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

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

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”.