates them into their own search platform.
Carol Bartz Shoots A Subtle Dig At Facebook On CNBC, Asks "What's Their Revenue?"
Carol Bartz appeared on CNBC to talk Yahoo since today is the company's 15 year anniversary. In the course of the interview she heard the usual questions:
Maybe Carol thought she had to say this because she was on CNBC? They seem to like to trash the government. We're really not sure what she wants the government to do...or who/what she's talking about.
Watch on MSNBC
- Would she have sold to Microsoft for $36? Of course.
- Is the stock underpriced? Yes.
- Would she sell the company? She gives a flip answer saying, at the right price, sure. Then CNBC started hammering her asking what that price might be. She then backpedaled as far away from the question as possible.
- Why isn't Yahoo as huge as Google? Because they do search, Yahoo does something else.
- Why isn't it as hot at Facebook? She gets this one a lot, and her response was sort of funny: "Remind me what's their revenue." A cute answer for now, but Facebook looks like a rocket, ready to start generating serious revenue. This sort of snide comment will probably haunt her in two years.
Maybe Carol thought she had to say this because she was on CNBC? They seem to like to trash the government. We're really not sure what she wants the government to do...or who/what she's talking about.
Watch on MSNBC
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