23 Musings

This image from eMarketer shows just how sewn up the online ad world is by the big four...

When Google drops the branded terms rules on 5th May I reckon their revenue and share will leap as the cost of those terms in PPC rises!

According to SEMPO (the Search Engine Marketing Professional Organization) it does.

Apparently money is shifting into search and away from print and classified at an increasing rate. The reason for this I'd surmise is that search is being seen as a way to follow consumers rather than just trying to put an ad in front of them. It's now widely accepted that most markets have a need to be active in search so it's natural for spend to shift towards it.

Key findings from the SEMPO study are:

• The North American SEM industry grew from $9.4 billion in 2006 to $12.2 billion in 2007, exceeding earlier projections of $11.5 billion for 2007.
• North American SEM spending is now projected to grow to $25.2 billion in 2011, up significantly from the $18.6 billion forecast a year ago.
• Marketers are finding more search dollars by poaching budget from print magazine spending, website development, direct mail and other marketing programs
• Paid placement captures 87.4 percent of 2007 spending; organic SEO, 10.5 percent; paid inclusion, 0.07 percent, and technology investment, 1.4 percent.
• Google AdWords remains the most popular search advertising program, but both Google and Yahoo sponsored search spending has decreased from a year ago

Here's how the spend is shifting:

Shifting to search is great for all the SEO agencies out there but is also going to make their jobs a lot harder as they have to work for their money to get clients to the top of the listings. As competition grows, so it becomes more difficult to get dramatic improvements in position, some SEO agencies have had an easy ride in recent years and that's going to get harder.

Other developments will also affect SEO such as the introduction of semantic search technology (as announced by Yahoo recently). Developments such as this could change the rankings entirely and again will mean the agencies have to stay ahead of the game and work hard (not a bad thing).

So says Tim Berners-Lee in this article on the future of the web, search and semantic technologies over on the Times website.

I tend to agree with him unless Google move into the semantic search space pretty quickly. With Yahoo announcing support for semantic mark-up within their search index Google will surely not want to be left behind.

I'd like to think the future of Google will embrace semantic technologies and make it a real 'discovery engine', surfacing links of high relevance to searchers through much stronger understanding of the content within.

As an aside; one thing I've been thinking would be a nice app would be a semantic web robot which you could set off to scour the web for content and with the added semantic features (rather than the more usual boolean profile based robot) it could learn as it went by allowing you to score results for relevance to you. The first really intelligent agent?

So Yahoo recently announced their Open Search platform. Now more details are emerging and Yahoo have announced they will be supporting semantic mark-up and making use of the structured, meaningful data that can be applied to web pages to help them index better and serve up more relevant results.

This is a big step forwards and if released into the main Yahoo Search will surely help them in their fight for users with Google and Microsoft.

Relevance is king in the search engine world, being able to interpret results by more than just standard search algorithms of content density and link equity has the potential to deliver a much more relevant results set to every search. As semantic mark-up and web standards increase in usage this could give Yahoo and edge they badly need.


There hasn't been a major move to optimise relevance in search results for years, this could give SEO's something to keep them busy. Rather than following the usual tactics of copy optimisation and ensuring pages are well formed, developers will now need to ensure they use the relevant semantic tags to add meaning to their pages.

The one thing that will bring the users flooding in is if an engine finds a way to deliver highly relevant results. Returning three truly relevant links is far more useful than delivering one thousand arbitrarily ordered links. I for one would immediately switch to using an engine who gets semantic search right.

I hope to see this implemented asap if Yahoo have any chance of capitalising on this move. Google will be hot on their heels otherwise...

Some updates on the Microsoft-Yahoo approach:

Kevin Johnson, president of Microsoft Platforms and Services Division sent an internal email yesterday. The email was obviously designed to be leaked (and ended up on Microsoft.com after it got into the blogosphere) judging by the language in it and the mentions of looking after both companies employees in the event of the merger going ahead. Trying to stop people jumping off the ship? Or just a good PR exercise?


Yahoo are facing another lawsuit, this time from some pension funds who claim that by declining the Microsoft offer they are not returning value to shareholders and are actually risking their investments by dragging it out looking for other parties to strike a deal with.

Lastly, Sergey Brin has expressed his nervousness at the deal going ahead, saying that 'when you start to have companies that control the operating system, control the browsers, they really tie up the top Web sites, and can be used to manipulate stuff in various ways. I think that's unnerving'.

So no progress really, rumours still fly about Yahoo trying to find anyone else to deal with and Microsoft seem confident as ever that the deal will go through in the end.

Interesting fact about the possible Microsoft-Yahoo merger. It turns out that 90% of Yahoo's institutional investors also hold shares in Microsoft and most of them have more interest in Microsoft than in Yahoo.

That could mean that they are more interested in the deal going through than in securing a higher valuation for Yahoo.

It would be a real shame if shareholders decide the future of Yahoo. Times like this you need a strong CEO...

In a letter from Jerry Yang Yahoo have explained why they turned down the Microsoft bid. Is this just an attempt to appease them to prevent any further lawsuits (via Techcrunch)?

Lot's of Yahoo coverage in the blogosphere at the moment. Here's a few key pieces:

Yahoo are still launching new products and innovating. Examples include the News Globe mashup (via Mashable) and the exciting new mobile product oneConnect (an app allowing email IM and social networking to all come alive on your mobile phone, very promising).

The layoffs have started (again via Mashable).

Key players are leaving, Bradley Horowitz a key figure responsible for the area of Yahoo who come up with new and innovative products is apparently jumping ship to Google (via Techcrunch). This is a big loss, I've seen him at conferences and he's a very sharp guy.

Microsoft are still pushing for the merger to happen and rumours are that they may take their offer straight to the shareholders (again via Mashable).

And to top it all, Yahoo are said (via Techcrunch) to be in continuing talks with News Corp about a deal which could see them become a massive powerhouse with the properties to compete with Google (although not quite on eyeballs).

Where will this all lead? Who knows, but Yahoo need to resolve the merger issues and rebuild confidence in their employees and shareholders, losing key hires and all this talk of deals is going to begin to hurt them if they don't settle on a direction to follow soon.

The IDC have announced that the market for U.S. internet advertising grew by a massive 27% in 2007.

Interestingly though, while Google grew by 40% year on year in Q4 that was down on their growth a year earlier. That made their market share slip by 0.5%, but they do still own over 23% of the market. Something to do with the coming saturation of search marketing perhaps?

IDC says a merged Microsoft-Yahoo would command 17% of the U.S. online ad market, so still not enough to topple Google from the top spot.

One wonders if the figures for Google include DoubleClick yet??

So Yahoo have confirmed their no to Microsofts offer today and at the same time rumours emerge about the possibility of Yahoo buying AOL.

I can't see Yahoo-AOL happening at all, it just doesn't sound like a good fit for anyone. There isn't enough to be gained from AOL to help save Yahoo from their predicament of slowing revenues.

More likely Yahoo are playing a game to get the offer price up from Microsoft I reckon. I really believe the only options for Yahoo are innovate to survive or merge with MS.

The word is that Yahoo made a decision on Friday to reject the Microsoft offer. Whether that's a ploy to get a better bid out of them is not know yet. However the way Microsofts share price has dropped in the last few days, their offer of cash and stock is less attractive than when they first made it.

If Yahoo go it alone for the future they will really need to pull something out the bag to survive. Major changes will be needed and they must come up with a way to better monetise all the page views and eyeballs they get on their expanse of web properties.

It's surely not that difficult to strategise a way to make better profits out of what is still one of the best web properties around?

Mike Arrington over a Techcrunch has a great article with his usual insider insight on the Microsoft-Yahoo merger. He believes that today will be the day for an announcement of sorts.

He's also got some very relevant points about what might happen if Google got into bed with Yahoo. Go have a read!

So finally after months of speculation that this was coming (me too) Microsoft have bitten the bullet and written a letter (via Guardian) to the Yahoo board to show their intention to buy them.

It's a handsome offer as well, $44.6B in cash and shares, that's 62% up on Yahoo's closing share price from yesterday. I guess this means MS are really serious, I'm sure they could have put in a lower bid but this bid should make it very difficult to turn down by Yahoo as it's extremely attractive to their shareholders. I hope it's the right play for MS sake, if it's not and Yahoo really is slowly dying as many have said then they could be buying a very expensive load of traffic.

There's a very brief response from Yahoo here...

A conference call is being held at 8.30 EST in the U.S., should be more news after that. Techcrunch UK rightly mentions that a deal this big will see a great deal of scrutiny from Euro regulators (possibly putting Google/Doubleclick in the shade).

Will a deal like this produce a competitor for Google? Well maybe in terms of traffic and eyeballs but not in terms of search relevance, advertising technology, ad dollars earned, innovation or any of the other good things you can measure such companies on. This could get interesting!

A report (here via Marketing Charts) shows that ROI on search marketing has improved in the past year.

What is really interesting is the figures showing ROI improvements by search engine. Google has improved ROI by 7.5% (and it's taken a whopping 76% of the total spend). Yahoo showed a 39% improvement in ROI returned to advertisers since the launch of Panama which is great news for them although coming at a difficult time. MSN interestingly shows the highest clickthrough rate and ROI, it's ROI was 27% greater than the average across other engines.

Just shows why the money is still all in search at the moment. While returns like this are to be had it's going to be tough for anyone to convince me that it's worth moving money out of search into other areas.

Drag and drop; it's a common piece of functionality that makes our lives on PC's that little bit easier. Now, Yahoo has filed a patent for what it terms 'smart drag and drop'. Yahoo's claimed patent sounds pretty much like every piece of drag and drop functionality I've ever seen, I find it hard to believe that this will ever get through as it might give Yahoo enough ammo to claim others have copied it's patent.

The Electronic Frontier Foundation are coordinating efforts to get this patent application denied, more details here.

The perennial rumour of Microsofts impending acquisition of Yahoo has resurfaced in an article in the NY Post today. I last posted on this in September. See the last line of this NY Post article for the hint supposedly from an insider at MS, apparently the deal is still being debated at Microsoft.

I'm actually less unconvinced than I was about this rumour now. Microsoft are still failing to build the traction around their MSN portal and get significantly less browse traffic than Yahoo and have significantly less advertising real estate available to them. They are also lagging behind in search (although that could change soon). Yahoo would still be a great buy for them, and instantly propel them up the charts in terms of eyeballs and ad clicks.

Yahoo has announced a new developer platform for their Yahoo Go mobile web service. The new platform is being set up to enable developers and publishers to mobilise their services quickly, at high quality and low cost, across hundreds of devices.

This is a very different approach to Google's who are launching a whole mobile operating system (Android) with the help of many partners.

Yahoo's system aims to build on the success of Yahoo Go and allow developers to tap into multiple phone manufacturers and carriers much more easily. It probably won't have the flexibility to be able to create as sophisticated an application as you can on Android but it may well have the Facebook effect and allow developers to create simple apps with viral qualities which could prove very successful.

So Yahoo has settled the lawsuit with a number of Chinese dissidents who had filed a court case against them. The terms of settlement have not been disclosed.

The case had alleged that Yahoo had provided the Chinese government with information which helped them to prosecute the dissidents. No word on exactly what type of information Yahoo had handed over although one would suspect it could be search histories, email details, chat histories and possibly lists of websites visited.

So have they really breached the human rights of these dissidents? Well, the liberal in me thinks that they should never hand over any identifiable information to anyone else, I would be outraged if my details were misused in this way. But then, wouldn't the same happen in the UK? If I broke a law then Yahoo would happily hand over my email if the government requested it.

I guess the difference in this case is that they are dissidents living under a restrictive regime. Therefore by handing over the information Yahoo have put these poor people in danger which is inexcusable morally. However, it is understandable from a business point of view, if Yahoo refused they would have risked being switched off in the largest populated country in the world which would have damaged their business considerably.

I would imagine it was a pretty tough choice for Yahoo and although they chose the route which to me personally is wrong morally for them it was probably the right decision.

For the first time the new darlings of the web (social networks) have overtaken the old darling (web based email) in the traffic stakes. Hitwise have a report showing the upward trend for the social networks and the rate at which they have caught up the likes of Hotmail, Gmail and Yahoo Mail.

So, are users now using social networks instead of email? Well yes they are , naturally, they are a quick way to converse with close friends especially to groups of friends. And they're more fun to use, something email providers will have to address (OpenSocial and Gmail perhaps?). However, email still has it's place and the demographic data from Hitwise shows that unsurprisingly it's the younger users who visit social networks more.

One factor we should also consider is that email is something that you visit a few times a day maybe (unless the web is your life) where as users tend to browse social networks for long periods so the traffic is bound to be higher.

Less is more it would seem when it comes to search interfaces. Just look at Google to see the less-is-more approach at it's best. Their minimal approach to the search homepage works really well, although I do think a big reason for that is that their algorithm is much better at returning relevant results with minimal input from the user.

Prof. John Maeda of MIT Media Lab had put together an interesting image showing the development of both Google and Yahoo's homepage over time. It's really interesting to see how Yahoo lost their way and Google stayed true to the minimal approach. Click the image below to see a full size version: