Wednesday, April 15, 2009

Has Microsoft finally created a real competitor to Adsense?


Reports coming out of the US suggest that Microsoft has finally created a genuine competitor in  PubCenter to compete with Google’s Adsense and Yahoo’s Publisher Network.  Although it is still in beta, it is receiving positive results. Microsoft’s PubCenter, which is a a self serve third party ad publishers platform similar to AdSense and Publisher Network.

YieldBuild, a US based ad optimisation company,  has just launched a new program for publishers which provides premium text ads to websites using Microsoft PubCenter as the source of high-quality text ads to run alongside existing text and display ads. YieldBuild uses computer algorithms to automatically optimize a website’s ad spots with the most profitable combination of ad layout, style, and network.

What’s interesting is that YieldBuild’s beta testers of the new text ad program with PubCenter ads have seen improvements of over 100% in effective CPM rates for clients, according to the company. But Paul Edmondson, CEO of YieldBuild says that the optimal ad plan for publishers is to have a mix of AdSense and PubCenter ads on their sites since both networks are highly complementary of each other.

Now qualified US publishers have a back door to start using PubCenter Ads, which has been in private beta testing since last summer. Edmondson confirms that PubCenter is an incredibly strong ad network that rivals AdSense. Google has dominated this space in the past  because it offers publishers higher fees for ads. However, this might change as Microsoft unveils PubCenter to the wider publisher community, particularly if Microsoft is aggressive in revenue splits to gain market share and this is the second report of high quality ads and higher CPMs with PubCenter than with AdSense.

Microsoft Pubcenter sounds like it will provide the sort of competition to Google that it is required for the market to work effectively and publishers to get the best service.  We can hardly wait for Pubcenter to get rolled out in Europe to finally give publishers some choice.

Link: Microsoft Pubcenter

Link: YieldBuild

Tuesday, April 14, 2009

Europe steps into to save UK users from Phorm!

Finally someone is willing to fight for our rights to privacy in the UK.  Sadly it isn't our Government.  The European Commission has today started legal action against the Government over its failure to protect the privacy of British Internet users.

The case was sparked by BT’s covert use of the controversial user-tracking technology Phorm on customers using itsInternet service in 2006 and 2007.

Phorm, a UK-based company founded in 2004, monitors users’ favourite sites and searches, and uses the information to deliver individually targeted advertising.  The European Commission has been concerned about the way Phorm was secretly tested in the United Kingdom. Last year, the Government through the Information Commissioner, backed Phorm after a complaint by Brussels.

However, Viviane Reding, the European Union's Commissioner for Information Society and Media, announced the first stage of legal action, saying that the UK Government had failed to implement European laws that protect internet users under the terms of  'The Privacy and Electronic Communications (EC Directive) Regulations 2003'.

"Technologies such as internet behavioural advertising can be useful for businesses and consumers but they must be used in a way that complies with EU rules,” the Commissioner said. “These rules are there to protect the privacy of citizens and must be rigorously enforced by all member states.”

BT has already admitted that it conducted trials of Phorm without users’ consent in 2006 and 2007. A further, invitation-only, trial was conducted last year.

Ms Reding’s statement continued: “I call on the UK authorities to change their national laws and ensure that national authorities are duly empowered and have proper sanctions at their disposal to enforce EU legislation on the confidentiality of communications.”

Ms Reding’s contention is that UK laws must be tightened to protect consumers and comply with the ePrivacy Directive, which the UK Government signed up to in 2002. It came into force at the end of October 2003.

The Commission has now given the Government two months to respond to today’s “infringement proceeding” - the first stage of a legal process which could end up in the European Court of Justice for an alleged breach of the directive.  The directive states that user consent must be “freely given, specific, and informed”, and it requires EU member states to impose sanctions in the event of breaches of the rules.

Ms Reding reinforced her stern message to the British Government in her weekly video message, delivered via the European Commission’s website.

“Privacy is a particular value for us Europeans; a value reflected in European laws for many years,” she said.

“However, in spite of the many advantages of technological development, there is an undeniable risk that privacy is being lost to the brave new world of intrusive technologies. On the global information highways, personal information is increasingly becoming ‘the new currency’. And I believe that Europeans… must have the right to control how their personal information is used.”

“European privacy rules are crystal clear,” she said. “A person's information can only be used with their prior consent. We cannot give up this basic principle, and have all our exchanges monitored, surveyed and stored, in exchange for a promise of ‘more relevant’ advertisements! I will not shy away from taking action where an EU country falls short of this duty.”

Phorm has already been investigated by the police and the Government over privacy concerns. It has attracted interest from UK Internet service providers including BT, Virgin Media and TalkTalk, although no company has yet fully introduced the system.

Mr Berners-Lee spoke out passionately against Phorm at a meeting in the House of Commons in March this year. "It is very important that when we click, we click without a thought that a third party knows what we're clicking on," he said. "'What is at stake is the integrity of the Internet as a communications medium. It's important there should be no snooping on the internet."

It has always been the contention of Blogcetera and many other industry observers that what Phorm was engaged in was both against the 'spirit' and the letter of the law as laid down in the EU directive that the British Government and Parliament passed into law.

Links  :The Privacy and Electronic Communications (EC Directive) Regulations 2003

Additional Reporting: The Times

Thursday, April 09, 2009

Youtube Still Losing Tens Of Millions Of Dollars Per Year Claims Analyst


In common with so many Web 2.0 applications which have attracted a huge following, Google-owned YouTube  is likely to face some serious financial repercussions this year, a financial analyst claimed. 

Spencer Wang, a financial analyst with Credit Suisse, claimed that the renowned video-sharing website is set to lose a whopping $470 million this year.

Wang further predicted that while the website seems all set to generate as much as $240 million in 2009, up by 20 percent on year-over-year basis, its operational cost could go over $700 million, causing huge monetary losses to the parent company Google. 

Elaborating on these hefty operational expenditures, the analyst claimed that the search engine giant have to spend around $711 million on bandwidth, ad-revenue sharing, sales and marketing, storage, licensing content, during the period. 

With around $360 million a year, bandwidth cost accounted more than half of the total operational costs for the website, the analyst added. 

Wang further attributed this loss to not selling advertisements on 97 percent of the pages of the site, coupled with huge expenses the company has to bear so as to allow a large number of users to watch videos on the website. 

In order to help YouTube check such huge losses, Wang wrote in its report, “The issue for YouTube going forward is to increase the percentage of its videos that can be monetised (likely through more deals with content companies) and to drive more advertiser demand through standardisation of ad formats and improved ad effectiveness”. 

Thursday, March 12, 2009

Trends Online - The Digital Outlook Report 2009

Each year Razorfish, an interactive marketing company, publishes its “Digital Outlook Report.”  The report is very interesting for anyone who is interested in making a living from the internet.

The first section identifies the key trends to watch over the coming year before examining them in greater depth.  They are:-

Trends to Watch

1.    Advertisers will turn to “measurability” and “differentiation”
in the recession.

2.   Search will not be immune to the impact of the economy.

3.   Social Influence Marketing will go mainstream.

4.   Online ad networks will contract; open ad exchanges will expand.

5.   This year, mobile will get smarter.

6.   Research and measurement will enter the digital age.

7.   “Portable” and “beyond-the-browser” opportunities will create new touch points for brands and content owners.

8.    Going digital will help TV modernize.

Whilst the document is overly long at 180+ pages and does offer a very US centric view, it is definitely worth a look.  Get your copy from this link:-  Razorfish : Digital Outlook Report 2009

Google launches behavioural tracking system

Google has launched a new behavioural targeting system across YouTube and partner sites in its AdSense advertising network.  Google doesn’t like the term behavioural ad targeting and prefers to call it "interest-based advertising." In the interests of clarity, it is easier to call it what it is “behavioural targeting”!

Google ‘s Susan Wojcicki writing under the title "Making ads more interesting”, stated that the new “beta” system will deliver ads associate with categories of interest such as sports, gardening, cars, pets - with your browser, based on the types of sites you visit and the pages you view. Furthermore, Google may then use those interest categories to show you more relevant text and display ads."

Google like Phorm before it, claims to anomylize your IP address and so the service is entirely legal and doesn’t breach any privacy concerns.  However, the out-turn is clear.  Google are monitoring what you surf and will deliver targeted ads based on you surfing activity.  This is not an altruistic move, but clearly aims to ensure that every moment of your surfing experience is monetised and the Google behemoth continues to suck up every ad dollar available regardless of its users’ personal privacy.

You can also opt-out of the program, but this is a cookie-based opt-out so the effect is limited by time to live of the cookie and the specific PC/laptop and browser you are using at the time. It also means that if you're someone who regularly clears your cookies for privacy reasons, you will effectively opt back in each time.

Google Chrome does offer the “incognito” surfing option, but does necessarily prevent your surfing activity remaining untracked just not retained for future sessions.

Whilst I do not believe that behavioural targeting is necessarily evil, I do think we should have a clear choice to be able to opt-in to such systems and not be corralled like dumb beasts without any genuine and permanent choice to the matter.  Increasingly, Google's mantra of "do no evil" has a caveat that may be added - unless it pays!

Friday, February 27, 2009

Google isn't recession proof.

In recent months the behemoth that is Google has started to take action to rein in non-core or non strategic business activities.  In January, Google announced it was shutting down Google Print Ads, and withdrew support for Google Notes.  Recently it announced it was shutting down Google Radio Automation.  Google had seen these areas as less successful than they had hoped.

Clearly Google is not immune to the recession.
  Recent figures released by JP Morgan last November suggest that online advertising spend fell by a third in the last six months of 2008.  In addition, advertisers are looking to improve return on investment and are turning to CPA and away from PPC.

With CPA (Charge per action) only costs an advertiser in response to some specific action such as a user buying goods rather than with PPC (Pay per click) which cost as soon as a web user clicks on the ad.  Google’s flagship advertising service is Adsense, their leading PPC service. So the primary driver seems to be sensible economic business steps rather than involved explanations of Google’s strategy etc.


Thursday, February 19, 2009

MySpace contemplate life after Google?

News that Google may end their search deal with MySpace will be adding to the concerns of the social networking scene.  The three and half year deal is reportedly worth $900M and it is proving very hard for Google to make money, even with their dominance of the PPC advertising market.  This news comes hot-on-the-heals of News Corps reported Q2 loss in its Fox Interactive Group.   MySpace is thought to bring in the majority of the revenues coming in from Fox Interactive. Here is what they had to say on the issue: “Fox Interactive revenues: $226 million revenues.  Down due to reduced subs at IGN. Search and advertising were similar to a year ago.  Costs were MySpace Music and international expansion”.  Overall the entire division lost $38million.

If Google pulls out, MySpace will become a significant drain on Fox as the shine seems to be coming off Social Networking as users begin to wake up to the many privacy issues that exist and how their personal information may be being exploited without their explicit permission.

As for Google, well Barclays' analyst Doug Anmuth stated that:-

Google no longer sees the need to win distribution at any cost, and we also think it is internally re-evaluating its relationship with MySpace which includes $900 million in payments in the 3.5 year term leading up to mid-2010.  Importantly we do not believe Google would lose share as a result of this shift”.

With such a ringing endorsement from a “Banker”, I am sure that Larry and Sergey can rest easy……….