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Hiring Management… in an Irrational Market October 27, 2006

Posted by Bill in Uncategorized.
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So much has been written about the ever increasing cost of hiring good talent in this seemingly crazy market of online advertising.  We must strive to find that balance between industry relevance, functional experience, and cultural fit within your organization.  I personally have narrowed it down a list of a few attributes for senior management that have treated my organization well…  

  • People who have the confidence to make educated, autonomous decisions… all the time!
  • The art of being humble is incredibly important to me
  • Be willing to roll up their sleeves and get dirty when needed:  we cannot afford to have people where the job is “beneath me” or “I did that job 5 years ago…”.   We are creating a new industry all over again… get with it and ride the wave!  
  • Hire motivated people whose job will be a a bit of a reach for them… they tend to work their way to prove they deserve to be at that level  (I was fortunate to have been the person who got the stretch job many times over my career)
  • Intelligence– common sense and street smarts go a long way these days 
  • Extremely motivated and hard working people.  This often trumps IQ intelligence.
  • Analytical… everything now has an ROI, marginal costs, measuring cause/effects, and understanding diminishing returns.  Must be analytical these days. 
  • The last piece, and my most important one is PASSION.  I consider myself a sound family guy, yet I spend more time with the people I work with than I do my wife and kids.  If I am not passionate about my work, I consider it a complete failure and waste of time.  I look for the fire in people.  I like to argue out and debate material decisions.  Passionate people can always add something to any decsision-making process.
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Yahoo’s “Right” Decision October 23, 2006

Posted by Bill in Online Advertising, Search Marketing, Yahoo Search Marketing.
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A few weeks back, I discussed Yahoo’s disappointing earnings release, and suggested that the solution to Yahoo’s troubles lies in a better integration of its approaches to search within its media arm. Yahoo, after all, is the #2 search engine and the #1 portal; combining the successful components of each would leave Yahoo a nearly unstoppable force in Internet media. And last week, with its 20% purchase of Right Media, Yahoo took a major first step towards making that integration a reality.  

 

As I said already, Yahoo has the second-largest search engine; that engine is funded almost entirely by auction-based advertising. Yahoo is also the Internet’s largest portal, and therefore one of the world’s largest publisher networks. But until now, the two sides of the business lived very different lives: the successful search side monetizes through auction-based advertising, while the publisher side has monetized through far more traditional models for network buys. With its purchase of Right Media, Yahoo can now bring its publisher monetization in line with its search business for all of Yahoo’s remnant space—and that’s key to effective yield management to complement online brand buys. That’s so because Right Media’s primary offering, the Right Media Exchange, enables publishers to offer auction-based purchases of display ad inventory. Yahoo plans to apply the Right Media Exchange technology to sell Yahoo’s own remnant graphical display inventory—within its own publisher network—in an auction.

 

That’s good news for Yahoo, because advertisers are steadily seeking more opportunities for auction-based advertising beyond search. The auction model means increased transparency; and, because each unit goes for a unique price, it fosters an environment that allows for better metrics. A promising—if anecdotal—sign that auction media may be particularly useful for Yahoo is Lexus’s quickness to join the e-Media Exchange, an online auction marketplace for traditional ad spots, that was initiated by advertisers disgruntled with the non-transparency of traditional ad networks. Yahoo blamed its below Q3 expectations on troubles from the automotive sector; perhaps auction-based display ads can help Yahoo woo Lexus and its fellow automotive advertisers back into the fold in a more material way.

 

But the value of the Right Media investment is more than just a way to fix the Yahoo portal’s monetization model. It’s an opportunity for Yahoo to capitalize on its strengths and come into its own in the online world, and out from beneath Google’s long shadow. And it manages to do all this while delivering a wonderful strategic counter to GoogTube, which will undeniably expand Google’s reach well beyond search, and far into content.

 

After all, despite Yahoo’s Q3 disappointment, Yahoo’s publisher side is still both enormous and hugely popular. Google is the #1 search engine; but Yahoo is the #1 online destination overall—due largely to the popularity of its publisher network. Yahoo clearly knows something about the world of online visuals, as well, whether you’re talking about the display ads and image and video content it offers on its portal; Yahoo video search, which predates Google Video by roughly two years; or its farsighted purchase of photosharing site Flickr, which Yahoo bought when YouTube was only a few weeks old. Yahoo clearly understands the worlds of content and online graphical display, and the investment in Right Media and the placement of the auction media model within the Yahoo portal means that Yahoo can now unlock a huge potential that it’s been sitting on for a long time, and truly begin to monetize its greatest strengths. By making that move on the heels of GoogTube, Yahoo has been able to show the world that Yahoo is still the leader in media in the content/publisher model; and that now it’s able to monetize—and help advertisers monetize—in a way that Google currently isn’t able to.

 

That’s a lot to offer—with or without GoogTube in the picture. And that’s why I predict a new online world order, coming soon. Yahoo, funded by the monetization through auction-based display ads and its large display network, will be able to solidify its lead in both content and graphical ads. It will become for content and graphical display what Google is for search and text links. How crucial will this change be in online history? Mike Walrath, CEO of Right Media, said it perfectly in an e-mail he sent me while I was working on this article; so I’ll leave the final word to him:

“Search has been the center of attention in our industry over the last few years.  It’s a huge piece of the online marketing puzzle, but it’s not the entire puzzle; and Google is still behind when it comes to display and branded advertising.  Yahoo and others have a substantial lead, and that’s going to be important as it becomes clearer that what’s happening isn’t a competition for dominance in search, but all of interactive advertising.”

 

Google’s YouTube Blunder, Reply to Comments… October 17, 2006

Posted by Bill in Uncategorized.
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In the immortal words of Groucho Marx… “Whatever it is, I’m against it!”
(Main line in his first musical number in Horse Feathers, 1932).

As the author of the article, Google’s YouTube Blunder, I recognize this piece is contrarian and I have received many passionate responses– nearly all of the messages I received to my email were positive. The comments in this blog range from “spot on” to “you’re out of your league, rookie”… all of which I very much appreciate. The art of discussion, differing opinions, taking a POV are very much lost these days and I love to see it.

To add light to the Marx quote above… YouTube, MySpace, Facebook, [insert the next 50] were all created from 3 things:
1. Easy to use
2. Amazingly viral
3. Anti-establishment

The minute a “GooTube” user types in an artist’s name and gets redirected from the video that is currently there to the copyrighted video, or when the user needs to sit through a 10 second commerical before seeing the video, they will lose both #2 and #3. It is cool to be different right now. The minute facebook added some trasparency to their groups and added more advertising, there were petitions around campuses to ban them.

If I were running Google, would I have done this acquisition? As a public company, hell yeah… I HAVE TO. Boutique acquisitions are for future product lines, revenue streams, R&D. Big acquisitions that aggregate billions of impressions, and only cost me less than 1% of my market cap is a bet I would probably make… rational? I think not… To go through the math of what earnings need to be ar the 60x EBITDA multiple to justify the purchase price… okay, see where you are going and I did the same math myself ( I was a finance guy before becoming an online marketing executive). However, GOOG is trading at 60x only because of their growth rate, not because that is what they are worth today. In a rational market, once that revenue growth rate slows, valuation should come down to realistic levels.

Anyway, its been fun. Thanks for all the comments– both positive and negative– all very much appreciated.

Google’s YouTube Blunder October 16, 2006

Posted by Bill in Google, Search Marketing.
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YOUTUBE IS A 65-EMPLOYEE STARTUP that hasn’t yet turned a profit, that’s in an unproven industry, and that faces enormous legal problems. Which is why last week’s Google purchase of the video-sharing sitefor $1.6 billion–was a huge mistake.

Let’s go through the facts, and you’ll see what I mean.

Problem #1: YouTube is young, the market is young. YouTube hasn’t made a profit yet. It certainly gets a lot of traffic, and it’s got advertising; but it’s still deeply enmeshed within the “let’s just get more eyeballs and wait” stage of the business. What will happen next is still unclear.

YouTube might hit on the magic formula of turning eyeballs into money–as Google has done for itself; and as Google is looking to help YouTube do, by supporting it with advertising. But there are definitely Google ad ventures that don’t work out (think Google print); and it’s entirely possible that, even with all of Google’s help, YouTube still might not live up to its $1.6B expectations.

After all, a lot can happen in online video over the next few years. Microsoft is beginning its own video sharing site, Soapbox. Meanwhile, MySpace still ranks higher than YouTube–at the time of this writing Alexa ranks MySpace as #6 on the web; and YouTube as #10and MySpace offers video. It’s even possible that the traditional television networks, which are starting to expand online (ABC.com now delivers complete episodes of “Desperate Housewives” and “Lost”), will also enter ithis newest medium of user-generated video. Think about it: reality TV and televised talent shows aren’t all that different from the 15-seconds-of-fame world that YouTube has created on the Internet.

And keep in mind that great empires certainly do fall. MySpace has clearly trumped Friendster in the social networking space, and Google itself pulled ahead of Yahoo, its elder rival. Both Google and Yahoo joined forces to crush Lycos.

And there’s always the possibility of something entirely new jumping out of nowhere that changes everything, rendering YouTube passé. YouTube didn’t even exist two years ago; who knows what the next two years will bring.

Problem #2: YouTube has 65 Employees. YouTube is still a small business. Google has about 8,000 employees; MySpace, which NewsCorp bought for $580 million, has a workforce of 300. So paying $1.6B for YouTube is placing an awful lot of faith in only 65 people.

Of course, YouTube will need to hire more people if they’re to fulfill their new parent company’s huge expectations. That shouldn’t be hard to do–a job at YouTube probably looks pretty good around now–and Google is certainly waiting in the wings to help out (or to take over) if organizational issues become a problem. But whatever step the YouTube organization takes next, it will certainly need to become a different animal than it has been until now. YouTube has achieved fairytale success as a grassroots-driven startup; but it remains to be seen how it will fare as a billion-dollar player and subsidiary of a Fortune 500 firm.

There are bound to be serious changes in how business gets done, and there might even be changes in the way the youth market reacts to a cool indie site that’s gone corporate. Only time will tell whether those changes will be positive or negative.

Problem #3: The legal issues. At the time of this writing, a YouTube search for Billboard-topping artist Justin Timberlake yields 3,084 results. A YouTube search for Kelis, number 50 on the Billboard Pop 100, returns 789 results. There’s clearly copyright infringement going on, and YouTube makes it possible. That could mean real legal headaches for both YouTube and Google.

Thus far, Google and YouTube have kept the lawsuits at bay by creating ad-revenue sharing deals with Warner Music Group, CBS, and Sony BMG. Google will also offer technologies that help YouTube prevent illegal filesharing. But either of those acts of appeasement could go sour, especially if the entertainment world feels that Google’s anti-piracy technology doesn’t go far enough. If the entertainment world’s relationship with the two online kings does fizzle, the breakup might not be so friendly.

There’s no doubt that YouTube’s a valuable company. And Google is certainly on to something in pricing out the competition in a valuable market–which most analysts think is Google’s strategy in overpaying for YouTube. But the high price is a huge gamble, and there’s a lot of reasons to say that it won’t pay off. If the relationship doesn’t pan out, it could very well go down as the greatest blunder in Google history.

Your Customers Want More Than Just Keyword Bids October 12, 2006

Posted by Bill in Online Advertising, Search Marketing.
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logo_searchinsider_sm.gifLAST WEEK ALLURENT, A rich media provider for e-commerce, came out with a study finding that 83 percent of Web users would purchase more online, if online retailers just “added more interactive and interesting ways to display and purchase products.” In other words, it’s not enough to just drive customers to your site. If you want them to buy, you have to give customers the right experience once they’ve arrived, and to continue providing that excellent experience all the way to the point of conversion. And in a separate news item last week, a Harris Interactive study, conducted for mobile marketing firm Enpocket, found that 78 percent of mobile users would be “happy to receive” targeted mobile advertising. Sixty-four percent of those interested in targeted ads, the study continues, would volunteer personal information to enable that targeting.

Now put the two points together, and you come to a very powerful picture of today’s new-media customer. These are people who are seeking the perfect, perfectly targeted marketing; and the perfect, perfectly targeted customer experience. And they want to achieve those things from beginning to end of the buy-cycle.

That’s great news for search, because search is uniquely positioned to fulfill the demands of new-media customers. Search, after all, has unparalleled targeting, and it enables you to make use of that targeting at a very wide array of touchpoints. Keywords tell you a customer’s intent. Higher-level analytics tell you where your searchers are located, the time of day your best search prospects are out there, the browsers they’re using, and a lot more. And because of that level of targeting, you can know which keywords to buy, when to deliver ads, what ads to deliver, and what landing page experiences you need to create for each customer. Meanwhile, behavioral retargeting lets you use search data to pinpoint your best customers, and to follow them across the Internet with targeted display ads–which means that search targeting can make your multichannel efforts more powerful, too.

Given that search enables such a powerful end-to-end customer experience–the very kind of experience that customers want–I’m left with a very basic question about a common decision in marketing departments. My question is this: Why, I’d like to know, are so many marketers fixated on keyword bid management?

I’m referring to the wide array of search methodologies, ranging from the very simple to the complex, that view search as a process of building the right keywords list, and then managing bids on those keywords to meet a budget. That’s certainly an absolutely crucial part of winning in search, but it doesn’t provide the targeting and touchpoint management that, as I’ve already argued, is also absolutely crucial to winning.

To be fair, some marketers are fixated on keyword bid management because it’s all that they can only afford, because it’s what the simpler search management tools and less sophisticated search management agencies have to offer. But that doesn’t explain why many otherwise savvy marketers from blue-chip organizations are stuck on keyword bid management, too.

For those otherwise-savvy marketers, my only explanation is that they’re either unaware of the full array of what search has to offer; or that they don’t realize the degree to which customers are seeking far more than just a well-positioned search ad. And because of that lack of awareness, they’re stuck in a search methodology that’s years behind the times. And so some very major organizations are leaving a lot on the table in search.

That’s a huge potential loss for those organizations, and a gain for their competitors. Meanwhile, the customers have clearly spoken; and the behind-the-times marketers will have to start listening to customers more carefully, and targeting to customers more carefully, if they’re to pull ahead.

For Better Click Fraud Defense, Target Your Customers October 5, 2006

Posted by Bill in Click fraud, Online Advertising, Search Marketing.
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One conclusion I’ve reached on the click fraud problem–the dark side of online advertising,” as last week’s Business Week aptly dubbed it–is that the key to fighting click fraud lies in knowing how to target your customers.

I say this because click fraud is really just a subset of a much larger problem: the problem of the non-converting searcher. And whether non-converting searchers are malicious  click-frauders, or innocent searchers who’ve just decided that your site’s not relevant, they all wreak the same havoc: they leave you with a click cost, but offer you nothing in return. And the first step to avoiding non-converting searchers is to know who your best prospects are, and to target only to those best prospects.

After all, if you target only to conversion-likely searchers, then the searchers who aren’t likely to convert–for whatever reason–will inevitably get weeded out.

I’ll give you an example. Let’s say you’ve found that your best conversions come from the Northeastern U.S., between 12 and 2 p.m. on weekdays. Now let’s say that at 3 a.m. on a Sunday, someone from Nepal searches on your keyword. Based on your target-customer profile, you’ll know that the Nepali searcher isn’t a likely prospect, and so you won’t advertise to him.

Is that Nepali searcher a would-be click frauder, hired as part of a “click farm” to damage your campaign? Or is he an innocent searcher who just happens to lie outside of your target customer group? It’s impossible for you to know. And what’s more, it doesn’t matter. Either way, it’s unlikely that he would convert for you; and by not advertising to him, you’ve prevented any damage he might have caused.

Of course, the example of the Nepali searcher is a fairly obvious case. And while many poor prospects are just as easily noticeable as that one is, many other cases are a lot more ambiguous. Searchers from one zip code might be great prospects, while poor prospects live just one zip code over; a Yahoo searcher might behave very differently from a Google searcher; and a Mozilla Firefox user might convert differently than an Internet Explorer user would. In other words, there are a lot of parameters that can go into identifying your target customer; and because of that, it often takes very subtle analytics to flesh out who your poor prospects are, and who will convert best.

Which is to say that if you want to avoid click fraud, you need a search firm with the analytics capability to pinpoint your best customers.

And it’s useful to keep in mind that, if you do become a click-fraud victim and seek a refund from the engines, you’ll need that same analytics capability to prove your case. “Proving your case” means explaining to the engines why a given searcher is so erratic, that it’s reasonable to assume that something’s afoul. And the better picture you have of your standard searcher, the easier it will be to make the case that your suspected click-frauder is outside of the norm. Again, your ability to profile your searchers is key to doing that, and your ability to profile is only as good as your analytics are.

Of course, profiling isn’t the only defense against click fraud, and it isn’t even the only one that matters. You need a system that acts quickly enough to respond to new click-frauders that appear out of the blue. You need proactive campaign management that’s vigilant for any problems, and that knows how to present a solid case to the engines. You need strategists and technology who are smart enough to weigh all the factors–to know when not to deliver an ad at all, and when to keep an ad up but just lower your bid; and who can tell the difference between a click fraud problem and a landing page problem that looks like a click fraud problem to an unskilled analyst.

If all of this sounds complicated to you, that’s because it is. Which is why my other piece of advice is this: if you want to avoid click fraud, your best bet is working with the smartest people. Which is good advice for any issue in search marketing that you might face.